Exhibit 4.1
COMMON
STOCK PURCHASE WARRANT
PROVECTUS
PHARMACEUTICALS, INC.
|
Warrant
Shares: 500,000
|
|
Initial
Exercise Date
:
___________,
2010
|
THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies
that, for value received, Lincoln Park Capital Fund, LLC (the “
Holder
”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after
__________,
2010 (the
“
Initial Exercise
Date
”) and on or prior to the close of business on the fifth anniversary
of the date hereof (the “
Termination Date
”)
but not thereafter, to subscribe for and purchase from Provectus
Pharmaceuticals, Inc., a Nevada corporation (the “
Company
”), up to
500,000 shares (the “
Warrant Shares
”) of
Common Stock
The purchase
price of one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
Section
1
.
Definitions
. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Purchase Agreement (the “
Purchase Agreement
”),
dated
_____
,
2010, among the Company and the Holder.
Section
2
.
Exercise
.
a)
Exercise of
Warrant
. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Business Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank or,
if available, pursuant to the cashless exercise procedure specified in Section
2(c) below. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Business
Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise Form within one (1) Business Day of receipt of such
notice. In the event of any dispute or discrepancy, the records of
the Holder shall be controlling and determinative in the absence of manifest
error.
The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a portion of the
Warrant Shares hereunder, the number of Warrant Shares available for purchase
hereunder at any given time may be less than the amount stated on the face
hereof.
b)
Exercise
Price
. The exercise price per share of the Common Stock under
this Warrant shall be
$1.50
, subject to adjustment
hereunder (the “
Exercise
Price
”).
c)
Cashless
Exercise
. If at the time of exercise hereof there is no
effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder
and all of the Warrant Shares are not then registered for sale by Holder (or the
prospectus contained therein is not available for use), then this Warrant may
also be exercised, in whole or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:
|
|
(A)
=
|
the
VWAP on the Business Day immediately preceding the date on which Holder
elects to exercise this Warrant by means of a “cashless exercise,” as set
forth in the applicable Notice of
Exercise;
|
|
|
(B)
=
|
the
Exercise Price of this Warrant, as adjusted hereunder;
and
|
|
|
(X)
=
|
the
number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless
exercise.
|
“
VWAP
” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on the Principal Market, the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Principal Market as reported by Bloomberg L.P.
(based on a Business Day from 8:30 a.m. (Central Standard Time to 3:02 p.m.
(Central Standard Time), (b) if the OTC Bulletin Board is not a Principal
Market, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock
is not then listed or quoted for trading on the OTC Bulletin Board and if prices
for the Common Stock are then reported in the “Pink Sheets” published by Pink
OTC Markets, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section
2(c).
d)
Mechanics of
Exercise
.
i.
Delivery of Certificates
Upon Exercise
. Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“
DWAC
”) system if the
Company is then a participant in such system and either (A) there is an
effective Registration Statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by Holder or (B) this Warrant is being
exercised via cashless exercise, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise by the date that is
three (3) Business Days after the latest of (A) the delivery to the Company of
the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C)
payment of the aggregate Exercise Price as set forth above (including by
cashless exercise, if permitted) (such date, the “
Warrant Share Delivery
Date
”). This Warrant shall be deemed to have been exercised on
the first date on which all of the foregoing have been delivered to the
Company. The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of
such shares, having been paid.
ii.
Delivery of New Warrants
Upon Exercise
. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
iii.
Rescission
Rights
. If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date,
then, the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise
. In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “
Buy-In
”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
v.
No Fractional Shares or
Scrip
. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
vi.
Charges, Taxes and
Expenses
. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder;
provided
,
however
, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental
thereto.
vii.
Closing of
Books
. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
e)
Holder’s Exercise
Limitations
. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other securities of
the Company which would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or
any of its Affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that the Company is
not representing to the Holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and the Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section
2(e), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as reflected in (A)
the Company’s most recent periodic or annual report filed with the Commission,
as the case may be, (B) a more recent public announcement by the Company or (C)
a more recent written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Business Days confirm orally
and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The “
Beneficial Ownership
Limitation
” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply. Any such increase or decrease will not be effective until the
61st day after such notice is delivered to the Company. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant. For purposes of the Warrant, “
Affiliate
” has the
meaning set forth in Rule 12b-2 of the regulations promulgated under the
Exchange Act.
Section
3
.
Certain
Adjustments
.
a)
Stock Dividends and
Splits
. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
b)
Subsequent Rights
Offerings
. If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to the Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the VWAP on the record
date mentioned below, then, the Exercise Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares so offered (assuming receipt by the Company in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such VWAP. Such adjustment shall be made whenever such
rights, options or warrants are issued, and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights, options or warrants.
c)
Pro Rata
Distributions
. If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case
the adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
d)
Fundamental
Transaction
. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“
Fundamental
Transaction
”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “
Alternate
Consideration
”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant). For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor (the “
Successor Entity
”) to
assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents in accordance with the provisions of this
Section 3(d) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the
holder of this Warrant, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction).
Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of
such Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.
e)
Calculations
. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
f)
Voluntary Adjustment By
Company
. The Company may at any time during the term of this Warrant
reduce the then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
g)
Notice to
Holder
.
i.
Adjustment to Exercise
Price
. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. If the Company
enters into a Variable Rate Transaction despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible conversion or exercise price at
which such securities may be converted or exercised.
ii.
Notice to Allow Exercise by
Holder
. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of its subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this
Warrant during the period commencing on the date of such notice to the effective
date of the event triggering such notice except as may otherwise be expressly
set forth herein.
Section
4
.
Transfer of
Warrant
.
a)
Transferability
. This
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. The Warrant, if properly
assigned in accordance herewith, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants
. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the initial issuance date set forth on the first page of this Warrant and shall
be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.
c)
Warrant Register
. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “
Warrant Register
”),
in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
d)
Representation by the
Holder
. The Holder, by the acceptance hereof, represents and
warrants that it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own account and
not with a view to or for distributing or reselling such Warrant Shares or any
part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act.
Section
5
.
Miscellaneous
.
a)
No Rights as Stockholder
Until Exercise
. This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 2(d)(i).
b)
Loss, Theft, Destruction or
Mutilation of Warrant
. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays,
Holidays, etc
. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.
d)
Authorized
Shares
.
The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e)
Jurisdiction
. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
f)
Restrictions
. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities
laws.
g)
Nonwaiver and
Expenses
. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or the
Purchase Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
h)
Notices
. Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
i)
Limitation of
Liability
. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j)
Remedies
. The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.
k)
Successors and
Assigns
. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of any Holder from time to time of
this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.
l)
Severability
. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.
m)
Headings
. The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.
|
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PROVECTUS
PHARMACEUTICALS, INC.
|
|
|
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By:
|
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|
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Name:
Peter R. Culpepper
|
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Title:
Chief Financial Officer and Chief Operating
Officer
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NOTICE
OF EXERCISE
TO:
PROVECTUS PHARMACEUTICALS,
INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
¨
in
lawful money of the United States; or
¨
the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of
Investing Entity
:
_________________________________________________
Name of
Authorized Signatory:
___________________________________________________________________
Title of
Authorized Signatory:
____________________________________________________________________
Date:
__________________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________
________________
Signature
Guaranteed: ___________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
Exhibit 10.1
EXECUTION
COPY
PURCHASE
AGREEMENT
PURCHASE AGREEMENT
(the
“Agreement”), dated as of December 22, 2010, by and between
PROVECTUS PHARMACEUTICALS,
INC.
, a Nevada corporation, (the “Company”), and
LINCOLN PARK CAPITAL FUND,
LLC
, an Illinois limited liability company (the “Investor”).
WHEREAS:
Subject
to the terms and conditions set forth in this Agreement, the Company wishes to
sell to the Investor, and the Investor wishes to buy from the Company, (i)
initially 1,000,000 shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), together with warrants (the "Warrant") to purchase
500,000 shares of Common Stock, and (ii) thereafter up to Thirty Million Dollars
($30,000,000) of the Common Stock. The shares of Common Stock to be purchased
hereunder are referred to herein as the “Purchase Shares.”
NOW
THEREFORE, the Company and the Investor hereby agree as follows:
1.
CERTAIN DEFINITIONS.
For
purposes of this Agreement, the following terms shall have the following
meanings:
(a) “Accelerated
Purchase Notice” shall mean an irrevocable written notice from the Company to
the Investor directing the Investor to buy such Accelerated Purchase Amount in
Purchase Shares as specified by the Company therein on the Purchase
Date.
(b) “Available
Amount” means initially Thirty Million Dollars ($30,000,000) in the aggregate
which amount shall be reduced by the Purchase Amount each time the Investor
purchases shares of Common Stock pursuant to Section 2 hereof. The Available
Amount shall not be reduced by the Investor's purchase of the Initial Purchase
Shares and Warrants or the amounts paid upon the exercise, if any, of the
Warrants.
(c) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.
(d) “Business
Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time
less than the customary time.
(e) “Closing
Sale Price” means, for any security as of any date, the last closing sale price
for such security on the Principal Market as reported by the Principal Market,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing sale price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by the Principal Market.
(f) “Confidential
Information” means any information disclosed by either party to the other party,
either directly or indirectly, in writing, orally or by inspection of tangible
objects (including, without limitation, documents, prototypes, samples, plant
and equipment). Confidential Information may also include information disclosed
to a disclosing party by third parties. Confidential Information shall not,
however, include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party’s obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in
the receiving party’s possession; or (vi) is required by law to be disclosed by
the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure.
(g) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(h) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(i) “Maturity
Date” means the date that is 600 Business Days (30 Monthly Periods) from the
Commencement Date.
(j) “Monthly
Period” means each successive 20 Business Day period commencing with the
Commencement Date.
(k) “Person”
means an individual or entity including but not limited to any limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(l) “Principal
Market” means the OTC Bulletin Board; provided however, that in the event the
Company’s Common Stock is ever listed or traded on the Nasdaq Global Market, the
Nasdaq Global Select Market, the Nasdaq Capital Market, the New York Stock
Exchange, or the NYSE Amex, then the “Principal Market” shall mean such other
market or exchange on which the Company’s Common Stock is then listed or
traded.
(m) “Purchase
Amount” means, with respect to any particular purchase made hereunder, the
portion of the Available Amount to be purchased by the Investor pursuant to
Section 2 hereof.
(n) “Purchase
Date” means with respect to any particular purchase made hereunder, the Business
Day on which the Investor receives by 10:00 a.m. eastern time of such Business
Day a valid Regular Purchase Notice or a valid Accelerated Purchase Notice that
the Investor is to buy Purchase Shares pursuant to Section 2
hereof.
(o) “Purchase
Price” means the lower of the (A) the lowest Sale Price of the Common Stock on
the Purchase Date and (B) the arithmetic average of the three (3) lowest Closing
Sale Prices for the Common Stock during the twelve (12) consecutive Business
Days ending on the Business Day immediately preceding such Purchase Date (to be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction).
(p) “Regular
Purchase Notice” shall mean an irrevocable written notice from the Company to
the Investor directing the Investor to buy such Regular Purchase Amount in
Purchase Shares as specified by the Company therein on the Purchase
Date.
(q) “Sale
Price” means any sale price for the shares of Common Stock on the Principal
Market as reported by the Principal Market.
(r) “SEC”
means the United States Securities and Exchange Commission.
