Exhibit 4.34
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement") is made as of February 19, 2002
between MILESTONE SCIENTIFIC INC., a Delaware corporation, with its principal
offices at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and X. Xxxxxx Xxxxxxxx having an address c/o Cumberland Associates
LLC, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Purchaser").
WHEREAS, the Company desires to sell to Purchaser and Purchaser desires to
purchase from the Company $150,000 face amount of its 8% Promissory Notes (the
"Notes"), substantially in the form annexed hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties hereto agree as follows:
1. Purchase and Sale of Notes.
(a) Subject to the terms and conditions hereinafter set forth,
Purchaser hereby subscribes for and agrees to purchase from the Company the
Notes.
(b) The purchase price for the Notes shall be $150,000 (the
"Purchase Price"). The Purchase Price is payable by check made payable to the
Company or by wire transfer of funds, contemporaneously with the execution and
delivery of this Agreement. The Notes being purchased by Purchaser will be
delivered by the Company on the Closing Date (as defined below).
2. Terms of the Notes. Except as otherwise set forth in this Agreement,
the terms of the Notes, shall be as set forth in the Notes.
3. Closing. The closing of the transactions contemplated hereby
("Closing") shall take place on a date (the "Closing Date") within three (3)
business days following the satisfaction of the conditions set forth herein and
at such times as shall be determined by the Company at the offices of Morse,
Zelnick, Rose & Lander, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser, which representations and warranties shall
be true and correct as of the date hereof and as of the Closing Date, as
follows:
4.1 Organization; Standing and Power. The Company and its
subsidiaries (a) are corporations duly organized, existing and in good
standing under the laws of the state of their incorporation, (b) have all
requisite corporate power and authority to own its properties and to carry
on their businesses as now conducted and as proposed hereafter to
be conducted, (c) are duly qualified to do business as foreign
corporations in each and every jurisdiction where such qualification is
necessary except where the failure to so qualify would not have a material
adverse effect on the financial condition, business, operations, assets or
prospects of the Company and its subsidiaries as a whole and (d) the
Company has all requisite corporate power and authority to execute and
deliver, and perform all of its obligations under this Agreement.
4.2 Authorization. The execution, delivery and performance by the
Company of its obligations under this Agreement, other than the issuance
of stock in payment of principal or interest, has been duly authorized by
all requisite corporate action and the issuance of any stock in payment of
principal or interest will be duly authorized prior to any such issuance,
and in either case, will not, either prior to or as a result of the
consummation of the transactions contemplated by this Agreement: (a)
violate any law, any order of any court or other agency of government, any
provision of the Certificate of Incorporation or Bylaws of the Company or
any contract, indenture, agreement or other instrument to which the
Company is a party, or by which the Company or any of its assets or
properties are bound, or (b) be in conflict with, result in a breach of,
or constitute (after the giving of notice or lapse of time or both) a
default under, or result in the creation or imposition of any lien of any
nature whatsoever upon any of the property or assets of any Company
pursuant to, or result in the acceleration of, any such contract,
indenture, agreement or other instrument. The Company is not required to
obtain any government approval, consent or authorization from, or to file
any declaration or statement with, any governmental instrumentality or
agency in connection with or as a condition to the execution, delivery or
performance of any of this Agreement other than the filings which have
heretofore been made. This Agreement is valid, binding and enforceable
against the Company in accordance with its terms. When issued, the Notes
will be the legal and binding obligations of the Company enforceable in
accordance with their terms. The shares of Common Stock issuable in
respect of principal and interest payable on the Notes or upon Mandatory
Conversion of the Notes (as defined in the Notes) have been duly
authorized and reserved for issuance and, when issued, as applicable, will
be fully paid and non-assessable, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act of 1933, as
amended (the "Securities Act") and state securities laws), taxes, security
interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands.
4.3 Non-contravention. To the best of its knowledge, the Company is
not in violation or breach of or in default with respect to, complying
with any material provision of any contract, agreement, instrument, lease,
license, arrangement or understanding to which it is a party, and each
such contract, agreement, instrument, lease, license, arrangement and
understanding is in full force and effect and is the legal, valid and
binding obligation of the Company enforceable as to the Company in
accordance with its terms (subject to applicable bankruptcy, insolvency
and other laws affecting the enforceability of creditors' rights generally
and to general equitable principals). Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation,
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rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the
Company is subject or (b) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which the Company is
bound or to which any of the Company's assets are subject.
4.4 Securities Law Exemption. Assuming the accuracy of Purchaser's
representations and warranties set forth herein, the sale of the Notes
pursuant to this Agreement has been made in accordance with the provisions
and requirements of Regulation D ("Regulation D") or ss.4(6) under the
Securities Act and any applicable state law.
4.5 Use of Proceeds. The proceeds from the sale of the Notes will be
used for working capital and general corporate purposes.
4.6 No Other Representations. The Company shall not be deemed to
have made any representations, warranties, covenants, agreements or
indemnifications pertaining to the subject matter of this Agreement,
whether express or implied, except to the extent that such
representations, warranties, covenants, agreements or indemnifications are
made in this Agreement or the Schedules hereto or in any certificate or
other agreement, document or instrument delivered pursuant to the
provisions of this Agreement.
5. Representations and Warranties of the Purchasers. The Purchaser hereby
represents and warrants to the Company, which representations and warranties
shall be true and correct as of the date hereof and the Closing Date, as
follows:
5.1 Authorization of Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action on the part of Purchaser, does not violate any laws or regulations
applicable to Purchaser and is the valid binding and enforceable
obligation of Purchaser in accordance with its terms.
5.2 Accredited Investor. Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of the Securities Act, and the rules
promulgated thereunder.
5.3 Investment. Purchaser acknowledges that this offering of Notes
have not been reviewed by the United States Securities and Exchange
Commission ("SEC") and that the sale of the Notes pursuant hereto is
intended to be a nonpublic offering pursuant to Sections 4(2), 4(6) or
3(b) of the Securities Act. Purchaser represents that the Notes are being
purchased for his own account, for investment and not for distribution or
resale to others. Purchaser agrees that Purchaser will not sell or
otherwise transfer the Notes or the shares of the Common Stock issuable in
payment of principal and interest on the Notes or upon Mandatory
Conversion of the Notes (as defined in the Notes), unless such
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securities, as the case may be, are registered under the Securities Act or
unless an exemption from such registration is available. Purchaser
understands that neither the Notes nor the shares of Common Stock issuable
upon in payment of principal and interest on the Notes nor the shares of
Common Stock issuable upon Mandatory Conversion of the Notes (as defined
in the Notes) have been registered under the Securities Act and they are
or will be issued pursuant to a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things,
the bona fide nature of the investment intent as expressed herein.
5.4 Access to Data. Purchaser has been given copies of the SEC
Filings and has had an opportunity to review same. Purchaser has had an
opportunity to discuss the SEC Filings and the Company's business,
management and financial affairs with the Company's management and the
opportunity to review the Company's facilities, each to Purchaser's
satisfaction. Purchaser understands that such discussions, as well as any
written information issued or provided by the Company, were intended to
describe the aspects of the Company's business and prospects which the
Company believes to be material but were not necessarily a thorough or
exhaustive description thereof.
5.5 Speculative Nature of Investment. Purchaser acknowledges that
the purchase of the Notes involves a high degree of risk and that (i) an
investment in the Company is highly speculative and only investors who can
afford the loss of their entire investment should consider investing in
the Company and purchasing the Notes; (ii) Purchaser may not be able to
liquidate his investment; (iii) transferability of the Notes and the
shares of Common Stock issuable in payment of principal and interest on
the Notes and upon Mandatory Conversion of the Notes (as defined in the
Notes) is extremely limited; and (iv) Purchaser could sustain the loss of
his entire investment.
5.6 Legends. Purchaser consents to the placement of a legend on the
Notes and shares of Common Stock issued in payment of interest on the
Notes and upon Mandatory Conversion of the Notes (as defined in the
Notes), provided they are not then covered by an effective Registration
Statement, all as set forth in Section 6 of this Agreement.
5.7 No Other Representations. Purchaser hereby represents that,
except as set forth herein, no representations or warranties have been
made to the Purchaser by the Company or any agent, employee or affiliate
of the Company and in entering into this transaction, Purchaser is not
relying on any information, other than that contained herein, that
contained in the SEC Filings and the results of independent investigation
by the Purchaser. The Purchaser shall not be deemed to have made any
representations, warranties, covenants, agreements or indemnifications
pertaining to the subject matter of this Agreement, whether express or
implied, except to the extent that such representations, warranties,
covenants, agreements or indemnifications are made in this Agreement or
the Schedules hereto or in any certificate or other agreement, document or
instrument delivered pursuant to the provisions of this Agreement.
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5.8 No Broker. There is no firm, corporation, agency or other entity
or person that is entitled to a finder's fee or any type of commission in
relation to or in connection with the transactions contemplated by this
Agreement as a result of any agreement or understanding with Purchaser or
any of its directors, officers, employees or agents.
6. Legends. The Notes shall be endorsed with the following legend:
THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL (I) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") SHALL
HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (II) RECEIPT BY THE COMPANY
OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE
SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN
EXCHANGE FOR THIS NOTE.
THIS SECURITY IS SUBJECT TO THE TERMS OF A PURCHASE AGREEMENT, DATED AS OF
FEBRUARY 19, 2002, A COPY OF WHICH IS ON FILE AT THE EXECUTIVE OFFICES OF
MILESTONE SCIENTIFIC INC.
7. Registration Rights. If the Company issues any shares of Common Stock
to Purchaser, either in payment of principal and/or interest on the Notes or
upon the Mandatory Conversion of the Notes (as defined in the Notes), then the
Company, as soon as practicable thereafter, will prepare and file with the
Securities and Exchange Commission a registration statement on Form S-3 with
respect to such securities and use its reasonable best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby.
8. Confidentiality. Purchaser covenants and agrees that none of Purchaser,
his agents and representatives will use for their own benefit, convey or
disclose to any third party any information provided by the Company concerning
its current or proposed business, operations and financial conditions, other
than information which is already publicly available, was already known to
Purchaser or is obtained from a source other than the Company and to the extent
required by law.
9. Affirmative Covenants. The Company covenants and agrees with the Purchaser
that, from the date hereof and until the Notes have been paid in full, it shall:
9.1 Corporate. Do or cause to be done all things necessary to
at all times (a) other than mergers solely among the Company and any
of its subsidiaries, preserve, renew and keep in full force and
effect its corporate existence, patents, trademarks, rights,
licenses, permits and franchises, (b) comply
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with this Agreement, (c) maintain and preserve all of its material
property used or useful in the conduct of their respective
businesses, and (d) comply with all applicable laws material to its
businesses, including the reporting requirements of the Securities
Exchange Act of 1934, whether now in effect or hereafter enacted,
promulgated or issued.
9.2 Notice of Proceedings. Give prompt written notice to the
Purchaser of any proceeding instituted against the Company in any
federal or state court or before any commission or other regulatory
body, whether federal, state or local, which, if adversely
determined, could have a material adverse effect upon their
business, operations, properties, assets or condition, financial or
otherwise when taken as a whole.
9.3 Books and Records; Inspection. Maintain true and accurate
books and records respecting all of their business operations, and
permit agents or representatives of the Purchasers to inspect, at
any time during normal business hours, upon reasonable notice, and
without undue material disruption of their business operations, all
of such books and records and to visit the properties and operations
of the Company and consult with the employees and officers of the
Company.
9.4 Notice of Default or Material Adverse Change. Promptly
advise the Purchaser of any event which could have a material
adverse effect on the Company's business, operation, property,
assets or condition, financial or otherwise, or the existence or
occurrence of any Event of Default (as defined in the Notes), any
breach of this Section 9 or any default of the Company under any
agreement or instrument to which it is a party.
9.5 Notice of Filings with SEC. Promptly advise the Purchaser
of any filing of a registration statement under the Securities Act
with the SEC covering any of the Company's securities.
9.6 Delivery of Financial Statements and other Reports. The
Company will deliver to each holder of Notes promptly upon
transmission thereof, copies of all financial statements,
information circulars, proxy statements and reports as the Company
shall send to its stockholders and copies of all registration
statements, prospectuses and all reports which it shall file with
the Securities and Exchange Commission or with any securities
exchange on which any of its securities is listed or with NASDAQ and
copies of all press releases and other statements made available to
the public concerning material developments in the business of the
Company.
9.7 Stock to be Reserved. The Company covenants that all
shares of Common Stock that may be issued in respect of principal
and interest payable on the Notes or upon Mandatory Conversion of
the Notes (as defined in the Notes),
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will, upon issuance, be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the
issuance thereof. The Company covenants that during the period in
which the Notes are outstanding it will at all times have authorized
and reserved a sufficient number of shares of Common Stock to permit
the conversion of the Notes.
10. Conditions Precedent to the Obligations of the Company. The
obligations of the Company pursuant to this Agreement are subject to the
satisfaction at the Closing of each of the following conditions; provided,
however, that the Company may, in its sole discretion, waive any of such
conditions and proceed with the transactions contemplated hereby.
10.1 Accuracy of Representations and Warranties. The representations
and warranties of the Purchaser contained in this Agreement or in any
document or certificate delivered in connection with the transactions
contemplated hereby shall be true and correct in all material respects on
and as of the Closing Date, as if made on and as of the Closing Date.
