UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 13)
AMERICAN ELECTROMEDICS CORP.
----------------------------
(Name of Issuer)
COMMON STOCK, $.10 PAR VALUE
----------------------------
(Title of Class of Securities)
0225569-10 4
------------
(CUSIP Number)
Alan Gelband
575 Madison Avenue - 7th Floor
New York, New York 10022
-----------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
OCTOBER 3, 1997
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this Schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement
[ ]. (A fee is not required only if the reporting person: (1)
has a previous statement on file reporting beneficial ownership
of more than five percent of the class of securities described in
Item 1; and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent of less of such
class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all provisions of the Act (however, see the Notes).
Page 1 of 5 Pages
- -
<PAGE>
SCHEDULE 13D
CUSIP No. 022 5569 10 4 PAGE 2 OF 5 PAGES
------------- --- ---
------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Alan Gelband
S.S. # ###-##-####
------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 51,076 shs. (including 10,000 shares
underlying convertible debentures)
BENEFICIALLY ---------------------------------------------------
8 SHARED VOTING POWER
OWNED BY
N/A
EACH ---------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
51,076 shs. (including 10,000 shares
PERSON WITH underlying convertible debentures)
---------------------------------------------------
10 SHARED DISPOSITIVE POWER
N/A
------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
51,076 shs. (including 10,000 shares underlying
convertible debentures)
------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2%
------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND ISSUER
-------------------
The class of equity securities to which this Amendment
No. 13 relates is the common stock, $.10 par value per share (the
"Common Stock"), of American Electromedics Corp., a Delaware
corporation (the "Company"). The Company has its principal
executive offices at 13 Columbia Drive, Suite #18, Amherst, New
Hampshire 03031.
Except to the extent set forth provided for in this
Amendment No. 13, the information in the initial Schedule and
prior amendments thereto remains in effect.
ITEM 2. IDENTITY AND BACKGROUND
-----------------------
This Amendment is being filed by Alan Gelband
("Gelband") individually and on behalf of the Alan Gelband
Company, Inc. Defined Contribution Pension Plan and Trust (the
"Pension Plan") and the Alden Foundation (the "Foundation").
Gelband is the sole shareholder, officer and director of Alan
Gelband Company, Inc., a New York corporation ("Gelband
Company"), and is a Trustee of the Foundation.
ITEM 4. PURPOSE OF TRANSACTION
----------------------
On October 3, 1997, Gelband, the Pension Plan and the
Foundation (Gelband, the Pension Plan and the Foundation
collectively referred to as the "Sellers") sold an aggregate of
500,000 shares (the "Shares") to an investor group (the
"Purchasers") pursuant to a Letter Agreement dated October 1,
1997 (the "Agreement"). The Agreement provided that the Sellers
sell the Shares to the Purchasers at a purchase price of $1.00
per share. Prior to the sale of the Shares, the Sellers
beneficially owned in the aggregate approximately 20% of the
outstanding shares of the Company's Common Stock. Subsequent to
such sale, the Sellers own approximately 2% of the Company's
Common Stock. A copy of the Agreement is filed as Exhibit 3
hereto.
Pursuant to the Agreement, Gelband also resigned as a
director of the Company effective October 3, 1997 upon the
closing of the sale of the Shares.
In addition, and pursuant to the Agreement, Gelband
entered into a Standstill Agreement (the "Standstill Agreement"),
as more fully described in Item 6 hereto, whereby Gelband and his
affiliate's investment in the Company is restricted for a period
of two years to the greater of 150,000 shares of Common Stock or
2% of the outstanding shares of Common Stock and Gelband is also
restricted from certain acts that may have an effect on the
control of the Company. A copy of the Standstill Agreement is
filed as Exhibit 4 hereto.
-3-
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
------------------------------------
(a) Gelband is the direct beneficial owner of 51,076
shares of the Company's Common Stock (including 10,000 shares
underlying Debentures). The 51,076 shares beneficially owned by
Gelband represent approximately 2% of the outstanding shares of
the Company's Common Stock as at October 3, 1997 (assuming
conversion of the Debentures).
(b) Gelband has sole voting power for the 51,076
shares listed in Item 5(a) of this Schedule and has sole
dispositive power as to such 51,076 shares.
(c) Pursuant to the Agreement, on October 3, 1997,
Gelband privately sold 500,000 shares of Common Stock of the
Company as follows: 254,400 shares directly, 144,400 shares on
behalf of the Foundation, and 101,200 shares on behalf of the
Pension Plan.
(d) Not applicable.
(e) On October 3, 1997, Gelband ceased to be the
beneficial owner of more than five percent of the Common Stock of
the Company.
ITEM 6. CONTRACTS, ARRANGEMENTS AND UNDERSTANDINGS
------------------------------------------
Pursuant to the Agreement, Gelband resigned as a
director of the Company effective October 3, 1997 upon the
closing of the sale of the Shares.
Gelband also entered into the Standstill Agreement with
the Company which provides that for two years following October
1, 1997 neither Gelband nor his affiliates will own or acquire,
directly or indirectly, any Voting Securities (as defined in the
Standstill Agreement) in an amount exceeding the greater of (i)
150,000 shares of Common Stock (as presently constituted) or (ii)
2% of the issued and outstanding shares of Common Stock
(excluding treasury shares). The Standstill Agreement also
restricts Gelband from certain acts which would have the effect
influencing or altering control of the Company, e.g., from
seeking representation on the Board, from soliciting proxies, or
submitting proposals for stockholder vote. A copy of the
Standstill Agreement is filed as Exhibit 4 hereto.
