Advanced Mammography Systems, Inc.
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▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
This letter will confirm our mutual agreement with
respect to our engagement as exclusive distributors
("Distributors") to act on behalf of Advanced Mammography
Systems, Inc. ("MAMO" or the "Company") in connection with the
offer and sale on a best efforts basis of $3,000,000 aggregate
principal amount of 4% Convertible Debentures of the Company
pursuant to Regulation S promulgated under the Securities Act of
1933, as amended (the "Act").
1. (a) The engagement hereunder shall be for a term of
three (3) business days. You represent that no other offering
under Regulation S is presently in progress by the Company which
has not been disclosed to us.
(b) You have represented that the Debentures will be
senior in priority to all other indebtedness of the Company,
excluding conventional institutional and secured debt.
2. (a) The Distributors shall be entitled to a placement
fee of 6% of the principal amount of the Debentures sold, and the
net purchase price to be paid to the Company shall be $940 per
Debenture. Other than the placement fee payable hereunder, and
the warrant set forth in [paragraph] 11 hereof, the Distributors
shall not be entitled to any additional compensation from the
Company. The Company shall assume the Escrow Agent's (as defined
below) fee of 1/2 of 1% of the aggregate amount subscribed by all
purchasers and accepted by the Company.
(b) Each purchaser will, simultaneous with the
execution of an Offshore Securities Subscription Agreement (the
"Agreement") in the form annexed hereto as Exhibit A, pay the
purchase price for the Debentures in escrow to the Escrow Agent.
The Escrow Agent is authorized to release the funds of each
purchaser after both
(i) the Company approves such purchaser and
subscription documents (in the form of an
exhibit hereto) which have been submitted and
signed by the purchaser, and
(ii) the Company has caused to be delivered to the
Escrow Agent or his designee, one or more
Debentures purchased by such purchaser, and
the opinion of counsel attached as ▇▇▇▇▇ ▇▇▇
to the Agreement.
(c) The restricted period referred to in Rule 903
("Restricted Period") for each purchaser shall commence on the
date (the "Closing date") that the purchase funds are delivered
to the Company.
(d) The Distributors (i) represent and warrant, and
will provide confirmatory documentation, that each purchaser is
either purchasing the Debentures for its own account, or is a
fiduciary which has full, exclusive and irrevocable investment
discretion with respect to the Debentures which investment
discretion cannot be revoked prior to the 180th day after the
Closing Date, and (ii) represents and warrants that no purchaser
is an affiliate of Distributors. To the best of Distributors'
knowledge, all representations and warranties by purchasers are
true and correct.
(e) The Company shall have the right in its sole
discretion to disapprove any person or entity which is proposed
by the Distributors to be a purchaser of any Debentures.
3. The Company will cause the Debentures to be delivered
to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Esqs. as escrow agent (the "Escrow Agent")
pursuant to the terms of the Joint Escrow Instructions attached
as Annex II to the Agreement.
4. (a) The Distributors represent, warrant and agree that
(i) each purchaser of the Debentures will be qualified to
purchase the Debentures under the laws of the jurisdiction in
which such person resides and that the offer and sale of the
Debentures will not violate the securities or other laws of such
jurisdiction and (ii) each purchaser will agree that neither it
nor any of its affiliates presently have or will, directly or
indirectly, maintain any short position in securities of the
Company during the Restricted Period.
(b) The Distributors understand that the Debentures
have not been registered under the Act and may not be offered or
sold within the United states or to, or for the account or
benefit of, United States persons except in accordance with
Regulation S under the Act or pursuant to another exemption from
the registration requirements of the Act.
