As filed with the Securities and Exchange Commission on June 9, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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REGISTRATION STATEMENT
ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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ADVANCED MAMMOGRAPHY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3166348
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
46 Jonspin Road
Wilmington, Massachusetts 01887
(508) 657-8876
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Jack Nelson Bruce A. Rich, Esq.
Chairman of the Board Reid & Priest LLP
Advanced Mammography Systems, Inc. 40 West 57th Street
46 Jonspin Road New York, New York 10019
Wilmington, Massachusetts 01887 (212) 603-2000
(508) 657-8876
(Names and addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration
Statement as determined by market conditions and other factors.
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If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
please check the following box. [x]
If this form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration number of the earlier effective registration
statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to
Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
=============================================================
Proposed
Title of Each Maximum Proposed
Class Offering Maximum
of Price Aggregate Amount of
Securities to Amount to be Per Offering Registration
be Registered Registered Share (1)
Price (1) Fee
------------- ---------- ------- --------- ------------
Common Stock, 203,252
$.01 par shares
value . . . . $.95 -- --
------------- ---------- ------- --------- ------------
Common Stock, 867,560
$.01 par shares (2)
value . . . . $.95 -- --
------------- ---------- ------- --------- ------------
TOTAL . . . . 1,070,812 $.95 1,020,617.69 $309.28
shares
=============================================================
(1) Estimated solely for purposes of determining the
registration fee pursuant to Rule 457.
(2) Represents shares issuable upon exercise of various warrants
held by the Selling Stockholders. In accordance with Rule 416,
this registration statement also covers such indeterminate number
of additional shares of Common Stock as may become issuable upon
exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions or by reason of
changes in the exercise price as aforesaid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in
any jurisdiction in which such offer, solicitation, or sale
would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 9, 1997
P R O S P E C T U S
ADVANCED MAMMOGRAPHY SYSTEMS, INC.
1,070,812 shares of Common Stock, $.01 par value
This Prospectus relates to the offer for sale of up to
1,070,812 shares (the "Shares") of Common Stock, par value $.01
per share (the "Common Stock"), of Advanced Mammography Systems,
Inc., a Delaware corporation (the "Company"), from time to time
on behalf of certain persons named herein (the "Selling
Stockholders"). The Shares consist of: (i) 203,252 shares
presently outstanding; (ii) 228,658 shares (the "Placement
Shares") issuable upon exercise of the Placement Warrants (as
hereinafter defined); (iii) 243,902 shares (the "Agent Shares")
issuable upon exercise of the Agent Warrants (as hereinafter
defined); (iv) 197,500 shares (the "Series A Shares") issuable
upon exercise of the Series A Warrants (as hereinafter defined);
and (v) 197,500 shares (the "Series B Shares") issuable upon
exercise of the Series B Warrants (as hereinafter defined). See
"Selling Stockholders."
The Placement Shares are issuable upon exercise of warrants
(the "Placement Warrants"), each of which entitles the holder
thereof to purchase one share of the Company's Common Stock at an
exercise price of $1.93 per share until expiration on February 6,
2000, and the Agent Shares are issuable upon exercise of warrants
(the "Agent Warrants"), each of which entitles the holder thereof
to purchase one share of the Company's Common Stock at an exercise
price of $1.68 per share until expiration on January 31, 2000.
The Series A Shares are issuable upon exercise of warrants (the
"Series A Warrants"), each of which entitles the holder thereof
to purchase one share of the Company's Common Stock at an exercise
price of $2.20 per share until expiration on November 30, 1997, and
the Series B Shares are issuable upon exercise of warrants (the
"Series B Warrants" and collectively with the Placement, Agent
and Series A Warrants, the "Warrants"), each of which entitles
the holder thereof to purchase one share of the Company's Common
Stock at an exercise price of $2.50 per share until expiration on
May 31, 2001. The shares of Common Stock issuable upon exercise of
the Warrants are subject to customary anti-dilution provisions.
The Company's Common Stock is traded on the Nasdaq Small Cap
System under the symbol MAMO. On June 6, 1997, the closing bid
price was $.97 per share for the Common Stock, as reported by
Nasdaq. See "Market Price Information."
AN INVESTMENT IN THESE SECURITIES IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
The Shares will be offered by the Selling Stockholders, or
their donees, pledgees, transferees or other successors in
interest, for resale by this Prospectus from time to time after
the date hereof in the over-the-counter market through dealers or
brokers. The Shares may also be sold in privately negotiated
transactions. Sales through dealers or brokers are expected to
be made with customary commissions being paid by the Selling
Stockholders. Payments to persons assisting the Selling
Stockholders with respect to privately negotiated transactions
will be negotiated on a transaction-by-transaction basis. The
Selling Stockholders have advised the Company that, prior to the
date of this Prospectus, they have not made any agreement or
arrangement with any underwriters, brokers or dealers regarding
the sale of the Shares. See "Plan of Distribution."
Any commissions and/or discounts on the sale of the Shares
offered by the Selling Stockholders will be paid by the Selling
Stockholders, and all other expenses related to the filing of the
registration statement of which this Prospectus is a part, are
being paid by the Company. See "Use of Proceeds."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATEMENT SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is June , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the
"SEC"). Such reports and other information can be inspected and
copied at the Public Reference Section of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; or at its
offices at Northwest Atrium Center, 500 West Madison Street, 14th
Floor, Chicago, IL 60661; or Seven World Trade Center, 13th
Floor, New York, NY 10048. Copies of this material can also be
obtained at prescribed rates by writing to the Public Reference
Section of the SEC at its principal office at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
maintains a Web site (http://www.sec.gov) that contains reports,
proxy statements and other information regarding registrants that
file electronically with the SEC, including the Company. In
addition, copies of this material and other information are
provided to Nasdaq and can be inspected at the Nasdaq offices
maintained at the National Association of Securities Dealers,
Inc., 1735 "K" Street, Washington, D.C. 20549.
This Prospectus constitutes a part of a Registration
Statement filed by the Company with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain information contained in the Registration
Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further
information with respect to the Company and the offering. Any
statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the
SEC. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the SEC, are
hereby incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended
September 30, 1996.
2. Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1996.
3. Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997.
4. Current Report on Form 8-K for an event of February 6,
1997.
5. Current Report on Form 8-K for an event of May 1, 1997.
6. Proxy Statement for 1996 Annual Meeting of
Stockholders, dated July 29, 1996.
7. Description of the Common Stock contained in the
Registration Statement on Form 8-A, filed on December
11, 1992.
All documents filed by the Company with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to
the date of this Prospectus and prior to the termination of the
offering of the securities covered by this Prospectus shall be
deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for the purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
statement so modified or
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<PAGE>
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each
person to whom this Prospectus is delivered, upon request of any
such person, a copy of any and all of the documents referred to
above which have been or may be incorporated by reference in this
Prospectus other than the exhibits thereto. Requests for such
copies should be directed to the Company at One Executive Drive,
Fort Lee, New Jersey 07024, Attn: Steven J. James, Chief
Financial Officer; telephone (201) 592-8838.
THE COMPANY
Advanced Mammography Systems, Inc. ( AMS or the Company )
is a development stage company which was organized in Delaware in
July 1992 to acquire and develop proprietary technology from
Advanced NMR Systems, Inc. ( ANMR ) in order to design,
manufacture and commercialize a dedicated (or partial body)
magnetic resonance imaging ( MRI ) system for breast imaging
which can be used to detect and characterize breast tissue
abnormalities. ANMR has been engaged in the development and
commercialization of certain aspect of MRI systems.
The Company believes its Aurora System has the potential to
become an important adjunct in the evaluation of the 15-20% of x-
ray mammograms that are ambiguous or indeterminate, for imaging
dense breast tissue using a patent pending technique that can
suppress fat in breast images, for earlier diagnostic
intervention among high risk individuals, for characterizing
breast lesions, for staging cancer treatment and for post surgery
and post radiation follow-up. The Company is initiating studies
among its clinical partners to accelerate the expansion of MRI's
potential in breast imaging. The study's goal is to establish
breast MRI as an integral tool in the diagnosis and treatment of
breast disease. These studies will be performed applying
American College of Radiology (ACR) lexicon or decision making
criteria. Assuming broader diagnostic applications are
established, the next Company goal would be to demonstrate
clinical utility beyond diagnosis to potentially include
screening. This expansion of breast MRI's clinical utility is
anticipated to alter medical practices to include MR on a more
routine basis which would derive patient demand that should
exceed the capacity of currently available whole body MRI
systems. The Aurora MRI solution is a technology optimized for
and dedicated to breast imaging to address this future demand and
meet patient needs that are distinct from and not adequately
served by whole body MRI systems. Also, the Aurora is intended to
be offered at about one-third the cost of a whole body system, or
approximately $550,000, as the Aurora System utilizes a .5T
magnet that maintains an imaging field of view and image quality
comparable to a 1.5T whole body system, dramatically reducing the
customer purchase price and siting costs. The Company plans to market
the Aurora System to mammography clinics and practices where patient
volume is sufficient to justify the cost of adding MR breast imaging
to the diagnostic workup of certain breast patients. The Company
has been notified that tests utilizing its Aurora breast imaging
technology are eligible for reimbursement to their patient
members by certain Massachusetts managed health care providers.
In February 1996, the U.S. Food and Drug Administration (the
FDA ) cleared the commercial use of the Company's AuroraTM
dedicated MR Breast Imaging System. In order to fully
commercialize the Aurora System and to demonstrate diagnostic
effectiveness as an accepted tool for the diagnosis and
management of breast disease and permit reimbursement for
dedicated breast MRI by third parties such as Medicare, private
insurance and managed care consortiums, the Company must develop
maximum clinical utility. The Company has launched a clinical
study which includes a scientific investigation of the improved
breast imaging device in a large patient population to provide
objective evidence of its clinical utility. The Aurora System has
been placed at the University of Texas Medical Branch at
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Galveston and the Company expects to install a second Aurora
System at the Faulkner-Sagoff Centre for Breast Health Care at
Faulkner Hospital in Boston, Massachusetts in the fourth quarter
of fiscal 1997 for research testing. The Company is seeking to
install the Aurora System in other recognized hospitals and
research facilities.