10.2 Performance of Agreements. Each Purchaser shall have duly
executed and delivered this Agreement to the Company and shall have
performed and complied in all material respects with all covenants,
obligations and agreements to be performed or complied with by any of them
on or before the Closing Date pursuant to this Agreement.
11. Conditions Precedent to the Obligations of the Purchaser. The
obligations of the Purchaser under this Agreement is subject to the satisfaction
at the Closing of each of the following conditions; provided, however, that the
Purchaser may, in Purchaser's sole discretion, waive any of such conditions and
proceed with the transactions contemplated hereby.
11.1 Accuracy of Representations and Warranties. The representations
and warranties of the Company contained in this Agreement or in any
document or certificate delivered in connection with the transactions
contemplated hereby shall be true and correct in all material respects on
and as of the Closing Date, as if made on and as of the Closing Date.
11.2 Performance of Agreements. The Company shall have duly executed
and delivered this Agreement and the Registration Rights Agreement and
shall have performed and complied in all material respects with all
covenants, obligations and agreements to be performed or complied with by
it on or before the Closing Date pursuant to this Agreement.
11.3 Litigation, Material Changes, Defaults, etc. No claim, action,
suit, proceeding, arbitration or hearing or notice of hearing shall be
pending (and no action or investigation by any governmental authority
shall be threatened) which seeks to enjoin, prevent or adversely affect
the consummation of the transactions contemplated by this Agreement. There
shall not have been any changes in the business of the Company which have
or could reasonably be expected to have a material adverse effect on the
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business, operations, properties, assets or condition, financial or
otherwise, of the Company. There shall exist no defaults under the
provisions of any instrument evidencing indebtedness of the Company.
11.4 Purchase Permitted by Applicable Laws. The purchase of and
payment for the Notes shall not be prohibited by any applicable law or
governmental regulation (including without limitation Regulations G, T and
X of the Board of Governors of the Federal Reserve System) and shall not
subject the holder of the Notes to any tax, penalty or liability under any
applicable law or governmental regulation.
12. General Provisions.
12.1 Survival of Representations, Warranties, Covenants, and
Agreements. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the execution of this Agreement.
12.2 Notices. All notices, requests, demands and other
communications which are required to be or may be given under this
Agreement to any party to any of the other parties shall be in writing and
shall be deemed to have been duly given when (a) delivered in person, (b)
the day following dispatch by an overnight courier service (such as
Federal Express or UPS, etc.) or (c) five (5) days after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made. Any notice
or other communication given hereunder shall be addressed to the Company,
at its principal offices as set forth above and to the Purchaser at his
address indicated on the signature page hereto.
12.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12.4 Headings. All headings are inserted for convenience of
reference only and shall not affect the meaning or interpretation of any
such provisions or of this Agreement, taken as an entirety.
12.5 Severability. If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this Agreement
to be invalid or unenforceable, such holding shall in no way affect the
validity of the remainder of this Agreement.
12.6 Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but rather
may only be changed by a statement in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is
sought. It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a
waiver of any subsequent breach by that same party.
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12.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The
parties hereby agree that any dispute which may arise between them arising
out of or in connection with this Agreement shall be adjudicated before a
court located in New York City and they hereby submit to the exclusive
jurisdiction of the courts of the State of New York located in New York,
New York and of the federal courts in the Southern District of New York
with respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to
or arising out of this Agreement or any acts or omissions relating to the
sale of the securities hereunder, and consent to the service of process in
any such action or legal proceeding by means of registered or certified
mail, return receipt requested, in care of the address set forth below or
such other address as the undersigned shall furnish in writing to the
other.
12.8 Binding Effects. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors,
legal representatives and assigns.
12.9 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter
thereof and incorporates and supersedes all prior discussions, agreements
and understandings of any and every nature among them.
12.10 Further Assurances. The parties agree to execute and deliver
all such further documents, agreements and instruments and take such other
and further action as may be necessary or appropriate to carry out the
purposes and intent of this Agreement.
12.11. Expenses. Each party hereto shall pay all of its own fees and
expenses in connection with the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
MILESTONE SCIENTIFIC INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------
Xxxxxxx Xxxxx, Chairman and
Chief Executive Officer
By: /s/ X. XXXXXX XXXXXXXX
-------------------------
X. XXXXXX XXXXXXXX
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EXHIBIT A
FORM OF 8% PROMISORY NOTE
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