EXHIBIT 4.5
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY APPLICABLE STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT SUCH REGISTRATION
IS NOT REQUIRED.
SECOND AMENDED AND RESTATED SENIOR SECURED CONVERTIBLE NOTE
$1,185,959 November 26, 2004
FOR VALUE RECEIVED, PROVECTUS PHARMACEUTICALS, INC. (the "Borrower"),
promises to pay to the order of GRYFFINDOR CAPITAL PARTNERS I, L.L.C.
("Lender"), at the Lender's office at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000, or such other place as the holder hereof may from time
to time appoint in writing, in lawful money of the United States of America, the
principal sum of One Million, One Hundred Eighty-Five Thousand, Nine Hundred
Fifty Nine Dollars ($1,185,959), or such lesser principal amount as may be
outstanding hereunder, together with interest payable quarterly in arrears on
the principal balance from time to time unpaid at the rate of eight percent (8%)
per annum (the "Loan Rate") until maturity. From and after the occurrence of an
Event of Default (as hereinafter defined), the outstanding principal amount
hereof shall bear interest at the rate of twelve percent (12%) per annum (the
"Default Rate"). Interest will be computed on the daily principal balance
outstanding during the period from the last payment date to the current payment
date. Interest shall be the product resulting when multiplying the rate of
interest by the principal balance outstanding, dividing by 360, and then
multiplying by the actual number of days interest has accrued.
This Note is issued in substitution for, and in replacement of, that
certain Senior Secured Convertible Note dated November 26, 2002, as amended by
that certain Xxxxxxx and Restated Senior Secured Convertible Note dated January
31, 2003, by the Borrower and payable to the order of Lender in the principal
amount of One Million, Twenty-Five Thousand, Nine Hundred Fifty-Nine Dollars
($1,025,959) (collectively, the "Prior Note"). The replacement of the Prior Note
with this Note shall not be construed (i) to deem paid or forgiven the unpaid
principal amount, or unpaid accrued interest on, the Prior Note outstanding at
the time of replacement or (ii) to release, cancel terminate or otherwise
adversely affect all or any part of any lien, mortgage, deed of trust,
assignment, security interest or other encumbrance heretofore granted to or for
the benefit of the payee of the Prior Note which has not otherwise been
expressly released.
The following is a statement of the rights of Lender under this Note and
the conditions to which this Note and the Borrower are subject, and to which the
Borrower hereby agrees:
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1. Purchase Agreement. This Note is executed and delivered by the Borrower
pursuant to the terms and conditions of the Convertible Secured Promissory
Note and Warrant Purchase Agreement dated as of November 26, 2002, between,
among others, the Borrower and Lender (the "Original Purchase Agreement"),
as amended by Amendment No. 1 to Transaction Documents dated as of November
26, 2004 (the "Purchase Agreement"). This Note is subject to the terms and
conditions of the Purchase Agreement. Any capitalized term used herein and
not otherwise defined herein shall have the meaning given to it in the
Purchase Agreement.
2. Repayment Terms. Subject to Xxxxxx's conversion rights set forth below, the
Borrower shall pay the outstanding principal balance and all accrued and
unpaid interest due hereunder on November 26, 2005 (the "Maturity Date").
Notwithstanding anything to the contrary contained herein, if at any time
prior to the Conversion Start Date (as hereinafter defined), the Borrower shall
fail to make any quarterly payment of interest due hereunder (each, a
"Pre-Conversion Unmatured Interest Default"), the Borrower shall forfeit any
right to pay the amount of such Pre-Conversion Unmatured Interest Default (or
cause any other entity or affiliate of the Borrower, including any guarantor, to
pay such amount) and the outstanding principal amount hereof shall bear interest
at the Default Rate until such time as this Note is repaid in full or the full
amount due under this Note is converted in accordance with the terms herein;
provided, further, that, at any time after the Conversion Start Date, the
Borrower shall fail to make any quarterly payment of interest due hereunder,
such failure shall constitute an Event of Default under Section 8(a) hereof.
