EXHIBIT 10.1
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FUNDING AGREEMENT
This Funding Agreement (hereinafter referred to as "Agreement"), is
entered into as of the 31st day of January, 1997 by and among Advanced
Mammography Systems, Inc. (the "Company"), Emerald Capital Corporation
("Lender") and InterFirst Capital Corporation ("InterFirst") with reference
to the following:
A. Whereas, the Company desires a funding facility (the "Funding
Facility") in the amount of up to $10,000,000.00 and the Lender has sources
to provide the Funding Facility and which would be provided at the
discretion of the Lender.
B. Whereas, in connection with the Funding Facility the Company will
sell to the Lender or its assigns (the "Investor"), shares of the common
stock, par value $0.01 (the "Stock") of the Company at an aggregate
purchase price of $1,250,000, with the price per share determined by the
closing bid price on January 31, 1997, less 27% (the "Purchase Price"),
plus one warrant (the "Warrant") for each share of stock purchased, with an
exercise price equal to 115% of the closing bid price on January 31, 1997,
(the "Exercise Price"), and shall expire on January 31, 2000. The Stock
and Warrants are to be issued pursuant to Regulation S or Regulation D.
The Warrants will be callable, if the bid price of the Stock of the Company
averages 180% of the Purchase Price for 20 consecutive trading days. Upon
execution of this Agreement, the transaction will close on or before
February 6, 1997.
C. Whereas, the Company and Lender are desirous of entering into an
agreement whereby InterFirst will be paid a placement distribution fee by
the Company.
NOW, THEREFORE, IN CONSIDERATION of and in reliance upon the
respective representations and warranties, covenants, terms and conditions
herein contained, the parties agree as follows:
1. FUNDING FACILITY The Lender hereby grants to the Company a
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Funding Facility for $10,000,000, which will be an unsecured revolving
facility so that when prior advances are repaid, those funds again become
available for use by the Company. The interest rate shall be fixed at the
prime plus 1.5%, on the outstanding balance from date of funding. The
Company will make a written request to the lender for a draw down on the
Funding Facility giving details of the proposed use of the funds. The
lender will have five business days to accept the request or reject the
request in its sole discretion. The funds will be used by the Company for
any corporate purpose. Each advance shall be repaid within one year of the
advance, with interest. Lender, with the prior approval of the Lender, may
convert a portion of the outstanding balance to Stock of the Company,
according to such terms as may be agreed upon at time of issuance. This
Funding Facility shall be nonexclusive and the Company is free to obtain
other forms of financing and through sources other than the Lender.
2. FEES. Company agrees to pay to InterFirst or its assigns a
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placement distribution fee of Ten percent (10%) and the Investors Counsels
fees of One and One Quarter percent (1 1/4) ("Fees") of the gross proceeds
in connection with the sale of the Stock and the exercise of the Warrants.
The legal fees are to be agreed upon for the purchase of Stock (not in
connection with the exercise of the Warrants) and/or the conversion of a
portion of the Funding Facility to Stock.
3. PAYMENT OF FEES. The Fees shall be payable at the closing of
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any transaction under the Funding Facility for the purchase of Stock or the
exercise of the Warrants, and/or the conversion of a portion of the funding
facility to Stock, prior to the distribution of the net sales proceeds to
the Company. The Fees shall be paid simultaneous with the funds being
transferred to the Company. InterFirst and Investors Counsel, shall be
entitled to advise and notify the Investor and the Company of any Fees due
to InterFirst and Investors Counsel from the gross proceeds from any of the
transactions under this Agreement. InterFirst and Counsel shall be
entitled to submit directly to such Investor a demand or claim for the
payment of the fees at the closing of and transaction under this Funding
Facility and if not paid by the Investor then the Company shall pay the
Fees of InterFirst and Investors counsel, assuming the Company receives the
gross proceeds.
4. PLACEMENT WARRANTS. InterFirst or its assigns, shall receive
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non-callable Three (3) year warrants to purchase common shares of the
Company at the price which shall be the closing bid price on the day of
closing of any transaction under this Agreement (the "Placement
Warrants"). The number of Placement Warrant to be issued to InterFirst
shall be Ten Percent (10%) of the number of Warrants issued to the
Warrant Holders, and/or for any Stock issued in connection with this
Agreement. The Placement Warrants and the underlying common stock will
be issued under Regulation D and InterFirst shall make the customary
Regulation D representations. Placement Warrants issuable with respect
to the Stock and Warrants shall rest upon and in proportion to the
purchase of the Stock and the exercise of the Warrants, as applicable.
