Exhibit 4.11
MILESTONE SCIENTIFIC INC.
8% SECURED PROMISSORY NOTE
$200,000 July 31, 2000
Livingston, New Jersey
FOR VALUE RECEIVED, MILESTONE SCIENTIFIC INC., a Delaware
corporation (the "Company" or "Maker") with its principal executive office at
220 South Orange Avenue, Livingston, New Jersey 07039, promises to pay to K.
Tucker Andersen, having an address at c/o Cumberland Associates LLC, 1114 Avenue
of the Americas, New York, N.Y. 10036 (the "Payee" or the "holder of this Note")
or permitted successors and assigns of the Payee, the principal amount of TWO
HUNDRED THOUSAND DOLLARS AND NO CENTS ($200,000.00) (the "Principal Amount"), in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, or such other
form as shall be acceptable by the Payee in his sole and absolute discretion
together with interest as set forth in Section 1 of this Note at such times and
in such amounts as set forth in Section 2 of this Note, at Payee's address
designated above or at such other place as the Payee shall have notified the
Company before such payment is due.
1. Interest.
A. Except as otherwise provided in Paragraph B of this Section 1,
interest on the Principal Amount hereof shall accrue at the rate of 8% per annum
from the date hereof until paid in full. Interest shall be payable quarterly in
arrears on the 1st day of each quarter commencing October 1, 2000 (each such
date, an "Interest Payment Date").
B. If an Event of Default (as defined in Paragraph 6 below) shall
have occurred and shall continue while this Note is outstanding, interest on
this Note shall accrue at a rate equal to the maximum rate permitted by law
(such rate is hereinafter referred to as the "Default Rate").
C. Interest as aforesaid shall be calculated on the basis of actual
number of days elapsed over a year of 360 days.
2. Principal Payments. The Principal Amount of this Note shall be due and
payable on the Maturity Date (as defined in Paragraph 3 below). The Principal
Amount, with interest to date, shall be prepayable at any time without penalty.
On any prepayment interest shall be paid to the date of prepayment.
3. Maturity. This Note shall mature, and the Principal Amount and all
accrued but unpaid interest thereon, shall be due in full on June 30, 2003 (the
"Maturity Date").
4. Security. Subject and subordinate to the security interests granted to
the holders of the series of notes (the "Series Note Holders") issued pursuant
to a Purchase Agreement between the Company and Series Note Holders, dated as of
January 31, 2000 (the "10% Series Notes"), the Company hereby grants to the
Payee a security interest in all the assets of the Company including the raw
material, work in process and finished goods inventories and certain proceeds
thereof, as security for the prompt payment of the principal and accrued
interest on this Note.
5. Priority. The payment of the Principal Amount, and the accrued but
unpaid interest hereon, shall be subordinate in right of payment to the 10%
Series Notes and senior in right of payment to all other indebtedness of the
Company whether incurred prior or subsequent to the date hereof other than (i)
any purchase money obligations incurred by the Company in connection with the
purchase of property in the ordinary course of business, (ii) all payment
obligations of the Company pursuant to any capitalized lease entered into by the
Company. and (iii) all payables incurred by the Company in the ordinary course
of its business.
6. Events of Default and Remedies.
A. Events of Default. Each of the following events is herein
referred to as an Event of Default:
(i) any default in the payment of any principal hereunder when
the same shall be due and payable, whether at the Maturity Date or by
acceleration or otherwise;
(ii) any default in the payment of any interest hereunder when
the same shall be due and payable not remedied within three (3) days of written
notice given pursuant to Paragraph 7(B) herein, whether at the Interest Payment
Date or by acceleration or otherwise;
(iii) any material default in the due observance or
performance of any other covenant, condition or agreement to be observed or
performed pursuant to the terms hereof, and the continuance of such default
unremedied for a period of twenty (20) days after written notice thereof to the
Company setting forth in reasonable detail the circumstances of such Event of
Default;
(iv) if the Company shall: (A) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of it or any of its
properties, (B) admit in writing its inability to pay its debts as they mature,
(C) make a general assignment for the benefit of creditors, (D) be adjudicated a
bankrupt or insolvent or be the subject of an order for relief under Title 11 of
the United States Code, or (E) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with creditors or
to take advantage or any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against him or it in any proceeding
under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;
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(v) if any order, judgment or decree shall be entered, without
the application, approval or consent of the Company, by any court of competent
jurisdiction, approving a petition seeking reorganization of the Company, or
appointing a receiver, trustee, custodian or liquidator of any of the Company,
or of all or any substantial part of its assets, and such order, judgment or
decree shall continue unstayed and in effect for any period of sixty (60)
consecutive days;
(vi) there shall be a default (taking into account lapse of
notice, written notice to the Company or both) under any bond, debenture, note
or other evidence of indebtedness for money borrowed or under any mortgage,
indenture or other instrument under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed by the Company,
whether existing on the date hereof or created subsequent to the date hereof,
which default relates to the obligation to pay the principal of or interest on
any such indebtedness and the effect of such default is to cause such
indebtedness to become due prior to its stated maturity; or
(vii) if final judgment(s) for the payment of money in excess
of $200,000 individually or $250,000 in the aggregate shall be rendered against
the Company, and the same shall remain undischarged or unbonded for a period of
thirty (30) consecutive days, during which execution shall not be effectively
stayed.