(s) “Securities
Act” means the Securities Act of 1933, as amended.
(t) “Transfer
Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the
Company in respect of the Common Stock.
2. PURCHASE OF COMMON
STOCK.
Subject
to the terms and conditions set forth in this Agreement, the Company has the
right to sell to the Investor, and the Investor has the obligation to purchase
from the Company, Purchase Shares as follows:
(a)
Initial Purchase and
Commencement of
Regular Sales of Common Stock
. Within one (1) Business Day
following the satisfaction of the conditions (the “Commencement”) as set forth
in Sections 7 and 8 below (the date of satisfaction of such conditions, (the
“Commencement Date”), the Investor shall purchase 1,000,000 Purchase Shares
(such initial Purchase Shares, the “Initial Purchase Shares”) together with
warrants (the “Warrant”) to purchase 500,000 shares (“Warrant Shares”) of Common
Stock, for aggregate consideration of $1,000,000. The Warrants shall
have a term of five (5) years from the date they are exercisable, an exercise
price of $1.50 per share and shall be in the form of
Exhibit E
hereto. Thereafter, the Company shall have the right but not the
obligation to direct the Investor by its delivery to the Investor of a Regular
Purchase Notice from time to time to buy Purchase Shares (each such purchase a
“Regular Purchase”) in any amount up to 100,000 Purchase Shares per Regular
Purchase Notice (and the amount so purchased the “Regular Purchase Amount”) at
the Purchase Price on the Purchase Date. The Company may deliver
multiple Regular Purchase Notices to the Investor no sooner than every Business
Day.
(b)
Accelerated
Purchases
.
At any time
after the Commencement Date, the Company shall also have the right to direct the
Investor to buy up to 400,000 Purchase Shares (each such purchase an
“Accelerated Purchase” and the amount so purchased the “Accelerated Purchase
Amount”) per Accelerated Purchase Notice at the Accelerated Purchase Price on
the Purchase Date by delivering to the Investor Accelerated Purchase Notices
provided that the Closing Sale Price of the Common Stock must not be below $1.50
(subject to equitable adjustment for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction) on the Purchase
Date (the “Accelerated Purchase Threshold Price”). With respect to each such
Accelerated Purchase, the Company must deliver the Purchase Shares before 1:00
p.m. eastern time on the Business Day following the Purchase Date. As
used herein, the term “Accelerated Purchase Price” shall mean the lesser of (i)
the lowest Sale Price of the Common Stock on the Purchase Date or (ii) the
lowest Purchase Price during the previous ten (10) Business Days prior to the
date that the valid Accelerated Purchase Notice was received by the
Investor. However, if on any Purchase Date the Closing Sale Price of
the Common Stock is below the applicable Accelerated Purchase Threshold Price,
such Accelerated Purchase shall be void and the Investor’s obligations to buy
Purchase Shares in respect of that Accelerated Purchase Notice shall be
terminated.
Thereafter,
the Company shall again have the right to submit an Accelerated Purchase Notice
as set forth herein by delivery of a new Accelerated Purchase Notice only if the
Closing Sale Price of the Common Stock is at or above the applicable Accelerated
Purchase Threshold Price on the date of the delivery of the Accelerated Purchase
Notice. The Company may deliver multiple Accelerated Purchase Notices
to the Investor no sooner than every Business Day. Notwithstanding
anything herein to the contrary, the parties may otherwise mutually agree on the
purchase and sale of other amounts of Purchase Shares.
(c)
Payment for Purchase
Shares.
The Investor shall pay to the Company an amount
equal to the Purchase Amount with respect to such Purchase Shares as full
payment for such Purchase Shares via wire transfer of immediately available
funds on the same Business Day that the Investor receives such Purchase Shares
if they are received by the Investor before 1:00 p.m. eastern time or if
received by the Investor after 1:00 p.m. eastern time, the next Business Day.
The Company shall not issue any fraction of a share of Common Stock upon any
purchase. If the issuance would result in the issuance of a fraction of a share
of Common Stock, the Company shall round such fraction of a share of Common
Stock up or down to the nearest whole share. All payments made under this
Agreement shall be made in lawful money of the United States of America or wire
transfer of immediately available funds to such account as the Company may from
time to time designate by written notice in accordance with the provisions of
this Agreement. Whenever any amount expressed to be due by the terms of this
Agreement is due on any day that is not a Business Day, the same shall instead
be due on the next succeeding day that is a Business Day.
(e)
Reservation of
Shares
. The Company has or will have duly authorized and
reserved for issuance, and covenants to continue to so reserve once reserved for
issuance the requisite aggregate number of authorized but unissued shares of its
Common Stock to timely effect the issuance, sale and delivery in full to the
Investor of: (i) all Purchase Shares that the Company directs the Investor to
purchase in accordance with Section 2(a) and Section 2(b) and (ii) all
Additional Commitment Shares issuable in accordance with Section 5(e) upon the
Investor's purchase of such Purchase Shares.
3.
INVESTOR'S REPRESENTATIONS AND WARRANTIES.
The
Investor represents and warrants to the Company that as of the date hereof and
as of the Commencement Date:
(a)
Investment
Purpose
. The Investor is acquiring the Purchase Shares,
the Warrant, Warrant Shares and Commitment Shares (“Securities”) as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting the Investor’s right to sell the
Securities at any time pursuant to the registration statement described herein
or otherwise in compliance with applicable federal and state securities laws and
with respect to the Additional Commitment Shares, subject to Section 5(e)
hereof). The Investor is acquiring the Securities hereunder in the
ordinary course of its business.
(b)
Accredited Investor
Status
. The Investor is an "accredited investor" as that term
is defined in Rule 501(a)(3) of Regulation D.
(c)
Reliance on
Exemptions
. The Investor understands that the Securities may
be offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
(d)
Information
. The
Investor understands that its investment in the Securities involves a high
degree of risk. The Investor (i) is able to bear the economic risk of
an investment in the Securities including a total loss, (ii) has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment in the Securities and
(iii) has had an opportunity to ask questions of and receive answers from the
officers of the Company concerning the financial condition and business of the
Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence
investigations conducted by the Investor or its representatives shall modify,
amend or affect the Investor's right to rely on the Company's representations
and warranties contained in Section 4 below. The Investor has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the
Securities.
(e)
No Governmental
Review
. The Investor 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 or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
(f)
Transfer or
Sale
. The Investor understands that(i) the Securities may not
be offered for sale, sold, assigned or transferred unless (A) registered
pursuant to the Securities Act or (B) an exemption exists permitting such
Securities to be sold, assigned or transferred without such registration; (ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the 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 defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.
(g)
Validity;
Enforcement
. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(h)
Residency
. The
Investor is a resident of the State of Illinois.
(i)
No Short
Selling
. The Investor represents and warrants to the Company
that at no time has any of the Investor, its agents, representatives or
affiliates engaged in or effected, in any manner whatsoever, directly or
indirectly, any (i) "short sale" (as such term is defined in Section 242.200 of
Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.
4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to the Investor that as of the date hereof and
as of the Commencement Date:
(a)
Organization and
Qualification
. The Company and each of the Subsidiaries (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns 50% or more of the voting stock or capital stock or other
similar equity interests) is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation nor
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “
Material Adverse
Effect
”) and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification. The Company has no Subsidiaries
except as set forth on
Schedule
4(a)
.
(b)
Authorization; Enforcement;
Validity
. (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement,
the Registration Rights Agreement and each of the other agreements
entered into by the parties on the Commencement Date and attached hereto as
exhibits to this Agreement (collectively, the “Transaction Documents”), and to
issue the Securities in accordance with the terms hereof and thereof, (ii)
except for approvals of the Company's Board of Directors (or an authorized
committee thereof) as may be required in connection with the reservation,
issuance, and sale of any Additional Commitment Shares and Purchase Shares
(other than the Initial Purchase Shares, the Warrant, and the Warrant Shares),
which approvals shall have been obtained prior to delivery of any Regular
Purchase Notice or Accelerated Purchase Notice, the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation, the
reservation for issuance and issuance of the Initial Purchase Shares and Initial
Commitment Shares, the issuance of the Warrant, the reservation for issuance
and, assuming valid exercise of the Warrant, the issuance of the Warrant Shares
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its shareholders, (iii) this Agreement has been, and each other Transaction
Document shall be on the Commencement Date, duly executed and delivered by the
Company and (iv) this Agreement constitutes, and each other Transaction Document
upon its execution on behalf of the Company, shall constitute, the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies. The Board of Directors
of the Company has approved the resolutions (the “Signing Resolutions”)
substantially in the form as set forth as
Exhibit C
attached
hereto to authorize this Agreement and the transactions contemplated
hereby. The Signing Resolutions are valid, in full force and effect
and have not been modified or supplemented in any respect. The
Company has delivered to the Investor a true and correct copy of a unanimous
written consent adopting the Signing Resolutions executed by all of the members
of the Board of Directors of the Company. Except for approvals of the
Company's Board of Directors (or an authorized committee thereof) as may be
required in connection with the reservation, issuance, and sale of any Purchase
Shares and Commitment Shares (other than the Initial Purchase Shares, the
Warrant, the Warrant Shares, and the Initial Commitment Shares), no other
approvals or consents of the Company’s Board of Directors and/or shareholders is
necessary under applicable laws and the Company’s Articles of Incorporation
and/or Bylaws to authorize the execution and delivery of this Agreement or any
of the transactions contemplated hereby, including, but not limited to, the
issuance of the Commitment Shares, the issuance of the Warrant, assuming valid
exercise of the Warrant, the Warrant Shares and the issuance of the Purchase
Shares.
(c)
Capitalization
. As
of the date hereof, the authorized capital stock of the Company is set forth on
Schedule
4(c).
Except as disclosed in
Schedule 4(c)
, (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to the Investor
true and correct copies of the Company's Articles of Incorporation, as amended
and as in effect on the date hereof (the “Articles of Incorporation”), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"By-laws"), and summaries of the terms of all securities convertible into or
exercisable for Common Stock, if any, and copies of any documents containing the
material rights of the holders thereof in respect thereto.
(d)
Issuance of
Securities
. Upon issuance and payment therefor in accordance
with the terms and conditions of this Agreement, the Purchase Shares, shall be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. The Initial Purchase
Shares have been duly authorized and, upon issuance in accordance with the terms
hereof, the Initial Purchase Shares shall be (i) validly issued, fully paid and
non-assessable and (ii) free from all taxes, liens and charges with respect to
the issue thereof. The Initial Commitment Shares have been duly
authorized and, upon issuance in accordance with the terms hereof, the Initial
Commitment Shares shall be (i) validly issued, fully paid and non-assessable and
(ii) free from all taxes, liens and charges with respect to the issue
thereof. The Warrant Shares have been duly authorized and
reserved for issuance upon exercise in accordance with the
Warrants. When issued in accordance with the Warrants, the Warrant
Shares shall be validly issued, fully paid and non-assessable, to our knowledge,
free of all taxes, liens, charges, restrictions, rights of first refusal and
preemptive rights. The Company has duly authorized and reserved for issuance in
accordance with this Agreement as Purchase Shares (in addition to the Initial
Purchase Shares) and as Additional Commitment Shares (subject to equitable
adjustment for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction) 10,000,000 shares of Common
Stock.
