Exhibit 10.3

 

 

 

STOCK OPTION AGREEMENT

 

 

STOCK OPTION AGREEMENT, dated as of June 6, 2017, between Solee Science &
Technology, USA, Ltd., Inc., a Delaware corporation (the “Grantor”), and
Milestone Scientific Inc., a Delaware corporation (the “Grantee”).

 

WHEREAS, Grantor and Grantee are simultaneously with the execution and delivery
of this Agreement entering into a Stock Purchase Agreement (the “Purchase
Agreement”) pursuant to which Grantor will, upon the terms and subject to the
conditions stated therein, (a) purchase from Grantee 1,000,000 shares of common
stock (“Common Stock”) of Milestone (China) Company Limited, a Hong Kong
corporation (the “Company”), representing forty percent (40%) of the issued and
outstanding shares of the Company, and (b) deliver its promissory note to
Grantee in the principal amount of $1,275,000 (the “Note”) in full payment for
such shares purchased (the “Shares”);and

 

WHEREAS, in order to induce Grantee to enter into the Purchase Agreement,
Grantor has agreed to grant to Grantee the Stock Option (as hereinafter defined)
upon the terms and subject to the conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in the Purchase Agreement, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties agree
as follows:

 

1.         Grant of Stock Option. Grantor hereby grants to Grantee an
irrevocable option (the “Stock Option”) to purchase all but not less than all of
the Shares (and securities and other property as shall have been received in
respect of such Shares pursuant to Section 5 of this Agreement), for an amount
equal to the following:

 

(a)     if exercised at any time through and including the second anniversary of
the date hereof, U.S. $0.7143 per Share (corresponding to an aggregate Exercise
Price of $1,400,000); or

 

(b)     if exercised at any time after the second anniversary of the date
hereof, the fair market value of the Shares to be purchased, determined
utilizing the same valuation model, methods and assumptions as have been used in
that certain valuation of the Shares prepared by Sobel & Co., LLC, certified
public accountants, Livingston New Jersey, by such firm or such other firm as
shall be engaged by Grantee to provide such valuation.

 

2.         Exercise of Stock Option. (a) Grantee may, subject to the provisions
of this Section, exercise the Stock Option, in whole but not in part, at any
time or from time to time, after the date hereof and prior to the tenth (10th)
annual anniversary of the date hereof (the “Termination Date”). Notwithstanding
the occurrence of the Termination Date, Grantee shall be entitled to purchase
those Shares with respect to which it has properly exercised this Stock Option
prior to the occurrence of the Termination Date.

 

 

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(b)     If Grantee wishes to exercise the Stock Option, it shall do so by giving
Grantor written notice to such effect, specifying a closing date not earlier
than one business day nor later than twenty (20) business days from the date of
the notice. The place of the closing shall be at the offices of counsel to the
Grantee.

 

(e)     At the closing, (i) Grantee shall make payment to Grantor of the
aggregate purchase price for the Shares in immediately available funds by wire
transfer to a bank account designated by the Grantor or otherwise as mutually
agreed, and (ii) Grantor shall deliver to Grantee a certificate representing the
Shares, registered in the name of Grantee and such other securities or property
as shall have been received in respect of the Shares pursuant to Section 5 in
form appropriate for transfer to Grantee, and (iii) such other closing documents
consistent with the terms hereof as may be reasonably requested by Grantee. The
closing may occur by exchange of electronic files, and the originals of the
instruments referred to in clause (ii).

 

3.         Representations and Warranties of Grantor. Grantor hereby represents
and warrants to Grantee as follows

 

(a)      Grantor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The execution, delivery and
performance by Grantor of this Agreement and the consummation of the
transactions contemplated hereby (i) are within Company’s corporate powers, (ii)
have been duly authorized by all necessary corporate action, (iii) require no
action by or in respect of, or filing with, any governmental body, agency or
official,

 

(b)     Upon exercise of the Stock Option and upon transfer of the Shares to
Grantee, Grantee will acquire good and valid title to the Shares, free and clear
of all liens, claims, encumbrances, voting agreements, proxies, and other
charges of any nature whatsoever, and the Shares will not be subject to any
preemptive or similar rights.

