Exhibit 10.14
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SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement") is made and entered into as of
June 16, 2003 by and among (i) Kelly Adams, an individual resident of the State
of Utah ("Adams"), Justeene Blankenship, an individual resident of the State of
Utah ("Blankenship"), Nicholas Julian, an individual resident of the State of
Utah ("Julian"), and Pacific Management Services, Inc., a corporation formerly
incorporated under the laws of the State of Utah ("Pacific Management"),
collectively referred to in this Agreement as the "Pacific Parties;" and (ii)
Provectus Pharmaceuticals, Inc., a Nevada corporation formerly known as
"Provectus Pharmaceutical, Inc." ("Provectus"), and Xantech Pharmaceuticals,
Inc., a Tennessee corporation ("Xantech") and the successor by merger to
Provectus Pharmaceuticals, Inc., a Tennessee corporation ("PPI"), collectively
referred to in this Agreement as the "Provectus Parties."
RECITALS
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A. Pursuant to the Letter of Intent dated April 5, 2002 (the "Letter of
Intent") between Pacific and PPI, Pacific agreed to permit PPI to acquire
control of Provectus.
B. Pursuant to the Agreement and Plan of Reorganization dated April 22,
2002 (the "Reorganization Agreement") among Provectus, PPI and the PPI
Stockholders named therein, Provectus issued 6,680,000 shares of its common
stock, par value $.001 per share (each, a "Provectus Share") to the PPI
Stockholders named in the Reorganization Agreement in exchange for all of the
issued and outstanding capital stock of PPI, and PPI became a wholly owned
subsidiary of Provectus.
C. Pursuant to Section 6.12 of the Reorganization Agreement, the
certificates representing the 6,680,000 Provectus Shares issued to the PPI
Stockholders (the "Escrowed Shares") were held in escrow by Michael L. Labertew,
Attorney at Law ("Labertew"), pending the satisfaction, expiration or waiver of
certain obligations.
D. Adams, for himself and purportedly "as representative of certain
Stockholders" of Provectus, has filed suit in the Third Judicial District Court,
Salt Lake City, Utah (the "Court"), asserting the right to enforce certain
provisions of the Letter of Intent and/or the Reorganization Agreement,
including inter alia Section 6.12 of the Reorganization Agreement; such suit is
styled Kelly Adams v. Provectus Pharmaceuticals, Inc. and Michael Labertew, Case
No. 030908645 (the "Pending Litigation").
E. Blankenship and Julian are the "certain Stockholders" allegedly
represented by Adams in the Pending Litigation.
F. Labertew has impleaded the Escrowed Shares into the Pending Litigation,
and has delivered the certificates representing those shares to the Court.
G. The Pacific Parties and the Provectus Parties desire to settle the
Pending Litigation, to provide for the release of claims, and to enter into
certain covenants and agreements.
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AGREEMENT
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THEREFORE, in consideration of the foregoing recitals and of the mutual
covenants and agreements contained in this Agreement, the sufficiency of which
hereby is acknowledged, the Provectus Parties and the Pacific Parties hereby
agree as follows:
1. Definitions; Interpretation
1.01. Definitions
As used in this Agreement, the following terms have the following meanings:
(a) "Claim" means any action, cause of action, suit, debt, due, sum of
money, account, reckoning, bond, bill, specialty, covenant, contract,
controversy, agreement, promise, variance, trespass, cost, expense, attorneys'
fee, indemnity, damage, judgment, execution, liability, claim, demand and
obligation of every kind whatsoever, in law, admiralty or equity, whether known
or unknown, suspected or unsuspected.
(b) "Party" means any Person who executes this Agreement.
(c) "Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision thereof.
(d) "Related Person" means, with respect to any Party, any or all of the
following, to the extent applicable: past, present and future stockholders,
partners, principals, controlling Persons, subsidiaries, directors, officers,
affiliates, employees, agents, representatives, attorneys, insurers, and each of
their respective estates, trusts, trustees, heirs, predecessors, successors and
assigns.