(e)
No
Conflicts
. Except as disclosed in
Schedule 4(e)
, the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Purchase Shares, the Commitment Shares and the Warrant Shares)
will not (i) result in a violation of the Articles of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market applicable to the Company or any of its
Subsidiaries) or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations under
clause (ii), which could not reasonably be expected to result in a Material
Adverse Effect. Except as disclosed in
Schedule 4(e)
,
neither the Company nor its Subsidiaries is in violation of any term of or in
default under its Articles of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or By-laws or their organizational charter or by-laws,
respectively. Except as disclosed in
Schedule 4(e)
,
neither the Company nor any of its Subsidiaries is in violation of any term of
or is in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations or amendments which could not reasonably be
expected to have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance, regulation of any governmental entity,
except for possible violations, the sanctions for which either individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as
required under the Securities Act or applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof. Except as
disclosed in
Schedule
4(e)
, all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence shall
be obtained or effected on or prior to the Commencement Date. Except
as listed in
Schedule
4(e)
, since one year prior to the date hereof, the Company has not
received nor delivered any notices or correspondence from or to the Principal
Market. The Principal Market has not commenced any delisting
proceedings against the Company.
(f)
SEC Documents;
Financial Statements
. Except as disclosed in
Schedule 4(f)
the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Documents, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. Except as listed in
Schedule 4(f)
, the
Company has received no notices or correspondence from the SEC for the one year
preceding the date hereof
.
The SEC has not
commenced any enforcement proceedings against the Company or any of its
subsidiaries.
(g)
Absence of Certain
Changes
. Except as disclosed in
Schedule 4(g)
, since
September 30, 2010, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy
or
insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due
.
(h)
Absence of
Litigation
. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such, which
could reasonably be expected to have a Material Adverse
Effect. A description of each action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body which, as of the date of this Agreement, is
pending or threatened in writing against or affecting the Company, the Common
Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such, is
set forth in
Schedule
4(h)
.
(i)
Acknowledgment
Regarding Investor's Status
. The Company acknowledges and
agrees that the Investor is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to the Investor's purchase of the Securities. The
Company further represents to the Investor that the Company's decision to enter
into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives and advisors.
(j)
Reserved
.
(k)
Intellectual Property
Rights
. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. Except as set forth on
Schedule 4(k)
, none
of the Company's material trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of any material
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and, except as set
forth on
Schedule
4(k)
, there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.
(l)
Environmental
Laws
. The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
(m)
Title
. The
Company and the Subsidiaries have good and marketable title in fee simple to all
real property owned by them and good and marketable title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
(“Liens”) and , except for Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries and Liens for the
payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
Any
real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
(n)
Insurance
. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole.
(o)
Regulatory
Permits
. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(p)
Tax
Status
. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(q)
Transactions With
Affiliates
.
Except
as set forth in the SEC Documents, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $120,000
other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock
option plan of the Company.
(r)
Application of Takeover
Protections
. The Company and its board of directors have taken
or will take prior to the Commencement Date all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Articles of Incorporation or
the laws of the state of its incorporation which is or could become applicable
to the Investor as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and the
Investor's ownership of the Securities.
(s)
Disclosure
. Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided the Investor or its
agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in
the Registration Statement (as defined below) or prospectus supplements
thereto. The Company understands and confirms that the Investor
will rely on the foregoing representation in effecting purchases and sales of
securities of the Company. All of the disclosure furnished by or on
behalf of the Company to the Investor regarding the Company, its business and
the transactions contemplated hereby, including the disclosure schedules to this
Agreement, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The press releases disseminated by the Company during the
twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made,
not misleading. The Company acknowledges and agrees that the Investor
neither makes nor has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3 hereof.
(t)
Foreign Corrupt
Practices
.
Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
(u)
Registration
Statements
. The Company’s shelf registration statement on Form
S-3 (no. 333-167906) (the “Registration Statement”) has been declared effective
by the SEC and no stop order has been issued or is pending or threatened with
respect thereto and the Company is eligible to register the sale of the Purchase
Shares, the Warrant, the Warrant Shares and the Commitment Shares to the
Investor on the Registration Statement.
(v)
DTC
Eligible
. The Company through its transfer agent currently
participates in the Depository Trust Company Fast Automated Securities Transfer
Program (“DTC FAST System”) and the Company’s Common Stock can be transferred
electronically to third parties via the DTC FAST System.
5.
COVENANTS.
(a)
Filing of Form 8-K and
Registration Statement
. The Company agrees that it shall,
within the time required under the Exchange Act file a Report on Form 8-K
disclosing this Agreement and the transaction contemplated hereby.
The Company shall also
file within ten (10) Business Days from the date hereof prospectus supplements
to the Registration Statement covering only the sale of the Purchase Shares, the
Warrant, the Warrant Shares and the Commitment Shares, in accordance with the
terms of the Registration Rights Agreement between the Company and the Investor,
dated as of the date hereof (“Registration Rights Agreement”). Any
securities issuable under this Agreement that have not been registered under the
Securities Act shall bear the following restrictive legend (the “Restrictive
Legend”):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.
(b)
Blue Sky
. The Company
shall take such action, if any, as is reasonably necessary in order to obtain an
exemption for or to qualify (i) the initial sale of the Commitment Shares, the
Warrant and any Purchase Shares to the Investor under this Agreement and (ii)
any subsequent resale of the Commitment Shares, Warrant, Warrant Shares and any
Purchase Shares by the Investor, in each case, under applicable securities or
“Blue Sky” laws of the states of the United States in such states as is
reasonably requested by the Investor from time to time, and shall provide
evidence of any such action so taken to the Investor.
(c)
Listing/DTC
. The
Company shall promptly secure the listing of all of the Purchase Shares, Warrant
Shares and Commitment Shares upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the
Company nor any of its Subsidiaries shall take any action that would be
reasonably expected to result in the delisting or suspension of the Common Stock
on the Principal Market. The Company shall promptly, and in no event
later than the following Business Day, provide to the Investor copies of any
notices it receives from the Principal Market regarding the continued
eligibility of the Common Stock for listing on such automated quotation system
or securities exchange. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section. The
Company shall take all action necessary to ensure that its Common Stock can be
transferred electronically via the DTC FAST System.
(d)
Limitation on Short Sales
and Hedging Transactions
. The Investor agrees that beginning
on the date of this Agreement and ending on the date of termination of this
Agreement as provided in Section 11, the Investor and its agents,
representatives and affiliates shall not in any manner whatsoever enter into or
effect, directly or indirectly, any (i) “short sale” (as such term is defined in
Section 242.200 of Regulation SHO of the Exchange Act) of the Common Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.
(e)
Issuance of Commitment
Shares
. Within one (1) Business Day following the Commencement
Date, and concurrently with the Investor purchasing the Initial Purchase Shares
and Warrants in accordance with Section 2(a) hereof, the Company shall issue to
the Investor as consideration for the Investor entering into this Agreement
300,000 shares of Common Stock (the “Initial Commitment Shares”) and shall cause
the Transfer Agent to deliver the Initial Commitment Shares electronically via
the DTC FAST System to Investor’s account as specified by the Investor . In
connection with each purchase of Purchase Shares hereunder, the Company agrees
to issue to the Investor a number of shares of Common Stock (the “Additional
Commitment Shares” and together with the Initial Commitment Shares, the
“Commitment Shares”) equal to the product of (x) 1,500,000 and (y) the Purchase
Amount Fraction. The “Purchase Amount Fraction” shall mean a
fraction, the numerator of which is the Purchase Amount purchased by the
Investor with respect to such purchase of Purchase Shares and the denominator of
which is Thirty Million Dollars ($30,000,000). Notwithstanding the
foregoing, no Additional Commitment Shares shall be paid on the Investor's
purchase of the Initial Purchase Shares and the Warrant or the amounts paid upon
the exercise, if any, of the Warrant. The Additional Commitment
Shares shall be equitably adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction. The
Investor agrees that the Investor shall not pledge, transfer or sell the
Commitment Shares until the earlier of (a) 600 Business Days (30 Monthly
Periods) from the date hereof or (b) the date on which this Agreement has been
terminated, provided, however, that such restrictions shall not apply: (i) in
connection with any transfers to or among affiliates (as defined in the Exchange
Act), or (ii) if an Event of Default has occurred, or any event which, after
notice and/or lapse of time, would become an Event of Default, including any
failure by the Company to timely issue Purchase Shares under this
Agreement. Notwithstanding the forgoing, the Investor may transfer
Commitment Shares to a third party in order to settle a sale made by the
Investor where the Investor reasonably expects the Company to deliver additional
Purchase Shares to the Investor under this Agreement so long as the Investor
maintains ownership of the amount of Commitment Shares received up to that point
by "replacing" such Commitment Shares so transferred with new Purchase Shares
when the new Purchase Shares are actually issued by the Company to the
Investor.
(f)
Due
Diligence
. The Investor shall have the right, from time to
time as the Investor may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company
and its officers and employees shall provide information and reasonably
cooperate with the Investor in connection with any reasonable request by the
Investor related to the Investor's due diligence of the Company. Each
party hereto agrees not to disclose any Confidential Information of the other
party to any third party and shall not use the Confidential Information for any
purpose other than in connection with, or in furtherance of, the transactions
contemplated hereby. Each party hereto acknowledges that the
Confidential Information shall remain the property of the disclosing party and
agrees that it shall take all reasonable measures to protect the secrecy of any
Confidential Information disclosed by the other party. The Company
confirms that neither it nor any other Person acting on its behalf shall provide
the Investor or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Registration Statement or prospectus supplements
thereto.
(g)
Purchase Records
. The
Investor and the Company shall each maintain records showing the remaining
Available Amount at any given time and the dates and Purchase Amounts for each
purchase or shall use such other method, reasonably satisfactory to the Investor
and the Company.
(h)
Taxes.
The Company
shall pay any and all transfer, stamp or similar taxes that may be payable with
respect to the issuance and delivery of any shares of Common Stock to the
Investor made under this Agreement.
(i)
No Variable Rate
Transactions.
From the date hereof until the Maturity Date,
the Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents for cash consideration (or a combination of units
thereof) involving a Variable Rate Transaction other than in connection with an
Exempt Issuance. “Variable Rate Transaction” means a transaction in
which the Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a conversion price,
exercise price or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for the shares of Common Stock at any
time after the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined price. “
Exempt Issuance
”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or vendors of the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, which acquisitions or strategic
transactions can have a Variable Rate Transaction component, provided
that any such issuance shall only be to a Person (or to the equity holders of a
Person) which is, itself or through its subsidiaries, an operating company or an
asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities. “
Common Stock
Equivalents
” means any securities of the Company or its Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
6.
TRANSFER AGENT INSTRUCTIONS.
On the
Commencement Date and thereafter, the Company shall cause all of the Purchase
Shares and Commitment Shares, to be issued under this Agreement to be issued
electronically via the DTC FAST System to Investor’s account as designated by
Investor unless the Investor expressly consents otherwise. The
Company shall issue irrevocable instructions to the Transfer Agent, and any
subsequent transfer agent, to issue Purchase Shares in the name of the Investor
for the Purchase Shares (the “Irrevocable Transfer Agent
Instructions”). The Company warrants to the Investor that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 6, will be given by the Company to the Transfer Agent with
respect to the Purchase Shares and that the Commitment Shares and the Purchase
Shares shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement.
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7.
