SECURITIES PURCHASE AGREEMENT

Security Agreement

You are currently viewing:

This Security Agreement involves

PROVECTUS PHARMACEUTICALS, INC., | A.I. INTERNATIONAL CORPORATE HOLDINGS, LTD. | AMERICAN EQUITY CONSULTING SERVICES, INC. | CASTLERIGG MASTER INVESTMENTS, LTD.

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: SECURITIES PURCHASE AGREEMENT
Governing Law: New York Date: 10/7/2004
Law Firm: Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.McLaughlin & Stern, LLP;

Exhibit 10.3

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT, dated as of June 25, 2004, is entered

into by and between PROVECTUS PHARMACEUTICALS, INC., a Nevada corporation, with

headquarters located at 7327 Oak Ridge Highway, Suite A, Knoxville, TN 37931

(the "Company"), and A.I. INTERNATIONAL CORPORATE HOLDINGS, LTD.; AMERICAN

EQUITY CONSULTING SERVICES, INC.; AND CASTLERIGG MASTER INVESTMENTS, LTD. (the

"Purchasers").

R E C I T A L S :

WHEREAS, the Company and the Purchasers are executing and delivering this

Agreement in accordance with and in reliance upon the exemption from securities

registration for offers and sales to accredited investors afforded, inter alia,

by Rule 506 under Regulation D ("Regulation D") as promulgated by the United

States Securities and Exchange Commission (the "SEC") under the Securities Act

of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act; and

WHEREAS, the Company wishes to sell to the Purchasers and the Purchasers

wish to buy from the Company shares of the Common Stock, $.001 par value, of the

Company (the "Common Stock"), together with the Warrants (as defined below)

exercisable for the purchase of shares of Common Stock;

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

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

sufficiency of which are hereby acknowledged, the parties agree as follows:

(1) AGREEMENT TO PURCHASE; PURCHASE PRICE.

(a) Purchase.

(i) Subject to the terms and conditions of this Agreement and the other

Transaction Agreements (as defined below), the Purchasers hereby agree to pay to

the Company a purchase price of $.75 per share of Common Stock for One Million

Three Hundred Thirty Three Thousand Three Hundred and Thirty Three (1,333,333)

shares (the "Shares"), for a total purchase price of One Million Dollars

($1,000,000) (the "Purchase Price"). The Purchase Price shall be paid in three

equal installments, with all funds due within forty-five (45) days of the

Closing Date (as defined below). Each installment payment of Three Hundred

Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty-Three One

Hundredths ($333,333.33)(each an "Installment Payment") shall be made pursuant

to the payment schedule attached hereto as Annex I, with each payment date

constituting a "Installment Payment Date." The Company shall issue Certificates

(as defined below) representing the Shares, and each Share shall have a Warrant

attached, as provided below. The Certificates for the Shares shall be in

substantially the same form as attached hereto as Annex II.

(ii) The Purchase Price shall be payable in United States Dollars.

<PAGE>

(b) Certain Definitions. As used herein, each of the following terms has

the meaning set forth below, unless the context otherwise requires:

(i) "1933 Act" means the Securities Act of 1933.

(ii) "1934 Act" means the Securities Act of 1934.

(iii) "Affiliate" means, with respect to a specific Person referred to in the

relevant provision, another Person who or which controls or is controlled by or

is under common control with such specified Person.

(iv) "Certificates" means the Shares and the Warrants, each duly executed by the

Company and issued on the Closing Date in the name of the Purchaser.

(v) "Closing Date" means the date of the closing of the purchase and sale of the

Shares and Warrants, as provided herein.

(vi) "Company Control Person" means each director, executive officer, promoter,

and such other Persons as may be deemed in control of the Company pursuant to

Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

(vii) "Effective Date" means the effective date of the Registration Statement

covering the Registrable Securities.

(vii) "Escrow Agent" means the escrow agent identified in the Joint Escrow

Instructions attached hereto as Annex III (the "Joint Escrow Instructions").

(viii) "Escrow Funds" means the Purchase Price delivered to the Escrow Agent as

contemplated by Sections 1(c) and (d) hereof.

(ix) "Escrow Property" means the Escrow Funds and the Certificates delivered to

the Escrow Agent as contemplated by Section 1(c) hereof.

(x) "Finder" means Baker Consulting Services, Inc.

(xi) "Holder" means the Person holding the relevant Securities at the relevant

time.

(xii) "Last Audited Date" means December 31, 2003.

(xiii) "Material Adverse Effect" means an event or combination of events, which

individually or in the aggregate, would reasonably be expected to (w) adversely

affect the legality, validity or enforceability of the Securities or any of the

Transaction Agreements, (x) have or result in a material adverse effect on the

results of operations, assets, prospects, or condition (financial or otherwise)

of the Company and its subsidiaries, taken as a whole, (y) adversely impair the

Company's ability to perform fully on a timely basis its obligations under any

of the Transaction Agreements or the transactions contemplated thereby, or (z)

materially and adversely affect the value of the rights granted to the Purchaser

in the Transaction Agreements.

(xiv) "Person" means any living person or any entity, such as, but not

necessarily limited to, a corporation, partnership or trust.

<PAGE>

(xv) "Principal Trading Market" means The Over the Counter Bulletin Board.

(xvi) "Purchaser Control Person" means each director, executive officer,

promoter, and such other Persons as may be deemed in control of the relevant

Purchaser pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

(xvii) "Registrable Securities" has the meaning set forth in the Registration

Rights Agreement, in the form annexed hereto as Annex IV, as executed by each

Purchaser and the Company simultaneously with the execution of this Agreement.

(xviii) "Registration Rights Agreement" means the Registration Rights Agreement.

