AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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MILESTONE SCIENTIFIC INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 11-309811
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
220 South Orange Avenue
Livingston Corporate Park
Livingston, New Jersey 07039
(973) 535-2717
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Executive Offices)
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Leonard Osser
Milestone Scientific Inc.
220 South Orange Avenue
Livingston Corporate Park
Livingston, New Jersey 07039
(973) 535-2717
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Please send copies of all correspondence to:
Stephen A. Zelnick, Esq.
Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, New York 10022-2605
Telephone No. (212) 838-8040
Fax No. (212) 838-9190
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box |_|.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box |X|.
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of Each Amount to be Proposed Proposed Amount of
Class of Securities Registered Maximum Maximum Registration Fee
to be Registered Offering Price Aggregate Offering Price
Per Share (1) (1)
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Common Stock
$.001 par value 3,499,998 $13.6875 $47,906,222.625 $14,517.04
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457. Pursuant to Rule 457(c), based upon the
average of the high and low sales prices of the Common Stock on the
NASDAQ SmallCap System on September 16, 1997 of $13.6875.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by any other person. Neither the delivery of this prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy the shares to any person or by anyone in any jurisdiction in which such
offer or solicitation may not lawfully be made.
SUBJECT TO COMPLETEION, DATED SEPTEMBER 18, 1997
PROSPECTUS
3,499,998 Shares
MILESTONE SCIENTIFIC INC.
Common Stock, $.001 Par Value
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This Prospectus relates to the public offering of shares (the "Shares") of
Common Stock (the "Common Stock") of Milestone Scientific Inc. (the "Company")
which may be offered by certain stockholders and warrant-holders (collectively
the "Selling Stockholders"). Certain of the Shares offered are issuable to
Selling Stockholders upon exercise of various warrants (collectively referred to
as "Warrants") to purchase Shares of the Company. Sales of the Shares may be
effected from time to time in transactions (which may include block
transactions) on the Nasdaq SmallCap Market (or other market on which the Shares
are then traded), in negotiated transactions, or a combination of such methods
of sale, at fixed prices which may be changed, at market prices prevailing at
the time of sale or at negotiated prices. None of the Selling Stockholders has
entered into agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their Shares. The Selling Stockholders may
effect such transactions by selling their Shares directly to purchasers or to or
through broker-dealers, which may act as agents or principals. Such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker/dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker/dealer might
be in excess of customary commissions). See "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company; however, the Company will receive
the exercise price of any Warrants that are exercised. There is no assurance
that any Warrants will be exercised resulting in any proceeds to the Company.
---------------------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
See "Risk Factors" at page 5.
---------------------------------
The Shares are traded over-the-counter and are quoted through the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on the
SmallCap Market System under the symbol "WAND." On September 16, 1997 the last
sales price of the Shares on the NASDAQ SmallCap System was $13.25.
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The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act"). The Selling Stockholders may agree to
indemnify any agent, dealer, or broker-dealer that participates in transactions
involving sales of the securities against certain liabilities, including
liabilities arising under the Securities Act.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048. Such
reports, proxy statements and other information may also be obtained from the
web site that the Commission maintains at http://www.sec.gov. Copies of these
materials can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal offices in Washington, D.C., set
forth above.
The Company has filed a Registration Statement on Form S-3 (including all
amendments and supplements thereto, the "Registration Statement") with the
Commission under the Securities Act with respect to the Shares offered hereby.
This Prospectus, which forms a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits filed therewith, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained herein
concerning the provisions of such documents are not necessarily complete and, in
each instance, reference is made to the Registration Statement or to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference. Copies of the Registration Statement and the exhibits thereto
can be obtained upon payment of a fee prescribed by the Commission or may be
inspected free of charge at the public reference facilities and regional offices
referred to above.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish to its stockholders annual reports
containing audited financial statements. In addition, the Company is required to
file periodic reports on Forms 8-K, 10-QSB and 10-KSB with the Commission and
make such reports available to its stockholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated in this Prospectus by reference:
(1) Annual Report on Form 10-KSB, as amended (the "Form 10-KSB") for the
fiscal year ended December 31, 1996;
(2) Current Report on Form 8-K, dated March 13, 1997;
(3) Quarterly Report on Form 10-QSB for the quarter ended March 31,
1997; and
(4) Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997.
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Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document incorporated
by reference in this Prospectus (other than exhibits unless such exhibits are
specifically incorporated by reference in such documents). Requests should be
directed to Milestone Scientific Inc., 220 South Orange Avenue, Livingston
Corporate Park, Livingston, New Jersey 07039, (201) 535-2717 Attention: Patrick
Mele, Chief Financial Officer.
THE COMPANY
The Company was organized in August 1989 under the laws of Delaware. Its
principal executive office is located at 220 South Orange Avenue, Livingston
Corporate Park, Livingston, New Jersey 07039, telephone number (973) 535-2717.
FORWARD-LOOKING STATEMENTS
Certain statements made in or incorporated by reference to this
Registration Statement on Form S-3 are "forward-looking statements" (within the
meaning of the Private Securities Litigation Reform Act of 1995) regarding the
plans and objectives of management for future operations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The forward-looking statements made
in or incorporated by reference to this Form are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based, in part, on assumptions involving the growth and expansion
of business. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements made in or incorporated by reference to this Form will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements made in or incorporated by reference to this Form,
particularly in view of the Company's early stage of operations, the inclusion
of such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
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RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
Prospective investors should carefully consider, among other things, the
following factors before a decision is made to purchase any Shares.
All references in this Registration Statement to the Company refer to
Milestone Scientific Inc. (formerly U.S. Opportunity Search, Inc.), its wholly
owned subsidiaries, Princeton PMC, Inc. ("Princeton PMC") and Sagacity I, Inc.,
doing business in the United States as the Wisdom Toothbrush Co. ("Wisdom"), and
its 69% owned subsidiary, Spintech, Inc. ("Spintech"), unless the context
otherwise indicates.
Limited Operating History; History of Losses; Accumulated Deficit. The
Company has operated only since November 1995, when it acquired a 65% interest
in Spintech. Since that date, revenues have been limited and were $3,473 for the
fiscal year ended December 31, 1995 and $302,388 for the fiscal year ended
December 31, 1996. Revenues for the six months ended June 30, 1997 were
$1,634,564 compared to $107,385 for the six months ended June 30, 1996. The
Company sustained losses of $619,831 and $1,949,528 for the years ended December
31, 1995 and 1996, respectively, and losses of $647,792 and $1,863,899 for the
six months ended June 30, 1996 and 1997, respectively. The Company had an
accumulated deficit of $4,600,251 at June 30, 1997.
Limited Financial Resources; Need for Additional Financing. The Company's
capital requirements have been and will continue to be significant. The Company
did not operate profitably in 1996 and there can be no assurance that the
Company will be able to generate cash flows in the future which will be
sufficient to fund its operations. Assuming no change in the business operations
of the Company, it is expected that the approximately $10 million proceeds from
the private placement consummated on September 11, 1997 (the "Private
Placement") will be sufficient to meet its working capital requirements until,
at least, April 1999. However, no assurance can be given that the Company's
current working capital will be adequate for its planned operations or that
circumstances will not change and result in the need for additional working
capital. If additional financing is needed, the Company will be required to
borrow funds or, sell additional equity securities, or may be required to
curtail or reduce its activities. The Company has no current arrangements for
future additional financing. There can be no assurance that any sources of
additional financing will be available to the Company on acceptable terms, or at
all. To the extent that any future financing involves the sale of the Company's
equity securities, the ownership interest of the Company's then-stockholders
could be substantially diluted.
Highly Competitive Industry; Technological and Product Obsolescence. The
Company faces intense competition from many companies in the medical and dental
device industry, including well-established academic institutions, possessing
substantially greater financial, marketing, personnel, and other resources. Most
of the Company's competitors have established reputations, stemming from their
success in the development, sale, and service of their competing medical
products. Further, rapid technological change and extensive research and
development characterize the industry. Current or new competitors could, at any
time, introduce new or enhanced products with features that render the Company's
products less marketable, or even obsolete. Therefore, the Company must devote
substantial efforts and financial resources to enhance its existing products, to
bring its developmental products to market, and to develop new products for its
related markets. In order to compete successfully, the Company must establish an
effective distribution network. Several regulatory authorities must also approve
the Company's products before they may be marketed. There can be no
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assurance that the Company will be able to compete successfully, that its
competitors will not develop technologies or products that render the Company's
products less marketable or obsolete, or that the Company will be able to
successfully enhance its existing products, effectively develop new products, or
obtain required regulatory approval therefor.