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CONDITIONS
TO THE COMPANY'S RIGHT TO COMMENCE
SALES
OF SHARES OF COMMON STOCK.
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The right
of the Company hereunder to commence sales of the Purchase Shares is subject to
the satisfaction of each of the following conditions:
(a) The
Investor shall have executed each of the Transaction Documents and delivered the
same to the Company; and
(b) No
stop order with respect to the Registration Statement shall be pending or
threatened by the SEC.
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8.
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CONDITIONS
TO THE INVESTOR'S OBLIGATION TO PURCHASE SHARES OF COMMON
STOCK.
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The
obligation of the Investor to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions and once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has
occurred:
(a) The
Company shall have executed each of the Transaction Documents and delivered the
same to the Investor;
(b) The
Common Stock shall be authorized for quotation on the Principal Market, trading
in the Common Stock shall not have been within the last 365 days suspended by
the SEC or the Principal Market and the Purchase Shares, Warrant Shares
and Commitment Shares
shall be approved for listing upon the Principal Market;
(c) The
Investor shall have received the opinions of the Company's legal counsel dated
as of the Commencement Date substantially in the form of
Exhibit
A
attached hereto;
(d) The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 4 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Commencement Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Commencement Date. The Investor shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as
Exhibit
B
;
(e) The
Board of Directors of the Company shall have adopted resolutions in the form
attached hereto as
Exhibit
C
which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;
(f)
As of the Commencement Date, the Company shall have reserved out of its
authorized and unissued Common Stock, (A) solely for purposes of effecting
purchases of Purchase Shares (including the Initial Purchase Shares) in
accordance with Section 2(a) and Section 2(b) hereof and the issuance of
Additional Commitment Shares in accordance with Section 5(e), 11,000,000 shares
of Common Stock, (B) as Warrant Shares for issuance upon the exercise, if any,
of the Warrants issued in accordance with Section 2(a) hereof, 500,000 shares of
Common Stock, and (C) as Initial Commitment Shares for issuance after the
Commencement Date in accordance with Section 5(e) hereof, 300,000 shares of
Common Stock;
(g) Irrevocable
Transfer Agent instructions shall have been delivered to and acknowledged in
writing by the Company and the Company's Transfer Agent;
(h) The
Company shall have delivered to the Investor a certificate evidencing the
incorporation and good standing of the Company in the State of Nevada issued by
the Secretary of State of the State of Nevada as of a date within ten (10)
Business Days of the Commencement Date;
(i)
The Company shall have delivered to the Investor a certified copy of the
Articles of Incorporation as certified by the Secretary of State of the State of
Nevada within ten (10) Business Days of the Commencement Date;
(j)
The Company shall have delivered to the Investor a secretary's certificate
executed by the Secretary of the Company, dated as of the Commencement Date, in
the form attached hereto as
Exhibit
D
;
(k) The
Registration Statement shall continue to be effective and a prospectus
supplement shall have been filed with the SEC covering the sale of all of the
Purchase Shares, Warrant Shares and Commitment Shares, which shall be
effective under the Securities Act, and no stop order with respect to the
Registration Statement shall be pending or threatened by the SEC. The
Company shall have prepared and delivered to the Investor a final and complete
form of prospectus supplement, dated and current as of the Commencement Date, to
be used by the Investor in connection with any sales of any Purchase Shares,
Warrant Shares or Commitment Shares. The Company shall have made all filings
under all applicable federal and state securities laws necessary to consummate
the issuance of the Commitment Shares, the Warrants, Warrant Shares and Purchase
Shares pursuant to this Agreement in compliance with such laws;
(l)
No Event of Default has occurred, or any event which, after notice and/or lapse
of time, would become an Event of Default has occurred; and
(m) On
or prior to the Commencement Date, the Company shall take all necessary action,
if any, and such actions as reasonably requested by the Investor, in order to
render inapplicable any control share acquisition, business combination,
shareholder rights plan or poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the Articles of
Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Investor as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company's issuance of the
Securities and the Commitment Shares and the Investor's ownership of the
Securities and the Commitment Shares.
In
consideration of the Investor's execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Investor and all of its
affiliates, shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, other than with respect
to Indemnified Liabilities which directly and primarily result from the gross
negligence or willful misconduct of the Indemnitee. To the extent
that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. Payment under this indemnification shall be made
within thirty (30) days from the date Investor makes written request for it. A
certificate containing reasonable detail as to the amount of such
indemnification submitted to the Company by Investor shall be conclusive
evidence, absent manifest error, of the amount due from the Company to
Investor.
10. EVENTS
OF DEFAULT.
An “Event
of Default” shall be deemed to have occurred at any time as any of the following
events occurs:
(a) the
effectiveness of a registration statement registering the Purchase Shares,
Warrant Shares or Commitment Shares lapses for any reason (including, without
limitation, the issuance of a stop order) or is unavailable to the Investor for
sale of any or all of the Purchase Shares, Warrant Shares or Commitment Shares
(“Registrable Securities”), and such lapse or unavailability continues for a
period of ten (10) consecutive Business Days or for more than an aggregate of
thirty (30) Business Days in any 365-day period;
(b) the
suspension from trading or failure of the Common Stock to be listed on the
Principal Market for a period of three (3) consecutive Business
Days;
(c) the
delisting of the Company’s Common Stock from the Principal Market, provided,
however, that the Common Stock is not immediately thereafter trading on the New
York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market,
the Nasdaq Capital Market, the OTC Bulletin Board, or NYSE Amex;
(d) the
failure for any reason by the Transfer Agent to issue Purchase Shares to the
Investor within five (5) Business Days after the applicable Purchase Date which
the Investor is entitled to receive;
(e) the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach could have a Material
Adverse Effect and except, in the case of a breach of a covenant which is
reasonably curable, only if such breach continues for a period of at least five
(5) Business Days;
(f)
if any Person commences a proceeding against the Company pursuant to or within
the meaning of any Bankruptcy Law ;
(g) if
the Company pursuant to or within the meaning of any Bankruptcy Law; (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors or is generally unable to
pay its debts as the same become due;
(h) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company in an involuntary case, (B)
appoints a Custodian of the Company or for all or substantially all of its
property, or (C) orders the liquidation of the Company or any
Subsidiary.
(i)
If at any time the Company is not eligible to transfer its Common Stock
electronically via the DTC FAST System; or
(j)
a material adverse change occurs in the Company, its business, financial
condition, operations or prospects.
In
addition to any other rights and remedies under applicable law and this
Agreement, including the Investor termination rights under Section 11 hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the Floor
Price, the Investor shall not be permitted or obligated to purchase any shares
of Common Stock under this Agreement. If pursuant to or within the
meaning of any Bankruptcy Law, the Company commences a voluntary case or any
Person commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company
makes a general assignment for the benefit of its creditors, (any of which would
be an Event of Default as described in Sections 10(f), 10(g) and 10(h)
hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination
of this Agreement under Section 11(a) or 11(d) shall affect the Company's or the
Investor's obligations under this Agreement with respect to pending purchases
and the Company and the Investor shall complete their respective obligations
with respect to any pending purchases under this Agreement.
11. TERMINATION
This
Agreement may be terminated only as follows:
(a) If
pursuant to or within the meaning of any Bankruptcy Law, the Company commences a
voluntary case or any Person commences a proceeding against the Company, a
Custodian is appointed for the Company or for all or substantially all of its
property, or the Company makes a general assignment for the benefit of its
creditors, (any of which would be an Event of Default as described in Sections
10(f), 10(g) and 10(h) hereof) this Agreement shall automatically terminate
without any liability or payment to the Company without further action or notice
by any Person. No such termination of this Agreement under this
Section 11(a) shall affect the Company's or the Investor's obligations under
this Agreement with respect to pending purchases and the Company and the
Investor shall complete their respective obligations with respect to any pending
purchases under this Agreement.
(b) In
the event that the Commencement shall not have occurred, the Company shall have
the option to terminate this Agreement for any reason or for no reason without
any liability whatsoever of any party to any other party under this
Agreement.
(c) In
the event that the Commencement shall not have occurred on or before February
15, 2011, due to the failure to satisfy the conditions set forth in Sections 7
and 8 above with respect to the Commencement, the non-breaching party shall have
the option to terminate this Agreement at the close of business on such date or
thereafter without liability of any party to any other party.
(d) At
any time after the Commencement Date, the Company shall have the option to
terminate this Agreement for any reason or for no reason by delivering notice (a
“Company Termination Notice”) to the Investor electing to terminate this
Agreement without any liability whatsoever of any party to any other party under
this Agreement. The Company Termination Notice shall not be effective
until one (1) Business Day after it has been received by the Investor. No such
termination of this Agreement under this Section 11(d) shall affect the
Company's or the Investor's obligations under this Agreement with respect to
pending purchases and the Company and the Investor shall complete their
respective obligations with respect to any pending purchases under this
Agreement.
(e) This
Agreement shall automatically terminate on the date that the Company sells and
the Investor purchases the full Available Amount as provided herein, without any
action or notice on the part of any party and without any liability whatsoever
of any party to any other party under this Agreement.
(f)
If by the Maturity Date for any reason or for no reason the full Available
Amount under this Agreement has not been purchased as provided for in Section 2
of this Agreement, this Agreement shall automatically terminate on the Maturity
Date, without any action or notice on the part of any party and without any
liability whatsoever of any party to any other party under this
Agreement.
Except as
set forth in Sections 11(a) (in respect of an Event of Default under Sections
10(f), 10(g) and 10(h)) and 11(f), any termination of this Agreement pursuant to
this Section 11 shall be effected by written notice from the Company to the
Investor, or the Investor to the Company, as the case may be, setting forth the
basis for the termination hereof. The representations and warranties
and covenants of the Company and the Investor contained in Sections 3, 4, 5, and
6 hereof, the indemnification provisions set forth in Section 9 hereof and the
agreements and covenants set forth in Sections
10, 11 and 12, shall
survive the Commencement and any termination of this Agreement. No
termination of this Agreement shall affect the Company's or the Investor's
rights or obligations (i) under the Registration Rights Agreement which shall
survive any such termination or (ii) under this Agreement with respect to
pending purchases and the Company and the Investor shall complete their
respective obligations with respect to any pending purchases under this
Agreement.
12. MISCELLANEOUS.
(a)
Governing Law; Jurisdiction;
Jury Trial
. The corporate laws of the State of Nevada shall
govern all issues concerning the relative rights of the Company and its
shareholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the other Transaction
Documents shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b)
Counterparts
. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature or signature delivered by e-mail in a “.pdf”
format data file shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature or a signature in a “.pdf” format data
file.
(c)
Headings
. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d)
Severability
. 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 in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e)
Entire
Agreement
. With the exception of the Mutual Nondisclosure
Agreement between the parties dated as of December 15, 2010, this Agreement, the
Warrant and the Registration Rights Agreement supersede all other prior oral or
written agreements between the Investor, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement, the other Transaction Documents and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters.
(f)
Notices
. Any
notices, consents or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt when delivered personally; (ii) upon receipt
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the
Company:
Provectus
Pharmaceuticals, Inc.