(xix) "Registration Statement" has the meaning set forth in the Registration

Rights Agreement.

(xx) "Securities" means the Shares and the Warrants.

(xxi) "State of Incorporation" means Nevada.

(xxii) "Trading Day" means any day during which the Principal Trading Market

shall be open for business.

(xxiii) "Transaction Agreements" means this Securities Purchase Agreement, the

Common Stock Certificate, the Joint Escrow Instructions, the Registration Rights

Agreement, and the Warrants and includes all ancillary documents referred to in

those agreements.

(xxiv) "Warrant Shares" means the shares of Common Stock issuable upon exercise

of the Warrants.

(i) On each Installment Payment Date, the Purchasers shall pay the Purchase

Price by delivering immediately available good funds in United States Dollars to

the Escrow Agent.

(ii) No later than on each Installment Payment Date, but in any event promptly

following payment by the Purchaser to the Escrow Agent of each Installment

Payment, the Company shall deliver the Certificates, each duly executed on

behalf of the Company and issued in the name of the Purchaser, to the Escrow

Agent. The Common Stock Certificate on the first Installment Payment Date shall

be for Four Hundred Forty Four Thousand Four Hundred Forty Four (444,444)

Shares; the Common Stock Certificate for the second Installment Payment Date

shall be for Four Hundred Forty Four Thousand Four Hundred Forty Four (444,444)

Shares; and the Common Stock Certificate for the third Installment Payment Date

shall be for Four Hundred Forty Four Thousand Four Hundred Forty Five (444,445)

Shares.

(iii) By signing this Agreement, each of the Purchaser and the Company, subject

to acceptance by the Escrow Agent, agrees to all of the terms and conditions of,

and becomes a party to, the Joint Escrow Instructions, all of the provisions of

which are incorporated herein by this reference as if set forth in full.

(d) Method of Payment. Payment into escrow of the Installment Payment shall

be made by wire transfer of funds to:

<PAGE>

McLaughlin & Stern, LLP

260 Madison Avenue

New York, NY 10016

Attn: Steven W. Schuster

pursuant to the wiring instructions provided in the Joint Escrow Instructions.

(2) PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;

INDEPENDENT INVESTIGATION.

Each Purchaser represents and warrants to, and covenants and agrees with,

the Company as follows:

(a) Without limiting Purchaser's right to sell the Shares pursuant to the

Registration Statement or otherwise to sell any of the Securities in compliance

with the 1933 Act, the Purchaser is purchasing the Securities and will be

acquiring the Shares for its own account for investment only and not with a view

towards the public sale or distribution thereof and not with a view to or for

sale in connection with any distribution thereof.

(b) The Purchaser is (i) an "accredited investor" as that term is defined

in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of

Rule 501(a)(3), (ii) experienced in making investments of the kind described in

this Agreement and the related documents, (iii) able, by reason of the business

and financial experience of its officers (if an entity) and professional

advisors (who are not affiliated with or compensated in any way by the Company

or any of its Affiliates or selling agents), to protect its own interests in

connection with the transactions described in this Agreement, and the related

documents, and (iv) able to afford the loss of the entire Purchase Price.

shall be made pursuant to registration of the Shares under the 1933 Act or

pursuant to an exemption from registration.

(d) The Purchaser understands that the Securities are being offered and

sold to it in reliance on specific exemptions from the registration requirements

of the 1933 Act and state securities laws and that the Company is relying upon

the truth and accuracy of, and the Purchaser's compliance with, the

representations, warranties, agreements, acknowledgments and understandings of

the Purchaser set forth herein in order to determine the availability of such

exemptions and the eligibility of the Purchaser to acquire the Securities.

(e) The Purchaser and its advisors, if any, have been furnished with all

materials relating to the business, finances and operations of the Company and

materials relating to the offer and sale of the Securities and the offer of the

Shares which have been requested by the Purchaser, including those set forth on

Annex VI hereto. The Purchaser and its advisors, if any, have been afforded the

opportunity to ask questions of the Company and have received complete and

<PAGE>

satisfactory answers to any such inquiries. Without limiting the generality of

the foregoing, the Purchaser has also had the opportunity to obtain and to

review the Company's filings on EDGAR listed on Annex VII hereto (the documents

listed on such Annex VII, to the extent available on EDGAR or otherwise provided

to the Purchaser as indicated on said Annex VII, collectively, the "Company's

SEC Documents").

(f) The Purchaser understands that its investment in the Securities

involves a high degree of risk.

(g) The Purchaser hereby represents that, in connection with its purchase

of the Securities, it has not relied on any statement or representation by the

Company or any of its officers, directors and employees or any of its attorneys

or agents, except as specifically set forth herein.

(h) The Purchaser understands that no United States federal or state agency

or any other government or governmental agency has passed on or made any

recommendation or endorsement of the Securities.

(i) This Agreement and the other Transaction Agreements to which the

Purchaser is a party, and the transactions contemplated thereby, have been duly

and validly authorized, executed and delivered on behalf of the Purchaser and

are valid and binding agreements of the Purchaser enforceable in accordance with

their respective terms, subject as to enforceability to general principles of

equity and to bankruptcy, insolvency, moratorium and other similar laws

affecting the enforcement of creditors' rights generally.

(j) The Purchaser has taken no action which would give rise to any claim by

any Person for brokerage commission, finder's fees or similar payments by the

Company relating to this Agreement or the transactions contemplated hereby. The

Company shall have no obligation with respect to such fees or with respect to

any claims made by or on behalf of other Persons for fees of a type contemplated

in this paragraph that may be due in connection with the transactions

contemplated hereby. The Purchaser shall indemnify and hold harmless each of the

Company, its employees, officers, directors, agents, and partners, and their

respective Affiliates, from and against all claims, losses, damages, costs

(including the costs of preparation and attorney's fees) and expenses suffered

in respect of any such claimed or existing fees, as and when incurred.

