Exhibit 4.4
Private Securities Subscription Agreement
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
American Bio Medica Corporation
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned on September 17, 1996 in
connection with the sale pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), of certain shares of 8% Cumulative
Convertible Preferred Stock, Series A ("Preferred Shares"), convertible into
shares of common stock (hereinafter the "Common Shares" and, collectively with
the Preferred Shares, the ("Shares") of American Bio Medica Corporation, 000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000, a corporation organized under the laws
of New York (hereinafter the "Seller") to Midland Xxxxxx Capital Inc., located
at 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxx, (hereinafter the "Buyer"). Seller and Buyer
(hereinafter collectively the "parties") each hereby represents, warrants and
agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) Seller and Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule
506 under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) Buyer hereby subscribes for fifteen (15) Preferred Shares, at a
purchase price of Ten Thousand Dollars ($10,000) U.S. per share, said Preferred
Shares convertible into Common Shares in accordance with the terms set forth in
the Certificate of Designation attached as Exhibit 1 to this Agreement, for an
aggregate purchase price of $1,500,000 payable in United States Dollars at the
Closing, as defined in Paragraph 4 hereof.
(iii) No later than five (5) days after the Closing, Seller shall: (i)
register as a reporting company with the Securities and Exchange Commission
("SEC") pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (ii) file within twenty days (20) after the
closing a Registration Statement (the "Registration Statement") with the SEC to
register the resale of the Common Shares by Buyer and shall cause the
Registration Statement to become effective within one hundred twenty (120) days
thereafter.
(iv) Buyer shall pay the purchase price by delivering same day funds in
United States Dollars to an escrow agent or as otherwise agreed between the
parties, to be delivered to the order of Seller upon delivery of the Shares.
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2. BUYER'S REPRESENTATIONS AND AGREEMENTS
Buyer represents, warrants and agrees as follows:
(i) Buyer understands that the Shares have not been registered under the
Securities Act, or any other applicable securities law, and, accordingly, none
of the Shares may be offered, sold, transferred, pledged, hypothecated or
otherwise disposed of unless registered pursuant to, or in a transaction exempt
from registration under, the Securities Act and any other applicable securities
law;
(ii) Buyer is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
acquiring the Shares either for its own account or as a fiduciary or agent for
one or more institutional accounts as to which it exercises sole discretion,
each of which is an Accredited Investor. Buyer has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the Shares. Buyer has had a reasonable opportunity
to ask questions of and receive answers from Seller concerning Seller and the
offering of the Shares. Buyer is not subscribing for the Shares as a result of
or pursuant to any advertisement, article, notice, or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio. Buyer is aware that it (or such institutional account) may
be required to bear the economic risk of an investment in the Shares for an
indefinite period, and it (or such institutional account ) is able to bear such
risk for an indefinite period;
(A) Buyer is not a U.S. Person ("U.S. Person") as that term is defined in
Rule 902(o) of Regulation S including, without limitation, if a business
organization, such as a corporation or partnership, (1) it is organized under
the laws of a jurisdiction other than the United States and (2) if organized by
a U.S. Person principally for the purpose of investing in securities not
registered under the Securities Act, it was organized or incorporated and is
owned by Accredited Investors who are not natural persons, estates or trusts;
(B) The Preferred Shares were not offered to Buyer in the United States and
at the time of execution of this Subscription Agreement and the time of any
offer to Buyer to purchase the Preferred Shares hereunder, Buyer was physically
outside the United States;
(C) Buyer is purchasing the Preferred Shares for its own account and not on
behalf of or for the benefit of any U.S. Person and the sale and resale of the
Preferred Shares have not been prearranged with any U.S. Person or buyer in the
Untied States;
(D) Buyer agrees, and to the knowledge of Buyer, without any independent
investigation, each distributor, if any, participating in the offering of the
Preferred Shares, has agreed, that all offers and sales of the Preferred Shares
prior to the expiration of a period commencing on the date of the Closing and
ending forty (40) days thereafter (the "Restricted Period") shall not be made to
U.S. Persons or for the account or benefit of U.S. Persons and shall otherwise
be made in compliance with the provisions of Regulation S;
(E) Buyer is not an underwriter, dealer or other person who participates
pursuant to a contractual arrangement in the distribution of the securities
offered or sold in reliance on Regulation S.