B. Remedies. Upon the occurrence of any Event of Default, and at all
times thereafter during the continuance thereof: (i) this Note shall, at the
option of the holder of this Note, become immediately due and payable, both as
to principal, interest and premium, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything contained
herein to the contrary notwithstanding; (ii) all outstanding obligations under
this Note, and all other outstanding obligations on which the applicable
interest rate is determined by reference to the interest rate under this Note,
shall bear interest at the Default Rate; (iii) the holder of this Note may file
suit against the Company on the Note and/or seek specific performance or
injunctive relief hereunder (whether or not a remedy exists at law or is
adequate); (iv) the holder of this Note shall have the right, in accordance with
this Note to exercise any and all remedies as such holder may determine in such
holder's discretion (without any requirement of marshalling of assets, or other
such requirement).
7. Conversion.
If at any time on or after July __, 2000 and on or before May 31,
2003, the Company should complete the sale of any shares of its capital stock
(either in one transaction or a series of related transactions) wherein the
Company raises gross proceeds of at least $1,800,000 (an "Equity Sale"), then,
and in such event, at any time on or after the day on which the Company has
completed such Equity Sale to and including the 30th day after the completion of
such Equity Sale, the Company may upon 3 days prior written notice to the Payee
(and without any further action on the part of the Payee) cause the then unpaid
principal and accrued interest on the Note to be converted into the type of
securities sold in such Equity Sale at a price per share, and on such other
terms and conditions, as are substantially similar to the price per
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share and the terms and conditions of such Equity Sale. Upon delivery of this
Note to the Company, the Company will issue such securities to the Payee.
8. Miscellaneous.
A. Parties in Interest. All covenants, agreements and undertakings
in this Note binding upon the Company or the Payee shall bind and inure to the
benefit of the permitted successors and assigns of the Company and the Payee,
respectively, whether so expressed or not.
B. Notice Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed or
sent by certified, registered, or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed or, if mailed, five days
after the date of deposit in the United States mail as follows:
(i) if to the Maker: Milestone Scientific Inc.
220 South Orange Avenue
Livingston, NJ 07039
Attn: Thomas M. Stuckey, Chief Financial Officer
(ii) if to the Payee: K. Tucker Andersen
c/o Cumberland Associates LLC
1114 Avenue of the Americas
New York, N.Y. 10036
C. Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York and any applicable laws of the United States of America,
without giving effect to the conflicts or choice of law principles thereof.
D. Enforceability. Maker acknowledges that this Note and Maker's
obligations hereunder are and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to this Note and the obligations of
Maker evidenced hereby, unless otherwise expressly evidenced in a writing duly
executed by the holder of this Note.
E. Payment. If the date for any payment due hereunder would
otherwise fall on a day which is not a Business Day, such payment or expiration
date shall be extended to the next following Business Day with interest payable
at the applicable rate specified herein during such extension. "Business Day"
shall mean any day other than a Saturday, Sunday, or any day which shall be in
the City of New York a legal holiday or a day on which banking institutions are
authorized by law to close.
F. Waiver and Set-off. Maker hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The nonexercise by Payee of
any of its
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rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance. The Payee, in addition to any other
right available to it under applicable law, shall have the right, at its option,
to immediately set off against this Note any monies owed by the Payee in any
capacity to Maker, whether or not due, upon the occurrence of any Event of
Default, even though such charge is made or entered on the books of Payee
subsequent to those events.
G. Lost Documents. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note or
any Note exchanged for it, and (i) in the case of loss, theft or destruction, of
indemnity satisfactory to it and (ii) in the case of mutilation, of surrender
for cancellation of such Note, and, in any case, upon reimbursement to the
Company of all reasonable expenses incidental thereto, the Company will make and
deliver in lieu of such Note a new Note of like tenor and principal amount and
dated as of the original date of this Note.
IN WITNESS WHEREOF, this Note has been executed and delivered on the date
specified above by the duly authorized representative of the Company.
MILESTONE SCIENTIFIC INC.
By: _____________________________
Mitchell G. Kuhn,
President
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