(k) The Purchaser hereby covenants and warrants that, between the Closing

Date and the date on which he or she no longer holds any of the Securities,

Purchaser will not engage in any hedging transactions or shorting transactions

in any securities of the Company, including the Securities.

l. The Purchasers hereby covenant and warrant that they are not acting

as a "group" for purposes of Section 13 of the Securities Exchange Act of

1934.

(3) COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to

the Purchaser as of the date hereof and as of the Closing Date that, except as

otherwise provided in the Annex VI hereto or in the Company's SEC Documents:

<PAGE>

(a) Rights of Others Affecting the Transactions. There are no preemptive

rights of any shareholder of the Company, as such, to acquire the Shares or the

Warrants. No party has a currently exercisable right of first refusal which

would be applicable to any or all of the transactions contemplated by the

Transaction Agreements.

(b) Status. The Company is a corporation duly organized, validly existing

and in good standing under the laws of the State of Incorporation and has the

requisite corporate power to own its properties and to carry on its business as

now being conducted. The Company is duly qualified as a foreign corporation to

do business and is in good standing in each jurisdiction where the nature of the

business conducted or property owned by it makes such qualification necessary,

other than those jurisdictions in which the failure to so qualify would not have

or result in a Material Adverse Effect. The Company has registered its stock and

is obligated to file reports pursuant to Section 12 or Section 15(d) of the

Securities Exchange Act of 1934, as amended (the "1934 Act"). The Common Stock

is listed and quoted on the Principal Trading Market. The Company has received

no notice, either oral or written, with respect to the continued eligibility of

the Common Stock for such listing and quotation on the Principal Trading Market,

and the Company has maintained all requirements on its part for the continuation

of such listing and quotation.

of (i) 100,000,000 shares of Common Stock, $.001 par value per share, of which

approximately 13,666,558 shares are outstanding as of June 21, 2004, and (ii)

25,000,000 shares of Preferred Stock, $.001 par value per share, of which no

shares are outstanding as of the date hereof. As of June 21, 2004, there were

17,867,599 shares of Common Stock outstanding on a fully diluted basis,

excluding however the shares of Common Stock which would have been issued upon

the conversion of the Company's 8% Convertible Debentures. All issued and

outstanding shares of Common Stock have been duly authorized and validly issued

and are fully paid. The Company has sufficient authorized and unissued shares of

Common Stock as may be necessary to effect the issuance of the Securities. The

Securities have been duly authorized and, when issued, in accordance with their

terms, will be duly and validly issued, fully paid and non-assessable and,

except to the extent, if any, provided by the law of the State of Incorporation,

will not subject the Holder thereof to personal liability by reason of being

such Holder.

(d) Transaction Agreements and Stock. This Agreement and each of the other

Transaction Agreements, and the transactions contemplated thereby, have been

duly and validly authorized by the Company, this Agreement has been duly

executed and delivered by the Company and this Agreement is, and the

Certificates and each of the other Transaction Agreements, when executed and

delivered by the Company, will be, valid and binding agreements of the Company

enforceable in accordance with their respective terms, subject as to

enforceability to general principles of equity and to bankruptcy, insolvency,

moratorium, and other similar laws affecting the enforcement of creditors'

rights generally.

<PAGE>

(e) Non-contravention. The execution and delivery of this Agreement and

each of the other Transaction Agreements by the Company, the issuance of the

Securities, and the consummation by the Company of the other transactions

contemplated by this Agreement, the Certificates and the other Transaction

Agreements do not and will not conflict with or result in a breach by the

Company of any of the terms or provisions of, or constitute a default under (i)

the certificate of incorporation or by-laws of the Company, each as currently in

effect, (ii) any indenture, mortgage, deed of trust, or other material agreement

or instrument to which the Company is a party or by which it or any of its

properties or assets are bound, including any listing agreement for the Common

Stock except as herein set forth, or (iii) to its knowledge, any existing

applicable law, rule, or regulation or any applicable decree, judgment, or order

of any court, United States federal or state regulatory body, administrative

agency, or other governmental body having jurisdiction over the Company or any

of its properties or assets, except where such conflict, breach or default which

would not have or result in a Material Adverse Effect.

(f) Approvals. No authorization, approval or consent of any court,

governmental body, regulatory agency, self-regulatory organization, or stock

exchange or market or the shareholders of the Company is required to be obtained

by the Company for the issuance and sale of the Securities to the Purchaser as

contemplated by this Agreement, except such authorizations, approvals and

consents that have been obtained.

(g) Filings. None of the Company's SEC Documents contained, at the time

they were filed, any untrue statement of a material fact or omitted to state any

material fact required to be stated therein or necessary to make the statements

made therein in light of the circumstances under which they were made, not

misleading. Since March 1, 2002, the Company has timely filed all requisite

forms, reports and exhibits thereto required to be filed by the Company with the

SEC.

(h) Absence of Certain Changes. Since the Last Audited Date, there has been

no material adverse change and no Material Adverse Effect, except as disclosed

in the Company's SEC Documents. Since the Last Audited Date, except as provided

in the Company's SEC Documents, the Company has not (i) incurred or become

subject to any material liabilities (absolute or contingent) except liabilities

incurred in the ordinary course of business consistent with past practices; (ii)

discharged or satisfied any material lien or encumbrance or paid any material

obligation or liability (absolute or contingent), other than current liabilities

paid in the ordinary course of business consistent with past practices; (iii)

declared or made any payment or distribution of cash or other property to

shareholders with respect to its capital stock, or purchased or redeemed, or

made any agreements to purchase or redeem, any shares of its capital stock; (iv)

sold, assigned or transferred any other tangible assets, or canceled any debts

or claims, except in the ordinary course of business consistent with past

practices; (v) suffered any substantial losses or waived any rights of material

value, whether or not in the ordinary course of business, or suffered the loss

of any material amount of existing business; (vi) made any changes in employee

<PAGE>

compensation, except in the ordinary course of business consistent with past

practices; or (vii) experienced any material problems with labor or management

in connection with the terms and conditions of their employment.