5. (a) The Distributors further agree that:
(i) no offer or sale of the Debentures will be
made by the Distributors to, or accepted by
the Distributors from, any U.S. person or for
the account or benefit of a U.S. person;
(ii) all offers and sales of the Debentures prior
to the expiration of the applicable
Restricted Period made by the Distributors
shall be made only in accordance with the
provisions of Rule 903 or Rule 904, pursuant
to registration of the Debentures under the
Act, or pursuant to an available exemption
from the registration requirements of the
Act;
(iii) all offering materials and documents used in
connection with offers and sales of the
Debentures prior to the expiration of the
engagement period shall be approved in
advance by the Company, and shall on the
first page thereof include statements to the
effect that the Debentures have not been
registered under the Act and that neither the
purchaser, nor any direct or indirect
purchaser of the Debentures from such
purchaser, may directly or indirectly offer
or sell the Debentures in the United States
or to U.S. persons unless the Debentures are
registered under the Act, or an exemption
from the registration requirements of the Act
is available; and
(iv) it will not engage in any activity for the
purpose of, or that could reasonably be
expected to have the effect of, conditioning
the market in the United States for any of
the securities of the Company.
(b) For the purposes of this letter agreement, a U.S.
Person means a U.S. Person as that term is defined in Rule 902(o)
under Regulation S.
6. Distributors are independent contractors, and is not
the agent of the Company. It is not authorized to bind the
Company, or to make any representations or warranties on behalf
of the Company.
7. The Company represents, warrants, and agrees that in
addition to the warranties to be made by the Company to the
purchasers;
(a) the common stock to be issued upon conversion of
the Debentures will be registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Company has timely filed all the material required to
be filed pursuant to Section 13(a) or 15(d) of the Exchange Act
for a period of at least twelve months preceding the date hereof,
and the Company will continue to file all such material on a
timely basis;
(b) the Company is a reporting issuer as defined by
Rule 902 of Regulation S. The Company is in full compliance, to
the extent applicable with all reporting obligations under
Section 12(g) of the Exchange Act. The Company has registered
its Common Stock pursuant to Section 12 of the Exchange Act and
the Common Stock is listed on the NASDAQ SmallCap Market and has
received no notice, either oral or written, with respect to its
continued eligibility for such listing.
(c) the Debentures will be offered and sold in
compliance with the requirements for the exemption from
registration pursuant to Section 5 of the Act contained in Rule
903 under Regulation S and with all other U.S. securities laws
and regulations; it being understood that this representation,
warranty and agreement is made relying exclusively on the
representations, warranties and agreements made by the
Distributors and/or purchasers herein or in the applicable
subscription documents. The Company will, at its expense, make
all filings required under the Act and any applicable domestic
securities exchange or trading market if any;
(d) all information furnished or required to be
furnished to purchasers by the Company under Regulation S will
not contain any untrue statement of material fact or omit to
state a material fact required to be stated or necessary to make
the statements therein not misleading; provided however, that
this representation and warranty does not extend to written
material furnished to the Company by Distributors relating to
Distributors or the distribution process;
(e) the Company will not for a period of one hundred
eighty (180) days from the date hereof, offer for sale or sell
any securities unless, in the opinion of the Company's counsel,
such offer or sale does not jeopardize the availability of
exemptions from the registration and qualification requirements
under all applicable U.S. securities laws with respect to the
Debentures. The Company has not engaged in any such offering
during the six months prior to the date of this agreement, except
as disclosed to distributors;
(f) the Company has all requisite corporate power and
authority to execute and perform this agreement. All corporate
action necessary for the authorization, execution, delivery and
performance of this agreement and the transaction contemplated
hereby have been taken. This agreement constitutes a valid and
binding obligation of the Company;
(g) the execution and performance of this agreement by
the Company and the offer and sale of the Debentures will not
violate any provision of the Certificate of Incorporation or By-
laws of the Company or any material agreement or other instrument
to which the Company is party or by which it is bound, and which
violation(s) would have a material adverse effect on the business
or financial condition of the Company. Any material necessary
approvals, U.S. governmental and private, will be obtained by the
Company prior to the issuance of the Debentures; and
(h) the Company makes no other representation or
warranty with respect to the Company, its finances, assets,
business or prospects or otherwise, except as expressly set forth
herein or in the Agreement. Distributors will advise each
purchaser and potential purchaser of the foregoing, and that such
purchaser is relying on its own investigation with respect to all
such manners, and that it will be given reasonable access to any
and all material publicly available documents and Company
personnel it may require for such investigation.