(e) "Short Sale" means a "short sale," as that term is defined in Rule 3b-3
promulgated under the Securities Exchange Act of 1934.
1.02. Other Definitions
Terms defined in other provisions of this Agreement have the meanings
given in those provisions.
1.03. Rules of Interpretation
(a) Each term defined in the singular form in Section 1.01 or elsewhere in
this Agreement means the plural thereof whenever the plural form is used, and
each term defined in the plural form means the singular thereof whenever the
singular form is used. The use of a pronoun of any gender is applicable to all
genders.
(b) The words "hereof," "herein," "hereunder" and similar terms when used
in this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, subsection, schedule and
exhibit references herein are references
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to articles, sections, subsections, schedules and exhibits to this Agreement
unless otherwise specified.
(c) A reference to any agreement, document or instrument refers to the
agreement, document or instrument as amended or modified and in effect from time
to time in accordance with the terms thereof and as permitted herein.
(d) Except as otherwise specified, a reference to any applicable law refers
to the law as amended, modified, codified, replaced or reenacted, in whole or in
part, and in effect from time to time, and to any rules and regulations
promulgated thereunder; and a reference to any section or other provision of any
applicable law refers to that provision of the law from time to time in effect
and constituting the substantive amendment, modification, codification,
replacement or reenactment of the referenced section or other provision.
(e) The words "including" and "include" means including without limiting
the generality of any description preceding such term, the phrase "may not" is
prohibitive and not permissive, and the word "or" is not exclusive.
(f) Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from but excluding" and the words "to" and "until" each means "to and
including."
1.04. Construction
(a) The headings preceding the text of the sections of this Agreement and
the exhibits hereto are for convenience only and shall not be deemed part of
this Agreement.
(b) Each Party has cooperated in, and in any construction to be made of
this Agreement shall be deemed to have cooperated in, the drafting and
preparation of this Agreement, and no rule of strict construction shall be
applied against any Party.
(c) Each Party has had the assistance of legal counsel of his, her or its
own choosing in preparing, reviewing and entering into this Agreement.
2. Purchase of Outstanding Shares
2.01. From Adams
Adams affirms that, on and as of the Effective Date, he has sold to
Lawrence Schmelzer and his designees (collectively, the "Schmelzer Group") Two
Hundred Three Thousand, Three Hundred Thirty-Three (203,333) Provectus Shares
for an aggregate purchase price of Twenty Thousand and No/100 Dollars ($20,000).
Adams represents and warrants to Provectus that the Provectus Shares sold by
Adams to the Schmelzer Group are all of the Provectus Shares beneficially owned
by Adams, directly or indirectly, whether held of record or in "street name" in
an account with one or more brokers, dealers, banks, or other institutions.
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2.02. From Blankenship
Blankenship and Julian affirm that, on and as of the Effective Date,
Blankenship has sold to the Schmelzer Group Four Hundred Ninety-Three Thousand,
Six Hundred Sixty-Six (493,666) Provectus Shares for an aggregate purchase price
of One Hundred Seventy Thousand, Three Hundred Forty-Nine and 70/100 Dollars
($170,349.70). Blankenship and Julian represent and warrant to Provectus that
the Provectus Shares sold by Blankenship to the Schmelzer Group are
substantially all of the Provectus Shares beneficially owned by Blankenship or
Julian, directly or indirectly, whether held of record or in "street name" in an
account with one or more brokers, dealers, banks, or other institutions, or
through any family member or blood relative, and include all of the Provectus
Shares issued to either of them pursuant to the Reorganization Agreement.
3. Settlement
3.01. Dismissal of Pending Litigation
Immediately upon the execution of this Agreement, Adams shall file with the
Court a stipulated motion for the dismissal of the Pending Litigation with
prejudice, including with such stipulated motion a copy of this Agreement. The
Parties shall cooperate in taking any and all other actions necessary or
desirable to file this Agreement with the Court and to effect the dismissal of
the Pending Litigation with prejudice.
