REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement") made as of the 9th day
of March, 2001 by and between Milestone Scientific Inc., a Delaware corporation
(the "Company"), ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ having an address at c/o Cumberland
Associates LLC, 1114 Avenue of the Americas, New York, N.Y. 10036, and ▇▇▇▇▇▇
▇▇▇▇▇▇, having and address at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(individually the "Purchaser" and collectively the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser have entered into a Line of Credit
Agreement, dated even date herewith (the "Agreement") pursuant to which the
Purchaser periodically will purchase from the Company, at the Company's request,
and the Company will periodically sell to the Purchaser, the Company's 10%
Secured Notes, due August 31, 2002, and related Warrants; and
WHEREAS, in connection with the Purchase Agreement, the Company has agreed
to enter into this Registration Rights Agreement.
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 4.
"Registerable Securities" shall mean the shares of the Company's Common
Stock issuable upon exercise of the Warrants.
"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 4.
"Warrants" shall mean the Draw Down Warrants issued to the Purchaser in
connection with each draw down under the line of credit agreement, dated March
9, 2001, initially representing the right to purchase shares of the Common
Stock.
2. Registration. The Company will use its reasonable best efforts (subject
to the provisions of this Agreement) to file with the Commission no later than
August 15, 2001 a registration statement under the Securities Act and any
applicable state securities laws registering for reoffer and resale the
Registerable Securities and shall use its reasonable best efforts to make such
Registration Statement effective as soon as possible thereafter.
3. 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 Registerable Securities
covered by such registration statement in accordance with Purchasers' intended
method of disposition set forth in such registration statement for such period;
(c) Notify the Purchasers of the filing and effectiveness of the
registration statement and any amendments thereto and furnish to Purchasers such
number of copies of the registration statement and the prospectus included
therein, including each preliminary prospectus or any amendments or supplement
thereto, as Purchasers reasonably may request in order to facilitate the public
sale or other disposition of the Registerable Securities covered by such
registration statement;
(d) Use its reasonable best efforts to register or qualify the
Registerable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as Purchasers 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;
(e) Immediately notify Purchasers 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
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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 Registerable Securities 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 Purchasers 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 Purchasers or their counsel may
reasonably deem necessary to satisfy Purchasers and their counsel as to the
accuracy and completeness of the registration statement; and
(h) Use reasonable best 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) and shall notify
Purchasers regarding any such order.
For purposes of Sections 3(a) and 3(b) above, the period of distribution
of Registerable Securities shall be deemed to extend until the earlier of (i)
the sale of all Registerable Securities covered by the registration statement or
(ii) the date on which all of the Warrants have been exercised and all
Registerable Securities held by each Purchaser becomes salable under Rule 144
during a period of not more than 90 days.
In connection with registration hereunder, Purchasers 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.
4. Expenses. All expenses incurred by the Company in complying with
Section 2 hereof, including without limitation, all registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Purchaser (except as otherwise included in the term "Selling Expenses" below),
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 Registerable Securities."
The Company will pay all Registration Expenses in connection with the
registration statement. All Selling Expenses shall be borne by Purchasers.
5. Rule 144 Reporting. With a view to making available to Purchasers the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Registerable Securities without registration, the Company agrees to:
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(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; and
(c) furnish to each Purchaser upon request a written statement as to its
compliance with the reporting requirements under the Securities Act, the
Exchange Act, Rule 144, as such rule may be amended, and any other similar rule
that is adopted in the future.
6. Indemnification and Contribution.
(a) In the event of a registration of any of the Registerable Securities
under the Securities Act pursuant to Section 2 above, the Company will indemnify
and hold harmless Purchasers, and each other person, if any, who controls a
Purchaser within the meaning of the Securities Act, against any losses, claims,
damages, liabilities or expenses, joint or several, to which Purchasers 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 Registerable Securities was registered under the Securities Act
pursuant to Section 2 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 or any violation by the Company of the Securities Act or any rule or
regulation promulgated thereunder, and will reimburse Purchasers, 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 Purchasers, as such, furnished in writing by
Purchasers specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Registerable Securities
under the Securities Act pursuant to Section 2 above, each Purchaser shall
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 Registerable Securities was
registered under the Securities Act pursuant to Section 2 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
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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 defending any such loss, claim, damage, liability or action,
provided, however, that a Purchaser shall 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 such Purchaser, as such, furnished in writing to the
Company by such Purchaser specifically for use in such registration statement or
prospectus; and provided further, however, that the liability of such 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 Registerable Securities sold by such 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 such Purchaser from the sale of Registerable Securities 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 6 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 6 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 6 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. No indemnifying party,
in the defense of any such claim or litigation shall, except with the consent of
the indemnified party, consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
claimant or plaintiff to such indemnified party as a release from all liability
in respect of such claim or litigation.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) a Purchaser,
exercising its rights under this Agreement, or any controlling person of such
Purchaser, makes a claim for indemnification
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pursuant to this Section 6 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 6
provides for indemnification in such case notwithstanding, or (ii) contribution
under the Securities Act may be required on the part of a Purchaser or any
controlling person with respect to such Purchaser in circumstances for which
indemnification is provided under this Section 6, then and in each such case,
the Company and such Purchaser will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject, after contribution from
others, in such proportion as is appropriate to reflect the relative fault of
the indemnifying party, on the one hand, and the indemnified party on the other
in connection with the statements or omissions which resulted in such loss,
claim, damage or liability, as well as any other equitable considerations.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or omission to state a
material fact relates to the information supplied by the indemnifying party or
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in any such case, (x) such Purchaser will not be
required to contribute any amount in excess of the public offering price of all
such Registerable Securities 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.
7. 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 Purchasers shall continue with respect to the
Common Stock as so changed.
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8. Miscellaneous.
(a) The rights granted to Purchasers hereunder may not be assigned to any
other person, except to transferees of the Notes and/or the Warrants.
(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 to a Purchaser, at the address of such party
set forth in the 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 all of the
Purchasers.
(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.
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(f) The provisions of Section 2 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 exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of the Company, based on the advice of counsel, 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.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by a duly authorized officer, and each Purchaser has duly executed this
Agreement, as of the date first written above.
MILESTONE SCIENTIFIC INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and
Chief Executive Officer
PURCHASERS:
/s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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