5. REGISTRATION. The Company shall use its best efforts to register
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the Stock underlying the Placement Warrants, by filing a registration
statement with the Securities and Exchange Commission ("SEC") on Form S-3
or other appropriate form (the "Form") within 60 days after issuance of the
Placement Warrants and to file any amendments thereto within 30 days after
receipt of an SEC comment letter (subject to availability of audited
financial statements) and the Company agrees to keep the Form current and
effective so long as the Placement Warrants (including the common stock
that is issued upon the exercise of the warrant) ("Placement Warrants") are
owned by the holder of the Placement warrants, but not to exceed three
years from the date hereof. If the Company fails to fulfill its
obligations set forth in the preceding sentence as to the Form, then the
Company shall required to issue to InterFirst within 30 days, an additional
amount of Placement Warrants equal to 12.5% of the number of Placement
Warrants originally issued to InterFirst.
6. CONFIDENTIALITY. Company and Lender agree that the source of
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funds are to remain strictly confidential between Company and Lender only.
Neither Company nor Lender shall divulge or distribute the contents of this
Agreement to anyone else or use this Agreement in any way except as
intended between the parties hereto, subject to such disclosure as may be
required by law, as advised by Counsel to the Company. In addition, the
Company shall hold and keep confidential any information regarding the
identity and financial status of any investors/purchasers and Lender shall
hold and keep confidential any non-public information regarding the
Company.
7. INDEMNIFICATION. The Company hereby agrees to indemnify Lender
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and InterFirst for and hold them harmless against any loss, liability,
damage, claim or expense (including the reasonable fees and disbursements
of its attorneys) incurred by or asserted against Lender and InterFirst,
arising out of or in connection with it entering into this Agreement, the
performance of its duties hereunder and otherwise in respect hereof,
including the costs and expenses of defending itself against any claim or
liability in connection with this Agreement, except that the Company shall
not be liable hereunder as to matters in respect of which Lender or
InterFirst is determined to have acted with gross negligence or in bad
faith. Lender and InterFirst shall have no liability to the Investor or
the Company, or any other person in respect to any action taken or any
failure to act in respect of this Agreement if such action was taken of
omitted to be taken in good faith, and Lender and InterFirst shall be
entitled to rely in this regard on the advice of counsel.
8. MISCELLANEOUS.
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a. ENTIRE AGREEMENT. This Agreement constitutes the entire
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agreement among the parties pertaining to the subject matter hereof. No
supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver shall be binding
unless executed in writing by the party making the waiver.
b. COUNTERPARTS. This Agreement may be executed simultaneously
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in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
Facsimile signatures may be acceptable for the purpose of execution of this
Agreement.
c. ASSIGNMENT. The rights and obligations granted hereunder
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may not be assigned to any third party without the prior written consent of
the other party. Upon any valid assignment, this Agreement shall be
binding on, and shall inure to the benefit of, the parties to it and their
respective heirs, legal representatives, successors and assigns.
d. ATTORNEYS' FEES. If any legal action is brought for
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the violation or breach of this Agreement, the successful or prevailing
party shall be entitled to recover reasonable attorneys' fees and other
costs in connection therewith.
e. GOVERNING LAW. This Agreement shall be construed in
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accordance with and governed by the laws of the State of California.
f. ARBITRATION. The parties hereto agree that any controversy
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or claim arising under this Agreement will be settled by arbitration in
accordance with the Rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court or tribunal having jurisdiction thereof. The arbitration shall be
commenced within 60 days of the date of submission to arbitration and the
decision of the arbitrators shall be received within 30 days of the
commencement of the arbitration. The findings of such arbitration shall be
final and binding on all parties thereto and neither party shall have the
right to appeal such finding to any other forum. The place of arbitration
will be the County of Los Angeles, State of California.
g. SEVERABILITY. If any portion of this Agreement shall be
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declared or determined to be invalid, the remainder hereof shall
nevertheless remain in full force and effect.
h. NOTICE. All written notices, demands or requests of any
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kind, which either party may be required or may desire to serve on the
other in connection with this Agreement, must be served by registered or
certified mail, with postage prepaid and return receipt requested. In lieu
of mailing, either party may cause delivery of such notices, demands and
requests to be made by personal service, provided that acknowledgment of
receipt is made. Notice shall be deemed given upon personal delivery or
three (3) days after depositing in the U.S. Mail, postage prepaid.
Agreement continues on the next page
i. FURTHER ASSURANCES. Each party agrees to execute and
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acknowledge such other instruments as may be reasonably necessary to effect
the transactions contemplated herein.
IN WITNESS WHEREOF, the parties hereof have executed this Agreement as
of the date herein first written above.
"Company"
Advanced Mammography Systems, Inc.
By: /s/ Xxxx Xxxxxx
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"Lender"
Emerald Capital Corporation
By: /s/ Xxxxxxx Herik
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Xxxxxxx Herik, President
InterFirst"
InterFirst Capital Corporation
By: /s/ Xxxx Xxxxxxx
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