7327 Oak
Ridge Highway, Suite A
Knoxville,
TN 37931
Telephone:
(866) 594-5999
Facsimile: (866)
998-0005
Attention:
Peter R. Culpepper
With a
copy to:
Baker,
Donelson, Bearman, Caldwell & Berkowitz, PC
100 Med
Tech Parkway, Suite 200
Johnson
City, TN 37604
Telephone: (423)
928-0181
Facsimile: (423)
928-5694
Attention: Linda
Crouch
If to the
Investor:
Lincoln
Park Capital Fund, LLC
440 North
Wells, Suite 620
Chicago,
IL 60654
Telephone: (312)
822-9300
Facsimile: (312)
822-9301
Attention: Josh
Scheinfeld/Jonathan Cope
If to the
Transfer Agent:
StockTrans,
a Broadridge Company
44 W
Lancaster Avenue
Ardmore,
Pennsylvania 19003
Telephone: (610)
649-7300
Facsimile: (610)
649-7302
Attention: Laura
Skorny
or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of
such notice, consent or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
(g)
Successors and
Assigns
. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation. The Investor may not assign its
rights or obligations under this Agreement.
(h)
No Third Party
Beneficiaries
. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
(i)
Publicity
. The
Investor shall have the right to approve before issuance any press release, SEC
filing or any other public disclosure made by or on behalf of the Company
whatsoever with respect to, in any manner, the Investor, its purchases hereunder
or any aspect of this Agreement or the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Investor, to make any press release or other public disclosure
(including any filings with the SEC) with respect to such transactions as is
required by applicable law and regulations so long as the Company and its
counsel consult with the Investor in connection with any such press release or
other public disclosure within one (1) Business Day prior to its
release. The Investor must be provided with a copy
thereof one (1) Business Day prior to any release or use by the
Company thereof. The Company agrees and acknowledges that its failure
to fully comply with this provision constitutes a material adverse effect on its
ability to perform its obligations under this Agreement.
(j)
Further
Assurances
. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k)
No Financial Advisor,
Placement Agent, Broker or Finder
. The Company
represents and warrants to the Investor that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the transactions
contemplated hereby. The Investor represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated
hereby. The Company shall be responsible for the payment of any fees
or commissions, if any, of any financial advisor, placement agent, broker or
finder relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold the Investor harmless
against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.
(l)
No Strict
Construction
. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
(m)
Remedies, Other Obligations,
Breaches and Injunctive Relief
. The Investor’s remedies
provided in this Agreement shall be cumulative and in addition to all other
remedies available to the Investor under this Agreement, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy of the Investor contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy and nothing herein shall limit
the Investor's right to pursue actual damages for any failure by the Company to
comply with the terms of this Agreement. Each of the parties
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the other party and that the remedy at law for any such
breach may be inadequate. Each of the parties therefore agrees that,
in the event of any such breach or threatened breach, the other party shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
(n)
Enforcement
Costs
. If: (i) this Agreement is placed by the Investor in the
hands of an attorney for enforcement or is enforced by the Investor through any
legal proceeding; or (ii) an attorney is retained to represent the Investor in
any bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Investor in any other proceedings
whatsoever in connection with this Agreement, then the Company shall pay to the
Investor, as incurred by the Investor, all reasonable costs and expenses
including attorneys' fees incurred in connection therewith, in addition to all
other amounts due hereunder.
(o)
Failure or Indulgence Not
Waiver
. No failure or delay in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or
privilege.
* * * * *
IN WITNESS WHEREOF,
the
Investor and the Company have caused this Purchase Agreement to be duly executed
as of the date first written above.
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THE COMPANY:
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PROVECTUS
PHARMACEUTICALS, INC.
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By:
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/s/
Peter R. Culpepper
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Name:
Peter R. Culpepper
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Title:
Chief Financial Officer and Chief Operating Officer
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INVESTOR:
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LINCOLN
PARK CAPITAL FUND, LLC
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BY:
LINCOLN PARK CAPITAL, LLC
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BY:
ROCKLEDGE CAPITAL CORPORATION
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By:
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/s/
Josh Schienfeld
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Name: Josh
Schienfeld
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Title:
President
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SCHEDULES
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Schedule
4(a)
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Subsidiaries
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Schedule
4(c)
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Capitalization
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Schedule
4(e)
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Conflicts
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Schedule
4(f)
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Exchange
Act Filings
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Schedule
4(g)
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Material
Changes
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Schedule
4(h)
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Litigation
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Schedule
4(k)
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Intellectual
Property
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EXHIBITS
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Exhibit
A
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Form
of Company Counsel Opinion
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Exhibit
B
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Form
of Officer’s Certificate
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Exhibit
C
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Form
of Resolutions of Board of Directors of the Company
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Exhibit
D
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Form
of Secretary’s Certificate
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Exhibit
E
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Form
of Warrant
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DISCLOSURE
SCHEDULES
Schedule
4(a) – Subsidiaries
Each of
the following subsidiaries are wholly-owned by the Company:
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·
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Xantech
Pharmaceuticals, Inc., a Tennessee
corporation
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|
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·
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Pure-ific
Corporation, a Nevada corporation
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|
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·
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Provectus
Biotech, Inc., a Tennessee
corporation
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|
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·
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Provectus
Devicetech, Inc., a Tennessee
corporation
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|
|
·
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Provectus
Imaging, Inc., a Tennessee
corporation
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|
|
·
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IP
Tech, Inc., a Tennessee corporation
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|
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·
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Provectus
Pharmatech, Inc., a Tennessee
corporation
|
Schedule
4(c) - Capitalization
As of
December 22, 2010:
The
Company is authorized to issue 150,000,000 shares of common stock, par value
$.001 per share, and 25,000,000 shares of preferred stock, par value $.001 per
share, of which one series of preferred stock consisting of 13,333,333 shares,
has been established and designated as 8% Convertible Preferred Stock, par value
$.001 per share. Subject to the terms of the Certificate of Designation for the
8% Convertible Preferred Stock, the 8% Convertible Preferred Stock is
convertible into shares of Common Stock at the option of the holder, and the
Company may force conversion or redeem the shares of 8% Convertible Preferred
Stock after such time that the volume-weighted average price of Common Stock on
the principal trading market for the Common Stock for the 30 trading days
immediately preceding such date exceeds 300% of the conversion price (which is
$2.25) and the average daily trading volume exceeds 150,000 shares for 30
consecutive trading days.
Common
Stock
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|
·
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89,283,298
shares of common stock are issued and
outstanding;
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|
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·
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12,440,955
shares of common stock are reserved for issuance upon the exercise of
outstanding stock options
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·
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15,957,798
shares of common stock are reserved for issuance upon the exercise of
outstanding warrants to purchase common
stock
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·
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5,439,996
shares of common stock are reserved for issuance upon the conversion of
the 8% Convertible Preferred Stock
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·
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850,000
shares of common stock are reserved for issuance for future awards under
the Company's Amended and Restated 2002 Stock Plan, as
amended.
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·
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1,000,000
shares of common stock are authorized and reserved for issuance upon the
initial investment of $1,000,000 under the Purchase
Agreement.
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·
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A
warrant to purchase 500,000 shares of common stock is authorized for
issuance upon the initial investment of $1,000,000 under the Purchase
Agreement.
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·
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500,000
shares of common stock are authorized and reserved for issuance upon
exercise of the warrant to purchase 500,000 issued under the Purchase
Agreement.
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·
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300,000
shares of common stock are authorized and reserved for issuance upon the
Commencement Date under the Purchase
Agreement.
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·
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10,000,000
shares of common stock are authorized and reserved for issuance pursuant
to the Purchase Agreement upon the Company's direction to purchase shares
of common stock. The 10,000,000 shares of common stock may consist of
shares of common stock that the Company may direct Lincoln Park to
purchase and up to 1,500,000 shares of common stock which may be issued to
Lincoln Park as an additional commitment
fee.
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Preferred
Stock
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|
·
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5,439,996
shares of 8% Convertible Preferred Stock are issued and
outstanding
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Schedule
4(e) - No Conflicts
None.
Schedule
4(f) - Exchange Act Filings
As of
December 22, 2010, the Company has received the following correspondence from
the SEC during the preceding year:
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·
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Order
of the SEC granting confidential treatment dated January 15,
2010
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|
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·
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Letter
dated July 2, 2010, of the SEC to the Company commenting upon the
Company's Registration Statement on Form S-3 (File No.
333-167906)
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|
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·
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Order
of the SEC granting effectiveness to the Company's Registration Statement
on Form S-3 (File No. 333-167906) dated July 14,
2010
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·
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Order
of the SEC granting effectiveness to the Company's Post Effective
Amendment to Registration Statement on Form S-3 (File No. 333-147783)
dated August 5, 2010
|
Schedule
4(g) - Absence of Certain Changes
None.
Schedule
4(h) - Litigation
None.
Schedule
4(k) - Intellectual Property Rights
None.
EXHIBIT
A
FORM
OF COMPANY COUNSEL OPINION
SUBJECT
TO CUSTOMARY ASSUMPTIONS AND QUALIFICATIONS
Capitalized
terms used herein but not defined herein, have the meaning set forth in the
Purchase Agreement. Based on the foregoing, and subject to the
assumptions and qualifications set forth herein, we are of the opinion
that:
1. The
Company is a corporation existing and in good standing under the laws of the
State of Nevada.
2. The
Company has the corporate power to execute and deliver, and perform its
obligations under, each Transaction Document to which it is a
party. The Company has the corporate power to conduct its business
as, to the best of our knowledge, it is now conducted, and to own and use the
properties owned and used by it.
3. The
execution, delivery and performance by the Company of the Transaction Documents
to which it is a party have been duly authorized by all necessary corporate
action on the part of the Company. The execution and delivery of the Transaction
Documents by the Company, the performance of the obligations of the Company
thereunder and the consummation by it of the transactions contemplated therein
have been duly authorized and approved by the Company's Board of Directors and
no further consent, approval or authorization of the Company, its Board of
Directors or its stockholders is required. The Transaction Documents
to which the Company is a party have been duly executed and delivered by the
Company and are the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except as such enforceability
may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting creditor’s rights and remedies.
4. The
execution, delivery and performance by the Company of the Transaction Documents,
the consummation by the Company of the transactions contemplated thereby
including the offering, sale and issuance of the Warrant, the Warrant Shares,
Commitment Shares, and the Purchase Shares in accordance with the terms and
conditions of the Purchase Agreement, and fulfillment and compliance with terms
of the Transaction Documents, does not and shall not: (i) conflict with,
constitute a breach of or default (or an event which, with the giving of notice
or lapse of time or both, constitutes or could constitute a breach or a
default), under (a) the Articles of Incorporation or the Bylaws of the Company,
(b) any material agreement, note, lease, mortgage, deed or other material
instrument to which to our knowledge the Company is a party or by which the
Company or any of its assets are bound, (ii) result in any violation of any
statute, law, rule or regulation applicable to the Company, or (iii) to our
knowledge, violate any order, writ, injunction or decree applicable to the
Company or any of its subsidiaries.