In July 1992, ANMR licensed (the "ANMR License Agreement") to
the Company the right to use ANMR's technology in the development
of a dedicated breast imaging system. The ANMR License Agreement
grants to the Company a perpetual, worldwide exclusive,
royalty-free license to all proprietary technology and related
know-how, including patents owned and/or licensed by ANMR and
patent applications filed or to be filed by ANMR, to the extent,
if any, useful in connection with developing a dedicated MRI
system for mammography. As consideration for the ANMR Licensing
Agreement, AMS paid to ANMR $1,680,000 and issued 4,000,000
shares of its Common Stock, of which 2,750,000 shares (the
"Escrow Shares") were placed in escrow for release based upon the
Company achieving certain future minimum pre-tax income targets
or the market price of the Company's Common Stock reaching
certain levels through 1996. None of the conditions for release
were met, so on May 1, 1997, the Escrow Shares were returned to
the Company for cancellation.
The Company uses a portion of ANMR's facilities and ANMR
officers and employees pursuant to a Shared Services Agreement.
The expenses related to the use of the facilities, such as rent,
utilities and insurance, are apportioned based on the number of
square feet occupied by the Company and ANMR, respectively. The
remaining expenses, including those for senior management,
administration and miscellaneous supplies and resources, are
allocated evenly between the two companies, but are modified if
circumstances dictate.
On May 27, 1997, the Company and ANMR jointly announced that
their respective Boards of Directors (based as to the Company's
Board upon a recommendation of a Special Committee of Independent
Directors) had agreed upon the terms of a merger (the "Merger")
of the Company with ANMR. Upon the Merger, the Company's
stockholders (other than ANMR) would receive .40 of one share of
ANMR Common Stock (after a proposed one-for-ten reverse stock split
of ANMR Common Stock) for each outstanding share owned of the
Company's Common Stock. The Merger transaction is subject to
execution of a definitive Merger Agreement, filing and clearance
of a registration statement/proxy statement with the SEC for special
stockholder meetings of both companies' stockholders, fairness
opinions from their respective investment bankers and other
customary closing conditions. In January 1996, the Company and
ANMR had entered into a merger agreement, which agreement was
terminated in May 1996 for, among other reasons, the difficulty of
obtaining financing on a combined basis. The Company believes that
corporate actions taken by both companies since May 1996 should
permit the presently proposed Merger to go forward, subject to the
various approvals; however, no assurance can be given that the
Merger will go forward.
The Company was incorporated in Delaware under the name
MAM-MRI Image Technology, Inc. and changed its name to Advanced
Mammography Systems, Inc. in August 1992. The Company's
executive offices are located at 46 Jonspin Road, Wilmington,
Massachusetts 01887 and its telephone number is (508) 657-8876.
RISK FACTORS
The securities offered hereby are speculative in nature and
involve a high degree of risk. Investors should carefully
consider, among other matters, the following risks before making
a decision to purchase the Shares.
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<PAGE>
1. DEVELOPMENT STAGE COMPANY; ACCUMULATED DEFICIT. The
Company is in the development stage having been formed in 1992 in
order to design, develop, manufacture and commercialize an MRI
scanner for mammography. At March 31, 1997, the Company had an
accumulated deficit of $13,995,000, including a loss of
$1,157,000 for the fiscal quarter ended March 31, 1997, and the
Company has had minimal revenues. Accordingly, the auditor's report
in the fiscal 1996 financial statements includes an explanatory
paragraph relating to the Company's ability to continue as a going
concern. The Company's operations are subject to numerous risks
associated with establishing a new business with new technology,
including a competitive and regulatory environment in an industry
characterized by numerous well-established and well-capitalized
companies and by exhaustive regulatory scrutiny. There can be no
assurance that the Company's research and development activities
will be successful, that its products will be granted necessary
regulatory approvals, that such products will prove to be
medically effective and commercially viable or successfully
marketed or that the Company will ever achieve significant
revenues or profitable operations.
2. UNPROVEN PRODUCT. The Company's business involves work
in a relatively new and untried field and the Company is not
aware of any other entity which has developed a dedicated MRI
scanner for mammography. Given the political uncertainty of the
future of health care in the United States, and the conflicting
medical viewpoints on the necessity, frequency, risks and/or
benefits of mammograms, the Company is unable to predict the
market, if any, for its products. The Company's ability to
commercialize a dedicated use MRI scanner for mammography will
also be dependent, among other things, on the Company's MRI
scanning system being significantly smaller and less expensive
than conventional MRI scanners, and also having features which
are improvements over conventional x-ray mammography which would
justify higher patient charges, and being considered to have
medical efficacy. There is no assurance that this technology
will ultimately be successfully developed or prove to have
commercially viable applications. Further, the technology may
ultimately be rendered obsolete by advances in technology. There
can be no assurance that this system will be medically or
commercially acceptable or successful.
3. NEED FOR ADDITIONAL FUNDS AND NO ASSURANCE OF AVAILABLE
FINANCING. The Company expects to incur substantial expenditures
over the next 12 months for research, development, testing, and
marketing, particularly for pursuing systems related issues and
obtaining clinical studies to substantiate the efficacy and
reliability of the system. At March 31, 1997, the Company had
$2.1 million in cash and cash equivalents. The Company will
require additional funds prior to commercializing any products.
Potential sources of additional capital are proceeds received
from future equity or debt financings, or from research grants or
joint ventures. The Company raised an aggregate of $4.5 million
of gross proceeds through placements in May 1996 and February
1997. However, the Company does not have any commitments or
arrangements to obtain any funds and there is no assurance that
required financing will be available to the Company, or if
obtained that the terms would not be dilutive to existing
stockholders. During the pendency of the Merger transaction, any
financing by the Company would be subject to the prior consent of
ANMR.
4. RELIANCE ON DEVELOPMENT OF TECHNOLOGY AND PRODUCT LINE
LIMITED FOR DEVELOPMENT OF DEDICATED MRI SCANNER FOR MAMMOGRAPHY.
The Company's business is dependent on the development of
technology suitable for an MRI mammography scanner. Pursuant to
the ANMR License Agreement, the Company's use of the licensed
technology is limited to the field of mammography. Accordingly,
even if the Company is successful in developing a commercially
viable MRI scanner suitable for mammography, the Company's products
based on the licensed technology will be limited to mammography and
the Company may be prevented from expanding its operations into other
fields. However, the Company has been granted a 50% interest in
other dedicated use MRI scanners which may be developed by ANMR.
There can be no assurance that the technology transferred includes
all
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proprietary and patent rights necessary to develop an MRI scanner for
use in the field of mammography. The Company may also utilize
technologies, patents or other rights which may be held by or be
subject to patents or patent applications filed by third parties,
and there is no assurance that such technology will not infringe
patents or other rights owned by others, licenses to which may not
be available to the Company. In August 1996, ANMR announced that it
was eliminating research, development and production of its InstaScan
MRI technology. Restructuring of ANMR could have an impact on
the future availability of ANMR scientific personnel under the
Shared Services Agreement and its related technology under the
ANMR License Agreement.
5. DEPENDENCE ON ANMR. Pursuant to the Company's Shared
Services Agreement with ANMR, all of ANMR's officers also serve
as officers of the Company, and the Company obtains management
and administrative support from ANMR's staff. At March 31, 1997,
the Company's payable to ANMR was $1,083,000. There can be no
assurance that any conflict of interest that may arise on the
part of ANMR personnel performing services for the Company will
be capable of being resolved or that the payments to be made by
the Company to ANMR pursuant to the Shared Services Agreement
would be the same as if made under an arm's length arrangement.
In addition, all except two of the directors of the Company are
also directors of ANMR, and all of the directors of ANMR are also
directors of the Company. The Company and ANMR recently
announced a proposed Merger of the two companies. The Merger
transaction should take approximately 3-4 months to complete and
is subject to several conditions, including approval by the
stockholders of both companies. Should the Merger transaction be
terminated without the Company finding a strategic partner, the
Company would be in a severe need for additional capital.
Accordingly, if ANMR were unable to provide these services, it
would delay the Company's marketing of an MRI scanner and could
result in increased expenditures by the Company and a consequent
need for additional financing.
6. DEPENDENCE ON, AND NEED FOR, KEY PERSONNEL. Because of
the specialized nature of its business, the Company is dependent
upon the efforts of its current officers and employees, and upon
its ability to attract and retain technically qualified personnel
and marketing and sales personnel in the medical technology
field. The Company is heavily dependent upon ANMR's officers and
administrative and clerical staff under the Shared Services
Agreement. The loss of the services of Jack Nelson, Chairman of
the Board, could materially adversely affect the Company. There
is intense competition for qualified personnel in the MRI
industry, including competition from companies with substantially
greater resources than the Company. In light of the Company's
financial situation, there can be no assurance that the Company
will be successful in recruiting or retaining personnel of the
requisite scientific caliber or in the requisite numbers to
enable the Company to conduct its business as planned.
7. GOVERNMENTAL REGULATION AND UNCERTAINTY OF PRODUCT
APPROVALS. The manufacture and sale of the Company's proposed
MRI mammography scanning systems is subject to extensive
regulation by the FDA, as well as by other federal, state and
foreign authorities. The Company's products will be regulated as
medical devices by the FDA under the Food, Drug and Cosmetic Act,
and as such require premarket regulatory clearance before
commercialization. In addition, products distributed pursuant to
FDA clearances are subject to pervasive and continuous regulation
by the FDA, including compliance with good manufacturing practice
regulations. Discovery of previously unknown problems or
noncompliance with applicable regulations may result in product
labeling restrictions or withdrawal of the product from the market.
There can be no assurance that these regulations will not have an
adverse effect on the Company's future operations. In February 1996,
the FDA cleared the commercial use of the Company's AuroraTM
dedicated MR Breast Imaging System.
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Until required FDA or state approvals are obtained, neither
governmental agencies nor private insurers will reimburse for the
cost of MRI systems and diagnostic procedures. Furthermore,
reimbursement may not be authorized even after approvals are
granted or it may be delayed for substantial periods after such
approvals. Moreover, the Mammography Quality Standards Act of
1992 ("MQSA") authorizes the U.S. Department of Health and Human
Services ("DHHS") to regulate facilities that provide mammography
services and utilize radiological equipment. Under the MQSA, no
facility may provide mammographies (as defined therein to mean a
radiography (i.e., an x-ray) of the breast), unless it has
obtained a certificate from DHHS to do so. The MQSA also
requires that the Secretary of DHHS develop quality standards to
assure the safety and accuracy of mammography carried out by such
facilities. The Company's MRI products currently under
development do not provide radiography of the breast. Instead,
they rely upon magnetic resonance imaging technology, which does
not currently fall within the scope of the MQSA. Nonetheless,
the Company cannot predict whether the MQSA will be amended or
interpreted to regulate the use of any of the Company's proposed
MRI products. As such, there can be no assurance that the MQSA
and the standards promulgated thereunder will not have an adverse
effect on the Company's future ability to market its proposed MRI
products currently under development. In addition, a number of
states, through Certificate of Need ("CON") laws, limit the
establishment of a new facility or service or the purchase of
major medical equipment to situations where it had been
determined that the need for such facility, service or equipment
exists. The market for the Company's MRI products may be
adversely affected by CON regulation to the extent that
institutional health care facility purchasers and lessors of the
products are subject to CON regulation. While many states exempt
non-institutional providers from CON coverage, a number of states
have extended CON coverage to physicians' offices or medical
groups by restricting the purchase of major medical equipment
wherever located. There can be no assurance that such CONs can
be obtained if needed. Furthermore, laws, rules and regulations
pertaining to CONs have been subject to change in the past and
there can be no assurance that further changes will not take
place. Federal and state health care and related regulations are
subject to constant change. The Company cannot predict what
changes may be enacted which may affect its business or the
manner in which its business would be affected by such changes.