(i) Full Disclosure. There is no fact known to the Company (other than

general economic conditions known to the public generally or as disclosed in the

Company's SEC Documents) that has not been disclosed in writing to the Purchaser

that would reasonably be expected to have or result in a Material Adverse

Effect.

(j) Absence of Litigation. There is no action, suit, proceeding, inquiry or

investigation before or by any court, public board or body pending or, to the

knowledge of the Company, threatened against or affecting the Company before or

by any governmental authority or nongovernmental department, commission, board,

bureau, agency or instrumentality or any other person, wherein an unfavorable

decision, ruling or finding would have a Material Adverse Effect or which would

adversely affect the validity or enforceability of, or the authority or ability

of the Company to perform its obligations under, any of the Transaction

Agreements. The Company is not aware of any valid basis for any such claim that

(either individually or in the aggregate with all other such events and

circumstances) could reasonably be expected to have a Material Adverse Effect.

There are no outstanding or unsatisfied judgments, orders, decrees, writs,

injunctions or stipulations to which the Company is a party or by which it or

any of its properties is bound, that involve the transaction contemplated herein

or that, alone or in the aggregate, could reasonably be expect to have a

Material Adverse Effect.

(k) Absence of Certain Company Control Person Actions or Events. None of

the following has occurred during the past ten (10) years with respect to a

Company Control Person:

(1) A petition under the federal bankruptcy laws or any state

insolvency law was filed by or against, or a receiver, fiscal agent or

similar officer was appointed by a court for the business or property of

such Company Control Person, or any partnership in which he was a general

partner at or within two years before the time of such filing, or any

corporation or business association of which he was an executive officer at

or within two years before the time of such filing;

(2) Such Company Control Person was convicted in a criminal proceeding

or is a named subject of a pending criminal proceeding (excluding traffic

violations and other minor offenses);

(3) Such Company Control Person was the subject of any order, judgment

or decree, not subsequently reversed, suspended or vacated, of any court of

competent jurisdiction, permanently or temporarily enjoining him from, or

otherwise limiting, the following activities:

<PAGE>

(A) acting, as an investment advisor, underwriter, broker or

dealer in securities, or as an affiliated person, director or employee

of any investment company, bank, savings and loan association or

insurance company, as a futures commission merchant, introducing

broker, commodity trading advisor, commodity pool operator, floor

broker, any other Person regulated by the Commodity Futures Trading

Commission ("CFTC") or engaging in or continuing any conduct or

practice in connection with such activity;

(B) engaging in any type of business practice; or

sale of any security or commodity or in connection with any violation

of federal or state securities laws or federal commodities laws;

(4) Such Company Control Person was the subject of any order, judgment

or decree, not subsequently reversed, suspended or vacated, of any federal

or state authority barring, suspending or otherwise limiting for more than

60 days the right of such Company Control Person to engage in any activity

described in paragraph (3) of this item, or to be associated with Persons

engaged in any such activity; or

(5) Such Company Control Person was found by a court of competent

jurisdiction in a civil action or by the CFTC or SEC to have violated any

federal or state securities law, and the judgment in such civil action or

finding by the CFTC or SEC has not been subsequently reversed, suspended,

or vacated.

(l) Prior Issues. During the twelve (12) months preceding the date hereof,

the Company has not issued any stock option grants, convertible securities or

any shares of its Common Stock, except as provided in Annex VI hereto or the

Company's SEC Documents.

(m) No Undisclosed Liabilities or Events. The Company has no liabilities or

obligations other than those disclosed in the Transaction Agreements or the

Company's SEC Documents or those incurred in the ordinary course of the

Company's business since the Last Audited Date, or which individually or in the

aggregate, do not or would not have a Material Adverse Effect. No event or

circumstances has occurred or exists with respect to the Company or its

properties, business, operations, condition (financial or otherwise), or results

of operations, which, under applicable law, rule or regulation, requires public

disclosure or announcement prior to the date hereof by the Company but which has

not been so publicly announced or disclosed. There are no proposals currently

under consideration or currently anticipated to be under consideration by the

Board of Directors or the executive officers of the Company which proposal would

(X) change the certificate of incorporation or other charter document or by-laws

<PAGE>

of the Company, each as currently in effect, with or without shareholder

approval, which change would reduce or otherwise adversely affect the rights and

powers of the shareholders of the Common Stock or (Y) materially or

substantially change the business, assets or capital of the Company, including

its interests in subsidiaries.

(n) No Default. Neither the Company nor any of its subsidiaries is in

default in the performance or observance of any material obligation, agreement,

covenant or condition contained in any material indenture, mortgage, deed of

trust or other material instrument or agreement to which it is a party or by

which it or its property is bound.

(o) No Integrated Offering. Neither the Company nor any of its Affiliates

nor any person acting on its or their behalf has, directly or indirectly, at any

time since November 30, 2003, made any offer or sales of any security or

solicited any offers to buy any security under circumstances that would

eliminate the availability of the exemption from registration under Regulation D

in connection with the offer and sale of the Securities as contemplated hereby.