3. Warrant Issuance. In consideration of Lender accepting this Note and
extending the Maturity Date as set forth in the Prior Note, Lender shall be
issued a warrant ("Extension Warrant"), which shall provide Lender the
right to purchase Five Hundred Twenty-Five Thousand (525,000) fully paid
nonassessable shares of the Borrower's Common Stock, $0.001 par value per
share ("Common Stock"), at an exercise price of $1.00 per share, subject to
further adjustment and other terms as set forth in the Extension Warrant.
Commencing March 1, 2005, for each calendar month or portion thereof during
which this Note remains unpaid, Borrower shall also issue to Lender (i) a
warrant which provides Lender the right to purchase One Hundred Thousand
(100,000) fully paid nonassessable shares of Borrower's Common Stock at an
exercise price of $1.00 per share, subject to further adjustment and other
terms as set forth in such warrant; and (ii) a warrant which provides
Lender the right to purchase Seventy Five Thousand (75,000) fully paid
nonassessable shares of Borrower's Common Stock, at an exercise price of
$1.25 per share, subject to adjustment and other terms as set forth in such
Warrant (collectively, the "Additional Warrants"). The terms and provisions
of the Additional Warrants shall be the same as the Extension Warrant
except for the number of shares, the Date of Issuance and the Exercise
Price. In no event shall the total warrants issued pursuant to this Section
3 (including the Extension Warrant) grant Lender the right to purchase more
than an aggregate amount of 2,100,000 shares of Borrower's Common Stock.
4. Optional Conversion. Subject to Xxxxxx's conversion right pursuant to
Section 4.1.6 of the Shareholders' Agreement, dated as of November 26,
2002, by and among the Borrower, Lender and certain other shareholders,
commencing on November 26, 2004 (the "Conversion Start Date") through and
including the Maturity Date, Lender, in its sole discretion, shall have the
right to convert the outstanding principal and accrued and unpaid interest
on this Note, in whole or in part, into shares of the Borrower's Common
Stock as follows:
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a) Principal. Lender shall have the right to convert all or any portion
of the outstanding principal amount under this Note into that number
of shares of the Borrower's Common Stock equal to the amount of
principal to be converted divided by the conversion price of
$0.73655655 (the "Principal Shares").
b) Interest. Lender also shall have the right to convert all or any
portion of the accrued and unpaid interest under this Note into that
number of shares of the Borrower's Common Stock equal to the amount of
interest to be converted divided by the conversion price of $0.55 (the
"Interest Shares").
c) Mechanics of Conversion. Before Lender shall be entitled to convert
this Note into the Principal Shares and/or the Interest Shares
(collectively, the "Acquired Securities"), as applicable, Lender shall
surrender this Note, duly endorsed, at the office of the Borrower, and
shall give written notice to the Borrower at its principal corporate
office of the election to convert the same and shall state therein the
name or names in which the certificate or certificates for the
Acquired Securities are to be issued. The Borrower, promptly
thereafter, shall issue and deliver to such persons at the address
specified by Lender, a certificate or certificates for the Acquired
Securities to which the Holder is entitled. Such conversion shall be
deemed to have been made immediately prior to the close of business on
the date of such surrender of this Note, and the persons entitled to
receive the Acquired Securities issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such
Acquired Securities as of such date. No fractional shares shall be
issued upon conversion of the principal and/or interest due under this
Note and the number of Acquired Securities to be issued shall be
rounded up to the nearest whole share.
d) Effect of Reorganization, Reclassification, Consolidation, Merger or
Sale. If at any time while this Note is outstanding there shall be any
reorganization or reclassification of the capital stock of the
Borrower or any consolidation or merger of the Borrower with another
corporation (other than a consolidation or merger in which the
Borrower is the surviving entity and which does not result in any
change in the Common Stock), or any sale or other disposition by the
Borrower of all or substantially all of its assets to any other
corporation, the holder of this Note shall thereafter upon conversion
of this Note be entitled to receive the number of shares of stock or
other securities or property of the Borrower, or of the successor
corporation resulting from such consolidation or merger, as the case
may be, to which the Acquired Securities (and any other securities and
property) of the Borrower, deliverable upon the exercise of the
conversion rights under this Note, would have been entitled upon such
reorganization, reclassification of capital stock, consolidation,
merger, sale or other disposition if this Note had been converted
immediately prior to such reorganization, reclassification of capital
stock, consolidation, merger, sale or other disposition. In any such
case, appropriate adjustment (as determined in good faith by the Board
of Directors of the Borrower) shall be made in the application of the
provisions set forth in this Note with respect to the rights and
interests thereafter of the holder of this Note to the end that the
provisions set forth in this Note (including those relating to
adjustments of the number of shares issuable upon the conversion of
this Note) shall thereafter be applicable, as near as reasonably may
be, in relation to any shares or other property thereafter deliverable
upon the conversion hereof as if this Note had been converted
immediately prior to such reorganization, reclassification of capital
stock, consolidation, merger, sale or other disposition and the holder
hereof had carried out the terms of the exchange as provided for by
such reorganization, reclassification of capital stock, consolidation
or merger. The Borrower shall not effect any such reorganization,
consolidation or merger unless, upon or prior to the consummation
thereof, the successor corporation shall assume by written instrument
the obligation to deliver to the holder hereof such shares of stock,
securities, cash or property as such holder shall be entitled to
receive in accordance with the foregoing provisions.