Integration of Wisdom. Although the Company acquired Wisdom and its United
States distribution system for clinically oriented dental products and Wisdom is
an ongoing business with established revenues, there can be no assurance that
the Company will successfully integrate it into its current operations and
operate it profitably.
Future Revenue Growth Dependent on Proprietary Products. The Company
believes that its future growth in revenues will be dependent on its proprietary
products, The Sharps Disposal System ("SDS"), "SplatrFree(TM)" disposable prophy
angle and "The Wand(TM)", a computer controlled "painless" injection system. The
Company only has had limited sales of the SDS and the "SplatrFree(TM)" prophy
angle. The sale and use of the SDS unit and its precursor the TAPS unit and the
disposal of medical waste after processing by these units is subject to varying
degrees of federal, state, local and foreign regulation. Although the Company
has made sales of these units in the past, and believes that it will be able to
sell the SDS unit in the future, because of these regulations, no assurance can
be given that the SDS unit will be available for sale in a particular
jurisdiction or may be used by a purchaser, and no assurance can be given that
the Company will generate any significant revenues from this product in the
future. Further, there can be no assurance that the Company will be able to
successfully market these product lines, that demand exists at levels or prices
at which the Company can operate profitably, or that the products will meet user
expectations. The Company is still developing the commercial version of "The
Wand(TM)" and intends to launch this product at the Fall 1997 American Dental
Association Trade Show. No assurance can be given that "The Wand(TM)" will be
successfully marketed by the Company or accepted by the market place.
Uncertainty of Market Acceptance. Achieving market acceptance for the
Company's proprietary products will require substantial marketing efforts and
expense. As with any new technology, there is substantial risk that the
marketplace will not accept the potential benefits of such technology or be
willing to pay for any cost differential with the existing technologies. Market
acceptance of these current and proposed products will depend, in large part,
upon the ability of the Company to educate potential customers, including
third-party distributors, of the distinctive characteristics and benefits of its
products. There can be no assurance that current or proposed products will be
accepted by the end users or that any of the current or proposed products will
be able to compete effectively against current and alternative products.
Limited Distribution; Establishing Distribution Channels. The Company has
only a limited number of independent domestic sales representatives and did not
have a direct sales force until its acquisition of Wisdom in December 1996. Its
sales force remains limited. In December 1996, the Company began distribution of
the SDS and in February 1997 began distribution of its prophy angles through its
Wisdom subsidiary. In addition, while the Company has an exclusive distribution
agreement for the marketing of the SDS in Taiwan, it does not expect any
material sales pursuant thereto until that system is approved for sale in
Taiwan. The Company's future success is dependent upon its ability to establish
an effective sales organization for its proprietary products or to enter into
distribution arrangements with other entities selling to its target markets. No
assurances can be given that the Company will be able to hire and retain its own
sales force or enter into appropriate distribution arrangements.
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Patent and Intellectual Property Protection. The Company holds U.S.
patents applicable to the SDS and "The Wand(TM)" and has made application for a
U.S. patent on the "SplatrFree(TM)" prophy angle. The Company relies on a
combination of patent, trade secret, and trademark laws and employee and
third-party nondisclosure agreements to protect its intellectual property
rights. Despite the precautions taken by the Company to protect its products,
unauthorized parties may attempt to reverse engineer, copy, or obtain and use
its products and other information the Company regards as proprietary.
Litigation may be necessary to protect the Company's intellectual property
rights and could result in substantial cost to, and diversion of effort by, the
Company with no guarantee of success. The failure of the Company to protect its
proprietary information, and the expense of doing so, could have a material
adverse effect on the Company's operating results and financial condition.
Although the Company has received no claims of infringement, it is possible that
infringement of existing or future patents or proprietary rights of others may
occur. In the event that the Company's products infringe patent or proprietary
rights of others, the Company may be required to modify its processes or to
obtain a license. There can be no assurance that the Company would be able to do
so in a timely manner, upon acceptable terms and conditions, or at all. The
failure to do so would have a material adverse effect on the Company.
Dependence on Manufacturers. The Company has informal arrangements for the
manaufacture of its products by separate domestic manufacturers as follows: SDS
units by Arbutus Electronics, Inc.; SplatrFree(TM) prophy angles by Team
Technologies, Inc.; The Wand(TM) unit and system kit by Tricor Systems, Inc.;
and The Wand(TM) disposable handpiece by Nypro Inc. Termination of the
manufacturing relationship with any of the above manufactuers could
significantly and adversely affect the Company's ability to produce and sell its
products. Though alternate sources of supply exist and new manufacturing
relationships could be established, the Company would need to recover its
existing tools or have new tools produced. Establishment of new manufacturing
relationships could involve significant expense and delay. Any curtailment or
interruptions of the supply, whether or not as a result or termination of the
relationship, would adversely affect the Company.
Product Liability. The Company is engaged in a business which could expose
it to possible claims for personal injury from the use of its dental and medical
products. The Company maintains liability insurance in the aggregate amount of
$2,000,000 with a per-occurrence limit of $1,000,000 which the Company believes
to be adequate. Although no claims have been made against the Company or any of
the customers using its products, there can be no assurance that such claims
will not arise in the future or that the insurance coverage will be sufficient
to pay such claims. A partially or completely uninsured claim, if successful and
of significant magnitude, could have a material adverse effect on the Company.
Reliance Upon Management. The Company is dependent upon the personal
efforts and abilities of Leonard Osser, its President and Chief Executive
Officer and Gregory Volok, Executive Vice President and Chief Operating Officer.
Messrs. Osser and Volok have entered into employment agreements with the
Company, as amended, expiring in March 2000 and October 2001, respectively, and
each providing for non-competition periods at the expiration of the terms. The
Company has obtained key man life insurance in the amounts of $3,000,000 and
$1,000,000 on the lives of Messrs. Osser and Volok, respectively. While the
Company expects that such policies will issue in due course, no assurances can
be given that such policies will be obtained.
Litigation; Change in Officers. On April 10, 1997, the Board of Directors
of Spintech terminated the employment of Dr. Ronald Spinello as its Chairman and
Director of Research. The action by the Board follows the bringing by Milestone
and Spintech of legal action against Dr. Spinello
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in which the plaintiffs seek, among other things, a declaratory judgment that
Dr. Spinello has no personal rights to certain technology developed while he was
employed as Director of Research of Spintech relating to the design and
production of ancillary components of "The Wand(TM)" and a declaratory judgment
that plaintiffs have not breached Dr. Spinello's employment agreement.
Milestone, as principal stockholder of Spintech, also removed Dr. Spinello and
Glenn Spinello as directors of Spintech. On May 21, 1997, Dr. Spinello filed an
Answer and Counterclaim to the above legal action denying the material
allegations of the complaint and making certain counterclaims, including
recovery for breach of Dr. Spinello's employment agreement. On May 28, 1997,
Milestone and Spintech filed a reply to the counterclaim denying any liability.
Milestone has been advised by its patent counsel that all technology developed
by Dr. Spinello while employed by Spintech is owned by Spintech. Further, the
Company believes that ownership of the technology relating to these ancillary
components which are the subject of this litigation is not required for the
manufacture and sale of its anesthetic delivery system at economically viable
prices.
No Dividends. The Company has never paid a cash dividend on its Common
Stock. Payment of dividends on the Common Stock is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements and financial condition, and other relevant factors. The Company
does not currently intend to declare any dividends on its Common Stock in the
foreseeable future.
Control by Certain Persons. The Company's officers and the members of its
Board of Directors own approximately 36.55% of the currently outstanding shares
of Common Stock. Accordingly, by reason of their stockholdings, and their
control of the means for soliciting stockholder votes, the directors will be
able to exercise control of the Company and, in all likelihood, will be able to
continue to elect all directors.
Limitation of Director Liability. The Company's Certificate of
Incorporation provides that a director of the Company will not be personally
liable to the Company or its stockholders for monetary damages for breach of the
fiduciary duty of care as a director, including breaches which constitute gross
negligence, subject to certain limitations imposed by the Delaware General
Corporation Law. Thus, under certain circumstances, neither the Company nor the
stockholders will be able to recover damages even if directors take actions
which harm the Company.