(p) Dilution. The number of Shares issuable upon conversion of the Warrants

may have a dilutive effect on the ownership interests of the other shareholders

(and Persons having the right to become shareholders) of the Company. The

Company's executive officers and directors have studied and fully understand the

nature of the Securities being sold hereby and recognize that they have such a

potential dilutive effect. The Board of Directors of the Company has concluded,

in its good faith business judgment, that such issuance is in the best interests

of the Company. The Company specifically acknowledges that its obligation to

issue the Warrant Shares upon exercise of the Warrants is binding upon the

Company and enforceable regardless of the dilution such issuance may have on the

ownership interests of other shareholders of the Company, and the Company will

honor every Notice of Exercise (as contemplated by the Warrants), unless the

Company is subject to an injunction (which injunction was not sought by the

Company) prohibiting the Company from doing so.

(q) Fees to Brokers, Finders and Others. Except for payment of fees to the

Finder, payment of which is the sole responsibility of the Company, the Company

has taken no action which would give rise to any claim by any Person for

brokerage commission, finder's fees or similar payments by Purchaser relating to

this Agreement or the transactions contemplated hereby. Purchaser shall have no

obligation with respect to such fees or with respect to any claims made by or on

behalf of other Persons for fees of a type contemplated in this paragraph that

may be due in connection with the transactions contemplated hereby. The Company

shall indemnify and hold harmless each Purchaser, its employees, officers,

directors, agents, and partners, and their respective Affiliates, from and

against all claims, losses, damages, costs (including the costs of preparation

and attorney's fees) and expenses suffered in respect of any such claimed or

existing fees, as and when incurred.

(r) Certain New Transactions. For purposes of this Agreement, "New

Transaction" means the offer or sale of new common stock in a capital raising or

other financing transaction by or on behalf of the Company to a new investor in

<PAGE>

a transaction offered or consummated after the date hereof; provided, however,

that it is specifically understood that the term "New Transaction" does not

include (i) the sale of the Securities to the Purchasers, (ii) the issuance of

Common Stock upon the exercise or conversion of options, warrants, or

convertible securities outstanding at the date hereof or in connection with a

put exercised by the Company pursuant to the terms of an equity line agreement

in effect on the date hereof, (iii) the issuance of options or warrants

hereafter granted to employees or consultants for compensatory purposes or the

issuance of Common Stock upon the exercise of such options or warrants, (iv) the

issuance of Common Stock or securities exercisable for or convertible into

Common Stock in connection with a merger, acquisition or other business

combination or a strategic partnering or joint venture transaction or the

exercise or conversion of such securities, (v) the issuance of Common Stock or

securities exercisable for or convertible into Common Stock in connection with

the settlement of claims which are the subject of law suits, arbitrations and

similar proceedings or the conversion or exercise of such securities, and (vi)

the issuance of warrants to equipment lessors in connection with capital lease

transactions or the exercise of such warrants. If within 180 days of the

effective date of that certain registration statement covering the Registrable

Securities, the Company consummates a New Transaction in which it sells or is

deemed to sell Common Stock or securities exercisable for or convertible into

Common Stock at a lower price than the Shares, or issues warrants with an

exercise price lower than the Warrants, then the Company shall issue additional

shares of Common Stock so that the effective price per share for the Shares

equals the price of the new shares and if the Company issues warrants, the

exercise price of the warrants will be lowered to the price of the new warrants.

s. As of the Closing Date, the Company will have entered into a Securities

Redemption Agreement with the holders of the Company's 8% Convertible

Debentures.

(4) CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

(a) Transfer Restrictions. The Purchaser acknowledges that (1) the

Securities have not been and are not being registered under the provisions of

the 1933 Act and, except as provided in the Registration Rights Agreement or

otherwise included in an effective registration statement, the Shares have not

been and are not being registered under the 1933 Act, and may not be transferred

unless (A) subsequently registered thereunder or (B) the Purchaser shall have

delivered to the Company an opinion of counsel, reasonably satisfactory in form,

scope and substance to the Company, to the effect that the Securities to be sold

or transferred may be sold or transferred pursuant to an exemption from such

registration; (2) any sale of the Securities made in reliance on Rule 144

promulgated under the 1933 Act may be made only in accordance with the terms of

said Rule and further, if said Rule is not applicable, any resale of such

Securities under circumstances in which the seller, or the Person through whom

the sale is made, may be deemed to be an underwriter, as that term is used in

<PAGE>

the 1933 Act, may require compliance with some other exemption under the 1933

Act or the rules and regulations of the SEC thereunder; and (3) neither the

Company nor any other Person is under any obligation to register the Securities

(other than pursuant to the Registration Rights Agreement) under the 1933 Act or

to comply with the terms and conditions of any exemption thereunder.

(b) Restrictive Legend. The Purchaser acknowledges and agrees that, until

such time as the Common Stock has been registered under the 1933 Act as

contemplated by the Registration Rights Agreement and sold in accordance with an

effective Registration Statement or otherwise in accordance with another

effective registration statement, the certificates and other instruments

representing any of the Securities (including the Warrant Shares) shall bear a

restrictive legend in substantially the following form (and a stop-transfer

order may be placed against transfer of any such Securities):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED

FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE

SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY

THAT SUCH REGISTRATION IS NOT REQUIRED.

filings in connection with the sale of the Securities to the Purchaser under any

United States laws and regulations applicable to the Company, or by any domestic

securities exchange or trading market, and to provide a copy thereof to the

Purchaser promptly after such filing.

