Exhibit 4.8
Registration Rights Agreement Relating to Common Shares Underlying
Series "C" Preferred Shares
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September , 1997 (this
"Agreement"), is made by and among American Bio Medica Corporation, a New York
corporation (the "Corporation"), and the person named on the signature page
hereto (the "Investor").
W I T N E S S E T H :
WHEREAS, the Corporation is offering a maximum of 100 Series C Convertible
Preferred Shares, $.01 par value each, ("Preferred Shares") at $10,000 each
pursuant to a Private Security Subscription Agreement (the "Offering"); and
WHEREAS, in connection with the Private Securities Subscription Agreement,
dated as of September , 1997, between the Investor and the Corporation (the
"Subscription Agreement"), the Corporation has agreed, upon the terms and
subject to the conditions of the Subscription Agreement, to issue and sell to
the Investor Series C Convertible Preferred Shares (the "Preferred Shares"),
convertible into common shares, $.0l par value (the "Common Shares"); and
WHEREAS, to induce the Investor to execute and deliver the Subscription
Agreement, the Corporation has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws with respect to the Shares;
NOW, THEREFORE, in consideration of the premises set forth above and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Corporation and
the Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Investor" means the Investor and any transferee or assignee who
agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on such appropriate
registration form promulgated by the United States Securities and
Exchange Commission ("SEC") as shall be selected by the Corporation,
and, when requested by the Investor pursuant to Section 2(b) hereof,
shall (A) be reasonably acceptable to the holders of a majority of the
Registrable Securities to which such registration relates, and (B)
shall permit the disposition of Registrable Securities in accordance
with the intended method or methods specified in the Investor's
request for such registration, and the declaration or ordering of
effectiveness of such Registration Statement by the SEC.
(iii)"Registrable Securities" means those shares issuable, upon conversion
of the Preferred Shares issued and sold to the Investor including any
shares issued or issuable as dividends in respect thereof.
(iv) "Registration Statement" means a registration statement under the
Securities Act registering securities of the Corporation.
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(b) As used in this Agreement, the term Investor includes (i) each Investor
(as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Subscription Agreement.
2. Registration.
(a) Piggy-Back Registrations. If at any time the Corporation shall determine to
prepare and file with the SEC a Registration Statement relating to an
offering for its own account or the account of others under the Securities
Act any of its equity securities, other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans, the Corporation shall send to each Investor who is entitled
to registration rights under this Section 2(a) written notice of such
determination and, if within twenty (20) days after receipt of such notice,
such Investor shall so request in writing, the Corporation shall include in
such Registration Statement all or any part of the Registrable Securities
such Investor requests to be registered, except that if, in connection with
any underwritten public offering for the account of the Corporation the
managing underwriter(s) thereof shall impose a limitation on the number of
Common Shares which may be included in the Registration Statement because,
in such underwriter(s)' judgment, such limitation is necessary to effect an
orderly public distribution, then the Corporation shall be obligated to
include in such Registration Statement only such limited portion, if any,
of the Registrable Securities with respect to which such Investor has
requested inclusion hereunder. Any exclusion of Registrable Securities
shall be made pro rata among the Investors seeking to include Registrable
Securities, in proportion to the number of Registrable Securities sought to
be included by such Investors; provided, however, that the Corporation
shall not exclude any Registrable Securities unless the Corporation has
first excluded all outstanding securities the holders of which are not
entitled by right to inclusion of securities in such Registration
Statement; and provided further, however, that, after giving effect to the
immediately preceding proviso, any exclusion of Registrable Securities
shall be made pro rata with holders of other securities having the right to
include such securities in the Registration Statement to the extent such
pro rata allotment is permitted under the Corporation's currently existing
agreements with such holders of the Corporation's securities. No right to
registration of Registrable Securities under this Section 2(a) shall be
construed to limit any registration required under Section 2(b) hereof. The
obligations of the Corporation under this Section 2(a) may be waived by
Investors holding a majority in interest of the Registrable Securities and
shall expire at the earlier of (i) the Corporation having afforded the
opportunity for the Investors to exercise registration rights under this
Section 2(a) for two registrations; provided, however, that any Investor
who shall have had any Registrable Securities excluded from any
Registration Statement in accordance with this Section 2(a) shall be
entitled to include in an additional Registration Statement filed by the
Corporation the Registrable Securities so excluded or (ii) when all of the
Registrable Securities held by any Investor may be sold by such Investor
under Rule 144 under the Securities Act ("Rule 144") within any three-month
period.
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(b) Demand Registration. As soon as practicable after the closing of the
Offering, the Corporation shall prepare and file a Registration Statement
covering such Registrable Securities with the SEC.