 

(c)     The representations and warranties of Grantor contained in the Purchase
Agreement are true and correct.

 

4.         Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Grantor that the Stock Option and the Shares acquired upon
exercise of the Stock Option will not be taken with a view to the public
distribution thereof and will not be sold or otherwise disposed of by Grantee
except in compliance with the Securities Act of 1933, as amended (the
“Securities Act”).

 

5.          Adjustment Upon Changes in Capitalization or Merger. The number of
shares of Common Stock of the Company and other securities or property
comprising the Shares deliverable to Grantee upon exercise of the Stock Option
shall be subject to adjustment from time to time as follows:

 

(a)     In case the Company after the date hereof shall (i) pay a dividend in
shares of any class or series to the holders of its Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any securities by recapitalization or
reclassification of its Common Stock, then the number of shares of Common Stock
or other securities of the Company subject to the Stock Option immediately after
the happening of any of the events described above in this subsection (a) shall
be adjusted so as to consist of the number of shares or other securities of the
Company which a record holder of a number of shares of the Company subject to
the Stock Option immediately prior to the happening of such event would own or
be entitled to receive after the happening of such event and the Exercise Price
adjusted accordingly to maintain the economic attributes of the Stock Option.

 

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(b)     In case of any recapitalization or reclassification of the Company’s
capital stock or any other capital reorganization to which subsection (a) above
does not apply, or in the case of any consolidation of the Company with, or
merger of the Company into, any other corporation (other than a merger in which
the Company is the continuing corporation and in which no change is made in the
outstanding shares of Common Stock of the Company other than a reclassification
to which such subsection (a) would apply), then lawful and adequate provision
shall be made whereby the shares subject to the Stock Option shall thereafter
include the kind and amount of shares of stock or other securities or property
receivable upon such transaction by a holder of the number of shares of Common
Stock or other securities of the Company subject to the Stock Option immediately
prior to such transaction; and, in any such case, appropriate provision shall be
made to the end that the provisions of this Agreement shall thereafter by
applicable (as nearly as may be practicable) with respect to any shares of
stock, securities or property, thereafter deliverable upon exercise of the Stock
Option. The provisions of this subsection (b) shall similarly apply to
successive recapitalizations, reclassifications, reorganizations, consolidations
and mergers.

 

(c)     Whenever the composition of the shares or other securities subject to
the Stock Option deliverable hereunder shall be adjusted as provided in this
Section 5, then in such case Grantor as soon as practicable thereafter (subject
to the provisions of Section 5 hereof) shall give written notice thereof to
Grantee, which notice shall state the new content of the Stock Option and new
Exercise Price resulting from such adjustment and shall set forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based.

 

(d)     In the event that Company enters into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its subsidiaries,
and the Company will not be the continuing or surviving corporation in such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into the Company and the Company will be the
continuing or surviving corporation, but in connection with such merger, the
shares of Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of the
Company or any other person or cash or any other property, or the shares of
Common Stock outstanding immediately prior to the consummation of such merger
will, after such merger, represent less than 50% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
subsidiaries, or in the case of any other capital reorganization to which
Section 5(a) does not apply, then, and in each such case, the agreement
governing such transaction will make proper provision so that the Stock Option
will, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, (A) an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Common Stock if the Stock Option had been exercised immediately prior
to such consolidation, merger, sale or transfer or the record date therefor, as
applicable and make any other necessary adjustments or (B) at the option of
Grantee, the right to receive the shares or other securities or property that
Grantee would have received in respect of Common Stock if the Stock Option had
been exercised immediately prior to such event (less the exercise price thereof
not paid).

 

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6.         Further Assurances; Remedies. (a) The Company and Grantor each agrees
to execute and deliver such other documents and instruments and take such
further actions as may be necessary or appropriate or as Grantee may reasonably
request in order to ensure that Grantee receives the full benefits of this
Agreement.      