(d) Reporting Status. So long as the Purchaser beneficially owns any of the

Securities, the Company shall file all reports required to be filed with the SEC

pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable

action under its control to ensure that adequate current public information with

respect to the Company, as required in accordance with Rule 144(c)(2) of the

1933 Act, is publicly available, and shall not terminate its status as an issuer

required to file reports under the 1934 Act even if the 1934 Act or the rules

and regulations thereunder would permit such termination. The Company will take

all reasonable action under its control to maintain the continued listing and

quotation and trading of its Common Stock (including, without limitation, all

Registrable Securities) on the Principal Trading Market or a listing on the

NASDAQ/Small Cap or National Markets and, to the extent applicable to it, will

comply in all material respects with the Company's reporting, filing and other

obligations under the by-laws or rules of the Principal Trading Market and/or

the National Association of Securities Dealers, Inc., as the case may be, at

least through the date which is thirty (30) days after the later of the date on

which all of the Warrants have been exercised or have expired.

(e) Use of Proceeds. The Company shall use the proceeds received hereunder

as follows:

(i) Two Hundred and Eight Thousand Three Hundred and Thirty Three Dollars

($208,333) of each Installment Payment shall be used to redeem the Company's 8%

<PAGE>

Convertible Debentures, with a principal amount of Five Hundred Thousand Dollars

($500,000) and a premium amount of One Hundred Twenty Five Thousand Dollars

($125,000);

(ii) payment of certain fees to the Finder as described below in Section

4(i); and

(iii) the remainder shall be used for general corporate purposes.

(f) Warrants. The Company agrees to issue to the Purchaser on each

Installment Payment Date transferable warrants (the "Warrants") for the purchase

of a number of shares equal to the number of Shares issued on each Installment

Payment Date, each Warrant with an exercise price of $1.00. The Warrants will

expire on the date which is the fifth annual anniversary of each Installment

Payment Date. Each of the Warrants shall be in the form annexed hereto as Annex

VIII, and shall have registration rights as provided in the Registration Rights

Agreement.

(g) Available Shares. The Company shall have at all times authorized and

reserved for issuance, free from preemptive rights, a number of shares (the

"Minimum Available Shares") at least equal to the number of shares issuable upon

exercise of all outstanding Warrants held by all Holders.

(h) Publicity, Filings, Releases, Etc. Each of the parties agrees that it

will not disseminate any information relating to the Transaction Agreements or

the transactions contemplated thereby, including issuing any press releases,

holding any press conferences or other forums, or filing any reports

(collectively, "Publicity"), without giving the other party reasonable advance

notice and an opportunity to comment on the contents thereof. Neither party will

include in any such Publicity any statement or statements or other material to

which the other party reasonably objects. Notwithstanding the foregoing, each of

the parties hereby consents to the inclusion of the text of the Transaction

Agreements in filings made with the SEC.

(i) Finder Fees. The Company shall pay to the Finder a commission in the

form of cash and restricted stock equal in value to ten percent (10%) of the

gross proceeds from the sale of the Common Stock under this Agreement. Such

commission is more fully described in the Broker Commission Agreement between

the Company and the Broker of even date herewith.

j. Attorneys' Fees. The Company shall reimburse the Purchaser for its legal

fees and expenses incurred in connection with the preparation and negotiation of

the documents contemplated by this transaction by paying an aggregate of $15,000

to A.I. International Corporate Holdings Ltd. Other than the amounts

contemplated in the immediately preceding sentence, each party shall pay the

fees and expenses of its advisers, counsel, accountants, and other experts, if

any, and all other expenses incurred by such party incident to the negotiation,

preparation, execution, delivery and performance of this Agreement

(5) TRANSFER AGENT INSTRUCTIONS.

(a) The Company warrants that, with respect to the Securities, other than

the stop transfer instructions to give effect to Section 4(a) hereof, it will

give its transfer agent no instructions inconsistent with instructions to issue

<PAGE>

Common Stock from time to time, including upon exercise of the Warrants in such

amounts as specified from time to time by the Company to the transfer agent,

bearing the restrictive legend specified in Section 4(b) of this Agreement prior

to registration of the Shares under the 1933 Act, registered in the name of the

Purchaser or its nominee and in such denominations to be specified by the

Purchaser in connection with each exercise of the Warrants. Except as so

provided, the Shares shall otherwise be freely transferable on the books and

records of the Company as and to the extent provided in this Agreement and the

Registration Rights Agreement. Nothing in this Section shall affect in any way

the Purchaser's obligations and agreement to comply with all applicable

securities laws upon resale of the Securities. If the Purchaser provides the

Company with an opinion of counsel reasonably satisfactory to the Company that

registration of a resale by the Purchaser of any of the Securities in accordance

with clause (1)(B) of Section 4(a) of this Agreement is not required under the

1933 Act, the Company shall (except as provided in clause (2) of Section 4(a) of

this Agreement) permit the transfer of the Securities and, in the case of the

Warrant Shares, promptly instruct the Company's transfer agent to issue one or

more certificates for Common Stock without legend in such name and in such

denominations as specified by the Purchaser.

(b) Subject to the provisions of this Agreement, the Company will permit

the Purchaser to exercise its right to exercise the Warrants in the manner

contemplated by the Warrants.

Securities, provided the Company's transfer agent is participating in the

Depository Trust Company ("DTC") Fast Automated Securities Transfer program,

upon request of the Holder and its compliance with the provisions contained in

this paragraph, so long as the certificates therefor do not bear a legend and

the Holder thereof is not obligated to return such certificate for the placement

of a legend thereon, the Company shall use its best efforts to cause its

transfer agent to electronically transmit the Common Stock issuable to the

Holder by crediting the account of Holder's Prime Broker with DTC through its

Deposit Withdrawal Agent Commission system.

(6) CLOSING DATE.

(a) The Closing Date shall occur on the date which is the first Trading Day

after each of the conditions contemplated by Sections 7 and 8 hereof shall have

either been satisfied or been waived by the party in whose favor such conditions

run. The first Installment Payment Date will occur simultaneously with the

Closing Date, as provided in Annex I.