In addition, manufacturers of medical devices are subject to FDA
regulations, including compliance with good manufacturing
practice regulations. There can be no assurance that these
regulations will not have an adverse impact on the Company in the
future.
8. POSSIBLE RESTRICTIONS ON THIRD PARTY COVERAGE AND
REIMBURSEMENT. The Company's proposed MRI mammography scanning
systems and any other MRI technology devices are generally of the
type that would be purchased by hospitals or clinics, which then
bill various third-party payers, such as governmental programs
and private insurance plans, for the health care services
provided to patients. Payment to health care providers by third
party payers for diagnostic services generally depends
substantially upon such payors' coverage and reimbursement
policies. Consequently, those policies will have a direct effect
on health care providers' ability and willingness to pay for any
products developed by the Company. Mounting concerns about
rising health care costs and the future of the health care
industry in general may cause more restrictive coverage and
reimbursement policies to be implemented in the future. Failure
by third party payers to cover the Company's proposed MRI scanner
or to obtain adequate reimbursement for procedures employing
products subsequently developed by the Company could have a
material adverse effect on the Company's financial condition.
9. POTENTIAL PRODUCT LIABILITY; LACK OF INSURANCE. The
Company's business will expose it to potential product liability
risks which are inherent in the testing, manufacturing, marketing
and sale of diagnostic products. If available, product liability
insurance generally is expensive. The Company does
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not currently have any product liability insurance and there
can be no assurance that it will be able to obtain or maintain
such insurance on acceptable terms or that any insurance obtained
will provide adequate protection against potential liabilities.
In the event of a successful suit against the Company, a lack or
insufficiency of insurance coverage could have a material adverse
effect on the Company's business and operations.
10. NO CASH DIVIDENDS. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the
Board of Directors out of funds legally available therefor. To
date, the Company has not paid any cash dividends. The Board
does not intend to declare any cash dividends in the foreseeable
future, but instead intends to retain all earnings, if any, for
use in the Company's business operations.
11. POSSIBLE ADVERSE EFFECT ON MARKET PRICE OF THE COMPANY'S
SECURITIES AND FUTURE FINANCINGS DUE TO FUTURE SALES OF COMMON
STOCK. The sale, or availability for sale, of the Shares offered
herein, or any additional placement of Common Stock, could
adversely affect the prevailing market price of the Common Stock
and could impair the Company's ability to raise additional
capital through the sale of its equity securities. Depending
upon the market price of the Company's Common Stock, the
Company's net tangible assets and revenues, the Common Stock may
come within the "Penny Stock Rules" under the Exchange Act.
Under the Penny Stock Rules, brokers must undertake certain
procedures prior to selling a "penny stock," which may make it
more difficult for them to sell the Company's Common Stock.
Purchasers of the Common Stock offered hereby may likewise have
difficulty selling their shares in the secondary trading market.
In addition, Nasdaq has raised questions regarding the Company's
ability to meet the maintenance requirements for continued
inclusion on the Small Cap System. Should the Common Stock be
removed from the Small Cap System, it would be traded on the OTC
Bulletin Board which could adversely affect the trading market.
MARKET PRICE INFORMATION
The Company's Common Stock is included on the Nasdaq Small
Cap System under the symbol MAMO. The following table sets forth
the quarterly high and low bid prices for the Common Stock as
reported by Nasdaq for the periods indicated. These prices are
based on quotations between dealers, and do not reflect retail
mark-up, mark-down or commissions. Investors should check the
current market prices before making an investment decision with
respect to the Company's common Stock.
Common Stock High Low
------------ ---- ---
1997
----
January 1 $2.56 $1.44
through March 31
April 1
through June 4 1.66 .88
1996
----
January 1 4.13 1.50
through March 31
-8-
<PAGE>
April 1 4.63 1.81
through June 30
July 1 2.06 .63
through September 30
October 1 2.37 1.63
through December 31
1995
----
January 1 13.87 8.75
through March 31
April 1 15.25 10.00
through June 30
July 1 14.00 4.75
through September 30
October 1 5.94 1.00
through December 31
USE OF PROCEEDS
The Company will not receive any of the proceeds from the
sale of the Shares by the Selling Stockholders. The Shares
offered hereby are being sold by the Selling Stockholders acting
as principal for each Selling Stockholder's own account and may
be sold from time to time by the Selling Stockholders. However,
the Company will receive an amount equal to (i) $1.93 per share
upon exercise of the Placement Warrants, (ii) $1.68 per share
upon exercise of the Agent Warrants, (iii) $2.20 per share upon
exercise of the Series A Warrants and (iv) $2.50 per share upon
exercise of the Series B Warrants, or aggregate gross proceeds of
$1,779,315 upon exercise in full of the Warrants in accordance
with the terms thereof. There can be no assurance that the
Selling Stockholders will exercise any or all of the Warrants.
The Company would use the net proceeds for further research and
development and for general corporate purposes.
The Company will bear the expenses of the registration of the
Shares. The Company estimates that these expenses will be
approximately $35,000.
SELLING STOCKHOLDERS
The Shares offered by this Prospectus may be offered from
time to time by the Selling Stockholders. The Company issued an
aggregate of 203,252 shares of Common Stock and the Placement
Warrants to (i) Saundra J. Kessler as her sole and separate
property and (ii) Saundra J. Kessler as guardian for Nicholas C.
Kessler, a minor (collectively, the "Purchasers"), in a private
placement (the "Placement") pursuant to Private Placement
Agreements, dated as of February 5, 1997. In connection with the
Placement and a related placement which were effected in
accordance with a Funding Agreement, dated as of January 31,
1997, among the Company, InterFirst Capital Corporation
("InterFirst") and another firm, the Company issued the Agent
Warrants to InterFirst, the placement agent, and InterFirst
subsequently transferred a portion of the Agent Warrants to Paul
Kessler, who was then associated with InterFirst. Further, the
Company issued the Series A Warrants and the Series B Warrants to
Adar Equities LLC, Rickel & Associates, Inc. and Howard Miller
pursuant to a Distributor Agreement, dated as of May 6, 1996,
among the Company, Adar Equities LLC and Rickel & Co.
Pursuant to the Private Placement Agreements, the Funding
Agreement, the Distributor Agreement and the Warrants, the
Company is obligated to file the registration statement of which
this Prospectus is
-9-
<PAGE>
a part. Each of the owners of the Shares have entered into
customary agreements with the Company regarding the sale of the
Shares and mutual indemnification.
The following table sets forth, as of May 30, 1997 and upon
completion of this offering, information with regard to the
beneficial ownership of the Company's Common Stock by each of the
Selling Stockholders. The information set forth below is based
upon information concerning beneficial ownership provided to the
Company by each Selling Stockholder. None of the Selling
Stockholders has held any position, office or material
relationship with the Company or any of its predecessors or
affiliates within three years of the date of this Prospectus, and
each of the Selling Stockholders has sole voting power and
investment power with respect to the Shares set forth opposite
such Selling Stockholder's name. The table assumes the exercise
of the Warrants.
Beneficial
Beneficial Ownership Ownership
Prior to Registration After Offering
--------------------- --------------
Shares
Number to be Number of
Name of Shares Percent Registered Shares Percent
---- --------- ------- ---------- -------- -------
Saundra J. 431,910 5.5% 431,910 -0- --
Kessler as her
sole and separate
property(1)(2)
Saundra J. 215,955 2.8% 215,955 -0- --
Kessler as
guardian for
Nicholas C.
Kessler, a
minor(3)
InterFirst 195,122 2.5% 195,122 -0- --
Capital
Corporation(4)
Paul 48,780 0.6% 48,780 -0- --
Kessler(1)(5)
Adar Equities 250,000 3.2% 250,000 -0- --
LLC(6)
Rickel & 95,000 1.2% 95,000 -0- --
Associates,
Inc.(7)
Howard Miller(8) 50,000 0.7% 50,000 -0- --
1. Saundra Kessler is the wife of Paul Kessler. Each disclaims
beneficial ownership of the shares of the Company's Common
Stock owned by the other.
2. Includes (i) 114,329 shares underlying Placement Warrants and
(ii) 215,955 shares beneficially owned as guardian for her
son, as to which shares she has investment and voting power.
-10-
<PAGE>
3. Includes 114,329 shares underlying Placement Warrants.
4. Includes 195,122 shares underlying Agent Warrants, of which
97,561 shares underlying Class A Agent Warrants are presently
exercisable and 97,561 shares under Class B Agent Warrants
become exercisable proportionately with the exercise of the
Placement Warrants and certain other Warrants of the Company.
5. Includes 48,780 shares underlying Agent Warrants, of which
24,390 shares underlie Class A Agent Warrants and 24,390
shares underlie Class B Agent Warrants.
6. Includes 125,000 shares underlying Series A Warrants and
125,000 shares underlying Series B Warrants.
7. Includes 47,500 shares underlying Series A Warrants and
47,500 shares underlying Series B Warrants.
8. Includes 25,000 shares underlying Series A Warrants and
25,000 shares underlying Series B Warrants.
PLAN OF DISTRIBUTION
The Selling Stockholders have advised the Company that, prior
to the date of this Prospectus, they have not made any agreement
or arrangement with any underwriters, brokers or dealers
regarding the distribution and resale of the Shares. If the
Company is notified by a Selling Stockholder that any material
arrangement has been entered into with an underwriter for the
sale of the Shares, a supplemental prospectus will be filed to
disclose such of the following information as the Company
believes appropriate: (i) the name of the participating
underwriter; (ii) the number of the Shares involved; (iii) the
price at which such Shares are sold, the commissions paid or
discounts or concessions allowed to such underwriter; and (iv)
other facts material to the transaction.
