EXHIBIT 4.8
D U N C A N C A P I T A L G R O U P L L C 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 Tel
(000) 000-0000 Fax
xxx.xxxxxxxxxxxxx.xxx
March 1, 2005
Provectus Pharmaceuticals, Inc.
0000 Xxx Xxxxx Xxxxxxx
Xxxxx X
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx, CFO
RE: ADVISORY AGREEMENT
Dear Xx. Xxxxxxxxx:
This letter confirms the terms upon which Provectus Pharmaceuticals, Inc.,
together with all subsidiaries, affiliates, successors and other controlled
units, either existing or formed subsequent to the execution of this engagement
(the "Company"), engages Xxxxxx Capital Group LLC ("Xxxxxx Group"), to act as
its financial advisor and consultant for the Company in connection with (i)
advising and structuring a 2.0 - 3.5 million financing (the "Financing"), (ii)
advising the Company on restructuring of certain of the Company's obligations
with Cornell Capital (the "Restructuring"), and (iii) assist the Company in
preparing for a follow-on offering and in engaging an underwriter for such a
purpose (the "Follow-on Offering").
1. Scope of Engagement.
The Company hereby engages Xxxxxx Group (the "Engagement") on a "best
efforts" basis to provide financial advice and recommendations to the
Company in connection with the Financing.
2. Scope of Work; Parameters
In connection with the Engagement:
- Xxxxxx Group will familiarize itself to the extent it deems
appropriate with the business, operations, financial condition and
prospects of the Company;
- Xxxxxx Group will assist the Company and its counsel in structuring,
negotiating and finalizing the Financing;
- Xxxxxx Group will assist in restructuring the Company's equity line of
credit and Convertible Debentures held by Cornell Capital; and
- Xxxxxx Group will advise the Company on positioning itself fora
follow-on offering and introduce the Company to and assist with the
negotiations for potential underwriters.
3. Company Responsibilities, Representations and Warranties.
In connection with the Engagement:
- The Company agrees to cooperate with Xxxxxx Group and will furnish to
Xxxxxx Group all information and data concerning the Company (the
"Information") which Xxxxxx Group reasonably deems appropriate for
purposes of rendering its services hereunder, and will provide Xxxxxx
Group access to its officers, directors, employees and advisors.
- The Company represents and warrants to Xxxxxx Group that all
Information included or incorporated by reference in any documents or
otherwise made available to Xxxxxx Group by the Company to be
communicated to parties in connection with the Financing: (a) will be
complete and correct and does not and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and (b) any
projected financial information or other forward-looking information
which the Company provides to Xxxxxx Group will be made by the Company
in good faith, based on management's best estimates at the time and
based on facts and assumptions which the Company believed were
reasonable at the time.
- The Company agrees to promptly notify Xxxxxx Group, in writing, if the
Company believes that any Information that was previously provided to
Xxxxxx Group has become materially misleading or inaccurate in any
way.
- The Company acknowledges and agrees that, in rendering its services
hereunder, Xxxxxx Group will be using and relying on the Information
(and information available from public sources and other sources
deemed reliable by Xxxxxx Group) without independent investigation or
verification thereof or independent appraisal or evaluation of the
Company or its business or assets, or any other party to the
Financing. Xxxxxx Group has no responsibility for the accuracy or
completeness of any information, regarding the Company.
- The Company agrees it is solely responsible for the decision to pursue
the Financing and acknowledges that Xxxxxx Group is not responsible
for the due diligence, legal, regulatory, compliance and success or
failure of the Financing.
- Any advice rendered by Xxxxxx Group during the Engagement or in
meetings with the Company or its Board of Directors, as well as any
written materials provided by Xxxxxx Group, are intended solely for
the benefit and confidential use of the Company and will not be
reproduced, summarized, described or referred to or given to any other
person for any purpose without Xxxxxx Group's prior written consent,
except as required by law, legal process or the rules of any
regulatory agency.