(b) Notwithstanding anything to the contrary contained herein, the Escrow

Agent will be authorized to release the Escrow Funds to the Company and to

others and to release the other Escrow Property on the Closing Date and on each

subsequent Installment Payment Date upon satisfaction of the conditions set

forth in Sections 7 and 8 hereof and as provided in the Joint Escrow

Instructions.

(7) CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

<PAGE>

The Purchaser understands that the Company's obligation to sell the Shares

to the Purchaser pursuant to this Agreement on the Closing Date and on each

subsequent Installment Payment Date is conditioned upon:

(a) The execution and delivery of this Agreement, the Joint Escrow

Instructions, the Investor Questionnaire attached hereto as Annex IX and the

Registration Rights Agreement by the Purchaser;

(b) Delivery by the Purchaser to the Escrow Agent of good funds as payment

in full of an amount equal to the Installment Payment due for the Shares in

accordance with Annex I of this Agreement;

and warranties of the Purchaser contained in this Agreement, each as if made on

such date, and the performance by the Purchaser on or before such date of all

covenants and agreements of the Purchaser required to be performed on or before

such date; and

(d) There shall not be in effect any law, rule or regulation prohibiting or

restricting the transactions contemplated hereby, or requiring any consent or

approval which shall not have been obtained.

(8) CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.

The Company understands that the Purchaser's obligation to purchase the

Shares on the Closing Date and on each subsequent Installment Payment Date is

conditioned upon:

(a) The execution and delivery of this Agreement and the other Transaction

Agreements by the Company;

(b) Delivery by the Company to the Escrow Agent of the Certificates in

accordance with this Agreement;

of the representations and warranties of the Company contained in this

Agreement, each as if made on such date, and the performance by the Company on

or before such date of all covenants and agreements of the Company required to

be performed on or before such date;

(d) On the Closing Date and on each subsequent Installment Payment Date,

the Registration Rights Agreement shall be in full force and effect and the

Company shall not be in default thereunder;

(e) On the Closing Date, the Purchaser shall have received an opinion of

counsel for the Company, dated as of the Closing Date (provided, however, that

such counsel shall advise the Escrow Agent in writing after the Closing Date if

the opinion issued on the Closing Date would not be issued on any subsequent

Installment Payment Date), in form, scope and substance reasonably satisfactory

to the Purchaser, substantially to the effect set forth in Annex V attached

hereto;

<PAGE>

(f) There shall not be in effect any law, rule or regulation prohibiting or

restricting the transactions contemplated hereby, or requiring any consent or

approval which shall not have been obtained; and

(g) From and after the date hereof to and including the Closing Date, each

of the following conditions will remain in effect: (i) the trading of the Common

Stock shall not have been suspended by the SEC or on the Principal Trading

Market; (ii) trading in securities generally on the Principal Trading Market

shall not have been suspended or limited; and (iii) no minimum prices shall been

established for securities traded on the Principal Trading Market.

(9) OPTION.

The Purchasers are hereby granted an option (the "Option") to purchase up to an

additional One Million Three Hundred Thirty Three Thousand Three Hundred and

Thirty Three (1,333,333) shares on the same terms and conditions as provided

herein, including the attachment of warrants to the shares and registration

rights. Such Option shall terminate at 5:00 p.m. New York City time on the date

which is the six month anniversary of the final Installment Payment Date.

Notwithstanding the foregoing, the Option shall terminate earlier if any changes

are made to any law, rule or regulation that would prohibit or restrict the

transactions contemplated by the Option, or requiring any consent or approval

which shall not have been obtained.

(10) INDEMNIFICATION.

The Company agrees to indemnify and hold harmless each Purchaser and its

officers, directors, employees, and agents, and each Purchaser Control Person

from and against any losses, claims, damages, liabilities or expenses incurred

(collectively, "Damages"), joint or several, and any action in respect thereof

to which Purchaser, its partners, Affiliates, officers, directors, employees,

and duly authorized agents, and any such Purchaser Control Person becomes

subject to, resulting from, arising out of or relating to any misrepresentation,

breach of warranty or nonfulfillment of or failure to perform any covenant or

agreement on the part of Company contained in this Agreement, as such Damages

are incurred, except to the extent such Damages result primarily from

Purchaser's failure to perform any covenant or agreement contained in this

Agreement or Purchaser's or its officers', directors', employees', agents' or

Purchaser Control Persons' negligence, recklessness or bad faith in performing

its obligations under this Agreement.

(11) JURY TRIAL WAIVER. The Company and the Purchaser hereby waive a trial by

jury in any action, proceeding or counterclaim brought by either of the Parties

hereto against the other in respect of any matter arising out or in connection

with the Transaction Agreements.

(12) GOVERNING LAW: MISCELLANEOUS.

(a) This Agreement shall be governed by and interpreted in accordance with

the laws of the State of New York for contracts to be wholly performed in such

state and without giving effect to the principles thereof regarding the conflict

of laws. The Company and each Purchaser hereby submit to the jurisdiction of any

state court of competent jurisdiction in and for New York County, New York, or

in the United States District Court for the Southern District of New York

sitting at New York City in any action or proceeding arising out of or relating

<PAGE>

to this Agreement and agree that all claims in respect of the action or

proceeding may be heard and determined in any such court; agree not to bring any

action or proceeding arising out of or relating to this Agreement in any other

court; waive any defense of inconvenient forum to the maintenance of any action

or proceeding so brought and waive any bond, surety, or other security that

might be required of any other party with respect thereto; and agree that a

final judgment in any action or proceeding so brought shall be conclusive and

may be enforced by suit on the judgment or in any other manner provided by law

or in equity.