The Company expects that the Selling Stockholders will sell
their Shares covered by this Prospectus through customary
brokerage channels, either through broker-dealers acting as
agents or brokers for the seller, or through broker-dealers
acting as principals, who may then resell the Shares in the over-
the-counter market, or at private sale or otherwise, at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares
to or through broker-dealers, and such broker-dealers may receive
compensation in the form of concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom
they may act as agent (which compensation may be in excess of
customary commissions). The Selling Stockholders and any broker-
dealers that participate with the Selling Stockholders in the
distribution of Shares may be deemed to be underwriters and
commissions received by them and any profit on the resale of
Shares positioned by them might be deemed to be underwriting
discounts and commissions under the Securities Act.
Sales of the Shares on the Nasdaq SmallCap System may be by
means of one or more of the following: (i) a block trade in which
a broker or dealer will attempt to sell the Shares as agent, but
may position and resell a portion of the block as principal to
facilitate the transaction; (ii) purchases by a
-11-
<PAGE>
dealer as principal and resale by such dealer for its account
pursuant to this Prospectus; and (iii) ordinary brokerage
transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by
the Selling Stockholders may arrange for other brokers or dealers
to participate.
The Selling Stockholders are not restricted as to the price
or prices at which they may sell their Shares. Sales of such
Shares at less than market prices may depress the market price of
the Company's Common Stock. Moreover, the Selling Stockholders
are not restricted as to the number of Shares which may be sold
at any one time.
The Company will pay all of the expenses incident to the
offer and sale of the Shares to the public by the Selling
Stockholders other than commissions and discounts of
underwriters, dealers or agents. There can be no assurance that
any of the Selling Stockholders will sell any or all of the
Shares offered by them hereunder.
The Company has advised the Selling Stockholders that the
anti-manipulative rules under the Exchange Act, including
Regulation M, may apply to sales in the market of the Shares
offered hereby and has furnished the Selling Stockholders with a
copy of such rules. The Company has also advised the Selling
Stockholders of the requirement for the delivery of this
Prospectus in connection with resales of the Shares offered
hereby.
The Company has been advised by each Selling Stockholder that
it will comply with Regulation M promulgated under the
Exchange Act, in connection with all resales of the Shares
offered hereby. The Company has also been advised by the Selling
Stockholders that none of them has, as of May 31, 1997, entered into
any arrangement with a broker-dealer for the sale of the Shares
through block trade, special offering, exchange distribution or
secondary distribution of a purchase by a broker-dealer.
LEGAL MATTERS
Certain legal matters in connection with the validity of the
shares of Common Stock offered hereby will be passed upon for the
Company by Reid & Priest LLP, New York, New York.
EXPERTS
The financial statements of the Company for the year ended
September 30, 1996, the nine-month period ended September 30,
1995, the year ended December 31, 1994 and the period from July
2, 1992 (inception) to September 30, 1996 are incorporated in
this Prospectus by reference to the Company's 1996 Annual Report
on Form 10-K and have been so incorporated in reliance upon the
report of Richard A. Eisner & Company, LLP, independent auditors,
given upon the authority of said firm as experts in auditing and
accounting.
-12-
<PAGE>
DISCLOSURE OF SEC POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
-13-
<PAGE>
======================================
No person is authorized in connection
with any offering made hereby to give any
information or to make any representation
not contained in this Prospectus, and,
if given or made, such information or
representation must not be relied upon
as having been authorized by the Company
or any Underwriter. This Prospectus does
not constitute an offer to sell or a solicita-
tion of an offer to buy any security other
than the shares of Common Stock offered
hereby, nor does it constitute an offer
to sell or a solicitation of any offer
to buy any of the securities offered hereby
to any person in any jurisdiction in which it
is unlawful to make such an offer or
solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall
under any implication that the information
contained herein is correct as of any date
subsequent to the date hereof.
TABLE OF CONTENTS
Page
----
Available Information . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . 2
The Company . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . 4
Market Price Information . . . . 8
Use of Proceeds . . . . . . . . . 9
Selling Stockholders . . . . . . 9
Plan of Distribution . . . . . . 11
Legal Matters . . . . . . . . . . 12
Experts . . . . . . . . . . . . . 12
Disclosure of SEC Position on
Indemnification for Securities
Act Liabilities . . . . . . . . 13
===================================
===================================
1,070,812 Shares of Common Stock
ADVANCED MAMMOGRAPHY
SYSTEMS, INC.
---------------
P R O S P E C T U S
---------------
June , 1997
========================================
<PAGE>
PART II
Information Not Required in Prospectus
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of this offering in connection with
the issuance and distribution of the securities being registered,
all of which are to be paid by the Registrant, are as follows:
Registration Fee . . . . . . . . . . . . 309
Legal Fees and Expenses . . . . . . . . . 15,000
Accounting Fees and Expenses . . . 10,000
Miscellaneous Expenses . . . . . . . . . 5,000
-------
Total . . . . . . . . . . . . . . . $30,309
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws provide, in part, that the
Company shall indemnify its directors, officers, employees
and agents to the fullest extent permitted by the Delaware
General Corporation Law ("DGCL").
The DGCL permits Delaware corporations to indemnify
their directors and officers against all reasonable expenses
incurred in the defense of any lawsuit to which they are
made parties by reason of being directors or officers, in
cases of successful defense, and against such expenses in
other cases, subject to specified conditions and exclusions.
Such indemnification is not exclusive of any other rights to
which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or otherwise.
The DGCL contains a provision eliminating the personal
liability of a director to a corporation or its stockholders
for monetary damages for breach of, or failure to perform,
any duty resulting solely from his status as a director,
except with respect to (a) willful failure to deal fairly
with the corporation or its stockholders where a director
has a material conflict of interest, (b) a violation of
criminal law unless the director had reasonable cause to
believe his conduct was lawful, (c) a transaction yielding
an improper personal profit, and (d) willful misconduct.
The foregoing statute also is inapplicable to situations
wherein a director has voted for, or assented to the
declaration of, a dividend, repurchase of shares,
distribution, or the making of a loan to an officer or
director, in each case where the same occurs in violation of
applicable law.
The Company has purchased and maintains insurance for
its officers and directors against certain liabilities,
including liabilities under the Securities Act. The effect
of such insurance is to indemnify any officer or director of
the Company against expenses, judgements, fines, attorney's
fees and other amounts paid in settlements incurred by him,
subject to certain exclusions. Such insurance does not
insure against any such amount incurred by an officer or
director as a result of his own dishonesty.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 Certificate of Incorporation of the Company, as
amended (filed as Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the fiscal year
ended September 30, 1996 and incorporated herein
by reference)
3.2 By-Laws of the Company (filed as Exhibit 3.2 to
the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 and
incorporated herein by reference)
4.1 Form of Placement Warrant (filed as Exhibit 4.2 to
the Company's Current Report on Form 8-K for an
event of February 6, 1997, File No. 0-20968 (the
"Current Report") and incorporated herein by
reference)
4.2 Form of Agent Warrant (filed as Exhibit 4.3 to the
Current Report and incorporated herein by
reference)
4.3* Form of Warrant for an aggregate of 197,500 Series
A and Series B Warrants issued May, 1996.
10.1 Funding Agreement, dated as of January 31, 1997,
among the Company, Emerald Capital Corporation and
InterFirst Capital Corporation (filed as Exhibit
10.1 to the Current Report and incorporated herein
by reference)
10.2 Form of Private Placement Agreement (filed as
Exhibit 10.3 to the Current Report and
incorporated herein by reference)
10.3* Distributor Agreement, dated as of May 6,
1996, among the Company, Adar Equities LLC
and Rickel & Co.
5* Opinion of Reid & Priest LLP
23.1* Consent of Reid & Priest LLP (included in the
Opinion of Reid & Priest LLP filed as Exhibit
5 herewith)
23.2* Consent of Richard A. Eisner & Company, LLP
24* Power of Attorney (see Page II-4)
--------------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
UNDERTAKINGS REQUIRED BY REGULATION S-K, ITEM 512(a).
The Undersigned Registrant Hereby Undertakes:
II-2
<PAGE>
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act").
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement.
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(2) that, for the purpose of determining any
liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering
thereof.
(3) to remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
UNDERTAKING REQUIRED BY REGULATION S-K, ITEM 512(h).
Insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers
and controlling persons of the Registrant pursuant to
the provisions of its By-Laws, of the DGCL or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Securities Act and is, therefore,
unenforceable. In event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer of controlling person of
the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed
by the final adjudication of such issue.
UNDERTAKINGS REQUIRED BY REGULATION S-K, ITEM 512(i).
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act, the information omitted from the form
of prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement
as of the time it was declared effective.
(2) For purposes of determining any liability under
the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wilmington, and
Commonwealth of Massachusetts, on the 30th day of May, 1997.
ADVANCED MAMMOGRAPHY SYSTEMS, INC.
By: /s/ Jack Nelson
--------------------------------
Jack Nelson
Chairman of the Board
POWER OF ATTORNEY
EACH DIRECTOR AND/OR OFFICER OF THE REGISTRANT WHOSE
SIGNATURE APPEARS BELOW HEREBY APPOINTS JACK NELSON OR
ENRIQUE LEVY, AND EACH OF THEM SEVERALLY, AS HIS ATTORNEY-
IN-FACT TO SIGN IN HIS NAME AND BEHALF, IN ANY AND ALL
CAPACITIES STATED BELOW AND TO FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION, ANY AND ALL AMENDMENTS, INCLUDING POST-
EFFECTIVE AMENDMENTS, TO THIS REGISTRATION STATEMENT.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF
1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
Signature Title Date
--------- ----- ----
/s/ Jack Nelson Chairman of the May 30, 1997
------------------ Board, Chief
Jack Nelson Executive Officer
and Director
/s/ Steven J. James
----------------- Chief Financial June 9, 1997
Steven J. James Officer
/s/ George Aaron
------------------
George Aaron Director May 30, 1997
------------------
Alison Estabrook Director May , 1997
/s/ Enrique Levy
------------------ Director May 30, 1997
Enrique Levy
/s/ Robert Spira
------------------
Robert Spira, M.D. Director May 30, 1997
/s/ Sol Triebwasser
------------------
Sol Triebwasser Director May 30, 1997
------------------
Bernard Weiner Director May , 1997
II-4
<PAGE>
EFFECTIVE DATED JUNE , 1997
II-5
<PAGE>
EXHIBIT INDEX
Exhibit Page
------- ----
4.3 Form of Warrant for an aggregate of 197,500 Series A
and Series B Warrants issued May, 1996.
5 Opinion of Reid & Priest LLP
10.3 Distributor Agreement, dated as of May 6, 1996,
among the Company, Adar Equities LLC and Rickel &
Co.