(F) To the knowledge of Buyer, without any independent investigation,
neither the Seller nor any distributor participating in the offering, nor any of
their respective employees or agents, has conducted any "directed selling
efforts" in the United States, as such term is defined in Rule 902 of Regulation
S;
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(iii) Buyer is acquiring the Shares for its own account or for one or more
institutional accounts as described in Paragraph 2(ii) hereof, in each case for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control). Buyer agrees, prior to
registration of the Common Shares pursuant to the Registration Statement, on its
own behalf and on behalf of any such institutional account for which it is
acquiring the Shares to offer, sell or otherwise transfer any Shares only to
Accredited Investors (subject to any requirement of law that the disposition of
its property or the property of such institutional account or accounts remain
within its or their control) in conformity with the Securities Act and any other
applicable securities law and with the restrictions on transfer set forth on the
certificate(s) evidencing the Shares. Buyer acknowledges that, prior to
registration of the Common Shares, each certificate evidencing the Preferred
Shares shall bear a legend substantially to the effect of the foregoing
paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such legend shall be in
substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE CORPORATION SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE CORPORATION AND MIDLAND XXXXXXX
CAPITAL LTD. DATED SEPTEMBER 17, 1996. A COPY OF THE PORTION OF THE AFORESAID
SUBSCRIPTION AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE
CORPORATION'S EXECUTIVE OFFICES."
Following registration, Buyer agrees not to sell any Shares except in
accordance with: (a) the Registration Statement, in which case Buyer agrees to
comply with the requirement of delivering a current prospectus, (b) Rule 144
under the Securities Act, in which case Buyer agrees to comply with such rule,
or (c) Regulation S under the Securities Act, in which case Buyer agrees to
comply with such rule. Buyer agrees that it will not utilize Regulation S unless
Seller breaches its obligations to have a registration statement relating to the
Shares underlying the Preferred Shares declared and maintained effective.
(iv) Each certificate representing Common Shares issued after registration
pursuant to the Registration Statement shall bear no legend.
(v) Buyer acknowledges that Seller or any transfer agent of Seller shall
register the transfer or exchange of any of the Shares upon receipt of the
certificate(s) evidencing such Shares with the transfer notice set forth thereon
appropriately completed and, in the event of a transfer or exchange prior to
registration, upon receipt in writing from the transferor and the transferee or
the recipient of such Shares in such transfer or exchange (as the case may be)
of a certificate setting forth the representations in Paragraph 2 hereof;
(vi) If Buyer is acquiring any Shares as fiduciary or agent for one or more
institutional accounts, Buyer represents that it has sole investment discretion
with respect to each such account and that it has full power to make the
foregoing acknowledgments, representations and agreements on behalf of each such
institutional account;
(vii) Buyer acknowledges that Seller and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations and agreements
and further agrees that if, prior to the Closing, any of such acknowledgments,
representations and agreements made by Buyer are no longer accurate, Buyer will
promptly notify Seller;
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(viii) Buyer has received all information necessary to make an informed
business decision with respect to an investment in the Shares, including but not
limited to Seller's latest Form 10-K, all Forms 10-Q and 8-K filed thereafter,
and Proxy Statement for its latest fiscal year, and the use of proceeds and
investment considerations, prepared by Seller, which are attached hereto as
Exhibit 3;
(ix) This Agreement has been duly authorized, validly executed, and
delivered on behalf of Buyer and is a valid and binding agreement enforceable in
accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
(x) Buyer has not engaged and agrees not to engage in any short sales of
the Corporation's common stock prior to the date the Preferred Shares become
convertible, except to the extent that any such short sale is fully covered by
shares of common stock of the Corporation other than the Common Shares to be
acquired upon conversion of the Preferred Shares purchased pursuant to this
Agreement.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
Seller represents, warrants and agrees as follows:
(i) Seller has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect to any of its securities;
(ii) The Shares when issued and delivered will be duly and validly
authorized and issued, fully-paid and nonassessable, free and clear of any
liens, encumbrances, charges, or adverse claims of any nature whatsoever, and
will not subject the holders thereof to personal liability by reason of being
such holders. There are no preemptive rights of any shareholder of Seller with
respect to the Shares;
(iii) This Agreement has been duly authorized, validly executed and
delivered on behalf of Seller and is a valid and binding agreement in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally;
(iv) The execution and delivery of this Agreement and the consummation of
the issuance of the Shares and the transactions contemplated by this Agreement
do not and will not conflict with or result in a breach by Seller of any of the
terms or provisions of, or constitute a default under, the Certificates of
Incorporation or By-laws of Seller, or any indenture, mortgage, deed of trust or
other material agreement or instrument to which Seller is a party or by which it
or any of its properties or assets are bound, or any existing applicable decree,
judgment or order of any court, federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over Seller or any of its
properties or assets;
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(v) No authorization, approval or consent of or filing with any federal,
state or local governmental body of the United States is legally required for
the issuance and sale of the Shares as contemplated by this Agreement, except
that Seller will file any necessary Form D, Certificate of Designation and/or
any necessary state blue sky filings;
(vi) The information provided by or on behalf of Seller to Buyer and
referred to in Section 2(viii) of this Agreement does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which, and at the time at which, they were made, not misleading. Since [December
31, 1995], there has been no material adverse development in the business,
properties, operations, financial condition or results of operations of Seller,
except as disclosed in the documents referred to in Section 2(vii) hereof.
