SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of March 24,
2005, by and among MILESTONE SCIENTIFIC INC., a Delaware corporation (the
"Company"), and the subscribers identified on the signature page hereto (each a
"Subscriber" and collectively "Subscribers").
WHEREAS, the Company and the Subscribers are executing and delivering
this Agreement in reliance upon an exemption from securities registration
afforded by the provisions of Section 4(2) and Rule 506 of Regulation D
("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers shall purchase, in the
aggregate, an amount not to exceed $3,000,000 (the "Purchase Price") of Units
each Unit consisting of (i) ten (10) shares of the Company's common stock, $.001
par value (the "Common Stock"), and (ii) two warrants each to purchase one share
of Common Stock (the "Warrants"), in the form attached hereto as EXHIBIT A (the
"Warrants"). The shares underlying the Warrants are referred to as the Warrant
Shares. The per Unit Purchase Price shall be $29.69, which is equal to the
average closing price of the Common Stock on the American Stock exchange during
the first ten of the 12 trading days ending on March 24, 2005, (the "Closing
Date") multiplied by 10. The Purchase Price shall be payable to the Company on
the Closing Date, as defined in Section 10 hereof. The shares of Common Stock
issuable to the Subscribers are referred to herein as the "Shares," and the
Shares, the Warrants and the Warrant Shares are collectively referred to herein
as the "Securities".
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Subscribers hereby
agree as follows:
1. Purchase and Sale of Shares and Warrants. Subject to the
satisfaction (or waiver) of the conditions to Closing set forth in this
Agreement, each Subscriber shall purchase the Shares and Warrants for the
Purchase Price indicated on the signature page hereto, and the Company shall
sell the Shares and Warrants called for by the above formula price to the
Subscriber. The Purchase Price for the Shares and Warrants shall be paid in
cash. The Company shall (i) instruct its transfer agent to issue stock
certificates for the number of Shares included in the Units to be purchased
hereunder and to deliver such Shares to each Subscriber within 15 business days
of the Closing Date, such Shares to be registered in the name of the Subscriber
and (ii) deliver Warrants for the number of Warrants purchased hereunder to the
Subscriber within said 15 business days. The Company will not issue fractional
Units but will refund amounts in excess of the price of the nearest full number
of Units which can be purchased with the purchase price tendered hereunder.
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2. Warrants. Promptly after the Closing Date the Company will
issue two Warrants to each Subscriber for each ten (10) shares issued to such
Subscriber on the Closing Date. The per Warrant exercise price shall be $4.89
per share. The Warrants shall be exercisable until February 17, 2009.
3. Subscriber's Representations and Warranties. Each
Subscriber hereby represents and warrants to and agrees with the Company only as
to such Subscriber that:
(a) Information on Company. The Subscriber has been
furnished with a draft of the Company's Form 10-KSB for the year ended December
31, 2004, and has also been furnished with or has had access at the XXXXX
Website of the Commission to the Company's Form 10-KSB for the year ended
December 31, 2003 as filed with the Commission, together with all subsequently
filed Forms 10-QSB, 8-K, and filings made with the Commission available at the
XXXXX website (hereinafter referred to collectively as the "Reports"). the
Subscriber has considered all factors the Subscriber deems material in deciding
on the advisability of investing in the Securities.
(b) Information on Subscriber. At the time the
Subscriber was offered the Securities it was, and as of the date hereof it is an
"accredited investor", as such term is defined in Regulation D promulgated by
the Commission under the 1933 Act, is experienced in investments and business
matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements in
the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable the Subscriber to utilize
the information made available by the Company to evaluate the merits and risks
of and to make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment. The Subscriber has the
authority to purchase and own the Securities. The Subscriber is able to bear the
economic risk of such investment and at the present time, is able to afford a
complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.
(c) Purchase of Common Stock and Warrants. The
Subscriber is purchasing the Common Stock and Warrants as principal for its own
account and not with a view to any distribution thereof (this representation and
warranty not limiting such Subscriber's right to sell the Shares and Warrant
Shares pursuant to the Registration Statement (as defined below hereof) or
otherwise in compliance with applicable federal and state securities laws).
(d) Compliance with 1933 Act. The Subscriber
understands and agrees that the Securities have not been registered under the
1933 Act or any applicable state securities laws, by reason of their issuance in
a transaction that does not require registration under the 1933 Act (based in
part on the accuracy of the representations and warranties of Subscriber
contained herein), and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration.