3.02. Return of Escrowed Shares
Immediately upon the execution of this Agreement, Adams shall file with the
Court a stipulated motion for the release from the Court of the certificates
representing the Escrowed Shares to the PPI Stockholders named thereon. Such
release shall be deemed completed by overnight delivery of the certificates to
David L. Morehous, counsel for Provectus, at the address set forth in Section 9
of this Agreement.
4. Release by Pacific Parties
4.01. Release of Claims
Each of the Pacific Parties, for himself, herself or itself and his, her or
its respective Related Persons (for purposes of this Section 4, collectively,
the "Pacific Releasors"), hereby jointly and severally releases and discharges
each of the Provectus Parties and the Related Persons of any and all Provectus
Parties (for purposes of this Section 4, collectively, the "Provectus
Releasees"), from any and all Claims against any and all Provectus Releasees
that any and all Pacific Releasors ever had, now have, or hereafter can, shall
or may have, for, upon, or by reason of any matter, cause or thing whatsoever
through the Effective Date (for purposes of this Section 4, the "Released
Claims").
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4.02. Representations and Warranties as to Released Claims
The Pacific Releasors hereby jointly and severally represent and warrant
that they are the sole and lawful owners of all right, title and interest in and
to the Released Claims, and that they have not assigned or transferred, or
purported or attempted to assign or transfer, in whole or in part, any of the
Released Claims against or purportedly against the Provectus Releasees to any
third parties. The Pacific Releasors jointly and severally shall indemnify the
Provectus Releasees against, and defend and hold them harmless from any Released
Claims arising out of or relating to, any such assignment or transfer or any
such purported or attempted assignment or transfer of any Released Claims.
4.03. No Proceedings; Indemnification
The Pacific Releasors hereby jointly and severally covenant not to initiate
any action or proceeding seeking recovery on any Released Claim and jointly and
severally shall indemnify and hold harmless Provectus Releasees from any and all
expenses, including reasonable attorneys' fees, incurred by any Provectus
Releasee in responding to any such action or proceeding.
4.04. Acknowledgement
Each Pacific Releasor acknowledges that he, she or it:
(a) Is not relying on any representations, warranties, assurances,
statements, or other information of any kind provided or made by the Provectus
Releasees or their counsel in executing this Agreement and specifically this
Section 4.
(b) Is aware that he, she or it is releasing Released Claims as to which
he, she or it may be currently unaware and only later may come to learn, but is
nevertheless willing to enter into this Agreement and specifically this Section
4.
(c) Intends that, notwithstanding the possibility that the Pacific
Releasors or their counsel discover or gain a more complete understanding of the
facts, events or law which, if presently known or fully understood, would have
affected this Agreement and specifically this Section 4, this Agreement and
specifically this Section 4 shall be deemed to have fully, finally, and forever
settled any Released Claims without regard to the existence or subsequent
discovery of different or additional facts, events or law.
5. Release by Provectus Parties
5.01. Release of Claims
Each of the Provectus Parties, for himself, herself or itself and his, her
or its respective Related Persons (for purposes of this Section 5, collectively,
the "Provectus Releasors"), hereby jointly and severally releases and discharges
each of the Pacific Parties and the Related Persons of any and all Pacific
Parties (for purposes of this Section 5, collectively, the "Pacific Releasees"),
from any and all Claims against any and all Pacific Releasees that any and all
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Provectus Releasors ever had, now have, or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever through the
Effective Date (for purposes of this Section 5, the "Released Claims").
5.02. No Proceedings; Indemnification
The Provectus Releasors hereby jointly and severally covenant not to
initiate any action or proceeding seeking recovery on any Released Claim and
jointly and severally shall indemnify and hold harmless Pacific Releasees from
any and all expenses, including reasonable attorneys' fees, incurred by any
Pacific Releasee in responding to any such action or proceeding.