4. Fees.
4.1 Advisory Fee. As compensation for its advisory services rendered
in connection with the Financing, Xxxxxx Group will be paid a cash advisory
fee equal to $30,000, payable at the rate of $5,000 per month for the next
six months commencing on the date hereof ("Advisory Fee"). To the extent
that Xxxxxx Group has used any other agents or broker dealers in
consummating the Financing, Xxxxxx Group will pay them directly or at
Xxxxxx Group's option, the Company will pay such agent and reduce Xxxxxx
Group's Transaction Advisory Fee by such amount.
4.2 Warrants. Additionally, as compensation for its advisory services
rendered in connection with the Financing, Xxxxxx Group will receive
warrants to purchase 750,000 shares of common stock. The warrants will have
an exercise price equal to the market price at the time this agreement is
executed and the other half of the warrants will have an exercise price
equal to 125% of the market price at the time this agreement is executed.
In addition, the warrants shall have a vesting schedule as follows: 100,000
vest upon execution of this agreement, 500,000 vest upon the completion of
the Financing and the remaining 150,000 vest upon the signing of a contract
for a follow-on offering by an underwriter. In the event that any of the
events do not occur, then the relevant warrants will not vest. The terms of
the warrants shall be set forth in one or more agreements in form and
substance reasonably satisfactory to Xxxxxx Group and the Company. The
warrant agreements shall contain customary terms, including without
limitation, provisions for "cashless" exercise, change of control, price
based anti-dilution and customary registration rights.
4.3 Financing Fee. The Company shall pay Xxxxxx Group an advisory fee
of $150,000. Such payment shall be due upon the completion of the
Financing. However, if the total amount paid to all advisory, finders and
bankers by the Company in connection with the current round of contemplated
financing (including amount that is restructured) exceeds 10% of the total
amount raised, Xxxxxx Group will reduce its fee such that the total
payments made by the Company equals 10% of the total amount raised.
4.4 Follow-on Offering. During the term of this Agreement and for a
period of twelve (12) months following the termination of this Agreement,
if a Follow-On Offering is completed by the Company, a fee of $250,000 cash
shall be due and payable to Xxxxxx Group.
4.5 Merger, Acquisition or Other Related Transaction. During the term
of this Agreement and for a period of twelve (12) months following the
termination of this Agreement, if a merger, acquisition or other related
transaction is completed by the Company, Xxxxxx Group and the Company will
negotiate a mutually acceptable fee to be paid to Xxxxxx Group as long as
Xxxxxx Group referred the relevant parties.
5. Expenses.
The Company will reimburse Xxxxxx Group for all out-of-pocket expenses
reasonably incurred by it in connection with its Engagement hereunder,
including reasonable fees and expenses of its counsel and any other
independent experts retained by Xxxxxx Group (and any retainers related
thereto); provided, however, that without the prior written consent of the
Company, all fees and expenses shall not exceed $25,000. Subject to the
provisions of Section 8, all such fees and expenses referred to above shall
be paid to Xxxxxx Group whether or not the Financing is consummated. Such
out-of-pocket expense reimbursement will be payable promptly upon
submission by Xxxxxx Group of statements to the Company.
6. Scope of Responsibility.
Neither Xxxxxx Group nor any of its affiliates (nor any of their
respective control persons, directors, officers, employees or agents) shall
be liable to the Company or to any other person claiming through the
Company for any claim, loss, damage, liability, cost or expense suffered by
the Company or any such person arising out of or related to Xxxxxx Group's
Engagement hereunder except for a claim, loss or expense that arises solely
out of or is based solely upon any action or failure to act by Xxxxxx
Group, other than an action or failure to act undertaken at the request or
with the consent of the Company, that is found in a final judicial
determination to constitute bad faith, willful misconduct or gross
negligence on the part of Xxxxxx Group. The Company understands that Xxxxxx
Group is not a broker-dealer and will not be performing any services that
may only be performed by a registered broker-dealer.
1
7. Indemnification.
Since Xxxxxx Group will be acting on behalf of the Company in
connection with its Engagement, the Company agrees to indemnify Xxxxxx
Group as set forth in Exhibit A to this Agreement.