(c) If any offering pursuant to a Registration Statement pursuant to Section
2(b) hereof involves (at the Corporation's election) an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering shall have the right to
select one legal counsel and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or bankers or
manager or managers shall be reasonably satisfactory to the Corporation.
The Investors who hold the Registrable Securities to be included in such
underwriting shall pay all underwriting discounts and commissions and other
fees and expenses of such investment banker or bankers and manager or
managers so selected in accordance with this Section 2(c) (other than fees
and expenses relating to registration of Registrable Securities under
federal or state securities laws which are payable by the Corporation
pursuant to Section 5 hereof) with respect to their Registrable Securities
and the fees and expenses of such legal counsel selected by the Investors.
(d) Payments by the Corporation. It shall be the Corporation's obligation that
the Registration Statement be declared effective on or before December 31,
1997. If this date is not met, and Investor shall have performed its
obligations as set forth in this Agreement with respect to such
registration, then the Corporation will make payments to each holder of
Registrable Securities (each, a "Holder") in such amounts and at such times
as shall be determined pursuant to this Section 2(d). The amount to be paid
by the Corporation to the Holders shall be determined as of each
Computation Date, and such amount shall be equal to two percent (2%) of the
aggregate subscription price paid by the Investor for the Shares pursuant
to the Subscription Agreement for each month (the "Periodic Amount");
provided, however, that if any Computation Date is less than 30 days
subsequent to another Computation Date, then the Periodic Amount payable on
the later Computation Date shall be prorated. The Periodic Amount shall be
divided among all the Holders in the same proportion as each Holder's
Registrable Securities bears to the total of the outstanding Registrable
Securities. The Periodic Amount shall be paid by the Corporation within
five (5) business days after each Computation Date and shall be payable in
cash.
"Computation Date" means December 31, 1997 and each 30 days thereafter.
with respect to the Subscription Agreement under Section 2(b) and, if the
Registration Statement required to be filed by the Corporation pursuant to
Section 2(b) has not theretofore been declared effective by the SEC, each
date which is 30 days after a Computation Date and, if the Registration
Statement required to be filed by the Corporation pursuant to Section 2(b)
is not declared effective by the SEC within 90 days, or 120 days in the
event of an S-1 or an underwritten offering, after the exercise of demand
registration rights under Section 2(b), the date on which such Registration
Statement is declared effective.
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3. Obligations of the Corporation. In connection with the registration of
the Registrable Securities, the Corporation shall:
(a) prepare file with the SEC as soon as practicable a Registration Statement
or Statements with respect to all Registrable Securities to be included
therein, and thereafter use its best efforts to cause the Registration
Statement to become effective on or before December 31, 1997. The
Corporation shall keep the Registration Statement effective at all times
until such date as is two years after the date such Registration Statement
is first ordered effective by the SEC. In any case, the Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Corporation shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided,
however, that, subject to the conditions set forth in Section 4(a) below,
each Investor may notify the Corporation in writing that it wishes to
exclude all or a portion of its Registrable Securities from such
Registration Statement.
(b) prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until
such date as is two years after the date such Registration Statement is
first ordered effective by the SEC, and, during such period, comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Corporation covered by the Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in the Registration Statement;
(c) furnish to each Investor whose Registrable Securities are included in the
Registration Statement, such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold
a majority in interest of the Registrable Securities being offered
reasonably request, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements, (iii)
take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times until such date as is the earlier
of three years after the date such Registration Statement is first ordered
effective by the SEC or is three years after the Investor acquired the
Shares and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Corporation shall not be required in connection
therewith or as a condition thereto to (I) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (II) subject itself to general taxation in any such
jurisdiction, (III) file a general consent to service of process in any
such jurisdiction, (IV) provide any undertakings that cause more than
nominal expense or burden to the Corporation or (V) make any change in its
charter or by-laws, which in each case the Board of Directors of the
Corporation determines to be contrary to the best interests of the
Corporation and its shareholders;
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(e) in the event Investors who hold a majority in interest of the Registrable
Securities being offered in the offering select underwriters for the
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the managing
underwriter of such offering;
(f) as promptly as practicable after becoming aware of such event, notify each
Investor who holds Registrable Securities being sold pursuant to such
registration of the happening of any event of which the Corporation has
knowledge, as a result of which the prospectus included in the 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, in light of the circumstances
under which they were made, not misleading, and use its best efforts
promptly to prepare a supplement or amendment to the Registration Statement
to correct such untrue statement or omission, and deliver a number of
copies of such supplement or amendment to each Investor as such Investor
may reasonably request;
(g) as promptly as practicable after becoming aware of such event, notify each
Investor who holds Registrable Securities being sold pursuant to such
registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;
(h) permit a single firm of counsel designated as selling shareholders' counsel
by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the
Registration Statement and all amendments and supplements thereto a
reasonable period of time prior to their filing with the SEC, and shall not
file any document in a form to which such counsel reasonably objects;
(i) make generally available to its shareholders as soon as practicable, all
periodic filings pursuant to the Securities Exchange Act of 1934; but not
later than ninety (90) days after the close of the period covered thereby,
an earnings statement (in form complying with the provisions of Rule 158
under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Corporation's fiscal quarter next following