6. Consideration
Each Party, for himself, herself or itself and his, her or its respective
Related Persons, hereby (a) affirms that the release set forth in Section 4 of
this Agreement is granted in consideration for (i) the purchase of Provectus
Shares from Adams and Blankenship as described in Section 2 of this Agreement
and/or (ii) the several covenants and agreements set forth in this Agreement;
and (b) acknowledges that such consideration is sufficient consideration for the
grants of the releases set forth in Sections 4 and 5 of this Agreement and for
the other covenants and agreements of the Parties set forth in this Agreement.
7. Confidentiality and Non-Disparagement
7.01. Public Announcement
The Parties agree that Provectus, at its sole discretion, may disclose the
terms of this Agreement to the extent that Provectus may determine that such
disclosure is necessary or advisable to comply with Provectus's reporting
obligations under the Securities Exchange Act of 1934 and other applicable law.
7.02. Confidentiality
Except as provided in Section 7.01, the terms of this Agreement shall be
considered confidential by the Parties and their respective Related Persons, and
the Parties agree to take reasonable steps required to maintain the
confidentiality of the terms of this Agreement. Nothing herein shall preclude
disclosure of this Agreement or its terms as provided in Section 7.01, or to the
outside attorneys, accountants, or auditors of the Parties or as required by law
or pursuant to rules of any court in connection with any litigation, arbitration
or bankruptcy proceeding or for other legitimate business purposes.
7.03. Non-Disparagement
(a) None of the Provectus Parties, nor any Person acting on behalf or at
the direction of any Provectus Party or any Related Person of a Provectus Party,
will take any action after the Effective Date intended to or having the effect
of disparaging any of the Pacific Parties or any of their respective Related
Persons or make or solicit any comments or statements to the media or
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other Persons that reasonably might be considered to be derogatory or
detrimental to the professional or personal representation of any Pacific Party
or Related Person of a Pacific Party.
(b) None of the Pacific Parties, nor any Person acting on behalf or at the
direction of any Pacific Party or any Related Person of a Pacific Party, will
take any action after the Effective Date intended to or having the effect of
disparaging any of the Provectus Parties or any of their respective Related
Persons or make or solicit any comments or statements to the media or other
Persons that reasonably might be considered to be derogatory or detrimental to
the professional or personal representation of any Provectus Party or Related
Person of a Provectus Party.
8. Trading in Provectus Shares
Each of the Pacific Parties hereby agrees that, from and after the
Effective Date, no Pacific Party and no Related Person of a Pacific Party,
directly or indirectly, shall:
(a) Engage in or execute any Short Sale of any Provectus Share, whether for
his, her or its own account or for the account of any other Person; or
(b) Sell, purchase, or offer to sell or purchase any Provectus Share at a
price lower than the highest current quoted bid price as reported by the OTC
Bulletin Board.
9. Notices
All notices, consents, requests, waivers and other communications required
or permitted under this Agreement shall be in writing and shall be deemed to
have been made (x) upon actual receipt, when given by hand or confirmed
facsimile transmission, (y) one business day after delivery to the carrier, when
given by overnight delivery service or (z) two business days after mailing, when
given by first-class registered or certified mail, postage prepaid, return
receipt requested; in any case to the following address, or to such other
address as a Party, by notice to the other Parties given pursuant to this
Section 9, may designate from time to time:
1. If to any Provectus Party, to: With a copy to:
Provectus Pharmaceuticals, Inc. Baker, Donelson, Bearman & Caldwell, P.C.
Attention: Chief Executive Officer Attention: David L. Morehous, Esq.