(e) Subscribers Representations. The Subscriber is
not currently a holder of the issuer's securities.
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(f) The Subscriber confirms that it understands that
it has been provided material non-public information with respect to the Company
and that if the Subscriber trades on the basis of such information or provides
such information to others such person may be subject to xxxxxxx xxxxxxx
liability or liability for violation of Regulation FD.
(g) Correctness of Representations. Each Subscriber
represents as to such Subscriber that the foregoing representations and
warranties are true and correct as of the date hereof in all material respects
and, unless a Subscriber otherwise notifies the Company prior to the Closing
Date (as hereinafter defined), shall be true and correct in all material
respects as of the Closing Date.
4. Company Representations and Warranties. The Company
represents and warrants to and agrees with each Subscriber that (i) the Company
is duly organized, validly existing and in good standing on the date hereof,
(ii) has full power and authority to issue the Securities, (iii) is eligible to
register the resale of its Common Stock by the Subscribers under Form S-3
promulgated under the 1933 Act, (iv) upon receipt and acceptance of
consideration from the Subscriber the Securities will be legally and validly
issued, (v) the Company's Form 10-KSB for the year ended December 31, 2004,
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended and the information contained in the Form
10-KSB fairly presents, in all material respects, the financial condition and
results of operations of the Company and does not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and (vi) the
Company has taken all action required by its Articles of Incorporation and
Bylaws and the rules and regulations of the American Stock Exchange to approve
the offer and sale of the securities, except that it has not applied for
additional listing of such securities with the American Stock Exchange but
undertakes to do so promptly upon closing hereunder.
5. Regulation D Offering. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) of the 1933 Act
and Rule 506 of Regulation D promulgated thereunder.
6. Registration and Listing.
(a) The Company covenants and agrees with the
Subscribers that on or before the 40th day after the last Closing Date, prior to
the Filing Date the Company shall prepare and file with the Commission a
Registration Statement covering the shares of common stock issuable under this
Agreement and issuable upon exercise of the Warrants (the "Registrable
Securities") for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form S-3. The Company shall cause
the Registration Statement to become effective and remain effective as provided
herein. The Company shall use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof. The Company shall use its best efforts to
keep
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the Registration Statement continuously effective under the Securities Act until
the date which is the earlier date of when (i) all Registrable Securities have
been sold or (ii) all Registrable Securities may be sold immediately without
registration under the Securities Act and without volume restrictions pursuant
to Rule 144(k), as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Company's
transfer agent and the affected Holders .
(b) Transfers. The Securities may only be disposed of
in compliance with state and federal securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement, to the Company, to an Affiliate of a Subscriber or in connection with
a pledge as contemplated in this Section 10, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the 1933 Act. As a condition
of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Subscriber under this Agreement
and the Registration Rights Agreement.
(c) Shares Legend. The Subscribers agree to the
imprinting, so long as is required by this Section 7(b), of a legend on the
Shares and the Warrant Shares, in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED, EXCEPT THAT THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OF THE HOLDER WITH
A REGISTERED BROKER-DEALER OR OTHER LOAN OF THE HOLDER WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT."
(d) Warrant Legend. The Subscribers agree to the
imprinting, so long as is required by this Section 6, of a legend on the
Warrants, in substantially the following form:
"THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE
SHARES
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OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED, EXCEPT THAT THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OF THE HOLDER WITH A REGISTERED BROKER-DEALER
OR OTHER LOAN OF THE HOLDER WITH A FINANCIAL INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT"
(e) Certificates. Certificates evidencing the Shares
and Warrant Shares shall not contain any legend (including the legend set forth
in Sections 7(b) and (c)), (i) while a registration statement (including the
Registration Statement) covering the resale of such security is effective under
the 1933 Act, or (ii) following any sale of such Shares or Warrant Shares
pursuant to Rule 144, or (iii) if such Shares or Warrant Shares are eligible for
sale under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the 1933 Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
its counsel to issue a legal opinion to the Company's transfer agent promptly
after the effective date of the Registration Statement if required by the
Company's transfer agent to effect the removal of the legend hereunder as and
when any Subscriber so requests. If all or any portion of a Warrant is exercised
at a time when there is an effective registration statement to cover the resale
of the Warrant Shares, such Warrant Shares shall be issued free of all legends
(f) Acknowledgement. Each Subscriber severally and
not jointly agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 7 is predicated upon the
Company's reliance that the Subscriber will sell any Securities pursuant to
either the registration requirements of the 1933 Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.