the date of the Registration Statement;
(j) at the request of the Investors who hold a majority in interest of the
Registrable Securities being sold pursuant to such registration, furnish on
the date that Registrable Securities are delivered to an underwriter for
sale in connection with the Registration Statement (i) a letter, dated such
date, from the Corporation's independent certified public accountants in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed
to the underwriters; and (ii) an opinion, dated such date, from counsel
representing the Corporation for purposes of such Registration Statement,
in form and substance as is customarily given in an underwritten public
offering, addressed to the underwriters and Investors;
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(k) make available for inspection by any Investor whose Registrable Securities
are being sold pursuant to such registration, any underwriter participating
in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by any such Investor or
underwriter (collectively, the "Inspectors"), all pertinent financial and
other records, pertinent corporate documents and properties of the
Corporation (collectively, the "Records"), as shall be reasonably necessary
to enable each Inspector to exercise its due diligence responsibility, and
cause the Corporation's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such
due diligence; provided, however, that each Investor and each Inspector
shall hold in confidence and shall not make any disclosure (except to an
Investor) of any Record or other information which the Corporation
determines in good faith to be confidential, and of which determination the
Investors or Inspectors, respectively, are so notified, unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court or government
body of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Corporation shall not be
required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the
Corporation) with the Corporation with respect thereto, substantially in
the form of this Section 3(k). Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to the Corporation and allow the Corporation, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Corporation
shall hold in confidence and shall not make any disclosure of information
concerning an Investor provided to the Corporation pursuant to Section 4(e)
hereof unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other order from a court or governmental
body of competent jurisdiction or (iv) such information has been made
generally available to the public other than by disclosure in violation of
this or any other agreement. The Corporation agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information;
(l) use its best efforts either to secure designation of all the Registrable
Securities covered by the Registration Statement as a National Association
of Securities Dealers Automated Quotations System ("NASDAQ") "Small Cap"
or, if, despite the Corporation's best efforts to satisfy the preceding
clause, the Corporation is unsuccessful in satisfying the preceding clause
to secure such a listing for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least three
market makers to register with the National Association of Securities
Dealers, Inc. ("NASD") as such with respect to such Registrable Securities;
(m) provide a transfer agent and registrar, which may be a single entity, for
the Registrable Securities not later than the effective date of the
Registration Statement;
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(n) cooperate with the Investors who hold Registrable Securities being sold and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the
denominations or amounts as the case may be, and registered in such names
as the managing underwriter or underwriters, if any, or the Investors may
reasonably request; and, within five business days after a Registration
Statement which includes Registrable Securities is ordered effective by the
SEC, the Corporation shall deliver, and shall cause legal counsel selected
by the Corporation to deliver, to the transfer agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) instructions to the transfer agent
to issue new share certificates without a legend and an opinion of such
counsel that the shares have been registered; and
(o) take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement.
4. Obligations of the Investors. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Corporation to
take any action pursuant to this Agreement with respect to each Investor
that such Investor shall furnish to the Corporation such information
regarding itself, the Registrable Securities held by it and the intended
method of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of the Registrable
Securities and shall execute such documents in connection with such
registration as the Corporation may reasonably request. At least five (5)
days prior to the first anticipated filing date of the Registration
Statement, the Corporation shall notify each Investor of the information
the Corporation requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If within
three (3) business days prior to the filing date the Corporation has not
received the Requested Information from an Investor (a "Non-Responsive
Investor"), then the Corporation may file the Registration Statement
without including the Registrable Securities of such Non-Responsive
Investor;
(b) Each Investor by such Investor's acceptance of the Registrable Securities
agrees to cooperate with the Corporation as reasonably requested by the
Corporation in connection with the preparation and filing of the
Registration Statement hereunder, unless, in connection with the
preparation and filing of the Registration Statement, such Investor has
notified the Corporation in writing of such Investor's election to exclude
all of such Investor's Registrable Securities from the Registration
Statement;
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(c) In the event Investors holding a majority in interest of the Registrable
Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and to take
such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless such
Investor has notified the Corporation in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from the
Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice from the Corporation
of the happening of any event of the kind described in Section 3(f) or
3(g), such Investor will immediately discontinue disposition of the
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g)
and, if so directed by the Corporation, such Investor shall deliver to the
Corporation (at the expense of the Corporation) or destroy (and deliver to
the Corporation a certification of destruction) all copies in such
Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice; and
(e) No Investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved
by the Investors entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements and (iii) agrees to pay its pro
rata share of all underwriting discounts and commissions and other fees and
expenses of investment bankers and any manager or managers of such
underwriting and legal expenses of the underwriter applicable with respect
to its Registrable Securities, in each case to the extent not payable by
the Corporation pursuant to the terms of this Agreement.