 

(b)     The parties agree that Grantee would be irreparably damaged if for any
reason Grantor failed to deliver any of the Shares (or other securities or
property deliverable pursuant to Section 5) upon exercise of the Stock Option or
to perform any of its other obligations under this Agreement, and that Grantee
would not have an adequate remedy at law for money damages in such event.
Accordingly, Grantee shall be entitled to specific performance and injunctive
and other equitable relief to enforce the performance of this Agreement by
Grantor and the Company. This provision is without prejudice to any other rights
that Grantee may have against Grantor or the Company for any failure to perform
any of its obligations under this Agreement.

 

7.         Notice of Certain Events.

 

In case Grantor after the date hereof shall be offered the opportunity or right
to subscribe to or purchase any additional shares of any class or any other
rights, warrants or options or securities convertible into shares of Common
Stock, rights, warrants or options, Grantor shall forward to Grantee a copy
thereof within thirty (30) days, including written notice of the date on which
the Company's books shall close or records shall be taken for such subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up.

 

8.         Miscellaneous. (a) Amendments. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.      

 

(b)     Transfer Taxes. All transfer taxes payable in respect of the transfer of
Common Stock or other securities or property upon the exercise of the Stock
Option or delivered pursuant hereto shall be borne by Grantee.

 

(c)     Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if so given) by delivery in person or by email (with copies
by registered or certified mail, postage prepaid, return receipt requested) to
the respective parties as follows:

 

To Grantee:

Milestone Scientific Inc.

 

220 S. Orange Avenue

Livingston, NJ 07039

Attention: Len Osser

Email: lenosser@aol.com

 

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To Grantor:

Solee Science & Technology, USA, Ltd., Inc.

100 Connell Drive #2300

Berkeley Heights, NJ 07922

Attention:

Email:

 

with a copy to:

 

______________________

______________________

______________________

______________________

 

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.

 

(d)     Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

 

(e)     Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, regardless of the
laws that might otherwise govern under applicable principles of conflict of
laws. Any legal action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby shall only be instituted,
heard and adjudicated (excluding appeals) in a state or federal court located in
the County of New York, State of New York, and each party hereto knowingly,
voluntarily and intentionally waives any objection which such party may now or
hereafter have to the laying of the venue of any such action, suit or
proceeding, and irrevocably submits to the exclusive personal jurisdiction of
any such court in any such action, suit or proceeding. Service of process in
connection with any such action, suit or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement.

 

(f)     Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.

 

(g)     Headings. The section headings herein are for convenience only and shall
not affect the construction hereof.

 

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(h)     Assignment. This Agreement shall be binding upon each party hereto and
such party’s successors and permitted assigns. This Agreement shall not be
assignable by Company, except by operation of law, but may be assigned by
Grantee in whole or in part to any affiliate of Grantee. Except as provided in
the preceding sentence, Grantee may not, without the prior written consent of
Company, assign this Agreement to any other person.

 

(i)     Survival. All representations, warranties and covenants contained herein
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, including the exercise of the Stock
Option.

 

(j)     Time of the Essence. The parties agree that time shall be of the essence
in the performance of obligations hereunder.

 

(k)     Counsel. Each party acknowledges that it has retained legal counsel in
connection with this Agreement and has reviewed this Agreement with such counsel
to the extent it deems necessary.

 

IN WITNESS WHEREOF, Grantor and Grantee have caused this Agreement to be duly
executed as of the date first above written.

 

MILESTONE SCIENTIFIC, INC.

 

By:                                                                            
   

         Name:

         Title:

 

 

SOLEE SCIENCE & TECHNOLOGY, USA, LTD.

 

 

By:                                                                             
    

        Name:

        Title:

 

Accepted and Agreed

with respect to Section 6:

 

MILESTONE (CHINA) COMPANY LIMITED

 

 

By: ___________________________________

        Name:

        Title:

 

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