Government Regulation and FDA Clearance. The manufacture and sale of the
Company's "SplatrFree(TM)" prophy angles and "The Wand(TM)", are subject to
extensive regulation by the FDA pursuant to the Federal Food, Drug, and Cosmetic
Act ("FDC Act"), and by other federal, state and foreign authorities. Under the
FDC Act, these medical devices must receive FDA clearance before they can be
commercially marketed in the United States. Some products must undergo rigorous
pre-clinical and clinical testing and an extensive FDA approval process before
they can be marketed. These processes can take a number of years and require the
expenditure of substantial resources. The time required for completing such
testing and obtaining such approvals is uncertain, and FDA clearance may never
be obtained. Delays or rejections may be encountered based upon changes in FDA
policy during the period of product development and FDA regulatory review of
each submitted application. Similar delays may also be encountered in other
countries. While the "SplatrFree(TM)" prophy angle and "The Wand(TM)" have
received FDA marketing clearance there can be no assurance that all of the
Company's products under development will obtain the required regulatory
clearance on a timely basis, or at all. If regulatory clearance of a product is
granted, such clearance may entail limitations on the indicated uses for which
the product may be marketed. In addition, modifications may be made to the
Company's products to incorporate and enhance their functionality and
performance based upon new data and
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design review. There can be no assurance that the FDA will not request
additional information relating to product improvements, that any such
improvements would not require further regulatory review thereby delaying the
testing, approval and commercialization of the Company's development products or
that ultimately any such improvements will receive FDA clearance. FDA
regulations also require manufacturers of medical devices to adhere to certain
"Good Manufacturing Practices" ("GMP"), which include testing, design, quality
control and documentation procedures. Compliance with applicable regulatory
requirements is subject to continual review and will be monitored through
periodic inspections by the FDA. Later discovery of previously unknown problems
with a product, manufacturer, or facility may result in restrictions on such
product or manufacturer, including fines, delays or suspensions of regulatory
clearances, seizures or recalls of products, operating restrictions and criminal
prosecution and could have a material adverse effect on the Company. See
"Business - Government Regulation."
Limitation of Tax Loss Carryforward Benefits. As of November 13, 1995,
when the Company acquired a controlling interest in Spintech, the amount of net
operating loss of Spintech available to be carried forward to offset future
taxable income for United States tax purposes ("NOLs") was approximately
$1,890,000. These NOLs expire on various dates through December 31, 2009. The
Company believes that its acquisition of a controlling interest in Spintech
resulted in an "ownership change," as defined in Section 382 of the Internal
Revenue Code of 1986, as amended (the "Code"). As a consequence, the Company
believes that Spintech's NOLs to offset United States taxable income are, in
addition to the carryforward limitations described above, subject to an annual
limitation equal to the fair market value of Spintech immediately before the
ownership change, multiplied by the "long-term tax-exempt rate" as defined in
Section 382 of the Code, or approximately $235,750 per year. The limitation on
the utilization of the NOLs could increase the federal income taxes payable by
the Company if Spintech operates profitably, as to which no assurance can be
given.
Restricted Securities; Possible Volatility of Market Price; Limited Public
Market Trading. The Common Stock is currently traded on The Nasdaq SmallCap
Market. From time to time the market prices of dental and medical product
companies have been affected by various factors, including adverse publicity.
There can be no assurance that the market price of the Common Stock will not be
volatile as a result of factors such as the Company's financial results,
possible adverse publicity resulting from any infractions of governmental
regulations and various other factors affecting dental and medical product
companies or the market generally. In recent years the stock market has
experienced wide price fluctuations not necessarily related to the operating
performance of such companies. Although the Common Stock has been listed on The
Nasdaq SmallCap Market since November 1995, there can be no assurance that a
regular trading market will be sustained. Further, in order to continue to trade
on The Nasdaq SmallCap Market, the Company must meet The Nasdaq SmallCap
Market's standards for continued listing. If, at any time, the Company's Common
Stock were delisted from The Nasdaq SmallCap Market, the Company's securities
would become subject to the "penny stock rules" applicable to non-Nasdaq
companies whose common stock trades at less than $5.00 per share or which have
tangible net worth of less than $5,000,000 ($2,000,000 if the Company has been
operating for three or more years). Such rules require, among other things, that
brokers who trade "penny stocks" to persons other than "established customers"
complete certain documentation, make suitability inquiries of investors and
provide investors with certain information concerning trading in the security,
including a risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade "penny stock" because of
the requirements of the penny stock rules and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited.
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Effect of Outstanding Warrants and Options. The Company currently has
outstanding the following options and warrants: (i) warrants to purchase an
aggregate of 150,000 shares of Common Stock at $6.00 per share issued to the
underwriter in the Company's November 1995 public offering and two bridge
lenders (the "1995 Warrants"); (ii) warrants to purchase 250,000 shares of
Common Stock granted to GKN Securities Corp. ("GKN") for services rendered to
the Company (the "1996 Warrants"); (iii) warrants (the "March Private Placement
Warrants") to purchase 852,262 Shares issued to investors in a private placement
consummated on March 13, 1997 (the "March Private Placement"); (iv) an option
(the "Purchase Option") to purchase 85,226 units (each unit containing one share
of Common Stock and one warrant to purchase one share of Common Stock (the
"March Private Placement Units")) granted to GKN, as placement agent (the
"Placement Agent") in the March Private Placement and its designees; (v)
Warrants to purchase 1,666,666 Shares issued to investors in the Private
Placement; (vi) warrants issued to Morse, Zelnick, Rose & Lander LLP, counsel to
the Company, to purchase at $6.00 per unit 83,333 units, each unit consisting of
one share of Common Stock and a warrant to purchase a share of Common Stock at
an exercise price of $9.00; and (vii) incentive and non-qualified stock options
issued to officers, directors and consultants to purchase an aggregate of
668,000 shares of Common Stock at prices ranging from $5.125 to $7.56 per share
expiring on various dates, the latest of which is June 2002. All of the
foregoing securities represent the right to acquire Common Stock of the Company
during various periods of time and at various prices. Holders of all the
foregoing securities are given the opportunity to profit from a rise in the
market price of the Common Stock and are likely to exercise their securities at
a time when the Company would be able to obtain additional equity capital on
more favorable terms. Thus, the terms upon which the Company will be able to
obtain additional equity capital may be adversely affected since the holders of
outstanding options and warrants can be expected to exercise them at a time when
the Company would, in all likelihood, be able to obtain any needed capital on
terms more favorable to the Company than the exercise terms provided by such
outstanding securities. The Company has not granted any registration rights with
respect to any shares of Common Stock or other securities that are "restricted
securities" or that underlie outstanding warrants or options, other than the
registration rights granted to investors in the Private Placement, the March
Private Placement, to the Placement Agent, to the holders of the 1996 Warrants
and to the holders of the 1995 Warrants.
USE OF PROCEEDS
All 3,499,998 Shares offered hereby are being registered for the account
of the Selling Stockholders. The Company will not receive any of the proceeds
from the sale of the Shares.
9
<PAGE>
RECENT DEVELOPMENTS
Private Offering.
On September 11, 1997, the Company completed a $10 million private equity
offering (the "Private Placement") to 36 accredited investors of 1,666,666 units
(the "Units"). The per-Unit offering price was $6.00, and each Unit consisted of
one Share and one Warrant to purchase one Share at an exercise price of $9.00
per Share until September 10, 1999.
The Company is unable to estimate the number of Warrants included herein
that may be exercised. The Company believes that the exercise of the Warrants
will be dependent primarily on the market price of a share of Common Stock at
the time of exercise and its relation to their exercise price. However, if all
the Warrants to purchase Shares included herein are exercised the Company will
issue 1,666,666 Shares upon exercise of such warrants and receive aggregate
gross proceeds of approximately $15 million. See "Selling Stockholders."
Registration Rights.
Under the terms of the agreement with each investor in the Private
Placement, the Company has agreed to register the re-offer and re-sale of the
Shares included in the Units and the Shares underlying the Warrants included in
the Units by filing the Registration Statement of which this Prospectus is a
part under the Securities Act with the Commission and the securities laws of
states reasonably selected by such investors. The Company will bear all the
expenses and pay all the fees incurred in connection with the preparation,
filing and modification or amendment of the Registration Statement.
10
<PAGE>
SELLING STOCKHOLDERS
The 3,333,332 Shares offered hereby consist of 1,666,666 Shares issued in
the Private Placement and 1,666,666 Shares underlying the Warrants issued in the
Private Placement. The following table sets forth certain information as of
September 12, 1997 and is adjusted to reflect the issuance of all of the above
Shares and the sale of all of the Shares offered hereby. Unless otherwise
indicated, the Selling Stockholders each possess sole voting and investment
power with respect to the Shares shown and none of the Selling Stockholders has
had a material relationship with the Company or any of its predecessors or
affiliates within the past three years.
Percentage
Number of Common Stock to of Common
Shares be Owned Stock Owned
Shares that May After the After
Selling Stockholders Owned (1) Be Sold Offering the Offering
- -------------------- --------- ------- -------- ------------
New Valley
Corporation(2) 1,000,000 1,000,000 0 *
The Aries Trust(3) 298,076 274,120 23,956 *
Little Wing, L.P. 533,046 466,666 66,380 *
Watchung Road
Associates 200,000 200,000 0 *
Irving B. Harris
Revocable Trust 170,000 170,000 0 *
The Aries Domestic
Fund, L.P.(3) 153,389 141,212 12,177 *
Wm. Harris Profit
Sharing Trust 119,334 119,334 0 *
Stephen A. Zelnick (4) 262,000 112,000 150,000 2.1%
Tradewinds Fund, Ltd. 108,050 100,000 8,050 *
Contrary Fund, Ltd. 109,570 100,000 9,570 *
Astro Communications
Corp. 80,000 80,000 0 *
Roxanne H. Frank
Trust 68,000 68,000 0 *
Ira Hirschbach 75,668 66,668 9,000 *
Louis I. Margolis(5) 74,000 64,000 10,000 *
W & M Partners, L.P. 40,000 40,000 0 *
11
<PAGE>
Percentage
Number of Common Stock to of Common
Shares be Owned Stock Owned
Shares that May After the After
Selling Stockholders Owned (1) Be Sold Offering the Offering
- -------------------- --------- ------- -------- ------------
Jerome Kahn
Revocable Trust 34,000 34,000 0 *
Harris Foundation #2 33,666 33,666 0 *
Irving Harris
Foundation #2 33,666 33,666 0 *
Howard L. Morse(6) 43,666 43,666 0 *
William W. Harris
Trust 34,000 34,000 0 *
Couderay Partners 24,000 24,000 0 *
Kenneth S. Rose(7) 33,334 33,334 0 *
Irving Harris
Foundation A 16,000 16,000 0 *
Irving Harris
Foundation B 16,000 16,000 0 *
Fred Holubow 10,000 10,000 0 *
Jack Polsky
Investment Trust 10,000 10,000 0 *
David Bloom 8,000 8,000 0 *
George Lander(8) 6,000 6,000 0 *
James J. Pelts 10,000 10,000 0 *
Howard J. Cooperman 6,000 6,000 0 *
Joel J. Goldschmidt 5,000 5,000 0 *
David Rosenbaum &
Margot Kahn 4,000 4,000 0 *
M. Beth Stevens 2,000 2,000 0 *
Michael McQuinn 2,000 2,000 0 *
12
<PAGE>
Percentage
Number of Common Stock to of Common
Shares be Owned Stock Owned
Shares that May After the After
Selling Stockholders Owned (1) Be Sold Offering the Offering
- -------------------- --------- --------- -------- ------------
Erewhon Holdings
Company(9) 36,000 36,000 0 *
Morse, Zelnick, Rose
& Lander, LLP(9) 166,666 1,666,666 0 *
- ----------
* Less than 1%
(1) Unless otherwise indicated by footnote, half of the Shares owned by each
Selling Stockholder are issuable upon exercise of Private Placement
Warrants at $9.0 per share.
(2) Includes 260,000 Shares underlying contingent Warrants which will not be
exerciseable until the 61st day after the day, and only to such extent,
that such exercise would not cause New Valley Corporation and its
affiliates own in excess of 9.9% of the total number of issued shares of
Common Stock as determined under Section 16 of the Exchange Act.
(3) Paramount Capital Asset Management, Inc. ("Paramount") is the general
partner of Aries Domestic Fund, L.P. (the "Partnership") and the
investment manager of the Aries Trust (the "Trust"). Dr. Lindsay A.
Rosenwald is the President and sole shareholder of Paramount. Paramount
and Dr. Rosenwald share voting and dispositive power over the Shares owned
by the Partnership and the Trust but disclaim any beneficial ownership of
such securities except to the extent of their respective pecuniary
interests therein, if any.
(4) Director of the Company. Consists of (i) 100,000 shares of Common Stock
and 45,000 shares of Common Stock underlying stock options which are
exerciseable within 60 days of the date hereof owned in the name of
Stephen A. Zelnick as to which beneficial ownership is shared with certain
partners, (ii) 105,000 shares of Common Stock (including the Shares) held
in the name of Cowen & Co. as Custodian for the Stephen A. Zelnick Profits
Sharing Trust and (iii) 12,000 Shares beneficially owned through Erewhon
Holdings Company. Does not include shares beneficially owned through
Morse, Zelnick, Rose & Lander, LLP. See note 10.
(5) Director of the Company. Includes 10,000 shares of Common Stock underlying
stock options which are exerciseable within 60 days of the date hereof.
(6) Includes 12,000 Shares owned through Erewhon Holdings Company. Does not
include shared beneficial ownership of 100,000 shares of Common Stock
owned in the name of Stephen A. Zelnick. See note 9. Does not include
shares beneficially owned through Morse, Zelnick, Rose & Lander, LLP. See
note 10.
(7) Includes 8,600 Shares owned by Legg Mason Wood Walker as Custodian f/b/o
Kenneth S. Rose Individual IRA and 12,000 shares beneficially owned
through Erewhon Holdings Company. Does not include shared beneficial
ownership of 100,000 shares of Common Stock owned in the name of Stephen
A. Zelnick. See note 9. Does not include shares beneficially owned through
Morse, Zelnick, Rose & Lander, LLP. See note 10.
(8) Does not include shares beneficially owned through Morse, Zelnick, Rose &
Lander, LLP. See note 10.
(9) Owned, in equal shares by Stephen A. Zelnick, a Director of the Company,
Howard L. Morse and Kenneth S. Rose.The sale of these Shares is reflected
elsewhere in the table and, therefore, is not included in the total. See
notes 4, 6 and 7.
(10) Counsel to the Company. Stephen A. Zelnick, a member of the firm is a
Director of the Company. See notes 4, 6, 7 and 8.
13
<PAGE>
PLAN OF DISTRIBUTION
Sales of the Shares may be effected from time to time in transactions
(which may include block transactions) on the Nasdaq SmallCap Market (or other
markets on which the Shares are then traded), in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. None of
the Selling Stockholders has entered into agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of their
Shares. The Selling Stockholders may effect transactions by selling their Shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Stockholders and any broker-dealers that act in connection with the sale of the
Shares might be deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act. The Selling Stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the securities against certain liabilities, including liabilities arising
under the Securities Act.
The Company has agreed to keep the Registration Statement, of which this
Prospectus is a part, effective until all the Shares are sold or can be sold
freely under an appropriate exemption from the securities laws of the United
States and the states, without limitation.
In order to comply with the applicable securities laws of certain states,
if any, the Shares will be offered or sold through registered or licensed
brokers or dealers in those states. In addition, in certain states the Shares
may not be offered or sold unless they have been registered or qualified for
sale in such states or an exemption from such registration or qualification
requirement is available and such offering or sale is in compliance therewith.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to such securities for a period beginning when
such person becomes a distribution participant and ending upon such person's
completion of participation in a distribution, including stabilization
activities in the Common Stock to effect syndicate covering transactions, to
impose penalty bids or to effect passive market making bids. In addition and
without limiting the foregoing, in connection with transactions in the Shares,
the Selling Stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Rule 10b-5 and, insofar as the Selling Stockholders are distribution
participants, Regulation M and Rules 100, 101, 102, 103, 104 and 105 thereof.
All of the foregoing may affect the marketability of the Shares.
The Company will pay all of the expenses, including, but not limited to,
fees and expenses of compliance with state securities or "blue sky" laws,
incident to the registration of the Shares other than selling commissions. The
expenses payable by the Company are estimated to be $50,000.
14
<PAGE>
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
Limitation of Director Liability; Indemnification
The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence. By its terms and in
accordance with the Delaware General Corporation Law, however, this provision
does not eliminate or limit the liability of a director of the Company (i) for
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law (relating to unlawful payments or dividends or
unlawful stock repurchases or redemptions), (iv) for any improper benefit or (v)
for breaches of a director's responsibilities under the Federal securities laws.
The Company' Certificate of Incorporation also provides that each director
or officer of the Corporation serving as a director or officer shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, against all expense liability and
loss (including attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith.
Section 203 of Delaware General Corporation Law
The Company is governed by the provisions of Section 203 of the General
Corporation Law of Delaware, an anti-takeover law enacted in 1988. In general,
the law prohibits a Delaware public corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interest stockholder,
unless it is approved in a prescribed manner. As a result of Section 203,
potential acquirors of the Company may be discouraged from attempting to effect
acquisition transactions with the Company thereby possibly depriving holders of
the Company's Securities of certain opportunities to sell or otherwise dispose
of such securities at above-market prices pursuant to such transactions.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Morse, Zelnick, Rose & Lander, LLP, 450 Park Avenue, New York, New
York 10022. Members of and counsel to the firm own in the aggregate 223,000
shares of Common Stock of the Company, options to purchase 170,000 shares of
Common Stock of the Company, 145,000 of which are currently exerciseable and
warrants to purchase an additional 166,666 Shares.
EXPERTS
The financial statements of the Company for the year ended December 31,
1996 incorporated in this Prospectus by reference to the Form 10-KSB have been
so incorporated in reliance on the report of Grant Thornton LLP, independent
accountants, given on the authority of such firms as experts in accounting and
auditing.
15
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus with
respect to the offering made hereby. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby to any person or by anyone in any jurisdiction in which such offer or
solicitation may not lawfully be made. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the business of the Company since the date hereof.
----------------------
TABLE OF CONTENTS
Page
Available Information ...................................................... 2
Reports to Security Holders ................................................ 2
Incorporation of Certain Documents
by Reference ............................................................. 2
The Company ................................................................ 3
Forward-Looking Statements ................................................. 3
Risk Factors ............................................................... 4
Use of Proceeds ............................................................ 9
Recent Developments ........................................................ 10
Selling Stockholders ....................................................... 11
Plan of Distribution ....................................................... 14
Certain Provisions of the Certificate
of Incorporation and By-Laws ............................................. 15
Legal Matters .............................................................. 15
Experts .................................................................... 15
3,449,998
Shares of Common Stock
Milestone Scientific Inc.
----------------------
PROSPECTUS
______________________
September , 1997
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the
securities being registered hereunder other than underwriting commissions and
expenses, are estimated below. The Selling Stockholders will not pay any of
these expenses.
SEC Registration Fee........................................$ 13,825.75
Printing expenses...........................................$ 350.00*
Accounting fees and expenses................................$ 5,000.00*
Legal fees and expenses.....................................$ 30,000.00*
Miscellaneous expenses......................................$ 824.25*
-----------
Total.................................................$ 50,000.00*
===========
* estimated
Item 15. Indemnification of Directors and Officers
Sections 145 of the Delaware General Corporation Law grants to the Company
the power to indemnify the officers and directors of the Company, under certain
circumstances and subject to certain conditions and limitations as stated
therein, against all expenses and liabilities incurred by or imposed upon them
as a result of suits brought against them as such officers and directors if they
act in good faith and in a manner they reasonably believe to be in or not
opposed to the best interests of the Company and, with respect to any criminal
action or proceeding, have no reasonable cause to believe their conduct was
unlawful.
The Company's certificate of incorporation provides as follows:
"NINTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
TENTH: (a) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be
<PAGE>
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment), against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the General
Corporation Law requires, the payment of such expenses incurred by a director or
officer (in his or her capacity as a director or officer and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership,
2
<PAGE>
joint venture, trust or other enterprise against any such expense, liability or
loss, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General Corporation
Law."
Item 16. Exhibits
Exhibit No. Description
- ----------- -----------
4.1 Specimen Stock Certificate*
4.2 Form of Stock Purchase Agreement
4.3 Form of Registration Rights Agreement
4.4 Form of Warrant Certificate
5.1 Opinion of Morse, Zelnick, Rose & Lander, LLP as to
legality of the securities being registered
23.1 Consent of Grant Thornton LLP
23.2 Consent of Morse, Zelnick, Rose & Lander, LLP
(included in Exhibit 5.1)
25.1 Power of Attorney (included in signature page)
- ----------
* Incorporated by reference to the Company's registration statement on Form
SB-2 No. 33-92324.
3
<PAGE>
Item 17. Undertakings
A. The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit of proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in Act and will be governed by the final
adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in New York, New York on
the 18th day of September, 1997.
MILESTONE SCIENTIFIC INC.
By: /s/ Leonard Osser
-------------------------------------
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Leonard Osser, Stephen A. Zelnick, or either one
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all pre- or post-effective amendments to
this Registration Statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on September 18, 1997.
Signatures Title
- ---------- -----
/s/ Leonard Osser President, Chief Executive
- --------------------------- Officer and Director
Leonard Osser
/s/ Pat Mele III Chief Financial Officer
- ---------------------------
Pat Mele III
/s/ Gregory Volok Director
- ---------------------------
Gregory Volok
/s/ Michael J. McGeehan Director
- ---------------------------
Michael J. McGeehan
Director
- ---------------------------
Giovanni Montoncello
/s/ David Sultanik Director
- ---------------------------
David Sultanik
/s/ Stephen A. Zelnick Director
- ---------------------------
Stephen A. Zelnick
/s/ Paul Gregory Director
- ---------------------------
Paul Gregory
/s/ Louis I. Margolis Director
- ---------------------------
Louis I. Margolis
/s/ Leonard M. Schiller Director
- ---------------------------
Leonard M. Schiller
6
STOCK PURCHASE AGREEMENT
Agreement entered into on September , 1997, by and among
____________________, a ____________ [corporation] (the "Buyer"), and Milestone
Scientific Inc., a Delaware corporation (the "Seller"). The Buyer and the Seller
are referred to collectively herein as the "Parties".
This Agreement contemplates a transaction in which the Buyer will purchase
from the Seller, and the Seller will sell to the Buyer, (i) __________ shares
(the "Shares") of Seller's common stock, par value $.001 per share (the "Common
Stock"), and (ii) warrants (the "Warrants") to purchase ___________ shares of
Common Stock (the "Warrant Shares") at an exercise price of $9.00 per share. The
total consideration to be paid by the Buyer for the Shares and the Warrants is
$__________ (the "Purchase Price").
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Applicable Rate" means the prime rate of interest as announced from time
to time by Citibank, N.A., New York, New York.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in ss.2(c) below.
"Closing Date" has the meaning set forth in ss.2(c) below.
<PAGE>
"Commission" means the United States Securities and Exchange Commission.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" has the meaning set forth in the preface above.
"Purchase Price" has the meaning set forth in the preface above.
"SEC Filings" means Seller's (i) proxy statement dated August 20, 1997;
(ii) Form 10-KSB for the year ended December 31, 1996; and (iii) Form 10-QSB for
the period ended June 30, 1997.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Shares" has the meaning set forth in the preface above.
"Warrants" has the meaning set forth in the preface above.
"Warrant Shares" has the meaning set forth in the preface above.
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2. Purchase and Sale of Shares and Warrants.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell to the Buyer, the Shares and the Warrants and the Buyer agrees to pay to
the Seller the Purchase Price.
(b) Purchase Price. The Buyer agrees to pay the Purchase Price to the
Seller at the Closing by delivery of cash payable by wire transfer to an account
designated in writing by the Seller.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Morse, Zelnick,
Rose & Lander LLP in New York, New York, commencing at 9:00 a.m. local time on
the date hereof or such date and time as the Buyer and the Seller shall mutually
determine (the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) the Seller will deliver
to the Buyer stock certificates representing the Shares and warrant
certificates, substantially in the form annexed hereto as Exhibit A representing
the Warrants,(ii) the Buyer will deliver to the Seller the Purchase Price,(iii)
the Parties will enter into the Registration Rights Agreement, substantially in
the form annexed hereto as Exhibit B and (iv) counsel for the Seller shall
deliver to the Buyer a legal opinion in form and substance reasonably
satisfactory to the Buyer.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller represents
and warrants to the Buyer that the statements contained in this ss.3(a) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this ss.3(a)).
(i) Organization of Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement
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constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions. The Seller need
not give any notice to, make any filing with, or obtain any authorization,
consent or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Seller is
subject or any provision of its charter or bylaws 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 material agreement,
contract, lease, license, instrument, or other arrangement to which the
Seller is a party or by which it is bound or to which any of its assets is
subject.
(iv) Brokers' Fees. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(v) The Shares and the Warrant Shares. The Shares and the Warrant
Shares have been duly authorized and, when issued, will be fully paid and
non-assessable, free and clear of any restrictions on transfer (other than
any restrictions under the Securities Act and state securities laws),
taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands.
(vi) Financial Statements; Undisclosed Liabilities. The Seller has
provided the Buyer with copies of the SEC Filings. The information set
forth in the SEC Filings is true, correct and complete in all material
respects as of the respective date of each such filing and does not omit
to state any material fact necessary in order to make the statements
therein not misleading. The financial statements of the Seller as set
forth in the SEC Filings have been prepared in accordance with GAAP
applied on a consistent basis throughout
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the periods covered thereby and fairly present in all material respects
the financial condition and results of operations of the Seller as of
their respective dates. Since June 30, 1997, there has not been any
material adverse change in the business, financial condition or results of
operations of the Seller except that the Company has continued to operate
at a loss. Except for the liabilities set forth in the financial
statements included in the SEC Filings and liabilities which have arisen
after June 30, 1997 in the Ordinary Course of Business, the Seller has no
material liability.