8. The Company will provide Escrow Agent with an opinion
of counsel substantially in the form attached as ▇▇▇▇▇ ▇▇▇ to the
Agreement.
9. During the time period commencing upon completion of
this distribution and ending ninety (90) days thereafter, the
Distributors will have the right of first refusal to act on
behalf of the Company for any further offer or sale of common
stock or securities convertible into common stock in any non-
public offering for cash consideration, and in which the company
intends to use a placement agent on a commission or fee basis,
upon the same terms and conditions as the within offering with
respect to commissions and applicable conversion price. Further,
during the time period commencing ninety (90) days upon
completion of this distribution and ending one year after the
date of this letter, the Distributors will have the right of
first refusal to act on behalf of the Company for any further
offer or sale of common stock or securities convertible into
common stock in any non-public offering for cash consideration,
and in which the company intends to use a placement agent on a
commission or fee basis. Upon deciding to proceed with an offer
or sale of securities subject to this Section 9, the Company
shall give Distributors written notice of the proposed offering,
specifying the type and amount of securities to be issued, the
proposed offering price, the class of purchasers to which the
securities shall be offered, and the commission or fee to be paid
to the placement agent. If the Distributors do not accept the
terms of engagement specified in the Company's notice within ten
calendar days immediately following the date of Distributors'
receipt of such notice, the Company may choose another placement
agent for the proposed offering (with no fee or commission of any
kind due to Distributors), provided, however, that if the terms
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of engagement with any such other placement agent are thereafter
changed whereby they vary materially from those last offered to
Distributors, then Distributors shall have a right to the notice
and response period specified in this Section with respect to
such new terms of engagement. Should the Distributors not accept
an engagement under this Section, thereafter their right of first
refusal hereunder shall terminate.
10. The Company will not, for a period of one hundred
eighty (180) days from the date hereof, list its shares on any
additional securities market (including a change to NASDAQ
National Market) without the written consent of the Distributors.
11. The Company agrees to issue to Adar Equities LLC, or
another affiliate of the Distributors within ten (10) days after
the Closing Date transferable divisible warrants for 197,500
shares of Common Stock at an exercise price of $2.20 per share of
Common Stock, exercisable commencing June 1, 1996 and for a
period of eighteen (18) months thereafter, and an additional
197,500 warrants at an exercise price of $2.50 per share
commencing June 1, 1996 and for a period of sixty (60) months
thereafter.
12. As more fully described in Exhibit B hereto, which is
incorporated herein by reference, each party hereto will
indemnify and hold the other (including its partners, agents,
employees and controlling persons within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) harmless from
and against certain claims, liabilities, losses, damages and
expenses incurred, including fees and disbursements of counsel,
related to or arising out of this agreement. Exhibit B will be
executed and delivered simultaneously with this agreement.
13. The obligations of the Distributors hereunder shall be
expressly conditioned upon the execution by the parties hereto of
a definitive agreement evidencing that certain Merger Agreement
dated as of February 4, 1996 among the Company, Advance NMR
Systems, Inc. and AMS Merger Corp.
14. This letter agreement shall be governed by and
construed under the laws of the State of New York without giving
effect to principles governing the conflicts of laws. A
facsimile transmission of this signed agreement shall be legal
and binding on all parties hereto. Terms otherwise not defined
herein shall have the meanings ascribed to them in the Agreement.
Dated: 5-6-97
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ADAR EQUITIES LLC
By: /s/ [illegible]
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▇▇▇▇▇▇ & CO.
By: /s/ [illegible]
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ADVANCED MAMMOGRAPHY SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Chief Financial Officer