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e) Effect of Stock Dividends, Splits, Etc. If the Borrower shall at any
time after the date hereof fix a record date for the subdivision,
split-up or stock dividend of shares of its Common Stock, then,
concurrently with the effectiveness of such subdivision, split-up or
dividend, the number of shares of the Borrower's Common Stock issuable
on conversion of this Note shall be increased in proportion to such
increase in outstanding shares of the Borrower's Common Stock.
f) Prior Notice as to Certain Events. In case at any time:
(i) the Borrower shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class
or any other rights; or
(ii) there shall be any reorganization or reclassification of the
capital stock of the Borrower, or consolidation or merger of the
Borrower with another corporation or a sale or disposition of all
or substantially all its assets; or
(iii)there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Borrower;
then, in each of said cases, the Borrower shall give prior written
notice, by first class mail, postage prepaid, addressed to the holder
of this Note at the address of such holder as shown on the books of
the Borrower, of the date on which (A) the books of the Borrower shall
close or a record shall be taken for such stock dividend, distribution
or subscription rights or (B) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up
shall take place, as the case may be. Such notice also shall specify
the date as of which the holders of record of the Borrower's Common
Stock shall participate in said stock dividend, distribution or
subscription rights or shall be entitled to exchange their Common
Stock of Borrower for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Such
written notice shall be given at least ten (10) days prior to the
action in question and not less than ten (10) days prior to the record
date or the date on which the Borrower's transfer books are closed in
respect thereto.
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g) Reservation of Common Stock. The Borrower will at all times after the
date hereof reserve and keep available for issuance upon the
conversions described herein such number of authorized and unissued
shares of the Borrower's Common Stock as will be sufficient to permit
the conversions described herein, and upon such issuance such shares
of the Borrower's Common Stock will be validly issued, fully paid and
nonassessable, and free from all liens and charges with respect to the
issuance thereof.
5. Prepayment. Subject to the terms hereof, the Borrower shall have the right
upon ten (10) days prior written notice to prepay this Note. Upon receipt
of written notice from Borrower of its intention to repay in full the
outstanding principal balance plus all accrued and unpaid interest thereon
hereunder (the "Obligations"), Xxxxxx has ten (10) days to elect (a) to
accept repayment in full of the Obligations or (b) to convert the
Obligations into shares of the Borrower's Common Stock pursuant to the
conversion terms set forth in Section 4 of this Note.
6. Security. This Note is secured by, among other things, the following:
a) a Security Agreement, dated as of November 26, 2002, between the
Borrower and Lender (the "Provectus Security Agreement"), which
encumbers certain collateral described therein;
b) a Stock Pledge Agreement, dated as of November 26, 2002, from the
Borrower in favor of Lender (the "Stock Pledge Agreement") providing
for a pledge of all of the common stock of Xantech Pharmaceuticals,
Inc. ("Xantech");
c) a Trademark Collateral Security Agreement, dated as of November 26,
2002, between Provectus and Lender which encumbers certain collateral
described therein (the "Trademark Security Agreement");
d) a Patent and License Security Agreement, dated as of November 26,
2002, between Provectus and Lender which encumbers certain collateral
described therein (the "Patent Security Agreement");
e) a Copyright Security Agreement, dated as of November 26, 2002, between
Provectus and Lender which encumbers certain collateral described
therein (the "Copyright Security Agreement" and together with the
Patent Security Agreement, the Stock Pledge Agreement, the Trademark
Security Agreement and the Provectus Security Agreement, the "Security
Documents"); and
f) that certain Xxxxxxxx, dated as of November 26, 2002, by Xxxxxxx in
favor of Xxxxxx (the "Guaranty").
