Exhibit 10.2
PURCHASE AGREEMENT
PURCHASE AGREEMENT (the "Agreement") made as of August 25, 2000 between
MILESTONE SCIENTIFIC INC., a Delaware corporation, with its principal offices at
220 South Orange Avenue, Livingston, New Jersey 07039 (the "Company"), and each
of the Purchasers identified on Exhibit A (collectively the "Purchasers" and
individually a "Purchaser").
WHEREAS, the Company desires to sell to Purchasers and Purchasers desire
to purchase from the Company an aggregate of $1,000,000 face amount of its 20%
Secured Notes (collectively the "Notes"), substantially in the form annexed as
Exhibit B;
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties hereto agree as follows:
1. Purchase and Sale of Notes.
(a) Subject to the terms and conditions hereinafter set forth, each
of the Purchasers hereby subscribes for and agrees to purchase from the Company
the face amount of the Notes set forth opposite the Purchaser's name on Exhibit
A.
(b) The aggregate purchase price for the Notes shall be $1,000,000
and each Note shall be purchased at the face amount thereof. Each of the
Purchasers shall be obligated to pay the amount of the face value of the Notes
set forth opposite his name on Exhibit A. The purchase price for each Note is
payable by good bank or certified check or by wire transfer of funds to the
Company, contemporaneously with the execution and delivery of this Agreement.
The Notes will be delivered by the Company on the Closing Date (as defined
below).
2. Terms of the Notes. Except as otherwise set forth in this Agreement,
the terms of the Notes shall be as set forth in the Notes.
3. Closing. The closing of each of the several Note purchases contemplated
hereby (each a "Closing") shall each take place on a date (the "Closing Date")
within three (3) business days following the satisfaction of the conditions set
forth herein for the purchase of that Note and at such times as shall be
determined by the Company at the offices of Morse, Zelnick, Rose & Lander, LLP,
450 Park Avenue, New York, New York 10022.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser, which representations and warranties
shall be true and correct as of the date hereof and as of each Closing Date, as
follows:
4.1 Organization; Standing and Power. The Company and its
subsidiaries (a) are corporations duly organized, existing and in good
standing under the laws of the state of their incorporation, (b) have all
requisite corporate power and authority to own their properties and to
carry on their businesses as now conducted and as proposed hereafter to be
conducted, (c) are duly qualified to do business as foreign corporations
in each and every jurisdiction where such qualification is necessary
except where the failure to so qualify would not have a material adverse
effect on the financial condition, business, operations, assets or
prospects of the
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Company and its subsidiaries as a whole and (d) the Company has all
requisite corporate power and authority to execute and deliver, and
perform all of its obligations under this Agreement.
4.2 Capitalization. The total authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock and no shares of
preferred stock. As of June 30, 2000, the Company has outstanding
10,652,898 shares of Common Stock. In addition, there are 1,000,000 shares
of Common Stock reserved for issuance under the Company's 1997 Stock
Option Plan of which 850,000 shares are issuable pursuant to the exercise
of outstanding stock options ranging in exercise price from $1.00 to
$23.00 per share. The Company also has outstanding other compensatory
options for 136,000 shares with exercise prices ranging from $5.125 to
$23.00 per share and warrants and options in connection with financing
transactions for 226,190 shares at exercise prices ranging from $1.75 to
$7.00 per share of Common Stock.
4.3 Authorization. The execution, delivery and performance by the
Company of its obligations under this Agreement has been duly authorized
by all requisite corporate action and will not, either prior to or as a
result of the consummation of the transactions contemplated by this
Agreement or the Notes: (a) violate any law, any order of any court or
other agency of government, any provision of the Certificate of
Incorporation or Bylaws of the Company or any contract, indenture,
agreement or other instrument to which the Company is a party, or by which
the Company or any of its assets or properties are bound, or (b) be in
conflict with, result in a breach of, or constitute (after the giving of
notice or lapse of time or both) a default under, or result in the
creation or imposition of any lien of any nature whatsoever upon any of
the property or assets of any Company pursuant to, or result in the
acceleration of, any such contract, indenture, agreement or other
instrument. The Company is not required to obtain any government approval,
consent or authorization from, or to file any declaration or statement
with, any governmental instrumentality or agency in connection with or as
a condition to the execution, delivery or performance of any of this
Agreement or the Notes other than the filings which have heretofore been
made. This Agreement and each of the Notes is valid, binding and
enforceable against the Company in accordance with its terms.