(vii) Capitalization. The entire authorized capital of the Seller
consists of 10,000,000 shares of Common Stock. As of August 1, 1997,
5,568,152 shares of Common Stock were issued and outstanding and
approximately 1,955,478 shares are issuable upon exercise of outstanding
options and warrants. The Board of Directors of the Seller has authorized
the sale on or before September 15, 1997 of up to $10 million of shares of
Common Stock and warrants on the same terms and conditions as the
transactions contemplated hereby. The transactions contemplated hereby are
being made pursuant to such authorization.
(viii) Securities Law Compliance. The transactions contemplated
hereby comply in all material respects with the requirements of (i)
Section 4(2) of the Securities Act and Regulation D promulgated thereunder
and with the requirements of all other published rules and regulations of
the Commission currently in effect relating to "private offerings" to
"accredited investors" of the type contemplated by the Seller; and (ii)
the securities laws of any state in which the shares and the warrants will
be offered.
(b) Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this ss.3(b) are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.3(b)).
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full
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power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and
conditions. The Buyer need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated
by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Buyer is
subject or any provision of its charter or bylaws 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 Buyer is a
party or by which it is bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
(v) Investment. The Buyer is an Accredited Investor. The Buyer
is not acquiring the Shares, the Warrants or the Warrant Shares with a
view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act.
(vi) SEC Filings. The Buyer has been given copies of the SEC Filings
and has reviewed such SEC Filings. The Buyer has been given the
opportunity to ask questions and receive answers from the Seller
concerning Seller's operations and financial condition and the
transactions contemplated hereby. The Buyer has been provided with all of
the information deemed necessary by the Buyer in connection with the
transactions contemplated hereby.
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4. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing:
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under ss.5 below).
(b) Share Certificate and Warrant Certificates. Each warrant certificate
representing the Warrants and, until such time as the Shares and the Warrant
Shares have been duly registered under the Securities Act, each stock
certificate representing the Shares and the Warrant Shares will be imprinted
with a legend substantially in the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act") or
applicable state securities laws and may not be offered, sold,
transferred, pledged, hypothecated, assigned or otherwise disposed of
except pursuant to an effective registration statement under the Act or in
a transaction which is exempt from registration under the Act and any
applicable state securities laws.
5. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Seller and the Buyer contained in this Agreement shall
survive the Closing hereunder (unless the other party knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of two years thereafter, other
than the representations and warranties contained in ss.3(a)(v), ss.3(a)(viii)
and ss.3(b)(vi) which shall survive without limitation.
(b) Indemnification Provisions for Benefit of the Buyer. In the event the
Seller breaches any of its representations, warranties, and covenants contained
herein, provided that the Buyer makes a written claim for indemnification
against the Seller pursuant to ss.6(g) below within such survival period, then
the Seller agrees to indemnify the Buyer from and against the entirety
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of any Adverse Consequences the Buyer may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach.
(c) Indemnification Provisions for Benefit of the Seller. In the event the
Buyer breaches any of its representations, warranties, and covenants contained
herein, provided that the Seller makes a written claim for indemnification
against the Buyer pursuant to ss.6(g) below within the survival period, then the
Buyer agrees to indemnify the Seller from and against the entirety of any
Adverse Consequences the Seller may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach.
(d) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax consequences and insurance coverage and take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this ss.5. All
indemnification payments under this ss.5 shall be deemed adjustments to the
Purchase Price.
(e) Exclusive Remedy. The Buyer and the Seller acknowledge and agree that
the foregoing indemnification provisions in this ss.5 shall be the exclusive
remedy of the Buyer and the Seller with respect to the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, the Buyer
and the Seller hereby waive any statutory, equitable, or common law rights or
remedies.
6. Miscellaneous.
(a) Press Releases and Public Announcements. The Seller and the Buyer may
file such forms with the Commission and issue such press releases and make such
public announcements relating to the transactions contemplated hereby as each
shall determine. The Parties shall cooperate with each other in connection with
any such filing.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
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(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Buyer or the Seller, as the case may be; provided, however, that the
Buyer may (i) assign any or all of its rights and interests hereunder to one or
more of its wholly-owned subsidiaries and (ii) designate one or more of its
wholly-owned subsidiaries to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for the performance
of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if delivered to the addresses in person,
by Federal Express or similar receipt delivery, by facsimile delivery or, if
mailed, by certified mail, return receipt requested, as follows:
If to the Seller:
Milestone Scientific Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Att'n: Leonard Osser, President
Fax: (201) 535-2829
with a copy to:
Morse, Zelnick, Rose & Lander LLP
450 Park Avenue
New York, New York 10022
Att'n: Stephen Zelnick, Esq.
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Fax: (212) 838-9190
If to the Buyer:
_________________________
_________________________
_________________________
Att'n: __________________
Fax: ____________________
Or to such other address as any of them, by notice to the other, may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or by mailing.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties
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and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean including
without limitation.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
[BUYER]______________________
By: _______________________
Title:_______________________
MILESTONE SCIENTIFIC INC.
By:
---------------------------------
Leonard Osser, President
12
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement") made this ___ day of
September, 1997 by and between Milestone Scientific Inc., a Delaware corporation
(the "Company"), and ("Purchaser"), a [corporation] [limited partnership].
WITNESSETH
WHEREAS, the Company and Purchaser have simultaneously herewith entered
into a Stock Purchase Agreement; and
WHEREAS, in connection with the Stock Purchase Agreement, the Company has
agreed to enter into this Registration Rights Agreement with Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
"Securities Act" (as defined herein).
"Common Stock" shall mean the Common Stock, $.001 par value per share, of
the Company, as constituted as of the date of this Agreement.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so described in Section
5.
"Restricted Stock" shall mean shares of Common Stock of the Company and
the shares of Common Stock of the Company underlying the Warrants which are
being sold to Purchaser pursuant to the Stock Purchase Agreement.
"Securities Act" shall mean the United States Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 5.
<PAGE>
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement, dated
the date hereof, between the Company and Purchaser.
2. Restrictive Legend. Each certificate representing Restricted Stock
shall, except as otherwise provided in this Section 2, be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS."
3. Registration. The Company will use its reasonable best efforts (subject
to the provisions of this Agreement) to file with the Commission no later than
September 30, 1997, a registration statement under the Securities Act and any
applicable state securities laws registering for reoffer and resale the
Restricted Stock.
4. Registration Procedures. The Company will, as expeditiously as
possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities (on such applicable form as the Company may in its
sole discretion elect to use) and use its reasonable best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby, determined as hereinafter provided;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the period
specified in subsection (a) above and comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such registration statement in accordance with Purchaser's intended method of
disposition set forth in such registration statement for such period;
(c) furnish to Purchaser such number of copies of the registration
statement and the prospectus included therein, including each preliminary
prospectus, as Purchaser reasonably may request in order to facilitate the
public sale or other disposition of the Restricted Stock covered by such
registration statement;
(d) use its reasonable best efforts to register or qualify the Restricted
Stock covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as Purchaser reasonably shall request; provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
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(e) immediately notify Purchaser at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(f) use its reasonable best efforts to include or list, as the case may
be, the Restricted Stock being registered on the automated quotation system of
the National Association of Securities Dealers, Inc. or the principal securities
exchange on which Common Stock of the Company is then quoted or listed;
(g) afford Purchaser and its representative, if any, an opportunity to
make such examination and inquiry into the financial position, business and
affairs of the Company and its subsidiaries as Purchaser or its counsel may
reasonably deem necessary to satisfy Purchaser and its counsel as to the
accuracy and completeness of the registration statement;
(h) deliver promptly to Purchaser copies of all correspondence between the
Commission and the Company relating to the registration statement; and
(i) use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement (which in no event
shall require the Company to commence any judicial proceeding).
For purposes of Sections 4(a) and 4(b) above, the period of distribution
of Restricted Stock shall be deemed to extend until the earlier of the sale of
all Restricted Stock covered by the Registration Statement or the seventh
anniversary of the effective date thereof.
In connection with registration hereunder, Purchaser will furnish to the
Company in writing such information with respect to itself and the proposed
distribution by it as shall be reasonably necessary in order to assure
compliance with federal and applicable state securities laws.
5. Expenses. All expenses incurred by the Company in complying with
Section 3 above, including without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company and
independent public accountants for the Company, fees and expenses, including
counsel fees, incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars and costs of insurance
are called "Registration Expenses." All selling commissions applicable to the
sale of Restricted Stock, including any fees and disbursements of any special
counsel to the sellers of Restricted Stock, are called "Selling Expenses."
The Company will pay all Registration Expenses in connection with the
registration statement. All Selling Expenses shall be borne by Purchaser.