The Purchase Agreement, this Note, the Guaranty, the Security Documents and
any and all other agreements presently existing or hereafter entered into in
connection therewith or which evidence and/or secure any indebtedness from the
Borrower to Lender shall hereinafter be collectively referred to as the
"Transaction Documents." Any and all collateral referred to in or granted by the
Security Documents is hereinafter collectively referred to as the "Collateral."
The terms, covenants, conditions, provisions, stipulations and agreements of the
Transaction Documents are hereby made a part of this Note, to the same extent
and with the same effect as if they were fully set forth herein. The Borrower
does hereby covenant to abide by and comply with each and every term, covenant,
condition, provision, stipulation and agreement set forth in the Transaction
Documents.
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The Borrower hereby expressly acknowledges and agrees that all collateral,
security interests, liens and pledges heretofore, under this Note or hereafter
granted to Lender, including, without limitation, such collateral, security
interests, liens and pledges granted under the Security Documents and all
documents executed in connection therewith or referred to or incorporated
therein, extend to and secure all of the Borrower's obligations to Lender, now
existing or hereafter arising including, without limitation, those arising in
connection with this Note, upon the terms set forth in such agreements, all of
which security interests, liens and pledges are hereby ratified, reaffirmed,
confirmed and approved.
The Borrower shall remain liable for the payment of this Note, including
interest, notwithstanding any extensions of time of payment or any indulgence of
any kind or nature that Lender may grant to the Borrower or any subsequent owner
of the Collateral, whether with or without notice to the Borrower, and the
Borrower hereby expressly waives such notice. No release of any or all of the
security given for this obligation shall release any other maker, co-maker,
surety, guarantor, or other party hereto in any capacity. Lender shall not be
required to look first to the Collateral for payment of this Note, but may
proceed against the Borrower in such manner as it deems desirable.
7. Intentionally Omitted.
8. Event of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder:
a) The Borrower shall fail to make any payment of principal of, or
interest on, this Note when due and payable or declared due and
payable (other than any Pre-Conversion Unmatured Interest Payment).
b) The Borrower or Xantech shall fail or neglect to perform, keep or
observe any provision of this Note, the Guaranty, the Security
Documents or any other Transaction Document.
c) Lender shall fail to have an enforceable first priority lien on and
security interest in the Collateral or any default or event of default
occurs under any of the Security Documents.
d) The Borrower or Xantech files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower which remains undismissed or
unstayed for sixty (60) consecutive days, or Xxxxxxxx makes a general
assignment for the benefit of creditors.
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e) Any default by the Borrower or Xantech, as applicable, occurs under
the Purchase Agreement or any other Transaction Document.
Upon the occurrence of any Event of Default, Lender may, in its sole
discretion, do one or more of the following: (i) declare all indebtedness
evidenced by this Note to be immediately due and payable, whereupon all such
indebtedness shall become due and payable, without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by the
Borrower, and/or (ii) continue to exercise any of its conversion rights pursuant
to Section 4 hereof, and/or (iii) exercise any or all of its rights and remedies
available hereunder or under any of the Security Documents, the Guaranty or any
other Transaction Document and applicable law.
9. Replacement. Upon receipt of evidence reasonably satisfactory to the
Borrower (an affidavit of Lender shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Note, and in the
case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Borrower (it being understood that the
written indemnity of Gryffindor Capital Partners I,L.L.C. shall be
sufficient indemnity) or, in the case of any such mutilation upon surrender
of this Note, the Borrower shall (at its expense) execute and deliver in
lieu of such Note, a Note of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated Note and dated as
of the date to which interest has been paid on the unpaid principal amount
of the Note so lost stolen, destroyed, or mutilated, or, if no interest has
been paid thereon, then dated as of the date of the Note so lost, stolen,
destroyed or mutilated.