5. The
issuance of the Purchase Shares, Warrant Shares and Commitment Shares pursuant
to the terms and conditions of the Transaction Documents has been duly
authorized and the Initial Commitment Shares and Initial Purchase Shares are
validly issued, fully paid and non-assessable, to our knowledge, free of all
taxes, liens, charges, restrictions, rights of first refusal and preemptive
rights. An aggregate of 11,800,000 shares of Common Stock have been properly
reserved for issuance under the Purchase Agreement. 1,000,000 shares of Common
Stock have been properly reserved for issuance under the Purchase Agreement as
Initial Purchase Shares. 500,000 shares of Common Stock have been
duly authorized and reserved for issuance upon exercise of the Warrant in
accordance with the Warrant as Warrant Shares. 300,000 shares of Common Stock
have been properly reserved for issuance under the Purchase Agreement as Initial
Commitment Shares. 10,000,000 shares of Common Stock have been
properly reserved for issuance under the Purchase Agreement as Purchase Shares
(other than the Initial Purchase Shares) and Additional Commitment Shares. When
issued and paid for in accordance with the Purchase Agreement, the Purchase
Shares shall be validly issued, fully paid and non-assessable, to our knowledge,
free of all taxes, liens, charges, restrictions, rights of first refusal and
preemptive rights. When issued in accordance with the Purchase Agreement, the
Additional Commitment Shares shall be validly issued, fully paid and
non-assessable, to our knowledge, free of all taxes, liens, charges,
restrictions, rights of first refusal and preemptive rights. To our knowledge,
the execution and delivery of the Registration Rights Agreement do not, and the
performance by the Company of its obligations thereunder shall not, give rise to
any rights of any other person for the registration under
the Securities Act of any shares of Common Stock or other securities
of the Company which have not been waived.
6. As
of December 22, 2010, the authorized capital stock of the Company consists of
150,000,000 shares of common stock, par value $.001 per share, of which to our
knowledge 89,283,298 shares are issued and outstanding, and 25,000,000 shares of
preferred stock, par value $.001 per share, of which 5,439,996 shares
of 8% convertible preferred stock are issued and outstanding. Except as set
forth on Schedule 4(c) of the Purchase Agreement, to our knowledge, there are no
outstanding shares of capital stock or other securities convertible into or
exchangeable or exercisable for shares of the capital stock of the
Company.
7. Other
than that which has been obtained and completed prior to the date hereof, no
authorization, approval, consent, filing or other order of any federal or state
governmental body, regulatory agency, or stock exchange or market, or any court,
or, to our knowledge, any third party is required to be obtained by the Company
to enter into and perform its obligations under the Transaction Documents or for
the Company to issue and sell the Purchase Shares as contemplated by the
Transaction Documents.
8. The
Common Stock is registered pursuant to Section 12(g) of the Exchange
Act. To our knowledge, since one year preceding the date of the
Purchase Agreement, the Company has been in compliance with the reporting
requirements of the Exchange Act applicable to it. To our knowledge,
since one year preceding the date of the Purchase Agreement, the Company has not
received any written notice from the Principal Market stating that the Company
has not been in compliance with any of the rules and regulations (including the
requirements for continued listing) of the Principal Market.
We
further advise you that to our knowledge, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body, pending or, to our knowledge,
threatened against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such.
In
addition, we have participated in the preparation of the Registration Statement
(SEC File #333-167906), including the prospectus contained therein, and the
prospectus supplement dated December 22, 2010 and filed with the SEC on
_________ covering the sale of the Purchase Shares, the Warrant, the Warrant
Shares, and the Commitment Shares and in conferences with officers and other
representatives of the Company (including the Company’s independent auditors)
during which the contents of the Registration Statement and related matters were
discussed and reviewed and, although we are not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, on the basis of the information that
was developed in the course of the performance of the services referred to
above, considered in the light of our understanding of the applicable law,
nothing came to our attention that caused us to believe that the Registration
Statement (other than the financial statements and schedules and the other
financial and statistical data included therein, as to which we express no
belief), as of their dates, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
EXHIBIT
B
FORM
OF OFFICER’S CERTIFICATE
This
Officer’s Certificate (“
Certificate
”) is being
delivered pursuant to Section 8(d) of that certain Purchase Agreement dated as
of December 22, 2010, (“
Purchase Agreement
”), by and
between
PROVECTUS
PHARMACEUTICALS, INC.
, a Nevada corporation (the “
Company
”), and
LINCOLN PARK CAPITAL FUND, LLC
(the “
Investor
”). Terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Purchase Agreement.
The
undersigned, ___________, ______________ of the Company, hereby certifies as
follows:
1. I
am the _____________ of the Company and make the statements contained in this
Certificate;
2. The
representations and warranties of the Company are true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 4 of the Purchase
Agreement, in which case, such representations and warranties are true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date);
3. The
Company has performed, satisfied and complied in all material respects with
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Commencement Date.
4.
The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy or insolvency proceedings.
The Company is financially solvent and is generally able to pay its debts as
they become due.
IN
WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
___________.
The
undersigned as Secretary of
PROVECTUS PHARMACEUTICALS,
INC.
, a Nevada corporation, hereby certifies that ___________ is the duly
elected, appointed, qualified and acting ________ of _________ and that the
signature appearing above is his genuine signature.
EXHIBIT
C
FORM
OF COMPANY RESOLUTIONS
FOR
SIGNING PURCHASE AGREEMENT
ACTION
BY UNANIMOUS WRITTEN CONSENT
OF
THE BOARD OF DIRECTORS OF
PROVECTUS
PHARMACEUTICALS, INC.
_________
In
accordance with the corporate laws of the state of Nevada, the undersigned,
being all of the directors of
PROVECTUS PHARMACEUTICALS,
INC.
, a Nevada corporation (the “Corporation”), acting by written consent
as permitted by Section 78.315 of the Nevada Revised Statutes do hereby consent
to and adopt the following resolutions as the action of the Board of Directors
for and on behalf of the Corporation and hereby direct that this Consent be
filed with the minutes of the proceedings of the Board of
Directors:
WHEREAS, there has been presented to
the Board of Directors of the Corporation a draft of the Purchase Agreement (the
“Purchase Agreement”) by and between the Corporation and Lincoln Park Capital
Fund, LLC (“Lincoln Park”), providing for the purchase of: (i) initially
1,000,000 shares (the "Initial Purchase Shares") of the Corporation's common
stock, par value $.001 per share (the "Common Stock"), together with warrants
(the "Warrant") to purchase 500,000 shares of Common Stock, and (ii) thereafter
up to Thirty Million Dollars ($30,000,000) of the Corporation's Common Stock;
and
WHEREAS, after careful consideration of
the Purchase Agreement, the documents incident thereto and other factors deemed
relevant by the Board of Directors, the Board of Directors has determined that
it is advisable and in the best interests of the Corporation to engage in the
transactions contemplated by the Purchase Agreement, including, but not limited
to: (i) the sale of 1,000,000 shares of Common Stock together with the Warrant,
and (ii) the sale of shares of Common Stock to Lincoln Park up to the available
amount under the Purchase Agreement (the "Purchase Shares").
Transaction
Documents
NOW,
THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase
Agreement are hereby approved and Craig Dees, the Corporation's Chief Executive
Officer, Timothy Scott, the Corporation's President, and Peter R. Culpepper, the
Corporation's Chief Financial Officer, Chief Operating Officer, and Secretary
(the “Authorized Officers”) are severally authorized to execute and deliver the
Purchase Agreement, and any other agreements or documents contemplated thereby
including, without limitation, a registration rights agreement (the
“Registration Rights Agreement”) providing for the registration of the shares of
the Company’s Common Stock issuable in respect of the Purchase Agreement on
behalf of the Corporation, with such amendments, changes, additions and
deletions as the Authorized Officers may deem to be appropriate and approve on
behalf of, the Corporation, such approval to be conclusively evidenced by the
signature of an Authorized Officer thereon; and
FURTHER
RESOLVED, that the terms and provisions of the Registration Rights Agreement by
and among the Corporation and Lincoln Park are hereby approved and the
Authorized Officers are authorized to execute and deliver the Registration
Rights Agreement (pursuant to the terms of the Purchase Agreement), with such
amendments, changes, additions and deletions as the Authorized Officer may deem
appropriate and approve on behalf of, the Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon;
and
FURTHER
RESOLVED, that the terms and provisions of the Form of Transfer Agent
Instructions (the “Instructions”) are hereby approved and the Authorized
Officers are authorized to execute and deliver the Instructions (pursuant to the
terms of the Purchase Agreement), with such amendments, changes, additions and
deletions as the Authorized Officers may deem appropriate and approve on behalf
of, the Corporation, such approval to be conclusively evidenced by the signature
of an Authorized Officer thereon; and
Execution of Purchase
Agreement
FURTHER
RESOLVED, that the Corporation be and it hereby is authorized to execute the
Purchase Agreement providing for the purchase of: (i) initially, of the Initial
Purchase Shares together with the Warrant, and (ii) thereafter up to Thirty
Million Dollars ($30,000,000) of the Corporation’s Common Stock;
and
Issuance of Common
Stock
FURTHER
RESOLVED, that the Corporation shall initially reserve 11,800,000 shares of
Common Stock for issuance, which shall consist of 1,000,000 Initial Purchase
Shares, 500,000 Warrant Shares (as defined in the Purchase Agreement and subject
to equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction), 300,000 Initial Commitment
Shares (as defined in the Purchase Agreement), and 10,000,000 remaining shares
of Common Stock to be issued as Purchase Shares (as defined in the Purchase
Agreement) and Additional Commitment Shares (as defined in the Purchase
Agreement and subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction)
in accordance with the terms of the Purchase Agreement;
FURTHER
RESOLVED, that upon the Commencement Date (as defined in the Purchase Agreement)
and in consideration of $1,000,000, the Corporation is hereby authorized to
issue to Lincoln Park 1,000,000 shares of Common Stock as Initial Purchase
Shares and the Warrant to purchase 500,000 shares of Common Stock (subject to
equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction), and that upon issuance of
the Initial Purchase Shares pursuant to the Purchase Agreement, the Initial
Purchase Shares shall be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof;
FURTHER
RESOLVED, that upon the Commencement Date and in consideration of Lincoln Park
entering into the Purchase Agreement, the Corporation is hereby authorized to
issue to Lincoln Park 300,000 shares of Common Stock as Initial Commitment
Shares, and that upon issuance of the Initial Commitment Shares pursuant to the
Purchase Agreement, the Initial Commitment Shares shall be duly authorized,
validly issued, fully paid and nonassessable with no personal liability
attaching to the ownership thereof;
FURTHER
RESOLVED, that the Corporation is hereby authorized to issue 500,000 shares of
Common Stock (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction)
as Warrant Shares in connection with the exercise of the Warrant in accordance
with the terms of the Warrant and that, upon issuance of the Warrant Shares
pursuant to the Warrant, the Warrant Shares will be duly authorized, validly
issued, fully paid and nonassessable with no personal liability attaching to the
ownership thereof; and
FURTHER
RESOLVED, that the Corporation is hereby authorized to issue up to 10,000,000
shares of Common Stock upon the purchase of Purchase Shares and the issuance of
Additional Commitment Shares (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction) in accordance with the terms of the Purchase Agreement and
that, upon issuance of the Purchase Shares and Additional Commitment Shares
pursuant to the Purchase Agreement, the Purchase Shares and Additional
Commitment Shares will be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof.