(b) Failure of any party to exercise any right or remedy under this

Agreement or otherwise, or delay by a party in exercising such right or remedy,

shall not operate as a waiver thereof.

successors and assigns of each of the parties hereto.

(d) All pronouns and any variations thereof refer to the masculine,

feminine or neuter, singular or plural, as the context may require.

(e) A facsimile transmission of this signed Agreement shall be legal and

binding on all parties hereto.

(f) This Agreement may be signed in one or more counterparts, each of which

shall be deemed an original.

(g) The headings of this Agreement are for convenience of reference and

shall not form part of, or affect the interpretation of, this Agreement.

(h) If any provision of this Agreement shall be invalid or unenforceable in

any jurisdiction, such invalidity or unenforceability shall not affect the

validity or enforceability of the remainder of this Agreement or the validity or

enforceability of this Agreement in any other jurisdiction.

(i) This Agreement may be amended only by an instrument in writing signed

by the party to be charged with enforcement thereof.

(j) This Agreement supersedes all prior agreements and understandings among

the parties hereto with respect to the subject matter hereof.

(13) NOTICES. Any notice required or permitted hereunder shall be given in

writing (unless otherwise specified herein) and shall be deemed effectively

given on the earliest of:

i) the date delivered, if delivered by personal delivery as against

written receipt therefor or by confirmed facsimile transmission,

ii) the seventh business day after deposit, postage prepaid, in the

United States Postal Service by registered or certified mail, or

<PAGE>

iii) the third business day after mailing by domestic or international

express courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the

following addresses (or at such other addresses as such party may designate by

ten (10) days' advance written notice similarly given to each of the other

parties hereto):

Company: PROVECTUS PHARMACEUTICALS, INC.

at its address at the head of this Agreement

Attn: Tim Scott

Telephone No.: (865) 769-4011

Telecopier No.: (865) 769-4013

with a copy to:

Linda Crouch

Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.

207 Mockingbird Lane

Post Office Box 3038 CRS

Johnson City, TN 37602

Telephone No.: (423) 928-0181

Telecopier No.: (423) 928-5694

Purchaser: To the addresses set forth on the Investor Questionnaires

attached hereto as Annex IX.

with a copy to:

Ezzat Jallad

FCIM Corp.

117 E. 57th Street, Suite 50C

New York, NY 10022

Telephone No.: (212) 332-1335

Escrow Agent: McLaughlin & Stern, LLP

260 Madison Avenue

New York, NY 10016

Attn: Steven W. Schuster

Telephone No.: (212) 448-1100

Telecopier No.: (212) 448-0066

(14) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the

Purchasers' representations and warranties herein shall survive the execution

and delivery of this Agreement and the delivery of the Certificates and the

<PAGE>

payment of the Purchase Price, and shall inure to the benefit of the Purchaser

and the Company and their respective successors and assigns.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly

executed by the Purchasers as of the date set forth below.

A.I. International Corporate Holdings,

Ltd.

Date: June 25 , 2004 By: /s/ Rima Salam

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

Its: Director

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

American Equity Consulting Services,

Inc.

Date: June 28 , 2004 By: /s/ Don Rose

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

Its: President

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

Castlerigg Master Investments, Ltd.

Date: June 25 , 2004 By: /s/ Tim O'Brien

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

Its: CFO of Sandell Asset Management

Corporation as Advisor to

Castlerigg Master Investments, Ltd.

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

As of the date set forth below, the undersigned hereby accepts this Agreement

and represents that the foregoing statements are true and correct and that it

has caused this Securities Purchase Agreement to be duly executed on its behalf.

PROVECTUS PHARMACEUTICALS, INC.

By: /s/ Timothy C. Scott

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

Title: President

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

Date: June 25 , 2004

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

<PAGE>

ANNEX I

PAYMENT SCHEDULE

First Installment Payment Date................. June 25, 2004

Second Installment Payment Date................ July 16, 2004

Third Installment Payment Date................. August 9, 2004

ANNEX I

<PAGE>

ANNEX II

FORM OF COMMON STOCK CERTIFICATE

ANNEX II

<PAGE>

ANNEX III

JOINT ESCROW INSTRUCTIONS

June 25, 2004

Steven W. Schuster

McLaughlin & Stern, LLP

260 Madison Avenue

New York, NY 10016

Dear Mr. Schuster:

As Escrow Agent for Provectus Pharmaceuticals, Inc., a Nevada corporation (the

"Company"); the "Purchasers" as that term is defined in the Securities Purchase

Agreement (the "Purchase Agreement") dated as of June 25, 2004, to which a copy

of these Joint Escrow Instructions is attached as Annex III; and the "Holders,"

as that term is defined in the Securities Redemption Agreement dated as of June

25, 2004 (the "Redemption Agreement"), to which a copy of these Joint Escrow

Instructions is attached as Annex II, you are hereby authorized and directed to

hold the documents delivered to you pursuant to the terms of the Purchase

Agreement and the Redemption Agreement, in accordance with the instructions set

forth below. All terms not defined herein shall have the meanings ascribed to

them in the Purchase Agreement and the Redemption Agreement.

(15) On the Closing Date, you are directed to:

(a) Accept via wire transfer from the Purchasers the first Installment

Payment of Three Hundred Thirty Three Thousand Three Hundred Thirty

Two Dollars ($333,332) in the following amounts:

Purchaser Amount

A.I. International Corporate Holdings, Ltd. $166,666

("A.I. International")

Castlerigg Master Investments, Ltd. $166,666

("Castlerigg")

(b) Accept the Debentures from the Holders;

Redemption Installment Payment in the amount of Two Hundred Eight

Thousand Three Hundred Thirty Three Dollars ($208,333) to the Holders

pursuant to the following wire instructions:

ANNEX III

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates