INVESTOR REGISTRATION RIGHTS AGREEMENT

 

 

                                                                     Exhibit 4.2

 

                     INVESTOR REGISTRATION RIGHTS AGREEMENT

                     --------------------------------------

 

 

 

     THIS REGISTRATION   RIGHTS AGREEMENT (this "Agreement") dated as of July 28,

2004, by and among PROVECTUS   PHARMACEUTICALS,   INC., a Nevada   corporation (the

"Company"), and the undersigned investors (each, an "Investor" and collectively,

the "Investors").

 

     WHEREAS:

 

     A. In connection   with the Securities   Purchase   Agreement by and among the

parties hereto of even date herewith (the "Securities Purchase Agreement"),   the

Company   has   agreed,   upon the   terms   and   subject   to the   conditions   of the

Securities   Purchase   Agreement,   to   issue   and sell to the   Investors   secured

convertible debentures (the "Convertible Debentures") which shall be convertible

into that number of shares of the Company's   common stock,   par value $0.001 per

share (the "Common   Stock"),   pursuant to the terms of the   Securities   Purchase

Agreement for an aggregate   purchase   price of up Seven   Hundred Fifty   Thousand

Dollars ($750,000).   Capitalized terms not defined herein shall have the meaning

ascribed to them in the Securities Purchase Agreement.

 

     B. To induce the Investors to execute and deliver the   Securities   Purchase

Agreement,   the Company has agreed to provide certain   registration rights under

the   Securities   Act of 1933, as amended,   and the rules and   regulations   there

under, or any similar   successor   statute   (collectively,   the "1933 Act"),   and

applicable state securities laws.

 

     NOW,   THEREFORE,   in consideration of the premises and the mutual covenants

contained   herein and other good and   valuable   consideration,   the   receipt and

sufficiency   of which are hereby   acknowledged,   the Company   and the   Investors

hereby agree as follows:

 

     1.   DEFINITIONS.

 

     As used in this   Agreement,   the   following   terms shall have the following

meanings:

 

     (a)   "Person"   means   a   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.

 

     (b) "Register,"   "registered," and   "registration"   refer to a registration

effected by preparing and filing one or more Registration Statements (as defined

below) in   compliance   with the 1933 Act and pursuant to Rule 415 under the 1933

Act or any successor rule   providing for offering   securities on a continuous or

delayed basis ("Rule 415"),   and the declaration or ordering of effectiveness of

such Registration   Statement(s) by the United States Securities and Exchange SEC

(the "SEC").

 

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     (c) "Registrable   Securities"   means the shares of Common Stock issuable to

Investors   upon   conversion   of   the   Convertible   Debentures   pursuant   to   the

Securities Purchase Agreement and the Investor's Shares, as this term is defined

in the Standby Equity Distribution Agreement dated the date hereof.

 

     (d) "Registration   Statement" means a registration statement under the 1933

Act which covers the Registrable Securities.

 

     2.   REGISTRATION.

 

     (a)   Subject to the terms and   conditions   of this   Agreement,   the Company

shall prepare and file, no later than   forty-five (45) days from the date hereof

(the "Scheduled Filing Deadline"), with the SEC a registration statement on Form

S-1 or SB-2 (or,   if the Company is then   eligible,   on Form S-3) under the 1933

Act (the "Initial   Registration   Statement") for the registration for the resale

by all Investors who purchased Convertible Debentures pursuant to the Securities

Purchase Agreement _________ shares of Common Stock to be issued upon conversion

of   the   Convertible   Debentures   issued   pursuant   to the   Securities   Purchase

Agreement and the Investor's   Shares.   The Company shall cause the   Registration

Statement to remain effective until all of the Registrable   Securities have been

sold.   Prior to the   filing   of the   Registration   Statement   with the SEC,   the

Company   shall   furnish   a copy of the   Initial   Registration   Statement   to the

Investors   and Butler   Gonzalez LLP for their review and comment.   The Investors

and Butler   Gonzalez   LLP shall   furnish   comments on the   Initial   Registration

Statement to the Company within   twenty-four   (24) hours of the receipt   thereof

from the Company.

 

     (b) Effectiveness of the Initial Registration Statement.   The Company shall

use its best   efforts (i) to have the Initial   Registration   Statement   declared

effective   by the SEC no   later   than   105   days   after   the   date   hereof   (the

"Scheduled Effective Deadline") and (ii) to insure that the Initial Registration

Statement and any subsequent   Registration Statement remains in effect until all

of   the   Registrable   Securities   have   been   sold,   subject   to the   terms   and

conditions of this Agreement.

 

     (c) Failure to File or Obtain Effectiveness of the Registration   Statement.

In the event the   Registration   Statement is not filed by the   Scheduled   Filing

Deadline   or is not   declared   effective   by the SEC on or before the   Scheduled

Effective   Date,   or if after   the   Registration   Statement   has   been   declared

effective   by the   SEC,   sales   cannot   be   made   pursuant   to the   Registration

Statement   (whether   because   of a failure   to keep the   Registration   Statement

effective,   failure to disclose such information as is necessary for sales to be

made   pursuant to the   Registration   Statement,   failure to register   sufficient

shares of Common   Stock or otherwise   then as partial   relief for the damages to

any holder of Registrable Securities by reason of any such delay in or reduction

of its ability to sell the underlying shares of Common Stock (which remedy shall

not be   exclusive of any other   remedies at law or in equity),   the Company will

pay as   liquidated   damages (the   "Liquidated   Damages")   to the holder,   at the

holder's   option,   either a cash amount or shares of the Company's   Common Stock

within three (3) business   days,   after demand   therefore,   equal to two percent

(2%) of the   liquidated   value   of the   Convertible   Debentures   outstanding   as

Liquidated   Damages for each thirty (30) day period after the   Scheduled   Filing

Deadline or the Scheduled Effective Date as the case may be.

 

 

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     (d) Liquidated Damages. The Company and the Investor hereto acknowledge and

agree   that the sums   payable   under   subsection   2(c)   above   shall   constitute

liquidated   damages and not penalties and are in addition to all other rights of

the   Investor,   including   the   right to call a   default.   The   parties   further

acknowledge   that (i) the amount of loss or   damages   likely to be   incurred   is

incapable or is difficult to precisely   estimate,   (ii) the amounts specified in

such   subsections   bear a   reasonable   relationship   to, and are not   plainly or

grossly   disproportionate   to,   the   probable   loss   likely   to be   incurred   in

connection    with   any   failure   by   the   Company   to   obtain   or   maintain   the

effectiveness   of a   Registration   Statement,   (iii) one of the   reasons for the

Company   and the   Investor   reaching   an   agreement   as to such   amounts was the

uncertainty and cost of litigation regarding the question of actual damages, and

(iv) the Company and the Investor are   sophisticated   business   parties and have

been   represented by   sophisticated   and able legal counsel and negotiated   this

Agreement at arm's length.

 

     3.   RELATED OBLIGATIONS.

 

     (a) The Company shall keep the Registration Statement effective pursuant to

Rule 415 at all times until the date on which the   Investor   shall have sold all

the   Registrable    Securities   covered   by   such   Registration    Statement   (the

"Registration   Period"),   which 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) The   Company   shall   prepare   and file   with   the SEC   such   amendments

(including    post-effective    amendments)   and   supplements   to   a   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 1933 Act,   as may be   necessary   to keep such   Registration   Statement

effective at all times during the Registration   Period, and, during such period,

comply with the   provisions of the 1933 Act with respect to the   disposition   of

all Registrable Securities of the Company covered by such 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.   In the case of

amendments and supplements to a Registration   Statement which are required to be

filed   pursuant to this Agreement   (including   pursuant to this Section 3(b)) by

reason of the Company's filing a report on Form 10-KSB,   Form 10-QSB or Form 8-K

or any analogous   report under the   Securities   Exchange Act of 1934, as amended

(the "1934 Act"),   the Company shall   incorporate   such report by reference into

the   Registration   Statement,   if applicable,   or shall file such   amendments or

supplements   with the SEC on the same day on which the 1934 Act   report is filed

which   created   the   requirement   for the   Company   to amend or   supplement   the

Registration Statement.

 

     (c) The Company shall furnish to each Investor whose Registrable Securities

are included in any Registration Statement, without charge, (i) at least one (1)

copy of such   Registration   Statement   as declared   effective by the SEC and any

amendment(s)   thereto,    including   financial   statements   and   schedules,    all

documents   incorporated therein by reference,   all exhibits and each preliminary

prospectus,   (ii) ten (10)   copies   of the   final   prospectus   included   in such

 

 

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Registration Statement and all amendments and supplements thereto (or such other

number of copies as such Investor may   reasonably   request) and (iii) such other

documents as such Investor may reasonably   request from time to time in order to

facilitate the disposition of the Registrable Securities owned by such Investor.

 

     (d) The Company   shall use its 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 any

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 (w) make any

change to its   certificate   of   incorporation   or   by-laws,   (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   each   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 threat of any proceeding for such purpose.

 

     (e) As   promptly   as   practicable   after   becoming   aware of such   event or

development,   the Company shall notify each Investor in writing of the happening

of any event as a result   of which the   prospectus   included   in a   Registration

Statement, as then in effect, includes an untrue statement of a material fact or

omission 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   (provided that in no event shall such notice contain any

material, nonpublic information), and promptly prepare a supplement or amendment

to such Registration Statement to correct such untrue statement or omission, and

deliver ten (10) copies of such   supplement or amendment to each   Investor.   The

Company   shall   also   promptly   notify   each   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 each

Investor   by   facsimile   on the   same   day of such   effectiveness),   (ii) of any

request by the SEC for amendments or supplements to a 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 best   efforts to prevent the issuance of any

stop order or other suspension of effectiveness of a Registration   Statement, or

the suspension of the   qualification   of any of the   Registrable   Securities for

sale in any   jurisdiction   within the United   States of America   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 each Investor who holds

Registrable   Securities   being   sold   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.

 

 

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     (g) At the reasonable request of any Investor, the Company shall furnish to

such Investor,   on the date of the   effectiveness of the Registration   Statement

and   thereafter   from time to time on such dates as an Investor   may   reasonably

request (i) a letter, dated such date, from the Company's   independent certified

public   accountants in form and substance as is customarily given by independent

certified public accountants to underwriters in an underwritten public offering,

and (ii) an opinion,   dated as of such date, of counsel representing the Company

for purposes of such Registration   Statement, in form, scope and substance as is

customarily   given   in   an   underwritten   public   offering,    addressed   to   the

Investors.

 

     (h) The Company shall make available for inspection by (i) any Investor and

(ii) one (1) firm of   accountants   or other   agents   retained   by the   Investors

(collectively,   the "Inspectors") all pertinent financial and other records, and

pertinent corporate documents and properties of the Company   (collectively,   the

"Records"), as shall be reasonably deemed necessary by each Inspector, and cause

the Company's officers,   directors and employees to supply all information which

any Inspector may reasonably   request;   provided,   however,   that each Inspector

shall agree, and each Investor hereby agrees,   to hold in strict   confidence and

shall not make any disclosure (except to an Investor) or use any Record or other

information which the Company   determines in good faith to be confidential,   and

of which determination the Inspectors are so notified, unless (a) the disclosure

of such Records is necessary to avoid or correct a   misstatement   or omission in

any Registration   Statement or is otherwise required under the 1933 Act but only

after the Investor has provided   written notice to the Company,   (b) the release

of such Records is ordered pursuant to a final, non-appealable subpoena or order

from   a   court   or   government   body   of   competent   jurisdiction,   or   (c)   the

information   in such   Records has been made   generally   available   to the public

other than by   disclosure   in violation of this or any other   agreement of which

the   Inspector   and the Investor has   knowledge.   Each   Investor   agrees that it

shall,   upon learning that disclosure of such Records is sought in or by a court

or   governmental   body of competent   jurisdiction   or through other means,   give

prompt notice to the Company and allow the Company, at its expense, to undertake

appropriate   action to prevent   disclosure   of, or to obtain a protective   order

for, the Records deemed confidential.

 

     (i) The Company   shall hold in   confidence   and not make any   disclosure of

information concerning an Investor provided to the Company unless (i) disclosure

of such   information   is necessary   to comply with   federal or state   securities

laws, (ii) the disclosure of such information is necessary to avoid or correct a

misstatement   or omission in any   Registration   Statement,   (iii) the release of

such    information    is   ordered    pursuant   to   a   subpoena   or   other    final,

non-appealable    order   from   a   court   or    governmental    body   of    competent

jurisdiction,   or (iv) such information has been made generally available to the

public other than by   disclosure   in   violation   of this   Agreement or any other

agreement.   The Company agrees that it shall,   upon learning that   disclosure of

such   information   concerning   an   Investor   is   sought   in   or   by a   court   or

governmental body of competent   jurisdiction or through other means, give prompt

written   notice to such   Investor   and allow such   Investor,   at the   Investor's

expense, to undertake   appropriate action to prevent disclosure of, or to obtain

a protective order for, such information.

 

     (j) The   Company   shall   use its   best   efforts   either   to   cause   all the

Registrable   Securities covered by a Registration   Statement (i) 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) the

 

 

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<PAGE>

 

inclusion for quotation on the National Association of Securities Dealers,   Inc.

OTC Bulletin Board for such   Registrable   Securities.   The Company shall pay all

fees and   expenses in   connection   with   satisfying   its   obligation   under this

Section 3(j).

 

     (k) The Company shall   cooperate   with the   Investors who hold   Registrable

Securities being offered and, to the extent applicable, to facilitate the timely

preparation   and delivery of certificates   (not bearing any restrictive   legend)

representing the Registrable Securities to be offered pursuant to a Registration

Statement and enable such   certificates to be in such   denominations or amounts,

as the case may be, as the Investors may   reasonably   request and   registered in

such names as the Investors may request.

 

     (l) The   Company   shall   use its   best   efforts   to cause   the   Registrable

Securities   covered by the   applicable   Registration   St