Seller's common stock trades on the Nasdaq Market;
(vii) Seller will issue one or more certificates representing the Preferred
Shares in the name of Buyer in such denominations to be specified by Buyer prior
to closing. The Preferred Shares will bear the restrictive legend specified in
Section 2(iii) of this Agreement. Seller further warrants that no instructions
other than these instructions and stop transfer instructions to give effect to
Section 2(i) hereof will be given to the transfer agent and also warrants that
the Shares shall otherwise be transferable on the books and records of Seller as
and to the extent provided in this Agreement, subject to compliance with Federal
and State securities laws. Nothing in this Section shall affect in any way
Buyer's obligations and agreement to comply with all applicable securities laws
upon resale of the Shares;
(viii) Seller shall not issue any press release or file any Form 8-K with
the SEC in connection with this Agreement or the securities being sold pursuant
hereto unless and until Buyer has reviewed and approved any such document for
such use; Seller will promptly inform Buyer of any material change in the
Company's business or business practices; and
(ix) Subject to the terms of the Registration Rights Agreement attached
hereto as Annex I, Seller agrees to file the Registration Statement with the SEC
within twenty (20) days after the Closing and shall cause the Registration
Statement to be declared effective within one hundred twenty (120) days
thereafter. If the Company fails to cause the Registration Statement to be
declared effective within such period, the Company will pay a cash penalty of 2%
of the amount raised for each 30 day period thereafter prorated for any period
less than 30 days. In the event the Registration Statement is not declared
effective within 180 days, Buyer can obtain freely tradable common stock through
Regulation S to the Securities Act of 1933.
(x) Seller agrees that it will not without prior approval of Buyer sell in
any nonpublic transaction, any equity security or security convertible into an
equity security for a period of 120 days after the date upon which the
registration statement is declared effective.
4. CLOSING. Preferred Share certificates shall be delivered to Buyer and
the funds therefor shall be delivered to Seller on September 17, 1996 (the
"Closing") or at such time to be mutually agreed.
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5. CONDITIONS TO CLOSING
(i) Buyer understands that Seller's obligation to sell the Preferred Shares
is conditioned upon Company's existence and status as a Company which has filed
a Form 10SB with the Securities and Exchange Commission which will become
effective on September 21, 1996 and pursuant thereto, the Company will become a
fully reporting company, and compliance with section (12) of the Securities
Exchange Act as well as delivery into escrow or otherwise as agreed between
Buyer and Seller by Buyer of the amount set forth in Paragraph 1 hereof.
(ii) Seller understands that Buyer's obligation to purchase and pay for the
Preferred Shares is conditioned upon delivery of certificate(s) representing
Preferred Shares as described in Paragraph 1(ii) hereto and provision of an
opinion of counsel, in customary form, confirming the matters set out in Section
3(ii), (iii), (iv) and (v) above, and 5(i).
(iii) Seller understands that Buyer's obligation to purchase and pay for
the Preferred Shares is conditioned upon Seller and Buyer entering into a
Registration Rights Agreement substantially in the form of Annex I hereto.
6. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to rules governing the conflict of laws. Facsimile signatures of this
agreement shall be binding on all parties hereto.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
MIDLAND XXXXXX CAPITAL, INC.
By: s/Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
Senior Vice-President
AMERICAN BIOMEDICA CORPORATION
By: s/Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx,
President
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