Approval of
Actions
FURTHER
RESOLVED, that, without limiting the foregoing, the Authorized Officers are, and
each of them hereby is, authorized and directed to proceed on behalf of the
Corporation and to take all such steps as deemed necessary or appropriate, with
the advice and assistance of counsel, to cause the Corporation to consummate the
agreements referred to herein and to perform its obligations under such
agreements; and
FURTHER RESOLVED, that the Authorized
Officers be, and each of them hereby is, authorized, empowered and directed on
behalf of and in the name of the Corporation, to take or cause to be taken all
such further actions and to execute and deliver or cause to be executed and
delivered all such further agreements, amendments, documents, certificates,
reports, schedules, applications, notices, letters and undertakings and to incur
and pay all such fees and expenses as in their judgment shall be necessary,
proper or desirable to carry into effect the purpose and intent of any and all
of the foregoing resolutions, and that all actions heretofore taken by any
officer or director of the Corporation in connection with the transactions
contemplated by the agreements described herein are hereby approved, ratified
and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned, to
evidence their consent to taking the foregoing actions by written consent in
lieu of a meeting and their approval of the above stated resolutions have
hereunto set their hands on December __, 2010.
|
|
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|
|
H.
Craig Dees, Ph.D.
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|
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|
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Timothy
C. Scott, Ph.D.
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|
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|
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|
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Eric
A. Wachter, Ph.D.
|
|
|
|
|
|
|
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|
Stuart
Fuchs
|
|
|
|
|
|
|
|
|
Kelly
M. McMasters, M.D.,
Ph.D.
|
EXHIBIT
D
FORM
OF SECRETARY’S CERTIFICATE
This Secretary’s Certificate
(“Certificate”) is being delivered pursuant to Section 8(j) of that certain
Purchase Agreement dated as of December 22, 2010, (“Purchase Agreement”), by and
between
PROVECTUS
PHARMACEUTICALS, INC.
, a Nevada corporation (the “Company”) and
LINCOLN PARK CAPITAL FUND, LLC
(the “Investor”), pursuant to which the Company may sell to the Investor: (i)
initially 1,000,000 shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), together with warrants (the "Warrant") to purchase
500,000 shares of Common Stock, and (ii) thereafter up to Thirty Million Dollars
($30,000,000) of the Common Stock. Terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Purchase
Agreement.
The undersigned, ____________,
Secretary of the Company, hereby certifies as follows:
1. I
am the Secretary of the Company and make the statements contained in this
Secretary’s Certificate.
2. Attached
hereto as
Exhibit
A
and
Exhibit
B
are true, correct and complete copies of the Company’s bylaws
(“Bylaws”) and Articles of Incorporation (“Articles”), in each case, as amended
through the date hereof, and no action has been taken by the Company, its
directors, officers or shareholders, in contemplation of the filing of any
further amendment relating to or affecting the Bylaws or Articles.
3. Attached
hereto as
Exhibit
C
are true, correct and complete copies of the resolutions duly adopted
by the Board of Directors of the Company on _____________, by action by
unanimous written consent of the Board of Directors in lieu of a meeting. Such
resolutions have not been amended, modified or rescinded and remain in full
force and effect and such resolutions are the only resolutions adopted by the
Company’s Board of Directors, or any committee thereof, or the shareholders of
the Company relating to or affecting (i) the entering into and performance of
the Purchase Agreement, or the issuance, offering and sale of the Purchase
Shares and the Commitment Shares and (ii) and the performance of the Company of
its obligation under the Transaction Documents as contemplated
therein.
4. As
of the date hereof, the authorized, issued and reserved capital stock of the
Company is as set forth on
Exhibit D
hereto.
IN WITNESS WHEREOF
, I have
hereunder signed my name on this ___ day of ____________.
The
undersigned as ___________ of _______, a _______ corporation, hereby certifies
that ____________ is the duly elected, appointed, qualified and acting Secretary
of _________, and that the signature appearing above is his genuine
signature.
EXHIBIT
E
FORM
OF WARRANT
Exhibit 10.2
EXECUTION
COPY
REGISTRATION
RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
(this "
Agreement
"),
dated as of December 22, 2010, by and between
PROVECTUS PHARMACEUTICALS,
INC.,
a Nevada
corporation, (the "
Company
"), and
LINCOLN PARK CAPITAL FUND,
LLC,
an Illinois limited liability
company
(together with it permitted assigns, the “
Buyer
”). Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement by and between the parties hereto,
dated as of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the "
Purchase
Agreement
").
WHEREAS:
The
Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to sell to the Buyer (i) initially 1,000,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), together with
warrants (the "Warrant") to purchase 500,000 shares of Common Stock, and (ii)
thereafter up to Thirty Million Dollars ($30,000,000) of the Common Stock, and
to induce the Buyer to enter into the Purchase Agreement, the Company has agreed
to provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "
Securities Act
"), and
applicable state securities laws.
NOW, THEREFORE,
in
consideration of the promises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1.
DEFINITIONS
.
As used
in this Agreement, the following terms shall have the following
meanings:
a. "
Investor
" means the Buyer, any
transferee or assignee thereof to whom a Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 10 and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
10.
b. "
Person
" means any person or
entity including but not limited to any corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a governmental
agency.
c. "
Register
," "
registered
," and "
registration
" refer to a
registration effected by preparing and filing one or more registration
statements of the Company in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("
Rule 415
"), and the
declaration or ordering of effectiveness of such registration statement(s) by
the United States Securities and Exchange Commission (the "
SEC
").
d. "
Registrable Securities
" means
the Purchase Shares which have been, or which may from time to time be, issued
or issuable to the Investor upon purchases of the Available Amount under the
Purchase Agreement (without regard to any limitation or restriction on
purchases), the Warrant Shares and the Commitment Shares issued or issuable to
the Investor and any shares of capital stock issued or issuable with respect to
the Purchase Shares, the Warrants, the Warrant Shares and the Commitment
Shares
or the
Purchase Agreement as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitation on purchases under the Purchase Agreement.
e. "
Registration Statement
" means
the Company’s shelf registration statement on Form S-3 (no.
333-167906).
2.
REGISTRATION
.
a.
Mandatory
Registration.
The Company shall within ten (10) Business Days
from the date hereof file with the SEC a prospectus supplement to the
Registration Statement covering the sale of the Registrable Securities by the
Company to the Investor. The Investor and its counsel
shall have a reasonable opportunity to review and comment upon such prospectus
supplement to such registration statement and any related prospectus prior to
its filing with the SEC. Investor shall furnish all information
reasonably requested by the Company for inclusion therein. The
Company shall use its best efforts to keep the Registration Statement effective
pursuant to Rule 415 promulgated under the Securities Act and available for
sales of all of the Registrable Securities by the Company to the Investor at all
times until the date on which the Investor shall have sold all the Registrable
Securities and no Available Amount remains under the Purchase Agreement (the
"
Registration
Period
"). The Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
b.
Rule 424
Prospectus
. The Company shall, as required by applicable
securities regulations, from time to time file with the SEC, pursuant to Rule
424 promulgated under the Securities Act, the prospectus and prospectus
supplements, if any, to be used in connection with sales of the Registrable
Securities under the Registration Statement by the Company to the
Investor. The Investor and its counsel shall have a reasonable
opportunity to review and comment upon such prospectus or prospectus supplement
prior to its filing with the SEC. The Investor shall use its reasonable best
efforts to comment upon such prospectus or prospectus supplement within one (1)
Business Day from the date the Investor receives the final version of such
prospectus or prospectus supplement, as the case may be.
c.
Sufficient Number of Shares
Registered, Registration Statement Available
. In the event the
number of shares available under the Registration Statement is insufficient to
cover all of the Registrable Securities, the Company shall amend the
Registration Statement or file a new registration statement (a ”
New Registration Statement
”),
so as to cover all of such Registrable Securities as soon as practicable, but in
any event not later than ten (10) Business Days after the necessity therefor
arises. Notwithstanding the foregoing, in any event that the Investor
is deemed unable to freely resell any of the Registrable Securities without
restriction under applicable securities laws then, at the Investor’s election,
and not later than ten (10) Business Days after such election, the Company shall
file a prospectus supplement or amendment to the Registration Statement or a New
Registration Statement so that all of the Registrable Securities may be resold
by the Investor without such restrictions and the Company shall use its
reasonable best efforts to keep such registration statement effective during the
Registration Period (a “
Resale
Registration
”). The Company shall use it reasonable best
efforts to cause such amendment and/or New Registration Statement to become
effective as soon as practicable following the filing thereof.
3.
RELATED
OBLIGATIONS
.
With
respect to the Registration Statement and whenever any Registrable Securities
are to be registered pursuant to Section 2(b) including on any New Registration
Statement, the Company shall use its reasonable best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
a. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to any registration statement and the
prospectus used in connection with such registration statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep the Registration Statement or any New Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the
Registration Statement or any New Registration Statement until such time as all
of such Registrable Securities shall have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in such registration statement.
b. The
Company shall permit the Investor to review and comment upon the Registration
Statement or any New Registration Statement and all amendments and supplements
one (1) Business Day prior to their filing with the SEC, and not file any
document in a form to which Investor reasonably objects. The Investor
shall use its reasonable best efforts to comment upon the Registration Statement
or any New Registration Statement and any amendments or supplements thereto
within one (1) Business Day from the date the Investor receives the final
version thereof. The Company shall furnish to the
Investor, without charge any correspondence from the SEC or the staff of the SEC
to the Company or its representatives relating to the Registration Statement or
any New Registration Statement.
c. Upon
request of the Investor, the Company shall furnish to the Investor, (i) promptly
after the same is prepared and filed with the SEC, at least one copy of such
registration statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, (ii) upon the effectiveness of any registration statement, a copy
of the prospectus included in such registration statement and all amendments and
supplements thereto (or such other number of copies as the Investor may
reasonably request) and (iii) such other documents, including copies of any
preliminary or final prospectus, as the Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by the Investor.
d. The
Company shall use reasonable best efforts to (i) register and qualify the
Registrable Securities covered by a registration statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as the
Investor reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify the Investor who
holds Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or "blue sky" laws of
any jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.
e. As
promptly as practicable after becoming aware of such event or facts, the Company
shall notify the Investor in writing of the happening of any event or existence
of such facts as a result of which the prospectus included in any registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and promptly prepare a supplement or amendment to such
registration statement to correct such untrue statement or omission, and deliver
a copy of such supplement or amendment to the Investor (or such other number of
copies as the Investor may reasonably request). The Company shall
also promptly notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
registration statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
any request by the SEC for amendments or supplements to any registration
statement or related prospectus or related information, and (iii) of the
Company's reasonable determination that a post-effective amendment to a
registration statement would be appropriate.
f. The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of any registration statement,
or the suspension of the qualification of any Registrable Securities for sale in
any jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to
notify the Investor of the issuance of such order and the resolution thereof or
its receipt of actual notice of the initiation or threat of any proceeding for
such purpose.
g. The
Company shall (i) cause all the Registrable Securities to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities on the Principal
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.
h. The
Company shall cooperate with the Investor to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered pursuant to any registration statement
and enable such certificates to be in such denominations or amounts as the
Investor may reasonably request and registered in such names as the Investor may
request.
i. The
Company shall at all times provide a transfer agent and registrar with respect
to its Common Stock.
j. If
reasonably requested by the Investor, the Company shall (i) immediately
incorporate in a prospectus supplement or post-effective amendment such
information as the Investor believes should be included therein relating to the
sale and distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Securities; (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any registration
statement.
k. The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by any registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.
l. Within
one (1) Business Day after the filing with the SEC of a prospectus supplement to
the Company’s Registration Statement relating to the Registrable Securities, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investor) confirmation that such prospectus supplement has been filed with the
SEC in the form attached hereto as
Exhibit
A.