23.1 Consent of Reid & Priest LLP (included in the
Opinion of Reid & Priest LLP filed as Exhibit 5
herewith)
23.2 Consent of Richard A. Eisner & Company, LLP
24 Power of Attorney (see page II-4)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
VOID WITH RESPECT TO SERIES A WARRANTS AFTER 5:00 P.M., NEW YORK
TIME, ON NOVEMBER 30, 1997, AND WITH RESPECT TO SERIES B WARRANTS
AFTER 5:00 P.M. MAY 31, 2001, OR IF EITHER SUCH DAY IS NOT A
BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON
THE NEXT FOLLOWING BUSINESS DAY, AS APPLICABLE.
No. _______________
WARRANT TO PURCHASE ______ SHARES
OF COMMON STOCK
OF ADVANCED MAMMOGRAPHY SYSTEMS, INC.
(SERIES A AND SERIES B PORTIONS)
TRANSFER RESTRICTED -- SEE SECTION 6.02
This certifies that, for good and valuable consideration,
_________________________ and its registered, permitted assigns
(collectively, the "Warrantholder"), are entitled to purchase
from ADVANCED MAMMOGRAPHY SYSTEMS, INC., a Delaware corporation
(the "Company"), subject to the terms and conditions hereof, at
any time before the respective Expiration Dates of the Series A
and B portions, the number of fully paid and non-assessable
shares of Common Stock set forth herein at the Exercise Prices
set forth herein. The Exercise Prices and the number of shares
purchasable hereunder are subject to adjustment as provided in
Article III hereof. This Warrant is being issued pursuant to an
agreement dated May 6, 1996, among the Company, Adar Equities LLC
("Adar") and Rickel & Co. ("Rickel") ("Distributor Agreement"),
which required the Company to issue Adar, or another affiliate of
Adar and Rickel, transferable divisible warrants for the purchase
of an aggregate of 395,000 shares of Common Stock, consisting of
a 197,500 share Series A portion and a 197,500 share of Series B
portion.
ARTICLE I
Section 1.01: Definition of Terms. As used in this
------------ -------------------
warrant, the following capitalized terms shall have the following
respective meanings:
(a) Business Day: A day other than a Saturday, Sunday
------------
or other day on which banks in the State of New York are
authorized by law to remain closed.
(b) Common Stock: The common stock, $.01 par value per
------------
share, of the Company.
(c) Common Stock Equivalents: Securities that are
------------------------
convertible into or exercisable for shares of Common Stock.
(d) Demand Registration: See Section 7.02.
-------------------
(e) Exchange Act: The Securities Exchange Act of
------------
1934, as amended, or any successor act.
(f) Exercise Prices: $2.20 per Warrant Share for the
---------------
Series A portion and $2.50 per Warrant Share for the Series B
portion, as such prices may be adjusted from time to time
pursuant to Article III hereof.
(g) Expiration Dates: 5:00 P.M., New York time, on
----------------
November 30, 1997 for the Series A portion and May 31, 2001 for
the Series B portion (or if such dates are not Business Days as
defined herein, the next following Business Day, as applicable).
(h) Holder: A Holder of Registrable Securities.
------
(i) NASD: National Association of Securities Dealers,
----
Inc.
(j) Person: An individual, partnership, limited
------
liability company, joint corporation, trust, unincorporated
organization or government or any department of agency thereof.
(k) Piggyback Registration: See Section 7.01.
----------------------
(l) Prospectus: Any prospectus included in a
----------
Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
(m) Public Offering: A public offering of any of the
---------------
Company's equity or debt securities pursuant to a registration
statement under the Securities Act.
(n) Registration Expenses: Any and all expenses
---------------------
incident to the performance of or compliance with Article VII,
including, without limitation, (i) all SEC, stock exchange or
automated quotation system and NASD registration and filing fees;
(ii) all fees and expenses of complying with securities or blue
sky laws (including reasonable fees and disbursements of counsel
for the underwriters in connection with blue sky qualifications
of the Registrable Securities); (iii) all printing, mailing,
messenger and delivery expenses; (iv) the fees and disbursements
of counsel for the Company and of its independent certified
public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such
performance and compliance; and (v) any disbursements of
underwriters customarily paid by issuers or sellers of securities
including liability insurance if the Company so desires, and the
reasonable fees and expenses of any special experts retained in
connection with the requested registration, but excluding
underwriting fees, discounts and commissions and transfer taxes
if any.
(o) Registrable Securities: Any Warrant Shares and/or
----------------------
other securities that may be or are issued by the Company upon
exercise of this Warrant, and other Warrants issued by the
Company pursuant to the Distributors Agreement, including
Warrants hereafter issued in respect of any such securities by
means of any stock splits, stock dividends, recapitalization or
the like, and as adjusted pursuant to Article III hereof;
provided, however, that as to any particular security contained
-------- -------
in Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with
respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have
been disposed of in accordance with such Registration Statement;
or (ii) they shall have been distributed to the public pursuant
to Rule 144 (or any successor provision) or other exemption or
"safe harbor" from registration under the Securities Act; or
(iii) they have been owned of record for a period of at least
three years by Persons who are not affiliates (as defined under
the Securities Act) of the Company.
(p) Registration Statement: Any registration statement
----------------------
of the Company filed or to be filed with the SEC which covers any
of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements
to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by
reference by such registration statement.
(q) SEC: The Securities and Exchange Commission or any
---
other federal agency at the time administering the Securities Act
or the Exchange Act.
(r) Securities Act: The Securities Act of 1933, as
--------------
amended, or any successor act.
(s) Series A: The portion of this Warrant exercisable
--------
at any time until November 30, 1997 for the purchase of 47,500
Warrant Shares and at an exercise price of $2.20 per Warrant
Share, as may be adjusted herein.
(t) Series B: The portion of this Warrant exercisable
--------
at any time until May 31, 2001 for the purchase of 47,500 Warrant
Shares and at an exercise price of $2.50 per Warrant Share, as
may be adjusted herein.
(u) Warrants: This Warrant, the warrants issued on the
--------
date hereof and all other warrants that may be issued in its or
their place (together evidencing the right to purchase an
aggregate of shares of the Company's Common Stock originally
issued as set forth in the definition of Registrable Securities).
(v) Warrantholder: The Person(s) to whom this Warrant
-------------
is originally issued, or any successor in interest thereto, or
any assignee or transferee thereof, in whose name this Warrant is
registered upon the books to be maintained by the Company for
that purpose.
(w) Warrant Shares: Common Stock purchasable upon
--------------
exercise of the Warrants.
ARTICLE II
Duration and Exercise of Warrant
--------------------------------
Section 2.01: Duration of Warrant. Subject to the terms
------------ -------------------
contained herein, the Series A and the Series B portions of this
Warrant may be exercised at any time before their applicable
Expiration Dates. If the Series A portion is not exercised in
full at or before 5:00 P.M., New York time, on its Expiration
Date, the unexercised Series A portion shall become void, and all
rights hereunder shall thereupon cease as to the Series A portion
except for the registration rights in Article VII hereof. If the
Series B portion of this Warrant is not exercised in full at or
before 5:00 P.M., New York time, on its Expiration Date, the
unexercised Series B portion shall become void, and all rights
hereunder shall thereupon cease.
Section 2.02: Exercise of Warrant. (a) The Warrantholder
------------ -------------------
may exercise this Warrant, in whole or in part, upon surrender of
this Warrant with the Subscription Form hereon duly executed, to
the Company at its corporate office at 2 Executive Drive, Fort
Lee, New Jersey 07024, together with the applicable full Exercise
Price for each Warrant Share to be purchased by tendering in
lawful money of the United States, or by certified check or bank
draft or wire transfer payable in United States Dollars to the
order of the Company.
(b) Upon receipt of this Warrant with the Subscription
Form duly executed and accompanied by payment of the aggregate
Exercise Price for the Warrant Shares for which this Warrant is
then being exercised, the Company will cause to be issued
certificates for the total number of whole shares of Common Stock
for which this Warrant is being exercised (adjusted to reflect
the effect of the anti-dilution provisions contained in Article
III hereof, if any, and as provided in Section 4.04 hereof) in
such denominations in multiples of 1,000 shares as are required
for delivery to the Warrantholder, and the Company shall
thereupon deliver such certificates to the Warrantholder. If at
the time this Warrant is exercised, a Registration Statement is
not in effect to register under the Securities Act the Warrant
Shares issuable upon exercise of this Warrant, the Company may
require the Warrantholder to make such investment intent
representations, and may place such legends on certificates
representation the Warrant Shares, as may be reasonably required
in the opinion of counsel to the Company to permit the Warrant
Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this
Warrant with respect to less than all of the Warrant Shares that
may be purchased under this Warrant, the Company will execute a
warrant in the form and on the terms of this Warrant, provided
that it has not expired, for the balance of such Warrant Shares
and deliver such new warrant to the Warrantholder.
(d) The Company covenants and agrees that it will pay
when due and payable any and all stock transfer and similar taxes
which may be payable in respect of the issue of this Warrant or
in respect of the issue of any Warrant Shares. The Company shall
not, however, be required to pay any tax imposed on income or
gross receipts or any tax which may be payable in respect of any
transfer involved in the issuance or delivery of this Warrant or
at the time of surrender and, until the payment of such tax,
shall not be required to issue such Warrant Shares.
ARTICLE III
Adjustment of Shares of Common Stock
Purchasable and of Exercise Price
---------------------------------
The Exercise Price and the number and kind of Warrant Shares
shall be subject to adjustment from time to time upon the
happening of certain events as provided in this Article III. A
separate calculation shall be made under this Article III with
respect to the Series A and the Series B portions.
Section 3.01: Mechanical Adjustments. (a) If at any time
------------ ----------------------
prior to the full exercise of this Warrant, the Company shall (i)
pay a dividend or make a distribution on its shares of Common
Stock in shares of Common Stock (other than cash dividends or
distributions out of surplus or earnings); (ii) subdivide,
reclassify or recapitalize its outstanding Common Stock into a
greater number of shares; or (iii) combine, reclassify or
recapitalize its outstanding Common Stock into a smaller number
of shares, the Exercise Price in effect at the time of the record
date of such subdivision, combination, reclassification or
recapitalization shall be proportionately adjusted so that the
Warrantholder shall be entitled to receive the aggregate number
and kind of shares which, if this Warrant had been exercised in
full immediately prior to such time, he would have owned upon
such exercise and been entitled to receive upon such dividend,
subdivision, combination, reclassification or recapitalization.
Such adjustment shall be made successively whenever any event
listed in this paragraph 3.01(a) shall occur.