4.4 Non-contravention. To the best of its knowledge, the Company is
not in violation or breach of or in default with respect to, complying
with any material provision of any contract, agreement, instrument, lease,
license, arrangement or understanding to which it is a party, and each
such contract, agreement, instrument, lease, license, arrangement and
understanding is in full force and effect and is the legal, valid and
binding obligation of the Company enforceable as to the Company in
accordance with its terms (subject to applicable bankruptcy, insolvency
and other laws affecting the enforceability of creditors' rights generally
and to general equitable principals). Neither the execution and the
delivery of this Agreement, the issuance of the Notes, nor the
consummation of the transactions contemplated hereby or thereby, 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 Company is subject or (b)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Company is a party or by which the Company is bound or to which any of the
Company's assets are subject.
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4.5 Litigation. There is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other agency
now pending or, to the knowledge of the Company, threatened in writing
against the Company, or any of its assets, which, if adversely determined,
might reasonably be expected to have a material adverse effect on the
Company's business, operations and financial condition.
4.6 SEC Filings. The information set forth in the Form 10-KSB for
the year ended December 31, 1999 and Form 10-QSB for the six month period
ended June 30, 2000 (collectively, the "SEC Filings") as filed by the
Company with the Securities and Exchange Commission (the "SEC") 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 Company as set forth in the SEC Filings have been
prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby and fairly present in all material respects
the financial condition and results of operations of the Company as of
their respective dates. Since June 30, 2000, there has not been any
material adverse change in the business, financial condition or results of
operations of the Company 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, or otherwise disclosed in the SEC
Filings and liabilities which have arisen after June 30, 2000 in the
ordinary course of business, the Company has no material liability.
4.7 Due Authorization. The issuance of the Notes has been duly
authorized by all necessary corporate action and each Note when issued
will be the legal and binding obligation of the Company enforceable in
accordance with its terms.
4.8 Securities Law Exemption. Assuming the accuracy of Purchasers'
representations and warranties set forth herein, the sale of the Notes
pursuant to this Agreement has been made in accordance with the provisions
and requirements of ss.4(2), Regulation D or ss.4(6) under the Securities
Act of 1933, as amended (the "Securities Act") and any applicable state
law.
4.9 Use of Proceeds. The proceeds from the sale of the Notes will be
used for working capital, including the payment of all amounts currently
due and owing to the Company's auditors.
4.10 Compliance with Laws. The Company is in compliance in all
material respects with all occupational safety, health, wage and hour,
employment discrimination, environmental, flammability, labeling, usury
and other applicable laws which are material to its businesses, and the
Company is not aware of any state of facts, events, conditions or
occurrences which may now or hereafter constitute or result in a violation
of any of such applicable laws, or which may give rise to the assertion of
any such violation, the effect of which could have a material adverse
effect on the Company's business, operations and financial condition.
4.11 Licenses and Permits. The Company has obtained all federal,
state and local licenses and permits required to be maintained in
connection with and material to its operations, and all such licenses and
permits obtained are valid and in full force and effect.
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4.12 Patents, Trademarks, Copyrights, Etc. The Company owns or
validly licenses all patents, patent rights, patent applications,
licenses, shop rights, trademarks, trademark applications, tradenames,
copyrights and other proprietary information (collectively "Rights") used
in the conduct of its business as currently being conducted. To the actual
knowledge of the Company, the conduct of its business as currently being
conducted does not conflict with valid rights of others in any way, nor
has any material use been made of the Rights, except by the Company or by
other entities duly licensed to use the same.
4.13 No Other Representations. The Company shall not be deemed to
have made any representations, warranties, covenants, agreements or
indemnifications pertaining to the subject matter of this Agreement,
whether express or implied, except to the extent that such
representations, warranties, covenants, agreements or indemnifications are
made in this Agreement or the Schedules hereto or in any certificate or
other agreement, document or instrument delivered pursuant to the
provisions of this Agreement.