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6. Rule 144 Reporting. With a view to making available to Purchaser the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Restricted Stock without registration, the Company agrees to:
(a) make and keep public information available, as those terms are used
and defined in Commission Rule 144;
(b) use its reasonable best efforts to file with the Commission in a
timely manner all reports and other documents required by the Company under the
Exchange Act.
7. Indemnification and Contribution.
(a) In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Sections 3 and 4 above, the Company will
indemnify and hold harmless Purchaser, and each other person, if any, who
controls Purchaser within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which Purchaser or such
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses, or actions in
respect thereof, arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant to Sections 3 and 4 above, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Purchaser, and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, action
or expense; provided, however, that the Company will not be liable in any such
case if and to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information, pertaining to Purchaser, as such, furnished in writing by Purchaser
specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Section 3 above, Purchaser will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement and each director of the Company, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities, or
actions in respect thereof, arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Restricted Stock was registered under the Securities
Act pursuant to Section 3 above, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or
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defending any such loss, claim, damage, liability or action, provided, however,
that Purchaser will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
Purchaser, as such, furnished in writing to the Company by Purchaser
specifically for use in such registration statement or prospectus; and provided
further, however, that the liability of Purchaser hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the shares sold by
Purchaser under such registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event to exceed the
proceeds received by Purchaser from the sale of Restricted Stock covered by such
registration statement.
(c) Promptly after receipt by a party indemnified hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 7 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 7 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified parties shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) Purchaser,
exercising its rights under this Agreement, or any controlling person of
Purchaser, makes a claim for indemnification pursuant to this Section 7 but it
is judicially determined, by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal, that such indemnification may not be enforced in such
case, the fact that this Section 7 provides for indemnification in such case
notwithstanding, or (ii) contribution under the Securities Act may be required
on the part of Purchaser or any such controlling person in circumstances for
which indemnification is provided under this Section 7, then and in each such
case, the Company and Purchaser will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject, after contribution from
others, in such proportion so that Purchaser is responsible for the
5
<PAGE>
portion represented by the percentage that the public offering price of its
Restricted Stock offered by the registration statement bears to the public
offering price of all securities offered by such registration statement, and the
Company is responsible for the remaining portion; provided, however, that in any
such case, (x) Purchaser will not be required to contribute any amount in excess
of the public offering price of all such Restricted Stock offered by it pursuant
to such registration statement; and (y) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Securities Act,
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
8. Changes in Common Stock. If, and as often as, there is any change in
the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization where the Company is the surviving entity, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby to Purchaser shall continue with respect to the Common
Stock as so changed.
9. Miscellaneous.
(a) The rights granted to Purchaser hereunder may not be assigned to any
other person; provided, however, that Purchaser may assign any or all of its
rights and interests hereunder to one or more of its wholly-owned subsidiaries
and designate one or more of its wholly-owned subsidiaries to perform its
obligations hereunder (in any or all of which cases, Purchaser shall nonetheless
remain responsible for the performance of all of its obligations hereunder).
(b) Except as otherwise expressly provided herein, any notice required or
desired to be served, given or delivered hereunder shall be in writing, and
shall be deemed to have been validly served, given or delivered upon the earlier
of (i) personal delivery to the address set forth below, or (ii) in the case of
notice by Federal Express or other reputable overnight courier service, two (2)
business days after delivery to such courier service, addressed to the party to
be notified as follows:
if to the Company or Purchaser, at the address of such party set
forth in the Stock Purchase Agreement.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflict-of-laws principles
which would require the application of the laws of another jurisdiction.
(d) This Agreement may not be amended or modified, and no provision hereof
may be waived, without the written consent of the Company and Purchaser.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) The provisions of Section 4(a) above to the contrary notwithstanding,
the Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 30 days in any 12-month period if there
6
<PAGE>
exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed.
(g) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
(h) As used in this Agreement, the masculine, feminine or neutral gender
and the singular or plural number shall be deemed to include the others whenever
the context so indicates or requires.
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by a duly authorized officer, and Purchaser has duly executed this Agreement, as
of the date first written above.
MILESTONE SCIENTIFIC, INC.
By:
---------------------------------
Leonard Osser, President
[PURCHASER]
By:
-------------------------------
8
NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON THE
EXERCISE HEREOF ("WARRANT SHARES"), AS OF THE DATE OF ISSUANCE HEREOF, HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAW, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
For the Purchase of ______
shares of Common Stock
No.
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
MILESTONE SCIENTIFIC INC.
(A Delaware corporation)
Milestone Scientific Inc., a Delaware corporation (the "Company"),
hereby certifies that for value received, __________ ("Registered Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company, at
any time or from time to time during the period commencing on September , 1997,
and ending on September , 1999, _______ shares of Common Stock, $.001 par value,
of the Company ("Common Stock"), at a purchase price equal to $9.00 per share.
The number of shares of Common Stock purchasable upon exercise of this Warrant,
and the purchase price per share, each as adjusted from time to time pursuant to
the provisions of this Warrant, are hereinafter referred to as the "Warrant
Shares" and the "Purchase Price", respectively.
<PAGE>
1. Exercise.
(a) This Warrant may be exercised by Registered Holder, in whole or in
part, by the surrender of this Warrant (with the Notice of Exercise Form
attached hereto as Exhibit I duly executed by Registered Holder) at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the
United States, of an amount equal to the then applicable Purchase Price
multiplied by the number of Warrant Shares then being purchased upon such
exercise.
(b) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection l(a) above.
At such time, the person or persons in whose name or names any certificates for
Warrant Shares shall be issuable upon such exercise as provided in subsection
l(c) below shall be deemed to have become the holder or holders of record of the
Warrant Shares represented by such certificates.
(c) As soon as practicable after the exercise of the purchase right
represented by this Warrant, the Company at its expense will use its best
efforts to cause to be issued in the name of, and delivered to, Registered
Holder, or, subject to the terms and conditions hereof, to such other individual
or entity as Registered Holder (upon payment by Registered Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full
shares of Warrant Shares to which Registered Holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which Registered Holder would otherwise be entitled, cash in an
amount determined pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, stating on the face
or faces thereof the number of shares currently stated on the face
of this Warrant minus the number of such shares purchased by
Registered Holder upon such exercise as provided in subsection l(a)
above.
2. Adjustments.
(a) Split, Subdivision or Combination of Shares. If the outstanding shares
of the Company's Common Stock at any time while this Warrant remains outstanding
and unexpired shall be subdivided or split into a greater number of shares, or a
2
<PAGE>
dividend in Common Stock shall be paid in respect of Common Stock, the Purchase
Price in effect immediately prior to such subdivision or at the record date of
such dividend, simultaneously with the effectiveness of such subdivision or
split or immediately after the record date of such dividend (as the case may
be), shall be proportionately decreased. If the outstanding shares of Common
Stock shall be combined or reverse-split into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination or reverse split,
simultaneously with the effectiveness of such combination or reverse split,
shall be proportionately increased. When any adjustment is required to be made
in the Purchase Price, the number of shares of Warrant Shares purchasable upon
the exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the number of shares issuable upon the exercise
of this Warrant immediately prior to such adjustment, multiplied by the Purchase
Price in effect immediately prior to such adjustment, by (ii) the Purchase Price
in effect immediately after such adjustment.
(b) Reclassification, Reorganization, Consolidation or Merger. In the case
of any reclassification of the Common Stock (other than a change in par value or
a subdivision or combination as provided for in subsection 2(a) above), or any
reorganization, consolidation or merger of the Company with or into another
corporation (other than a merger or reorganization with respect to which the
Company is the continuing corporation and which does not result in any
reclassification of the Common Stock), or a transfer of all or substantially all
of the assets of the Company, or the payment of a liquidating distribution then,
as part of any such reorganization, reclassification, consolidation, merger,
sale or liquidating distribution, lawful provision shall be made so that
Registered Holder shall have the right thereafter to receive upon the exercise
hereof, the kind and amount of shares of stock or other securities or property
which Registered Holder would have been entitled to receive if, immediately
prior to any such reorganization, reclassification, consolidation, merger, sale
or liquidating distribution, as the case may be, Registered Holder had held the
number of shares of Common Stock which were then purchasable upon the exercise
of this Warrant. In any such case, appropriate adjustment (as reasonably
determined by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of Registered Holder such that the provisions set forth in
this Section 2 (including provisions with respect to the Purchase Price) shall
thereafter be applicable, as nearly as is reasonably practicable, in relation to
any shares of stock or other securities or property thereafter deliverable upon
the exercise of this Warrant.
(c) Price Adjustment. No adjustment in the per share exercise price shall
be required unless such adjustment would require an increase or decrease in the
Purchase Price of at least $0.01, provided, however, that any adjustments which
by reason of this paragraph are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 2 shall be made to the nearest cent or to the nearest 1/lOOth of a
share, as the case may be.