(b) If the Company shall hereafter issue rights,
options or warrants to all holders of its outstanding Common
Stock, without charge to such holders, entitling them to
subscribe for or purchase shares of Common Stock (or Common Stock
Equivalents) at a price (or having a conversion price per share)
less than the lower of the Exercise Price or the current market
price of the Common Stock (as determined pursuant to paragraph
(e) of this Section 3.01) on the record date described below, the
Exercise Price then in effect shall be adjusted so that the
Exercise Price shall equal the price determined by multiplying
the Exercise Price in effect immediately prior to the date of
such sale or issuance (which date in the event of distribution to
shareholders shall be deemed to be the record date set by the
Company to determine shareholders entitled to participate in such
distribution) by a fraction, the numerator of which shall be (i)
the number of shares of Common Stock outstanding on the date of
such sale or issuance, plus (ii) the number of additional shares
of Common Stock which the aggregate consideration received by the
Company upon such issuance or sale (plus the aggregate of any
additional amount to be received by the Company upon the exercise
of such rights or warrants) would purchase at such current market
price per share of the Common Stock; and the denominator of which
shall be (i) the number of shares of Common Stock outstanding on
the date of such issuance or sale, plus (ii) the number of
additional shares of Common Stock offered for subscription or
purchase (or into which the Common Stock Equivalents so offered
are convertible). Such adjustments shall be made successively
whenever such warrants or rights are issued. To the extent that
shares of Common Stock are not delivered (or Common Stock
Equivalents are not delivered) after the expiration of such
rights or warrants, the Exercise Price shall be readjusted to the
Exercise Price which would then be in effect had the adjustments
been made upon the issuance of such rights or warrants been made
upon the basis of delivery of only the number of shares of Common
Stock (or Common Stock Equivalents) actually delivered.
(c) In case the Company shall hereafter fix a record
date for making a distribution to the holders of Common Stock of
assets or evidences of its indebtedness (excluding cash dividends
or distributions out of earnings and dividends or distributions
referred to in paragraph (a) of this Section 3.01) or Common
Stock subscription rights, options or warrants for Common Stock
or Common Stock Equivalents (excluding those referred to in
paragraph (b) of this Section 3.01), then in each such case the
Exercise Price in effect after such record date shall be adjusted
to the price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of
which shall be the total number of shares of Common Stock
outstanding multiplied by the current market price per share of
Common Stock (as defined in paragraph (e) of this Section 3.01),
less the fair market value (as determined by the Company's Board
of Directors) of said assets or evidences of indebtedness so
distributed or of such Common Stock subscription rights, option
and warrants or of such Common Stock Equivalents applicable to
one share of Common Stock, and the denominator of which shall be
the total number of shares of Common Stock outstanding multiplied
by such current market price per share of Common Stock. Such
adjustment shall be made successively whenever the record date
for such distribution is fixed and shall become effective
immediately after such record date.
(d) Whenever the Exercise Price payable upon exercise
of either or both series of Warrants is adjusted pursuant to
paragraphs (a), (b) or (c) of this Section 3.01, the Warrant
Shares underlying the applicable series shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially
issuable upon exercise of each Warrant by the Exercise Price in
effect on the date thereof and dividing the product so obtained
by the Exercise Price, as adjusted.
(e) For the purpose of any computation under this
Section 3.01, the current market price per share of Common Stock
at any date shall be deemed to be the average of the daily
closing price for ten (10) consecutive Business Days before such
date. The closing price for each day shall be the last sale
price regular way or, in case no such reported sales take place
on such day, the average of the last reported bid and asked
prices regular way, in either case on the principal national
securities exchange on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to trading on
such exchange, the representative closing bid price as reported
by NASDAQ, or other similar organization if NASDAQ is no longer
reporting such information, or if not so available, the fair
market price as determined by the Board of Directors.
(f) No adjustments in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least five cents ($.05) in such price; provided,
however, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 3.01 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Notwithstanding anything in this Section 3.01 to the
contrary, the Exercise Price shall not be reduced to less than
the then existing par value of the Common Stock as a result of
any adjustment made hereunder.
(g) In the event that at any time, as a result of any
adjustment made pursuant to paragraph (a) of this Section 3.01,
the Warrantholder thereafter shall become entitled to receive any
shares of the Company, other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in
paragraphs (a) to (g), inclusive, of this Section 3.01.
Section 3.02: Notice of Adjustment. Whenever the number of
------------ --------------------
Warrant Shares or the Exercise Price is adjusted as herein
provided, the Company shall prepare and deliver to the
Warrantholder a certificate signed by its Chairman, President,
any Vice President, Treasurer or Secretary, or a similar officer
of any successor, setting forth the adjusted number of shares
purchasable upon the exercise of this Warrant and the Exercise
Price of such shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting
forth the computation by which adjustment was made.
Section 3.03: No Adjustment for Dividends. Except as
------------ ---------------------------
provided in Section 3.01 of this Agreement, no adjustment in
respect of any cash dividends shall be made during the term of
this Warrant or upon the exercise of this Warrant.
Section 3.04: Form of Warrant After Adjustments. The form
------------ ---------------------------------
of this Warrant need not be changed because of any adjustments in
the Exercise Price or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are
stated in this Warrant, as initially issued.
Section 3.05: Preservation of Purchase Rights in Certain
------------ ------------------------------------------
Transactions.
------------
(a) In case of any consolidation of the Company with
or a merger of the Company into another corporation or in case of
any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, upon
any such consolidation, merger, sale or conveyance and the
surviving entity is a publicly traded company, the Company agrees
that a condition of such transaction will be that the Company or
such successor or purchasing corporation, as the case may be,
shall assume the obligations of the Company hereunder in writing.
In the case of any such consolidation, merger or sale or
conveyance, the Warrantholder shall have the right until the
expiration date upon payment of the Exercise Price in effect
immediately prior to such action, to receive the kind and amount
of shares and other securities and/or property which he would
have owned or have been entitled to receive after the happening
of such consolidation, merger, sale or conveyance had this
Warrant been exercised immediately prior to such action, subject
to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article III.
The provisions of this Section 3.05 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
(b) In case of any consolidation of the Company with
or a merger of the Company into another corporation or in case of
any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, upon
any such consolidation, merger, sale or conveyance and the
surviving entity is a non-publicly traded company, the Company
agrees that a condition of such transaction will be that the
Company shall mail to the Warrantholders at the earliest
applicable time (and, in any event not less than 20 days before
any record date for determining the persons entitled to receive
the consideration payable in such transaction) written notice of
such record date. Such notice shall also set forth facts as
shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Exercise
Price of and the kind and amount of the shares of stock and other
securities and property deliverable upon exercise of this
Warrant.
ARTICLE IV
Other Provisions Relating
to Rights of Warrantholders
---------------------------
Section 4.01: No Rights as Stockholders: Notice to
------------ ------------------------------------
Warrantholders. Nothing contained in this Warrant shall be
--------------
construed as conferring upon the Warrantholder or its permitted
transferees the right to vote or to receive dividends or to
consent or to receive notice as a stockholder in respect of any
meeting of stockholders for the election of directors of the
Company or of any other matter or any rights whatsoever as
stockholders of the Company.
Section 4.02: Lost, Stolen Mutilated or Destroyed Warrants.
------------ --------------------------------------------
If this Warrant is lost, stolen, mutilated or destroyed, the
Company may, on such terms as to indemnity or otherwise as it may
in its discretion impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of
like denomination and tenor as, and in substitution for, this
Warrant.
Section 4.03: Reservation of Shares.
------------ ---------------------
(a) The Company covenants and agrees that at all times
it shall reserve and keep available for the exercise of this
Warrant such number of authorized shares of Common Stock as are
sufficient to permit the exercise in full of this Warrant.
(b) The Company shall use its best efforts to secure
the listing of any shares of Common Stock issued upon the
exercise of this Warrant on the securities exchange or automated
quotation system, if any, on which shares of Common Stock are
then listed in compliance with the rules of such exchange or
system.
(c) The Company covenants that all shares of Common
Stock issued on exercise of this Warrant will be validly issued,
fully paid, non-assessable and free of preemptive rights.
Section 4.04: No Fractional Shares. Anything contained
------------ --------------------
herein to the contrary notwithstanding, the Company shall not be
required to issue any fraction of a share in connection with the
exercise of this Warrant, and in any case where the Warrantholder
would, except for the provisions of this Section 4.04, be
entitled under the terms of this Warrant to receive a fraction of
a share upon exercise of this Warrant and receipt of the Exercise
Price, issue the larger number of whole shares purchasable upon
exercise of this Warrant. The Company shall not be required to
make any cash or other adjustment in respect of such fraction of
a share to which the Warrantholder would otherwise be entitled.
ARTICLE V
Treatment of Warrantholder
--------------------------
Prior to due presentment for registration or transfer of
this Warrant, the Company may deem and treat the Warrantholder as
the absolute owner of this Warrant (notwithstanding any notation
of ownership or other writing hereon) for the purpose of any
exercise hereof and for all other purposes of the Company shall
not be affected by any notice to the contrary.
ARTICLE VI
Split-Up, Combination
Exchange and Transfer of Warrants
---------------------------------
Section 6.01: Split-Up, Combination, Exchange and
------------ -----------------------------------
Transfer of Warrants. Subject to and limited by the provisions
--------------------
of Section 6.02 hereof, this Warrant may be split up, combined or
exchanged for another Warrant or Warrants containing the same
terms to purchase a like aggregate number of Warrant Shares of
the applicable Series. If the Warrantholder desires to split up,
combine or exchange this Warrant, he or it shall make such
request in writing delivered to the Company and shall surrender
to the Company this Warrant and any other Warrants to be so split
up, combined or exchanged. Upon any such surrender for a
split-up, combination or exchange, the Company shall execute and
deliver to the person entitled thereto a Warrant or Warrants, as
the case may be, as so requested. The Company shall not be
required to effect any split-up, combination or exchange which
will result in the issuance of a Warrant entitling the
Warrantholder to purchase upon exercise a fraction of a share of
Common Stock or a fractional Warrant.
Section 6.02: Restrictions on Transfer. Until June 1,
------------ ------------------------
1997, this Warrant may not be sold, hypothecated exercised,
assigned or transferred (a "Transfer"), except (i) to Howard
Miller, Adar, any successor to the business of the Warrantholder,
or any officer or employee of the Warrantholder, or (ii) to any
underwriter in connection with a Public Offering of the Company's
Common Stock, provided (as to (ii)) that this Warrant is
exercised immediately upon such Transfer and the Warrant Shares
issued upon such exercise is sold by such underwriter as part of
such Public Offering and, as to (i) and (ii), only in accordance
with and subject to the provisions of the Securities Act and the
rules and regulations promulgated thereunder. If at the time of
such a Transfer a Registration Statement is not in effect to
register this Warrant under the Securities Act, the Company may
require the Warrantholder to make such representations, and may
place such legends on certificates representing this Warrant, as
may be reasonably required in the opinion of counsel to the
Company to permit such a Transfer without such registration.