8. Termination.
The term of this Agreement is one (1) year from the date hereof;
provided, however, that Xxxxxx Group's Engagement hereunder may be
terminated, with or without cause, by either the Company or Xxxxxx Group
upon 30 days prior written notice to the other party; provided, further,
that subject to Section 8(b), such termination will not affect Xxxxxx
Group's right to (i) expense reimbursement under Section 5, (ii) receipt of
payment of any fees or compensation pursuant to Section 4, (iii) the
indemnification contemplated by Section 7 above, and (iv) any remaining
compensation due under this Agreement.
9. Intentionally Omitted
10. Governing Law; Jurisdiction; Waiver of Jury Trial.
10.1 This Agreement will be deemed made in New York and will be
governed by the laws of the State of New York without regard to the
conflict of law principles contained therein. The Company and Xxxxxx Group
irrevocably submit to the jurisdiction of the United States District Court
for the Southern District of New York or any court of the State of New
York, in each case located in New York County, New York, for the purpose of
any suit, action or other proceeding arising out of this Agreement, or any
of the agreements or transactions contemplated hereby, which is brought by
or against the Company or Xxxxxx Group. Each of the Company (and, to the
extent permitted by law, on behalf of the Company's equity holders and
creditors) and Xxxxxx Group hereby knowingly, voluntarily and irrevocably
waive any right it may have to a trial by jury in respect of any claim
based upon, arising out of or in connection with this Agreement and the
transactions contemplated hereby.
10.2 Any dispute arising hereunder, if not settled by mutual
agreement, shall, at Xxxxxx Group's option, and, upon written notice by
Xxxxxx Group to the Company, be settled by final and binding arbitration in
New York, New York. The arbitration shall be conducted in accordance with
the Commercial Dispute Resolution Procedures and Rules of the American
Arbitration Association ("AAA Rules") by a single disinterested arbitrator
appointed in accordance with such AAA Rules.
10.3 The arbitrator shall have authority to award relief under legal
or equitable principles, including interim or preliminary relief, and to
allocate responsibility for the costs of the arbitration and to award
recovery of attorneys' fees and expenses in such manner as is determined by
the arbitrators.
10.4 Judgment upon the award rendered by the arbitrators may be
entered in any court having personal and subject matter jurisdiction. Each
party hereby submits to the in personal and subject matter jurisdiction of
the federal and state courts in the County of New York for the purpose of
confirming any such award and entering judgment thereon.
All proceedings under Sections 10.3 through 10.6 and all evidence given or
discovered pursuant hereto, shall be maintained in confidence by both
parties, except as required by law.
2
11. No Rights in Equityholders, Creditors.
This Agreement does not create, and will not be construed as creating,
rights enforceable by any person or entity not a party hereto, except those
entitled thereto by virtue of Section 7 herein. The Company acknowledges
and agrees that (a) Xxxxxx Group will act as an independent contractor and
is being retained solely to assist the Company in its efforts to help with
a possible Financing, and that, Xxxxxx Group is not being retained to
advise the Company on, or to express any opinion as to, the wisdom,
desirability or prudence of consummating any Financing; and (b) Xxxxxx
Group is not and will not be construed as a fiduciary of the Company or any
affiliate thereof and will have no duties or liabilities to the equity
holders or creditors of the Company, and affiliates of the Company or any
other person by virtue of this Agreement and the retention of Xxxxxx Group
hereunder, all of which duties and liabilities are hereby expressly waived.
Neither equity holders nor creditors of the Company are intended
beneficiaries hereunder. The Company confirms that it will rely on its own
counsel, accountants and other similar expert advisors for legal,
accounting, tax and other similar advice.
12. Xxxxxx Group; Other Activities; Public Announcements.
(a) The Company acknowledges that Xxxxxx Group and its affiliates are
in the business of providing financial services and consulting advice to
others. Nothing herein contained shall be construed to limit or restrict
Xxxxxx Group in conducting such business with respect to others, or in
rendering such advice to others, except as such advice may relate to
matters relating to the Company's business and properties.