7327 Oak Ridge Highway, Suite A Riverview Tower, Suite 2200
Knoxville, TN 37931 900 South Gay Street
Facsimile: 865/769-4011 Knoxville, TN 37902
Facsimile: 865/525-8569
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2. If to any Pacific Party, to: With a copy to:
Pacific Management Services, Inc. James N. Barber, Esq.
c/o Hunt Labertew, LLC Suite 100, Bank One Tower
2469 East Fort Union Blvd., Suite 214 50 West Broadway
Salt Lake City, UT 84121 Salt Lake City, UT 84101
Facsimile: 801/274-1099 Facsimile: 801/364-3406
10. General Provisions
10.01. Governing Law
This Agreement has been, and shall for all purposes be deemed to have been,
executed and delivered within the State of Utah, and the rights and obligations
of the parties hereto shall have been construed and enforced in accordance with,
and governed by, the laws of the State of Utah.
10.02. Jurisdiction and Venue
The Parties each hereby (a) submit to the jurisdiction of (i) any state
court of competent jurisdiction in and for Salt Lake County, Utah, or in the
United States District Court for the District of Utah sitting at Salt Lake City
in any action or proceeding arising out of or relating to this Agreement that is
initiated by any Provectus Party, or (ii) any state court of competent
jurisdiction in and for Knox County, Tennessee, or in the United States District
Court for the Eastern District of Tennessee sitting at Knoxville in any action
or proceeding arising out of or relating to this Agreement that is initiated by
any Pacific Party; (b) agree that all claims in respect of the action or
proceeding may be heard and determined in any such court; (c) agree not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court; (d) 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 (e)
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.
10.03. Entire Agreement; Amendment
This Agreement is the entire Agreement between the parties with respect to
the subject matter hereof. It supersedes all prior and contemporaneous oral and
written agreements and discussions. It may be amended only by an agreement in
writing, signed by the parties hereto.
10.04. Binding Effect
This Agreement is binding upon, and shall inure to the benefit of, the
parties hereto and their respective agents, employees, representatives,
officers, directors, subsidiaries, assigns, heirs and successors in interest.
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10.05. General Acknowledgment of Parties
EACH PARTY TO THIS AGREEMENT AFFIRMS THAT HE, SHE OR IT HAS THOROUGHLY READ
THE ENTIRE AGREEMENT; THAT HE, SHE OR IT HAS, BEFORE SIGNING THIS AGREEMENT,
DISCUSSED THE CONTENTS OF THIS AGREEMENT WITH LEGAL COUNSEL OF HIS, HER OR ITS
CHOOSING; AND THAT HE, SHE OR IT FULLY UNDERSTANDS THE MEANING AND INTENT OF
THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ITS FINAL AND BINDING EFFECT.
10.06. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall be one and the same
document.
* Signatures begin on following page *
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SIGNATURES
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IN WITNESS WHEREOF, the Parties have executed this Agreement on and as of
the Effective Date.
The Pacific Parties:
KELLY ADAMS, an individual resident of the
State of Utah
Signed: /s/ Kelly Adams
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JUSTEENE BLANKENSHIP, an individual
resident of the State of Utah
Signed: /s/ Justeene Blankenship
--------------------------------
NICHOLAS JULIAN, an individual resident
of the State of Utah
By: JUSTEENE BLANKENSHIP, an
individual resident of the State of
Utah, under power of attorney (a
copy of which is attached hereto)
Signed: /s/ Justeene Blankenship
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PACIFIC MANAGEMENT SERVICES, INC., a
corporation formerly incorporated under the
laws of the State of Utah
By: /s/ Justeene Blankenship
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Justeene Blankenship
* Signatures continued on following page *
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THE PROVECTUS PARTIES:
PROVECTUS PHARMACEUTICALS, INC., a
Nevada corporation formerly known as
"Provectus Pharmaceutical, Inc."
By: /s/ H. Craig Dees
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H. Craig Dees, Ph.D.
Chief Executive Officer
XANTECH PHARMACEUTICALS, INC., a
Tennessee corporation and the successor by
merger to Provectus Pharmaceuticals, Inc., a
Tennessee corporation
By: /s/ H. Craig Dees
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H. Craig Dees, Ph.D.
Chief Executive Officer
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