10. Miscellaneous
a) In the event that Lender institutes legal proceedings to enforce the
Transaction Documents, the Borrower agrees to pay to Lender, in
addition to any indebtedness due and unpaid, all costs and expenses of
such proceedings, including reasonable attorneys' fees.
b) Lender shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in
writing and signed by an authorized officer of Lender and then only to
the extent specifically set forth therein. A waiver on one occasion
shall not be construed as continuing or as a bar to or waiver of such
right or remedy on any other occasion. All remedies conferred upon
Lender by the Transaction Documents shall be cumulative and none is
exclusive, and such remedies may be exercised concurrently or
consecutively at Lender's option.
c) Except as expressly provided for in this Note or any other Transaction
Document, every person at any time liable for the payment of the debt
evidenced hereby waives presentment for payment, demand, notice of
nonpayment of this Note, protest and notice of protest, all exemptions
and homestead laws and all rights thereunder and consents that Lender
may extend the time of payment of any part or the whole of the debt,
or grant any other modifications or indulgence pertaining to payment
of this Note at any time, at the request of any other person liable
for said debt.
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d) This Note is hereby expressly limited so that in no contingency or
event whatsoever, whether by acceleration of maturity of the
indebtedness evidenced hereby or otherwise, shall the amount paid or
agreed to be paid to Lender for the use, forbearance or detention of
the money advanced or to be advanced hereunder exceed the highest
lawful rate permissible under the laws of the State of Illinois as
applicable to the Borrower. If, from any circumstances whatsoever,
fulfillment of any provision of this Note or of any of the other
Transaction Documents shall, at the time performance of such
provisions shall be due, involve the payment of interest in excess of
that authorized by law, the obligation to be fulfilled shall be
reduced to the limit so authorized by law, and if, from any
circumstances, Lender shall ever receive as interest an amount which
would exceed the highest lawful rate applicable to the Borrower, such
amount which would be excessive interest shall be applied to the
reduction of the unpaid principal balance of the indebtedness
evidenced hereby and not to the payment of interest.
e) All covenants, agreements, representations and warranties made herein
and in any other Transaction Document are deemed to have been relied
upon by Xxxxxx, notwithstanding any investigation by Xxxxxx.
f) This Note is given and accepted as evidence of indebtedness only and
not in payment or satisfaction of any indebtedness or obligation.
g) The form and essential validity of this Note shall be governed by the
laws of the State of Illinois. If any provision of this Note is
prohibited by, or is unlawful or unenforceable under, any applicable
law of any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition without
invalidating the remaining provisions hereof; provided that where the
provisions of any such applicable law may be waived, they hereby are
waived by the Borrower to the full extent permitted by law in order
that this Note shall be deemed to be a valid and binding promissory
note in accordance with its terms.
h) Time is of the essence with respect to all the Borrower's obligations
and agreements under this Note.
i) This Note and all the provisions, conditions, promises and covenants
hereof shall inure to the benefit of Lender, its successors and
assigns, and shall be binding in accordance with the terms hereof upon
the Borrower, its successors and assigns, provided nothing herein
shall be deemed consent to any assignment restricted or prohibited by
the terms of the Transaction Documents.
j) All notices required under this Note shall be provided in accordance
with the terms of the Purchase Agreement.
k) To induce Xxxxxx to extend to the Borrower the loan evidenced by this
Note, Borrower irrevocably agrees that, subject to Xxxxxx's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT
OF OR RELATED TO THIS NOTE OR ANY TRANSACTION DOCUMENT WILL BE
LITIGATED IN COURTS HAVING SITUS IN CHICAGO, ILLINOIS. THE BORROWER
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED
WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS UPON THE
BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED ON THE
SIGNATURE PAGE HEREOF AND SERVICE SO MADE WILL BE DEEMED TO BE
COMPLETED UPON ACTUAL RECEIPT.
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l) THE BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH
THIS NOTE AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWER AGREES THAT THE
BORROWER WILL NOT ASSERT ANY CLAIM AGAINST XXXXXX ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
DAMAGES.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Note is executed as of the date and year first
set forth above.
PROVECTUS PHARMACEUTICALS, INC.
By: /s/X. Xxxxx Xxxx
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Name: X. Xxxxx Xxxx
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Title: Chief Executive Officer
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