(b) Except as required by law or any regulatory agency, neither Xxxxxx
Group nor the Company shall make or issue any public announcements or other
communications regarding this Agreement or the Financing without the prior
approval of the other, which consent shall not be unreasonably withheld,
delayed or conditioned.
13. Miscellaneous.
13.1 This Agreement may not be modified or amended except in writing
executed in counterparts, each of which will be deemed an original and all
of which will constitute one and the same instrument.
13.2 This Agreement supersedes all prior agreements between the
parties concerning the subject matter hereof.
13.3 Neither party may assign this Agreement without the prior written
consent of the other party.
13.4 This Agreement can be modified or amended only by a written
instrument signed by both parties.
13.5 If any provision of this Agreement shall for any reason be held
invalid or unenforceable by any court, governmental agency or arbitrator of
competent jurisdiction, such invalidity or unenforceability shall not
affect any other provision hereof, but this Agreement shall be construed as
if such invalid or unenforceable provision had never been contained herein.
13.6 The provisions contained in Sections 3, 4, 5, 7, 10, 11 and 13
shall survive expiration or termination of this Agreement.
13.7 All notices, requests, demands and other communications hereunder
shall be given in writing and shall be (a) personally delivered; (b) sent
by telecopier; (c) sent by an internationally-recognized overnight courier,
or (d) sent to the parties at their respective addresses indicated herein
3
by registered or certified mail, return receipt requested and postage
prepaid. The respective addresses to be used for all such notices, demands
or requests are as follows:
If to the Company,
0000 Xxx Xxxxx Xxxxxxx
Xxxxx X
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx, CFO
Or to such other person or address as the Company shall designate in
writing to the other party.
If to Xxxxxx Group,
Xxxxxx Capital Group LLC
000 Xxxxx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx
with a copy to:
The same address listed above for Xxxxxx Group, Attn: General Counsel.
Such communication shall be deemed delivered upon actual receipt
(provided, that if notice is sent by telecopier it shall be deemed
delivered the next day business after transmission and the sender shall
bear the burden of proof of delivery) or refusal of receipt. Either party
to this Agreement may change its address at any time by giving notice
thereof in accordance with this Section 13.
If the foregoing correctly sets forth our Agreement, please so indicate by
signing below and returning an executed copy to Xxxxxx Capital Group LLC. This
Agreement may be executed by the exchange by facsimile/telecopy or
e-mail/electronic signature between the Parties of signed counterparts of this
Agreement. We look forward to working with you and the rest of the management
team in a long-term relationship that assists the Company in achieving its
business goals.
Sincerely, ACCEPTED AND APPROVED:
Xxxxxx Capital Group LLC Provectus Pharmaceuticals, Inc.
/s/ Xxxxxxx Xxxx /s/ Xxxxx Xxxxxxxxx
------------------------- -------------------------------
Xxxxxxx Xxxx Xxxxx Xxxxxxxxx
President Chief Financial Officer
EXHIBIT A - INDEMNIFICATION PROVISIONS
In connection with our engagement of Xxxxxx Group as our consultant and
advisor, the Company hereby agrees to indemnify and hold Xxxxxx Group and its
affiliates, and the directors, officers, partners, shareholders, members,
employees and agents of Xxxxxx Group and each other person, if any, controlling
Xxxxxx Group or any of its affiliates (collectively the "Indemnified Persons"),
harmless from and against any and all claims, actions, suits, proceedings
(including those of shareholders), damages, liabilities and expenses incurred by
any of them (including, but not limited to, fees and expenses of counsel) which
are (A) related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company, or (ii) any actions taken or omitted to be taken by any Indemnified
Person in connection with the Company's engagement of Xxxxxx Group pursuant to
this Agreement between the Xxxxxx Group and the Company, or (B) otherwise
related to or arising out of Xxxxxx Group's activities on our behalf pursuant to
Xxxxxx Group's engagement under this Agreement, and the Company shall reimburse
any Indemnified Person for all expenses (including, but not limited to, fees and
expenses of counsel) as incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action, suit or proceeding
(collectively a "Claim"), whether or not in connection with pending or
threatened litigation in which any Indemnified Person is a party. The Company
will not, however, be responsible for any Claim which is finally judicially
determined to have resulted exclusively from the gross negligence or willful
misconduct of any person seeking indemnification hereunder. The Company further
agrees that no Indemnified Person shall have any liability to the Company for or
in connection with Xxxxxx Group's engagement under the Agreement except for any
Claim incurred by the Company solely as a direct result of any Indemnified
Person's gross negligence or willful misconduct.