3
<PAGE>
(d) Price Reduction. Notwithstanding any other provision set forth in this
Warrant, at any time and from time to time during the period that this Warrant
is exercisable, the Company in it sole discretion may reduce the Purchase Price
or extend the period during which this Warrant is exercisable.
(e) No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company but will at all times in good
faith assist in the carrying out of all the provisions of this Section 2 and in
the taking of all such actions as may be necessary or appropriate in order to
protect against impairment of the rights of Registered Holder to adjustments in
the Purchase Price.
(f) Notice of Adjustment. Upon any adjustment of the Purchase Price or
extension of the Warrant exercise period, the Company shall forthwith give
written notice thereto to Registered Holder describing the event requiring the
adjustment, stating the adjusted Purchase Price and the adjusted number of
shares purchasable upon the exercise hereof resulting from such event, and
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
3. Fractional Shares. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares, but shall make an adjustment
thereof in cash on the basis of the last sale price of the Warrant Shares on the
over-the-counter market as reported by Nasdaq or on a national securities
exchange on the trading day immediately prior to the date of exercise, whichever
is applicable, or if neither is applicable, then on the basis of the then fair
market value of the Warrant Shares as shall be reasonably determined by the
Board of Directors of the Company.
4. Limitation on Sales. Each holder of this Warrant acknowledges that this
Warrant and the Warrant Shares, as of the date of original issuance of this
Warrant, have not been registered under the Securities Act of 1933, as amended
("Act"), and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise
in the absence of (a) an effective registration statement under the Act as to
this Warrant or such Warrant Shares or (b) an opinion of counsel, satisfactory
to the Company, that such registration and qualification are not required. The
Warrant Shares issued upon exercise thereof shall be imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE
4
<PAGE>
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS."
5. Certain Dividends. If the Company pays a dividend or makes a
distribution on the Common Stock ("Dividend"), other than a cash dividend or a
stock dividend payable in shares of Common Stock, then the Company will pay or
distribute to Registered Holder, upon the exercise hereof, in addition to the
Warrant Shares purchased upon such exercise, the Dividend which would have been
paid to such Registered Holder if it had been the owner of record of such
Warrant Shares immediately prior to the date on which a record is taken for such
Dividend or, if no record is taken, the date as of which the record holders of
Common Stock entitled to such Dividend are determined.
6. Registration Rights of Registered Holder. The Company and Registered
Holder have entered into a Registration Rights Agreement, dated the date hereof,
with respect to the Warrant Shares, pursuant to which the Company has agreed to
use its reasonable best efforts to prepare and file a Registration Statement
under the Act ("Registration Statement") with the Securities and Exchange
Commission and in such states as shall be reasonably specified by Registered
Holder registering for reoffer and resale the Warrant Shares no later than
September 30, 1997.
7. Notices of Record Date. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of any class or any other securities,
or to receive any other right, or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or
any transfer of all or substantially all of the assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
5
<PAGE>
then, and in each such case, the Company will mail or cause to be mailed to
Registered Holder a notice specifying, as the case may be, (i) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the effective date on which such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization' reclassification,
consolidation, merger, transfer, dissolution, liquidation or winding-up. Such
notice shall be mailed at least ten (10) days prior to the record date or
effective date for the event specified in such notice, provided that the failure
to mail such notice shall not affect the legality or validity of any such
action.
8. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such shares of Common Stock and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant. The Company
shall apply for listing, and obtain such listing, for the Warrant Shares on The
Nasdaq Stock Market and each exchange on which the Common Stock is listed, at
the earliest time that such listing may be obtained in accordance with the rules
and regulations of The Nasdaq Stock Market and the exchange and maintain such
listing until the seventh anniversary of the date of original issuance of this
Warrant.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. Transfers. etc.
(a) The Company will maintain a register containing the names and address
of Registered Holder. Registered Holder may change its address as shown on the
warrant register by written notice to the Company requesting such change.
(b) Until any transfer of this Warrant is made in the warrant register,
the Company may treat Registered Holder as the absolute owner hereof for all
purposes, provided, however, that if and when this Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the bearer
hereof as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
6
<PAGE>
11. No Rights as Stockholder. Until the exercise of this Warrant,
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.
12. Successors. The rights and obligations of the parties to this Warrant
will inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, assigns, pledgees, transferees and purchasers.
Without limiting the foregoing, the registration rights set forth in this
Warrant shall inure to the benefit of Registered Holder and Registered Holder's
successors, heirs, pledgees, assignees, transferees and purchasers of this
Warrant and the Warrant Shares.
13. Change or Waiver. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
14. Headings. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
15. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York as such laws are applied to
contracts made and to be fully performed entirely within that state between
residents of that state.
16. Jurisdiction and Venue. The Company and Registered Holder (i) agree
that any legal suit, action or proceeding arising out of or relating to this
Warrant shall be instituted exclusively in New York State Supreme Court, County
of New York or in the United States District Court for the Southern District of
New York, (ii) waives any objection to the venue of any such suit, action or
proceeding and the right to assert that such forum is not a convenient forum for
such suit, action or proceeding, and (iii) irrevocably consent to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding, and the Company and Registered Holder further agree
to accept and acknowledge service or any and all process which may be served in
any such suit, action or proceeding in New York State Supreme Court, County of
New York or in the United States District Court for the Southern District of New
York and agrees that service of process upon it mailed by certified mail to its
address shall be deemed in every respect effective service of process upon it in
any suit, action or proceeding.
17. Mailing of Notices. etc. All notices and other communications under
this Warrant (except payment) shall be in writing and shall be sufficiently
given if delivered to the addressees in person, by Federal Express or similar
receipt delivery,
7
<PAGE>
by facsimile delivery or, if mailed, postage prepaid, by certified mail, return
receipt requested, as follows:
to Registered Holder:
to the Company: Milestone Scientific Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Attention: Leonard Osser, President
Fax: (201) 535-2829
with a copy to: Morse, Zelnick, Rose & Lander LLP
450 Park Avenue
New York, New York 10022
Attention: Stephen Zelnick, Esq.
Fax: (212) 838-9190
or to such other address as any of them, by notice to the other may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or by mailing.
MILESTONE SCIENTIFIC INC.
By:
----------------------------
Leonard Osser, President
8
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
TO: Milestone Scientific Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
1. The undersigned hereby elects to purchase shares of the Common Stock of
Milestone Scientific Inc., pursuant to terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full, together
with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
the Common Stock in the name of the undersigned or in such other name as is
specified below.
3. The undersigned represents that it will sell the shares of Common Stock
pursuant to an effective Registration Statement under the Securities Act of
1933, as amended, or an exemption from registration thereunder.
(Name)
(Address)
(Taxpayer Identification Number)
[print name of Registered Holder]
By:
Title:
Date:
9
EXHIBIT 5.1
MORSE, ZELNICK, ROSE & LANDER
A LIMITED LIABILITY PARTNERSHIP
450 PARK AVENUE
NEW YORK, NEW YORK 10022-2605
212 838 1177
FAX 212 838 9190
September 18, 1997
Milestone Scientific Inc.
220 South Orange Avenue
Livingston Corporate Park
Livingston, New Jersey 07039
Re: Registration Statement on Form S-3
Dear Sirs:
We have acted as counsel to Milestone Scientific Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), to register the sale by certain selling stockholders of 3,499,998
shares of Common Stock, par value $.001 per share (the "Common Stock"), of the
Company.
In this regard, we have reviewed the Certificate of Incorporation of the
Company, as amended, resolutions adopted by the Company's Board of Directors,
the Registration Statement, and such other records, documents, statutes and
decisions as we have deemed relevant in rendering this opinion.
Based upon the foregoing we are of the opinion that:
Each share of Common Stock included in the Registration Statement has been
duly authorized for issuance and is now, or when issued upon exercise and
pursuant to the terms of the instruments which they underlie will be, validly
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement. In giving this opinion, we do not hereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the SEC thereunder.
Very truly yours,
/s/ Morse, Zelnick, Rose & Lander, LLP
--------------------------------------
Morse, Zelnick, Rose & Lander, LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 5, 1997, except for Notes J and P as
to which the dates are February 26, and February 20, 1997, accompanying the
consolidated financial statements of Milestone Scientific Inc. and subsidiaries
appearing in the Annual Report on Form 10-KSB for the year ended December 31,
1996 which are incorporated by reference in this Registration Statement. We
consent to the incorporation by reference in the Registration Statement of the
aforementioned reports and to the use of our name as it appears under the
caption "Experts."
/s/ Grant Thornton LLP
New York, New York
September 15, 1997