5. Representations and Warranties of the Purchasers. Each of the
Purchasers hereby severally represents and warrants to the Company as to
that Purchaser, which representations and warranties shall be true and
correct as of the date hereof and the Closing Date, as follows:
5.1 Authorization of Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action on the part of the Purchaser, does not violate any laws or
regulations applicable to Purchaser and is the valid binding and
enforceable obligation of Purchaser in accordance with its terms.
5.2 Non-contravention. 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 Purchaser is
subject or (b) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which Purchaser is a party or by which Purchaser is bound or to which any
of Purchaser's assets are subject.
5.3 Accredited Investor. Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of the Securities Act, and the rules
promulgated thereunder.
5.4 Investment. Purchaser acknowledges that the offering of this
Notes has not been reviewed by the United States Securities and Exchange
Commission ("SEC") and that the sale of the Notes pursuant hereto is
intended to be a nonpublic offering pursuant to ss.4(2), Regulation D or
ss.4(6) of the Securities Act. Purchaser represents that the Note is being
purchased for its own account, for investment and not for distribution or
resale to others. Purchaser agrees that Purchaser will not sell or
otherwise transfer the Notes unless it is registered under the Securities
Act or unless an exemption from such registration is available. Purchaser
understand that the Notes has not been registered under the Securities Act
and it or will be issued pursuant to a specific exemption from the
registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed
herein.
5.5 Access to Data. Purchaser has been given copies of the SEC
Filings and has had an opportunity to review same. Purchaser has had an
opportunity to discuss the SEC Filings and
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the Company's business, management and financial affairs with the
Company's management and the opportunity to review the Company's
facilities, each to Purchaser's satisfaction. Purchaser understands that
such discussions, as well as any written information issued or provided by
the Company, were intended to describe the aspects of the Company's
business and prospects which the Company believes to be material but were
not necessarily a thorough or exhaustive description thereof.
5.6 Speculative Nature of Investment. Purchaser acknowledges that
the purchase of the Notes involves a high degree of risk and that (i) an
investment in the Company is highly speculative and only investors who can
afford the loss of their entire investment should consider investing in
the Company and purchasing Notes; (ii) Purchaser may not be able to
liquidate its investment; (iii) transferability of the Notes is extremely
limited; and (iv) Purchaser could sustain the loss of its entire
investment.
5.7 Experience. Purchaser acknowledges that it has prior investment
experience, including investment in non-listed and non-registered
securities, or has employed the services of an investment advisor,
attorney or accountant to review all of the documents furnished or made
available by the Company and to evaluate the merits and risks of such an
investment on Purchaser's behalf.
5.8 Lack of Liquidity. Purchaser understands that there is no public
market for the Notes.
5.9 Legends. Purchaser consents to the placement of a legend on the
Notes, provided it is not then covered by an effective Registration
Statement, all as set forth in Section 6 of this Agreement.
5.10 Address. Purchaser hereby represents that its address,
appearing on Exhibit A, is, if an individual, his principal residence or
if a business entity, its principal place of business.
5.11 Registered Representative. Purchaser acknowledges that if he is
a Registered Representative of a National Association of Securities
Dealers, Inc. ("NASD") member firm, he must give such firm the notice
required by the NASD Conduct Rules, or any applicable successor rules of
the NASD receipt of which must be acknowledged by such firm on the
signature page hereof.
5.12 No Other Representations. Purchaser hereby represent that,
except as set forth herein, no representations or warranties have been
made to the Purchaser by the Company or any agent, employee or affiliate
of the Company and in entering into this transaction, Purchaser are not
relying on any information, other than that contained herein, that
contained in the SEC Filings and the results of independent investigation
by the Purchaser. The Purchaser shall not be deemed to have made any
representations, warranties, covenants, agreements or indemnifications
pertaining to the subject matter of this Agreement, whether express or
implied, except to the extent that such representations, warranties,
covenants, agreements or indemnifications are made in this Agreement or
the Exhibits hereto or in any certificate or other agreement, document or
instrument delivered pursuant to the provisions of this Agreement.