The Company further agrees that it will not, without the prior written
consent of Xxxxxx Group settle, compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim), unless such settlement, compromise or consent
includes a legally binding, unconditional, and irrevocable release of each
Indemnified Person hereunder from any and all liability arising out of such
Claim.
Promptly upon receipt by an Indemnified Person of notice of any complaint
or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
the Company in writing of such complaint or of such assertion or institution,
but failure to so notify the Company shall not relieve the Company from any
obligation it may have hereunder, unless, and only to the extent that, such
failure results in the forfeiture by it of substantial rights and defenses, and
such failure to so notify the Company will not in any event relieve it from any
other obligation or liability it may have to any Indemnified Person otherwise
than under this Agreement. If the Company so elects or is requested by such
Indemnified Person, it will assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the
payment of the fees and expenses of such counsel. In the event, however, that
such Indemnified Person reasonably determines in its sole judgment that having
common counsel would present such counsel with a conflict of interest or such
Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to
those available to the Company, then such Indemnified Person may employ its own
separate counsel to represent or defend it in any such Claim and the Company
shall pay the reasonable fees and expenses of such counsel. Notwithstanding
anything herein to the contrary, if the Company fails timely or diligently to
defend, contest, or otherwise protect against any Claim, the relevant
Indemnified Party shall have the right, but not the obligation, to defend,
4
contest, compromise, settle, assert crossclaims or counterclaims, or otherwise
protect against the same, and shall be fully indemnified by the Company
therefor, including, but not limited to, for the fees and expenses of its
counsel and all amounts paid as a result of such Claim or the compromise or
settlement thereof. In any Claim in which the Company assumes the defense, the
Indemnified Person shall have the right to participate in such defense and to
retain its own counsel therefor at its own expense.
The Company agrees that if any indemnity sought by an Indemnified Person
hereunder is held by a court to be unavailable for any reason, then (whether or
not Xxxxxx Group is the Indemnified Person) the Company and Xxxxxx Group shall
contribute to the Claim for which such indemnity is held unavailable in such
proportion as is appropriate to reflect the relative benefits to the Company, on
the one hand, and Xxxxxx Group, on the other, in connection with Xxxxxx Group's
engagement by the Company under the Agreement, subject to the limitation that in
no event shall the amount of Xxxxxx Group's contribution to such Claim exceed
the amount of fees actually received by Xxxxxx Group from the Company pursuant
to Xxxxxx Group's engagement under the Agreement. The Company hereby agrees that
the relative benefits to it, on the one hand, and Xxxxxx Group, on the other
hand, with respect to Xxxxxx Group's engagement under the Agreement shall be
deemed to be in the same proportion as (a) the total value paid or proposed to
be paid or received by the Company or its stockholders as the case may be,
pursuant to the transaction (whether or not consummated) for which Xxxxxx Group
is engaged to render services bears to (b) the fee paid or proposed to be paid
to Xxxxxx Group in connection with such engagement.
The Company's indemnity, reimbursement and contribution obligations under
this Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that an Indemnified Party may have at law or at
equity.
Should Xxxxxx Group, or any of its directors, officers, partners,
shareholders, members, agents or employees, be required or be requested by the
Company to provide documentary evidence or testimony in connection with any
proceeding arising from or relating to Xxxxxx Group's engagement under the
Agreement, the Company agrees to pay all reasonable expenses (including, but not
limited to, fees and expenses of counsel) in complying therewith and customary
fees for sworn testimony or preparation thereof, payable in advance.