ARTICLE VII
Registration Under the Securities Act of 1933
---------------------------------------------
Section 7.01: Piggyback Registration.
------------ ----------------------
(a) Right to Include Registrable Securities. If at
---------------------------------------
any time prior to the Expiration Date the Company proposes to
register its Common Stock under the Securities Act on any form
for the registration of securities under such Act, whether or not
for its own account (other than a registration form relating to
(i) a registration of a stock option, stock purchase or
compensation or incentive plan or of stock issued or issuable
pursuant to any such plan, or a dividend investment plan; (ii) a
registration of securities proposed to be issued in exchange for
securities or assets of, or in connection with a merger or
consolidation with, another corporation; or (iii) a registration
of securities proposed to be issued in exchange for other
securities of the Company) in a manner which would permit
registration of Registrable Securities for sale to the public
under the Securities Act (a "Piggyback Registration"), it will at
such time give prompt written notice to all Holders of
Registrable Securities of its intention to do so and of such
Holders' rights under this Section 7.01. Such rights are
referred to hereinafter as "Piggyback Registration Rights". Upon
the written request of any such Holder made within 30 days after
the giving of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder
and the intended method of disposition thereof), the Company will
include in the Registration Statement the Registrable Securities
which the Company has been so requested to register by the
Holders thereof provided that the aggregate number of Registrable
Securities so requested to be requested by all Holders of
Registrable Securities is at least 180,000 Warrant Shares (as
initially constituted) and provided further that the Company need
not include any such Registrable Securities in Registration
Statements filed after the Expiration Date.
(b) Withdrawal of Piggyback Registration by Company.
-----------------------------------------------
If, any time after giving written notice of its intention to
register any securities in a Piggyback Registration but prior to
the effective date of the related Registration Statement filed in
connection with such Piggyback Registration, the Company shall
determine for any reason not to register such securities, the
Company will give written notice of such determination to each
Holder and thereupon shall be relieved of its obligation to
register any Registrable Securities in connection with such
Piggyback Registration. All best efforts obligations of the
Company pursuant to Section 7.02 shall cease if the Company
determines to terminate any registration where Registrable
Securities are being registered pursuant to this Section 7.01.
(c) Piggyback Registration of Underwritten Public
---------------------------------------------
Offerings. If a Piggyback Registration requested pursuant to
---------
this Section 7.01 involves an underwritten offering, then, (i)
all Holders requesting to have their Registrable Securities
included in the Company's registration must sell their
Registrable Securities to the underwriters selected by the
Company on the same terms and conditions as apply to other
selling shareholders; and (ii) any Holder requesting to have its
Registrable Securities included in such registration may elect in
writing, not later than three Business Days prior to the
effectiveness of the Registration Statement filed in connection
with such registration, not to have its Registrable Securities so
included in connection with such registration.
(d) Payment of Registration Expenses for Piggyback
----------------------------------------------
Registration. The Company will pay all Registration Expenses in
------------
connection with each registration of Registrable Securities
requested pursuant to a Piggyback Registration Right contained in
this Section 7.01, except for the fees and disbursements of any
counsel retained by the Holders of the Registrable Securities
being so registered.
(e) Priority in Piggyback Registration. If a
----------------------------------
Piggyback Registration involves an underwritten offering and the
managing underwriter advises the Company in writing that, in its
opinion, the number or kind of Registrable Securities requested
to be included in such Piggyback Registration would have a
material adverse effect on such offering, including a significant
decrease in the price at which such securities can be sold, then
the Registrable Securities to be offered for the accounts of
Holders pursuant to a Piggyback Registration Right shall be
eliminated entirely or reduced pro rata as to all requesting
Holders on the basis of the relative number of Registrable
Securities to be included in such offering to the amount
recommended by such managing underwriter; provided, however, that
no securities may be offered in such registration for the account
of persons other than the Company by virtue of their also having
"piggyback" registration rights, or otherwise, unless the
Registrable Securities requested to be included in such
registration are so included on a pro rata basis (by percentage
of each class of securities) as to such other persons holding
"piggyback" rights and the Holders requesting registration .
(f) Expiration of Piggyback Registration Rights. The
-------------------------------------------
Piggyback Registration Rights shall survive the exercise of the
Warrant or the transactions or events pursuant to which such
Registrable Securities were issued, but all such rights will
terminate in all events on the Expiration Date. The Holders, as
a group, shall be limited to two Piggyback Registrations under
this Section 7.01.
Section 7.02: Demand Registration.
------------ -------------------
(a) Request for Registration. Subject to the
------------------------
limitations set forth below in this Section 7.02, any Holder or
Holders may after June 1, 1997 from time to time but prior to the
Expiration Date of the Series B portion of this Warrant make
written requests for the registration under the Securities Act of
all or part of their Registrable Securities (a "Demand
Registration") and provided at least 180,000 Warrant Shares (as
initially constituted) are subject to the request. The Company
shall use its best efforts to effect such Demand Registration.
The Holders, as a group, shall be limited to one Demand
Registration, and thereafter may not make any further written
requests for registration under this Section 7.02.
(b) Limitations on Demand Registration. The Company
----------------------------------
shall not be required to effect a Demand Registration sooner than
(i) for a 120 day period following the effective date of a
registration statement pertaining to an underwritten Public
Offering for the account of the Company; (ii) if the Company, in
its reasonable judgment, determines that registration at the time
requested by the Holders would materially adversely affect the
Company, by, among other things, requiring disclosure of, any
litigation or transactions at an inopportune time, in which case
the obligation of the Company to register any Registrable
Securities shall be delayed until the reason for such adverse
affect has ceased to exist; or (iii) if the timing of the Demand
Registration is such that a special audit of the Company would be
required in connection with the preparation of financial
statements for the registration.
Section 7.03: Registration Procedures.
------------ -----------------------
(a) If and whenever the Company is required to use its
best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in
this Article VII, the Company will, as expeditiously as
practicable:
(i) notify the selling Holders of Registrable
Securities and the managing underwriters, if any, promptly, and
(if requested by any such Person) confirm such advice in writing,
(A) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the
same has become effective; (B) of any request by the SEC for
amendments or supplements to a Registration Statement or related
Prospectus or for additional information; (C) of the issuance by
the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for
that purpose; (D) of the receipt by the Company of any
notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose, and (E) of the happening of any event that makes any
statement made in the Registration Statement, the Prospectus or
any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement
or Prospectus so that they will not contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(ii) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment;
(iii) if reasonably requested by the managing
underwriters, immediately incorporate in a Prospectus supplement
or post-effective amendment such information as the managing
underwriters believe (on advice of counsel) should be included
therein as required by applicable law relating to such sale of
Registrable Securities, including, without limitation,
information with respect to the purchase price being paid for the
Registrable Securities by such underwriters and with respect to
any other terms of the underwritten (or "best-efforts"
underwritten) offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(iv) furnish to each selling Holder of
Registrable Securities and each managing underwriter, without
charge, at least one signed copy of the Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by
all exhibits (including those incorporated by reference);
(v) deliver to each selling Holder of Registrable
Securities and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each
preliminary Prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to
the use of such Prospectus or any amendment or supplement thereto
by each of the selling Holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of
the Registrable Securities covered by such Prospectus or any
amendment or supplement thereto;
(vi) prior to any public offering of Registrable
Securities, cooperate with the selling Holders of Registrable
Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the
United States as any seller or underwriter reasonably requests in
writing, use its reasonable efforts to keep each such
registration or qualification effective during the period such
Registration Statement is required to be kept effective and any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided that
--------
the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or
to take any action which would subject the Company to general
service of process in any jurisdiction where it is not at the
time so subject or would subject the principal stockholders of
the Company to any restrictions on the resale or transfer of
their shares of the Company's Common Stock;
(vii) cooperate with the selling Holders of
Registrable Securities and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the
managing underwriters may request at least two Business Days
prior to any sale of Registrable Securities to the underwriters;
(viii) upon the occurrence of any event
contemplated by paragraph (i)(D) above, prepare a supplement or
post-effective amendment to the applicable Registration Statement
or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not
contain an untrue statement or a material fact or omit to state
any material fact necessary to make the statements therein not
misleading;
(ix) with respect to each issue or class of
Registrable Securities, use its best efforts to cause all
Registrable Securities covered by the Registration Statements to
be listed on each securities exchange on which similar securities
issued by the Company are listed, if so requested by the Holders
of a majority of such Registrable Securities;
(x) except as otherwise provided in this
Agreement, the Company shall have sole control in connection with
the preparation, filing, withdrawal, amendment or supplementing
of each Registration Statement, the selection of underwriters,
and the distribution of any preliminary prospectus included in
the Registration Statement, and may include within the coverage
thereof additional shares of Common Stock or other securities for
its own account or for the account of one or more of its other
security holders;
(xi) Holders of Registrable Securities shall have
no registration rights hereunder in respect of any proposed
transfer of such securities if, in the opinion of securities
counsel to the Company (A) registration under the Securities Act
is not required for the transfer of the Registrable Securities in
the manner provided by such Holder and that there are no further
Securities Act resale restrictions on the Registrable Securities
or (B) a post-effective amendment to an existing registration
statement would be legally sufficient for such transfer.
(b) The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish to the Company such information regarding the
distribution of such securities and such other information as may
otherwise be required by the Securities Act to be included in
such Registration Statement, as the Company may from time to time
reasonably request in writing.
(c) Each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt of
any notice from the Company of the happening of any event of the
kind described in paragraph (a) hereof, such Holder will
forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by paragraph (i) hereof, or until it is
advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by
reference in such Prospectus, and, if so directed by the Company,
such holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice. Each Holder of Registrable Securities agrees to notify
the Company upon completion of its distribution of such
Registrable Shares.
Section 7.04: Indemnification.