5.13 No Broker. There is no firm, corporation, agency or other
entity or person that is entitled to a finder's fee or any type of
commission in relation to or in connection with the
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transactions contemplated by this Agreement as a result of any agreement
or understanding with the Purchaser or any of their employees or agents.
5.14 Limitation of Market Activity. Upon receipt of the foregoing
notice as to the issuance of shares in payment of principle and interest,
the holder of this Note shall cease all market activity, directly or
indirectly, in shares of the Company's common stock and shall not resume
such activity until the expiration of the 15 trading day pricing period
provided for in the preceding sentence.
6. Legends. The Notes shall be endorsed with the following legend:
THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL (I) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") SHALL
HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (II) RECEIPT BY THE COMPANY
OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE
SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN
EXCHANGE FOR THIS NOTE.
THIS SECURITY IS SUBJECT TO THE TERMS OF A PURCHASE AGREEMENT, DATED AS OF
AUGUST 25, 2000, A COPY OF WHICH IS ON FILE AT THE EXECUTIVE OFFICES OF
MILESTONE SCIENTIFIC INC.
7. Confidentiality. Purchaser covenants and agrees that Purchaser, its
agents and representatives will use for its own benefit, convey or disclose to
any third party any information provided by the Company concerning its current
or proposed business, operations and financial conditions, other than
information which is already publicly available, was already known to the
Purchaser or is obtained from a source other than the Company and to the extent
required by law.
8. Affirmative Covenants. The Company covenants and agrees with the
Purchaser that, from the date hereof and until the Notes have been paid in full,
it shall:
9.1 Corporate. Do or cause to be done all things necessary to
at all times (a) other than mergers solely among the Company and any
of its subsidiaries, preserve, renew and keep in full force and
effect its corporate existence, patents, trademarks, rights,
licenses, permits and franchises, (b) comply with this Agreement,
(c) maintain and preserve all of its material property used or
useful in the conduct of their respective businesses, and (d) comply
with all applicable laws material to its businesses, including the
reporting requirements of the Securities Exchange Act of 1934,
whether now in effect or hereafter enacted, promulgated or issued.
9.2 Notice of Proceedings. Give prompt written notice to each
of the Purchasers of any proceeding instituted against the Company
in any federal or state court or before any commission or other
regulatory body, whether federal, state or local, which, if
adversely determined, could have a material adverse effect upon
their business, operations, properties, assets or condition,
financial or otherwise when taken as a whole.
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9.3 Books and Records; Inspection. Maintain true and accurate
books and records respecting all of their business operations, and
permit agents or representatives of the Purchasers to inspect, at
any time during normal business hours, upon reasonable notice, and
without undue material disruption of their business operations, all
of such books and records and to visit the properties and operations
of the Company and consult with the employees and officers of the
Company.
9.4 Notice of Default or Material Adverse Change. Promptly
advise the Purchasers of any event which could have a material
adverse effect on the Company's business, operation, property,
assets or condition, financial or otherwise, or the existence or
occurrence of any Event of Default (as defined in the Notes), any
breach of this Section 9 or any default of the Company under any
agreement or instrument to which it is a party.
9.5 Shares Which May Be Issued. The Company covenants that all
shares issued in payment of principal or interest on the Notes will,
upon issuance, be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance
thereof.
10. Conditions Precedent to the Obligations of the Company. The
obligations of the Company pursuant to this Agreement are subject to the
satisfaction at the Closing of each of the following conditions; provided,
however, that the Company may, in its sole discretion, waive any of such
conditions and proceed with the transactions contemplated hereby.
10.1 Accuracy of Representations and Warranties. The representations
and warranties of the Purchasers contained in this Agreement or in any
document or certificate delivered in connection with the transactions
contemplated hereby shall be true and correct in all material respects on
and as of the Closing Date, as if made on and as of the Closing Date.
10.2 Performance of Agreements. The Purchasers shall have duly
executed and delivered this Agreement to the Company and shall have
performed and complied in all material respects with all covenants,
obligations and agreements to be performed or complied with by any of them
on or before the Closing Date pursuant to this Agreement.
11. Conditions Precedent to the Obligations of the Purchasers. The
obligations of each of the Purchasers under this Agreement are subject to the
satisfaction at the Closing of each of the following conditions; provided,
however, that the Purchasers may, in their sole discretion, waive any of such
conditions and proceed with the transactions contemplated hereby.