Thereafter, if requested by the Buyer at any time, the
Company shall require its counsel to deliver to the Buyer a written confirmation
whether or not the effectiveness of such registration statement has lapsed at
any time for any reason (including, without limitation, the issuance of a stop
order) and whether or not the registration statement is current and available to
the Company for sale of all of the Registrable Securities to the Investor or
otherwise.
m. The
Company shall take all other reasonable actions necessary to expedite and
facilitate the sale of the Registrable Securities by the Company to the Investor
or the disposition of the Registrable Securities by the Investor, if applicable,
pursuant to any registration statement..
4.
OBLIGATIONS OF THE
INVESTOR
.
a. The
Company shall notify the Investor in writing of the information the Company
reasonably requires from the Investor in connection with any registration
statement hereunder. The Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.
b. The
Investor agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any registration
statement hereunder.
c. In
the event of a Resale Registration, the Investor agrees that, upon receipt of
any notice from the Company of the happening of any event or existence of facts
of the kind described in Section 3(f) or the first sentence of 3(e), the
Investor will immediately discontinue disposition of Registrable Securities
subject to such Resale Registration pursuant to any registration statement(s)
covering such Registrable Securities until the Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e). Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to promptly deliver shares of Common Stock
without any restrictive legend in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which an Investor has entered into a contract for sale prior to the Investor's
receipt of a notice from the Company of the happening of any event of the kind
described in Section 3(f) or the first sentence of 3(e) and for which the
Investor has not yet settled.
5.
EXPENSES OF
REGISTRATION
.
All
reasonable expenses, other than sales or brokerage commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, shall be paid by the Company.
6.
INDEMNIFICATION
.
a. To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, each Person, if any, who
controls the Investor, the members, the directors, officers, partners,
employees, agents, representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "
Exchange Act
") (each, an
"
Indemnified Person
"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint
or several, (collectively, "
Claims
") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("
Indemnified Damages
"), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in the Registration Statement, any New Registration Statement or
any post-effective amendment thereto or in any filing made in connection with
the qualification of the offering under the securities or other "blue sky" laws
of any jurisdiction in which Registrable Securities are offered ("
Blue Sky Filing
"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement or any New Registration Statement or (iv) any
material violation by the Company of this Agreement (the matters in the
foregoing clauses (i) through (iv) being, collectively, "
Violations
"). The
Company shall reimburse each Indemnified Person promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(a):
(i) shall not apply to a Claim by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information about the Investor furnished in writing to the Company by such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement, any New Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any
superseded prospectus, shall not inure to the benefit of any such person from
whom the person asserting any such Claim purchased the Registrable Securities
that are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
superseded prospectus was corrected in the revised prospectus, as then amended
or supplemented, if such revised prospectus was timely made available by the
Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the use
giving rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e); and (iv)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investor pursuant to Section 10.
b. In
connection with the Registration Statement or any New Registration Statement,
the Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement or any New Registration Statement, each Person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively and together with an Indemnified Person, an "
Indemnified Party
"), against
any Claim or Indemnified Damages to which any of them may become subject, under
the Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information about the Investor set forth on
Exhibit B
attached hereto and furnished to the Company by the Investor expressly for use
in connection with such registration statement or such other information
furnished in writing to the Company for inclusion with such registration
statement; and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
the Investor as a result of the sale of Registrable Securities pursuant to such
registration statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 10.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
d. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7.
CONTRIBUTION
.
To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.
8.
REPORTS AND DISCLOSURE UNDER
THE SECURITIES ACTS
.
With a
view to making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the
public without registration ("
Rule 144
"), the Company
agrees, at the Company’s sole expense, to:
a. make
and keep public information available, as those terms are understood and defined
in Rule 144;
b. file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and
c. furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting and or disclosure provisions of Rule 144, the Securities Act and
the Exchange Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investor to sell such securities pursuant to Rule 144 without
registration.
d. take
such additional action as is requested by the Investor to enable the Investor to
sell the Registrable Securities pursuant to Rule 144, including, without
limitation, delivering all such legal opinions, consents, certificates,
resolutions and instructions to the Company’s Transfer Agent as may be requested
from time to time by the Investor and otherwise fully cooperate with Investor
and Investor’s broker to effect such sale of securities pursuant to Rule
144.
The Company agrees that damages may be
an inadequate remedy for any breach of the terms and provisions of this Section
8 and that Investor shall, whether or not it is pursuing any remedies at law, be
entitled to equitable relief in the form of a preliminary or permanent
injunctions, without having to post any bond or other security, upon any breach
or threatened breach of any such terms or provisions.
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9.
|
ACKNOWLEDGEMENT
OF TERMINATION.
|
The
parties acknowledge and agree that at such time that the Purchase Agreement is
terminated, notwithstanding anything herein to the contrary, the Company shall
have no obligation to register or to file or keep any registration statement
effective with respect solely to any of the Available Amount or any Additional
Commitment Shares that have not been issued and sold to the Company at or prior
to such termination.
10.
ASSIGNMENT OF REGISTRATION
RIGHTS
.
The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investor. The Investor may
not assign its rights under this Agreement without the written consent of the
Company, other than to an affiliate of the Investor controlled by Jonathan Cope
or Josh Scheinfeld.
11.
AMENDMENT OF REGISTRATION
RIGHTS
.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Investor.
12.
MISCELLANEOUS
.
a. A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one (1) Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the
Company:
|
Provectus
Pharmaceutcials, Inc.
|
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7327
Oak Ridge Highway, Suite A
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Knoxville,
TN 37931
|
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Telephone:
|
(866)
594-5999
|
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Facsimile:
|
(866)
998-0005
|
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Attention:
|
Peter
R.
Culpepper
|
With a
copy to:
|
Baker,
Donelson, Bearman, Caldwell & Berkowitz, PC
|
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100
Med Tech Parkway, Suite 200
|
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Johnson
City, TN 37604
|
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Telephone:
|
(423)
928-0181
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Facsimile:
|
(423)
928-5694
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Attention:
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Linda
Crouch
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If to the
Investor:
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Lincoln
Park Capital Fund, LLC
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440
N. Wells, Suite 620
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Chicago,
IL 60654
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Telephone:
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312-822-9300
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Facsimile:
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312-822-9301
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Attention:
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Josh
Scheinfeld/Jonathan
Cope
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or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. 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.
d. The
corporate laws of the State of Nevada shall govern all issues concerning the
relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting the City of
Chicago, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. 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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
e. This
Agreement, the Warrant and the Purchase Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Warrant and the Purchase Agreement
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
f. Subject
to the requirements of Section 10, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
g. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
h. This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.
k. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
*
* * * * *
IN WITNESS WHEREOF,
the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.
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THE
COMPANY
:
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PROVECTUS
PHARMACEUTICALS, INC.
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By:
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/s/
Peter R. Culpepper
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Name:
Peter R. Culpepper
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Title:
Chief Financial Officer and Chief Financial Officer
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BUYER:
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LINCOLN
PARK CAPITAL FUND, LLC
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BY:
LINCOLN PARK CAPITAL PARTNERS, LLC
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BY:
ROCKLEDGE CAPITAL, INC.
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By:
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/s/
Josh Schienfeld
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Name: Josh
Schienfeld
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Title:
President
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EXHIBIT
A
TO REGISTRATION RIGHTS
AGREEMENT
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
[Date]
[TRANSFER
AGENT]
___________________
___________________
Re:
[__________]
Ladies
and Gentlemen:
We are
counsel to
PROVECTUS
PHARMACEUTICALS, INC.
, a Nevada corporation (the
“Company”
), and have
represented the Company in connection with that certain Purchase Agreement,
dated as of December 22, 2010 (the
“Purchase Agreement”
), entered
into by and between the Company and Lincoln Park Capital Fund, LLC (the
“Buyer”
) pursuant to which the
Company shall initially sell to the Buyer One Million Dollars ($1,000,000) of
the Company's common stock, $.001 par value (the “
Common Stock
”), together with
a warrant (the "
Warrant
") to purchase 500,000
shares of Common Stock, and thereafter may sell up to Thirty Million Dollars
($30,000,000) of Common Stock. In connection with the transactions contemplated
by the Purchase Agreement, the Company has filed a prospectus supplement (the
“
Prospectus Supplement
”)
to the Company’s Registration Statement on Form S-3 File No. 333-167906 (the
“
Registration
Statement
”) which registration statement was declared effective on July
14, 2010. The Prospectus Supplement relates to the sale of the following shares
of Common Stock:
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(1)
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1,000,000
shares of Common Stock to be issued upon the initial investment of
$1,000,000 (the "
Initial
Purchase Shares
")
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(2)
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500,000
shares of Common stock issuable upon the exercise of the Warrant (the
"
Warrant
Shares
")
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(3)
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300,000
shares of Common Stock which are to be issued to the Buyer as a commitment
fee (the
“Initial
Commitment Shares”
).
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(4)
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10,000,000
shares of Common Stock that may be issued to Lincoln Park upon the
Company's direction to purchase shares of Common Stock pursuant to the
Purchase Agreement. The 10,000,000 shares of Common Stock may consist of
shares of Common Stock that the Company may direct the Buyer to purchase
(the "
Purchase
Shares
") and up to 1,500,000 shares of Common Stock which may be
issued to the Buyer as an additional commitment fee in connection with the
purchase of Purchase Shares (the
“Additional Commitment
Shares”
).
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Pursuant
to the Purchase Agreement, the Company also has entered into a Registration
Rights Agreement, dated as of December 22, 2010, with the Buyer (the
“Registration Rights
Agreement”
) pursuant to which the Company agreed, among other things, to
register the Initial Purchase Shares, the Purchase Shares, the Warrant Shares,
the Initial Commitment Shares, and the Additional Commitment Shares under the
Securities Act of 1933, as amended (the
“Securities
Act”
). In connection with the Company's obligations under the
Purchase Agreement and the Registration Rights Agreement, on[Date], the Company
filed with the Securities and Exchange Commission (the
“SEC”
) the Prospectus
Supplement relating to the sale of the Initial Purchase Shares, the Purchase
Shares, the Warrant Shares, the Initial Commitment Shares, and the Additional
Commitment Shares.
In
connection with the foregoing, we advise you that we have no knowledge that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the Initial
Purchase Shares, the Purchase Shares, the Warrant Shares, the Initial Commitment
Shares, and the Additional Commitment Shares are available for sale under the
Securities Act pursuant to the Registration Statement and may issued without any
restrictive legend.
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Very
truly yours,
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BAKER,
DONELSON, BEARMAN, CALDWELL &
BERKOWITZ,
PC
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By:
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CC: Lincoln
Park Capital Fund, LLC
EXHIBIT
B
TO REGISTRATION RIGHTS
AGREEMENT
Information
About The Investor Furnished To The Company By The Investor
Expressly
For Use In Connection With The Registration Statement
As of the
date of the Purchase Agreement, Lincoln Park Capital Fund, LLC, beneficially
owned _______ shares of common stock of the Company. Josh Scheinfeld
and Jonathan Cope, the Managing Members of Lincoln Park Capital, LLC, are deemed
to be beneficial owners of all of the shares of common stock owned by Lincoln
Park Capital Fund. Messrs. Cope and Scheinfeld have shared voting and
investment power over the shares being offered under the prospectus filed with
the SEC in connection with the transactions contemplated under the Purchase
Agreement. Lincoln Park Capital is not a licensed broker dealer or an
affiliate of a licensed broker dealer.