------------ ---------------
(a) Indemnification by Company. The Company agrees to
--------------------------
indemnify and hold harmless, to the full extent permitted by the
law, each Holder, its officers, directors and agents and each
Person who controls such Holder or agents (within the meaning of
the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are contained in any
information furnished in writing to the Company by such Holder
expressly for use therein; provided, however, that the Company
-------- -------
shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary prospectus
if (i) such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation
of the sale of Registrable Securities and (ii) the Prospectus
would have corrected such untrue statement or omission; and
provided, further, that the Company shall not be liable in any
such case to the extent that any such loss claim, damage,
liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission in the Prospectus, if such untrue statement or untrue
statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and if, having
previously been furnished by or on behalf of the Company with
copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver or cause to be delivered such
Prospectus as so amended or supplemented, prior to or
concurrently with the sale of a Registrable Security to the
person asserting such loss, claim, damage, liability or expense
who purchased such Registrable Security from such Holder. The
Company will also indemnify underwriters, selling brokers, dealer
managers, and similar securities industry professionals
participating in the distribution their officers and directors
and each person who controls such Persons (within the meaning of
the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable
Securities, if requested.
(b) Indemnification by Holder of Registrable
----------------------------------------
Securities. In connection with any registration, each Holder
----------
will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and
agrees to indemnify, to the same extent as the indemnification
provided by the Company in Section 7.04(a), the Company, its
directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue
statement of a material fact or any omission of a material fact
required to be stated in any Registration Statement or Prospectus
or preliminary prospectus or necessary to make the statements
therein not misleading, to the extent, but only to the extent,
that such untrue statement or omission is contained in or based
upon any information or affidavit so furnished in writing by such
Holder to the Company specifically for inclusion in such
Registration Statement or Prospectus. In no event shall the
liability of any selling Holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The
Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers, and similar
securities industry professionals participating in the
distribution, to the same extent as provided above with respect
to information so furnished in writing by such Persons
specifically for inclusion in any prospectus or Registration
Statement.
(c) Conduct of Indemnification Procedure. Any party
------------------------------------
that proposes to assert the right to be indemnified hereunder
will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which
a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy
of all papers served. No indemnification provided for hereunder
shall be available to any party who shall fail to give notice as
provided in this Section 7.04(c) if the party to whom notice was
not given was unaware of the proceeding to which such notice
would have related and was prejudiced by the failure to give such
notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any
such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so
to assume the defense thereof and the approval by the
indemnifying party to such indemnified party of its election so
to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest
between the indemnifying parties and the indemnified party in the
conduct of the defense of such action (in which case the
indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the
fees and expenses of counsel shall be at the expense of the
indemnifying parties. An indemnifying party shall not be liable
for any settlement of any action, suit, proceeding or claim
effected without its written consent.
Section 7.05: Restrictions on Public Sale. Restrictions on
------------ --------------------------- ---------------
Public Sale by Holder of Registrable Securities. (a) Each holder
-----------------------------------------------
of Registrable Securities whose Registrable Securities are
covered by a Registration Statement filed pursuant to Article VII
hereof agrees, if requested by the managing underwriters in any
underwritten offering, not to effect any public sale or
distribution of any securities of the Company of the same class
as the securities included in such Registration Statement,
including a sale pursuant to rule 144 under the Securities Act
(except as part of such underwritten registration), during the
ten-day period prior to, and during the period the officers and
directors of the Company are similarly restricted in the sale or
distribution of any securities of the Company pursuant to such
Registration Statement, to the extent timely notified in writing
by the managing underwriters.
(b) The foregoing provisions shall not apply to any
Holder if such Holder is prevented by applicable statute or
regulation from entering any such agreement. However, any such
Holder shall undertake, in its request to participate in such
underwritten offering, not to effect any public sale distribution
of the applicable Registrable Securities unless such Holder has
provided 45 days prior written notice of such sale distribution
to the underwriter or underwriters.
ARTICLE VIII
Other Matters
-------------
Section 8.01: Successors and Assigns. All the covenants
------------ ----------------------
and provisions of this Warrant by or for the benefit of the
Company and the Warrantholder shall bind and inure to the benefit
of their respective successors and permitted assigns hereunder.
Section 8.02: Amendments and Waivers. The provisions of
------------ ----------------------
this Warrant, including the provisions of this sentence, may not
be amended, modified or supplemented, and waiver or consents to
departures from the provisions hereof may not be given unless the
Company has obtained the written consent of holders of at least a
majority of the outstanding Registrable Securities. Holders
shall be bound by any consent authorized by this Section whether
or not certificates representing such Registrable Securities have
been marked to indicate such consent.
Section 8.03: Governing Law. This Warrant shall be
------------ -------------
governed by and construed in accordance with the laws of the
State of Delaware.
Section 8.04: Severability. In the event that any one or
------------ ------------
more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any
such provisions in every other respect and of the remaining
provisions contained herein shall not be affected or impaired
thereby.
Section 8.05: Integration/Entire Agreement. This Warrant
------------ ----------------------------
is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement
of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein with respect to the
registration rights granted by the Company with respect to the
warrants sold pursuant to the Warrant. This Warrant supersedes
all prior agreements and understandings between the parties with
respect to such subject matter, including, but not limited to,
the Distributors Agreement.
Section 8.06: Notices. Notice or demand pursuant to this
------------ -------
Warrant to be given or made by the Warrantholder to or on the
Company shall be sufficiently given or made if sent by first
class mail, postage prepaid, to the Warrantholder or the Holder
of Registrable Securities at its last known address as it shall
appear on the books of the Company.
Section 8.07: Headings. The Article and Section headings
------------ --------
herein are for convenience only and are not part of this Warrant
and shall not affect the interpretation thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed
by the Company as of the 1st of June, 1996.
ADVANCED MAMMOGRAPHY SYSTEMS, INC.
By:________________________________
Jack Nelson, Chairman
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ______________________________ hereby sells,
assigns and transfers unto _____________________________ the
within Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company with
respect to the number of Warrants set forth below, with full
power of substitution in the premises:
Name(s) of No. of
Assignee(s) Address Series Warrants
----------- ------- ------ --------
And if said number of Warrants shall not be all the Warrants
represented by the Warrant Certificate, a new Warrant Certificate
is to be issued in the name of said undersigned for the balance
remaining of the Warrants represented by said Warrant
Certificate.
Dated:________________ 19__.
Note: The above signature should
correspond exactly with the name on
the face of this Warrant
Certificate.
<PAGE>
EXERCISE FORM
(To be executed upon exercise of Warrant)
Advanced Mammography Systems, Inc.
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant Certificate
for Series __ (mark A or B) for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and
tenders herewith payment of the purchase price in full in the
form of cash or a certified or official bank check or wire
transfer in the amount of $
Please issue a certificate or certificates for such Common
Shares in the name of
Name__________________________
(Please Print)
__________________________
Address
__________________________
__________________________
Social Security No.
Signature___________________
Note: The above signature
should correspond exactly
with the name on the
first page of this
Warrant Certificate.
Dated: ________________
And if said number of shares shall not be all the shares
purchasable under the within Warrant Certificate, a new Warrant
Certificate is to be issued in the name of the undersigned for
the balance remaining of the number of whole shares purchasable
thereunder.
REID & PRIEST LLP
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019-4097
TELEPHONE (212) 603-2000
FAX (212) 603-2001
Exhibit 5
(212) 603-6780
New York, New York
June 5, 1997
Advanced Mammography Systems, Inc.
46 Jonspin Road
Wilmington, MA 01887
Gentlemen:
We have acted as counsel to Advanced Mammography
Systems, Inc., a Delaware corporation ("the Company"), in
connection with the preparation of a Registration Statement on
Form S-3 (the "Registration Statement") in accordance with
General Instruction IV. of Form S-3 and pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the registration of up to 1,070,812 shares
(the "Shares") of Common Stock, par value $.01 per share (the
"Common Stock"), of the Company. We are aware that the Shares
consist of (i) 203,252 shares presently outstanding (the
"Outstanding Shares") and (ii) 867,560 shares (the "Warrant
Shares") issuable upon exercise of certain warrants (the
"Warrants") of the Company, which were issued pursuant to a
Private Placement Agreement, a Funding Agreement and a
Distributor Agreement (the "Agreements").
For purposes of this opinion, we have examined
originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement; (ii) the
Agreements; (iii) the Warrants; (iv) the Certificate of
Incorporation and By-Laws of the Company, as in effect on the
date hereof; (v) resolutions adopted by the Board of Directors of
the Company relating to the approval of the Agreements; and (vi)
such other documents, certificates or other records as we have
deemed necessary or appropriate.
Based upon the foregoing, and subject to the
qualifications hereinafter expressed, we are of the opinion that:
(1) the Company is a corporation duly organized,
validly existing and in good standing under the
laws of the State of Delaware;
(2) The Board of Directors of the Company has taken
such action as may be necessary to authorize the
Agreements, the issuance of the Warrants in
accordance with the terms of the respective
Agreements and the issuance of the Shares in
accordance with the terms of the respective
Warrants;
(3) The Outstanding Shares are duly authorized and
validly issued, and fully paid and non-assessable
shares of the Company; and
(4) The Warrant Shares will be duly authorized and
validly issued, and fully paid and non-assessable
upon their issuance if the Warrants shall have
been properly exercised and the exercise price
shall have been paid in accordance with the terms
of the respective Warrants.
We are members of the Bar of the State of New York and
do not hold ourselves out as experts concerning, or qualified to
render opinions with respect to any laws other than the laws of
the State of New York, the Federal laws of the United States and
the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion with
the Securities and Exchange Commission as Exhibit 5 to the
Registration Statement. In giving the foregoing consent, we do
not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act, or the
rules and regulations of the SEC thereunder.
Very truly yours,
/s/ Reid & Priest LLP
Advanced Mammography Systems, Inc.
2 Executive Plaza
Suite 755
Fort Lee, New Jersey 07024
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 Annex III
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 Krieger & Prager, 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 Annex III 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
----------------------
ADAR EQUITIES LLC
By: /s/ [illegible]
------------------------------
RICKEL & CO.
By: /s/ [illegible]
------------------------------
ADVANCED MAMMOGRAPHY SYSTEMS, INC.
By: /s/ Charles M. Moche
-------------------------------
Chief Financial Officer
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this
Registration Statement of Advanced Mammography Systems, Inc. (the
"Company") on Form S-3 of our report dated November 22, 1996 on
the financial statements of the Company as at September 30, 1996
and September 30, 1995 and for the year ended September 30, 1996,
the nine months ended September 30, 1995, the year ended
September 30, 1994 and for the period from July 2, 1992
(inception) to September 30, 1996 appearing in the Company's
annual report on Form 10-K for its fiscal year ended September
30, 1996. Our report includes an explanatory paragraph relating
to the Company's ability to continue as a going concern. We also
consent to the reference to out firm under the caption "Experts"
included in the Registration Statement.
/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
Cambridge, Massachusetts
June 5, 1997