11.1 Accuracy of Representations and Warranties. The representations
and warranties of the Company contained in this Agreement or in any
document or certificate delivered in connection with the transactions
contemplated hereby shall be true and correct in all material respects on
and as of the Closing Date, as if made on and as of the Closing Date.
11.2 Performance of Agreements. The Company shall have duly executed
and delivered this Agreement and the Registration Rights Agreement and
shall have performed and complied in all material respects with all
covenants, obligations and agreements to be performed or complied with by
it on or before the Closing Date pursuant to this Agreement.
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11.3 Litigation, Material Changes, Defaults, etc. No claim, action,
suit, proceeding, arbitration or hearing or notice of hearing shall be
pending (and no action or investigation by any governmental authority
shall be threatened) which seeks to enjoin, prevent or adversely affect
the consummation of the transactions contemplated by this Agreement. There
shall not have been any changes in the business of the Company which have
or could reasonably be expected to have a material adverse effect on the
business, operations, properties, assets or condition, financial or
otherwise, of the Company. There shall exist no defaults under the
provisions of any instrument evidencing indebtedness of the Company.
11.4 Purchase Permitted by Applicable Laws. The purchase of and
payment for the Notes shall not be prohibited by any applicable law or
governmental regulation (including without limitation Regulations G, T and
X of the Board of Governors of the Federal Reserve System) and shall not
subject the holders of the Notes to any tax, penalty or liability under
any applicable law or governmental regulation.
12. General Provisions.
12.1 Survival of Representations, Warranties, Covenants, and
Agreements. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the execution of this Agreement.
12.2 Notices. All notices, requests, demands and other
communications which are required to be or may be given under this
Agreement to any party to any of the other parties shall be in writing and
shall be deemed to have been duly given when (a) delivered in person, (b)
the day following dispatch by an overnight courier service (such as
Federal Express or UPS, etc.) or (c) five (5) days after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made. Any notice
or other communication given hereunder shall be addressed to the Company,
at its principal offices as set forth above and to the Purchasers at the
addresses indicated on Exhibit A hereto.
12.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12.4 Headings. All headings are inserted for convenience of
reference only and shall not affect the meaning or interpretation of any
such provisions or of this Agreement, taken as an entirety.
12.5 Severability. If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this Agreement
to be invalid or unenforceable, such holding shall in no way affect the
validity of the remainder of this Agreement.
12.6 Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but rather
may only be changed by a statement in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is
sought. It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a
waiver of any subsequent breach by that same party.
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12.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The
parties hereby agree that any dispute which may arise between them arising
out of or in connection with this Agreement shall be adjudicated before a
court located in New York City and they hereby submit to the exclusive
jurisdiction of the courts of the State of New York located in New York,
New York and of the federal courts in the Southern District of New York
with respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to
or arising out of this Agreement or any acts or omissions relating to the
sale of the securities hereunder, and consent to the service of process in
any such action or legal proceeding by means of registered or certified
mail, return receipt requested, in care of the address set forth below or
such other address as the undersigned shall furnish in writing to the
other.
12.8 Binding Effects. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors,
legal representatives and assigns.
12.9 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter
thereof and incorporates and supersedes all prior discussions, agreements
and understandings of any and every nature among them.
12.10 Further Assurances. The parties agree to execute and deliver
all such further documents, agreements and instruments and take such other
and further action as may be necessary or appropriate to carry out the
purposes and intent of this Agreement.
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12.11 Expenses. Each party hereto shall pay all of its own fees and
expenses in connection with the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
MILESTONE SCIENTIFIC INC.
By: /s/ Mitchell Kuhn
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Mitchell Kuhn, President
CUMBERLAND BENCHMARKED PARTNERS, L.P.
By: CUMBERLAND ASSOCIATES
By: /s/ Bruce Wilcox
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Bruce Wilcox,
Chairman, Management Committee
LONGVIEW PARTNERS A, L.P.
By: CUMBERLAND ASSOCIATES
By: /s/ Bruce Wilcox
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Bruce Wilcox,
Chairman, Management Committee
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