5. Expenses of Registration. All expenses (other than underwriting
discounts and commissions and other fees and expenses of investment bankers and
other than brokerage commissions) incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting fees
and the fees and disbursements of counsel for the Corporation, shall be borne by
the Corporation; provided, however, that the Investors shall bear the fees and
out-of-pocket expenses of the one legal counsel selected by the Investors
pursuant to Section 3(h) hereof.
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6. Indemnification. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Corporation will indemnify and hold
harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such
Investor, each person, if any, who controls any Investor within the meaning
of the Securities Act or the Exchange Act, any underwriter (as defined in
the Securities Act) for the Investors, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and each person,
if any, who controls any such underwriter within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against
any losses, claims, damages, expenses or liabilities (joint or several)
(collectively "Claims") to which any of them become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any
post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment
thereof or 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, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the
Corporation files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading
or (iii) any violation or alleged violation by the Corporation of the
Securities Act, the Exchange Act or any state securities law or any rule or
regulation (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Corporation
shall reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable, for
any legal fees or other reasonable expenses incurred by them in connection
with investigating or defending any such Claim. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in
this Section 6(a) (I) shall not apply to a Claim arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Corporation by any Indemnified
Person or underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Corporation pursuant to Section 3(c) hereof; (II) with
respect to any preliminary prospectus shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of
any person controlling such person) if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was timely
made available by the Corporation pursuant to Section 3(c) hereof, and
(III) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Corporation, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Persons and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
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(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to indemnify and hold harmless, to
the same extent and in the same manner set forth in Section 6(a), the
Corporation, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Corporation
within the meaning of the Securities Act or the Exchange Act, any
underwriter and any other shareholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person
who controls such shareholder or underwriter within the meaning of the
Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any
of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished to the Corporation by such Investor expressly for use
in connection with such Registration Statement; and such Investor will
promptly reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld; provided further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a
Claim as does not exceed the net proceeds to such Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and hall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.
(c) The Corporation shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as
provided above, with respect to information such persons so furnished in
writing by such persons expressly for inclusion in the Registration
Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall,
if a Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written notice of
the commencement thereof and his indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying parties; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and other party represented by such counsel in such
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proceeding. The Corporation shall pay for only one separate legal counsel
for the Investors; such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities. The failure
to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. Contribution. To the extent any indemnification provided for herein is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(a) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation, and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Corporation to the public without registration, until such time as the Investors
have sold all the Registrable Securities pursuant to a Registration Statement or
Rule 144, the Corporation agrees to:
(a) make and keep public information available, as those terms are understood
and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Corporation under the Securities Act and the Exchange Act;
and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the
Corporation that it has complied with the reporting requirements of Rule
144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Corporation and such other reports
and documents so filed by the Corporation and (iii) such other information
as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have the
Corporation register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities only if: (a) the Corporation is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee and (ii) the
securities with respect to which such registration rights are being transferred
or assigned, (b) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, and (c) at or before
the time the Corporation received the written notice contemplated by clause (a)
of this sentence the transferee or assignee agrees in writing with the
Corporation to be bound by all of the provisions contained herein.
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10. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Corporation and Investors who hold a majority in interest
of the Registrable Securities. Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and the Corporation.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities.
If the Corporation receives conflicting instructions, notices or elections
from two or more persons or entities with respect to the same Registrable
Securities, the Corporation shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered or when
sent by registered mail, return receipt requested, addressed (i) if to the
Corporation, at American Bio Medica Corporation, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (ii) if to the
Investor, at the address set forth under its name in the Subscription
Agreement and (iii) if to any other Investor, at such address as such
Investor shall have provided in writing to the Corporation, or at such
other address as each such party furnishes by notice given in accordance
with this Section 11(b), and shall be effective, when personally delivered,
upon receipt, and when so sent by certified mail, four business days after
deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall
not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in accordance
with the laws of the State of New York applicable to the agreements made
and to be performed entirely within such state. In the event that any
provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of
the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
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(h) The headings in the Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a
copy of this Agreement bearing the signature of the party so delivering
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
AMERICAN BIO MEDICA CORPORATION
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
President
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If an entity by:
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Title: -----------------
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