(g) The Company covenants and agrees with the
Subscribers that on or before the 40th day after the last closing date it will
file an application with the American Stock Exchange to list the shares of the
Company's Common Stock underlying the Units, including the shares of Common
Stock underlying the Warrants and will use its best efforts to prosecute such
application to effectiveness
7. Conditions Precedent to Obligations of the Company. The
obligations of the Company are subject to the fulfillment prior to or on the
Closing Date of the following conditions any of which may be waived by the
Company in writing:
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(a) all representations and warranties of the
Subscribers contained in this Agreement shall be true and correct in all
respects as of the Closing Date with the same effect as though such
representations and warranties had been made on or as of such date; and
(b) all agreements and covenants of the Subscribers
to be performed or complied with on or prior to the Closing Date have in all
material respects been so performed or complied with.
8. Conditions Precedent to Obligations of the Subscribers. The
obligations of the Subscribers are subject to the fulfillment prior to or on the
Closing Date of the following conditions any of which may be waived by the
Subscribers in writing:
(a) all representations and warranties of the Company
contained in this Agreement shall be true and correct in all respects as of the
Closing Date with the same effect as though such representations and warranties
had been made on or as of such date; and
(b) all obligations, agreements and covenants of the
Company to be performed or complied with on or prior to the Closing Date shall
have, in all respects been so performed or complied with.
9. Miscellaneous.
(a) Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i)
personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: (i) if to the
Company, to: Milestone Scientific Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX
07039Attention: Xxxxxxx Xxxxx, Chairman, fax: (000) 000-0000, with a copy to:
Morse, Zelnick, Rose & Lander, LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxx Xxxxxxx, telecopier: (000) 000-0000, (ii) if to
the Subscriber[s], to: the one or more addresses and telecopier numbers
indicated on the signature pages hereto, , and (iii) if to the Placement Agent,
to: I-Bankers Securities.
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(b) Closing. The consummation of the transactions
contemplated herein shall take place at the offices of Morse, Zelnick, Rose &
Lander, LLP, upon receipt of good funds at its escrow account ,
The Chase Manhattan Bank,
1211 Avenue of the Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000,
Account Name: Morse, Zelnick, Rose & Lander, LLP
Attorney Trust Account
Account Number: 967086639
ABA Number: 000000000
and upon the satisfaction of all conditions to Closing set forth in this
Agreement. This offering shall be kept open no later than three business days
after this Closing Date so as to allow one or more subsequent Closings for late
subscriptions. The date of any such subsequent Closing is also referred to
herein as a "Closing Date."
(c) Entire Agreement; Assignment. This Agreement and
the other Transaction Documents represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by the Company and each Subscriber. Neither the Company
nor the Subscribers have relied on any representations not contained or referred
to in this Agreement and the documents delivered herewith. No right or
obligation of the Company shall be assigned without prior notice to and the
written consent of the Subscribers. Any Subscriber may assign any or all of its
rights hereunder to any person in connection with a transfer of any Security to
such person, provided such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions hereof that apply to
the Subscribers.
(d) Counterparts/Execution. This Agreement may be
executed in any number of counterparts and by the different signatories hereto
on separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. This Agreement may be executed by facsimile signature and delivered
by facsimile transmission.
(e) Law Governing this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. Any action brought
by either party against the other concerning the transactions contemplated by
this Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. THE PARTIES AND THE INDIVIDUALS
EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN
CONNECTION HEREWITH ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION
OF SUCH COURTS AND WAIVE TRIAL BY JURY. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule
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of law. Any such provision which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision of
any agreement.
(f) Independent Nature of Subscribers' Obligations
and Rights. The obligations of each Subscriber hereunder are several and not
joint with the obligations of any other Subscriber hereunder, and no such
Subscriber shall be responsible in any way for the performance of the
obligations of any other hereunder.
(g) Equitable Adjustment. The Securities and the
purchase prices of Securities being purchased hereunder shall be equitably
adjusted to offset the effect of stock splits, stock dividends, and
distributions of property or equity interests of the Company to its shareholders
occurring between the date of this Agreement and the Closing Date.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
Dated: March _____, 2005
The
Company
MILESTONE SCIENTIFIC INC
a Delaware corporation
By:
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Name:
Title:
Subscriber
Dated: March _______ 2005
---------------------------------
Name
by:
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Print
SUBSCRIBER'S NAME AND PURCHASE
ADDRESS PRICE
EXHIBIT A
Form of Warrant]
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