ITEM 7. MATERIAL FILED AS EXHIBITS
--------------------------
3. Letter Agreement dated October 1, 1997 among
Gelband, the Foundation and the Pension Plan and the Purchasers,
4. Standstill Agreement dated October 1, 1997 between
Gelband and the Company.
-4-
<PAGE>
SIGNATURES
----------
After reasonable inquiry and to the best of my
knowledge, I certify that the information set forth in the
statement is true, complete and correct.
Date: October 6, 1997
/s/ Alan Gelband
------------------------------
Alan Gelband
-5-
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
3. Letter Agreement dated October 1, 1997 among
Gelband, the Foundation and the Pension Plan
and the Purchasers
4. Standstill Agreement dated October 1, 1997 between
Gelband and the Company.
EXHIBIT 3
October 1, 1997
Mr. Alan Gelband
575 Madison Avenue
7th Floor
New York, New York 10022
Re: American Electromedics Corporation
----------------------------------
Dear Alan:
This letter sets forth the terms of the purchase by me,
Marcus Rowan ("Rowan") and/or my designees (collectively, the
"Purchasers"), of an aggregate of 500,000 shares (the "Shares")
of common stock, $.10 par value per share, of American
Electromedics Corp., a Delaware corporation (the "Company"),
consisting of 144,400 shares from The Alden Foundation ("Alden"),
101,200 shares from Alan Gelband Co. Defined Contribution Pension
Plan (the "Gelband Pension Plan") and 254,400 shares from you,
Alan Gelband ("Gelband"), at a price of $1.00 per share. (Alden,
the Gelband Pension Plan and Gelband are sometimes individually
referred to as a "Seller" and collectively as the "Sellers".) As
noted herein, the Purchasers will be seeking to purchase up to
$280,000 principal amount of the Company's 14% Convertible
Subordinated Debentures (the "Debentures") from holders
designated by you.
1. Subject to the terms and conditions herein, the
Sellers hereby sell the Shares to the Purchasers, and the
Purchasers hereby purchase the Shares from the Sellers, at an
aggregate purchase price of $500,000 (the "Purchase Price").
2. On or prior to October 3, 1997, Rowan shall deliver
to the Reid & Priest LLP Escrow Account (the "R&P Escrow") an
aggregate amount of not less than $630,000.
3. Upon closing, Gelband shall deliver to the Escrow
Agent share certificates for the Shares, duly endorsed for
transfer with signature guarantees, receipt of which shall be
acknowledged by the Escrow Agent.
4. Upon Closing, the R&P Escrow shall deliver to Alan
Gelband, a check in the amount of $500,000 for the Purchase
Price, receipt of which shall be acknowledged by Gelband.
5. Gelband, on behalf of himself and the other
Sellers, hereby represents and warrants to the Purchasers that
(i) the Sellers have good and marketable title to the Shares,
free and clear of any lien or restriction except those
restrictions imposed by the Securities Act of 1933, as amended
(the "Act"); (ii) each Seller has full authority to enter into
this letter agreement and to sell the Shares; and (iii) Gelband
as a director of the Company is familiar with the financial
condition and current developments of the Company.
6. Rowan, on behalf of himself and the other
Purchasers, represents and warrants to the Sellers that (i) he is
a director of the Company and is familiar with the affairs of the
Company, financial and otherwise, and is able to make an informed
decision regarding the purchase of the Shares; (ii) each
Purchaser is an "accredited investor," as such term is defined
under the Act; and (iii) he is aware that the Act imposes
restrictions upon any pledge, transfer or resale of Shares and
that the certificates evidencing the ownership of Shares will
bear the following legend:
"The securities represented by this certificate
may not be sold, transferred, pledged,
hypothecated or otherwise disposed of in the
absence of (i) an effective registration
statement for securities under the Securities
Act of 1993, (ii) compliance with Rule 144
under said Act or (ii) an opinion of the
Company counsel that such registration is not
required."
and that stop transfer orders may be placed against the Shares.
7. Simultaneous with the delivery of the Shares by
Gelband to Rowan and the release by the R&P Escrow to Gelband of
a check for the Purchase Price pursuant to Sections 2 and 3
hereof, (i) Gelband shall tender his resignation as a director of
the Company to the Board of Directors of the Company in the form
indicated in Exhibit A hereto, (ii) Gelband shall deliver
to the Company a general release in the form indicated in Exhibit
B hereto, (iii) Gelband shall deliver his agreement restricting
his investment in the Company for two years, which agreement is
in the form of Exhibit C hereto, and (iv) Rowan shall cause the
Company to deliver to Gelband a general release in the form
indicated in Exhibit D hereto.
8. Subject to the closing of the purchase of the
Shares, Rowan will offer to purchase (the "Offer") $127,900
principal amount of Debentures from the persons listed on
Schedule I to Exhibit E hereto ("Holders") at the face amount
thereof plus interest accrued through September 30, 1997, with
payment to be made from the R&P Escrow, and Rowan may offer to
purchase the balance of the Debentures from the persons listed on
Schedule II to Exhibit E for a period ending three (3) days prior
to expiration of the conversion period for a reduced Conversion
Price, during which period Gelband cannot offer to purchase any
of such Debentures. Rowan will send to each Holder a letter in
substantially the form of Exhibit F hereto.
9. This letter agreement shall be governed by the laws
of the State of New York without regard to its conflict of laws
principles.
10. This letter agreement constitutes the entire
agreement among the parties hereto with respect to the purchase
and sale of the Shares and the Offer, and may not be amended
except by written agreement of the parties.
If the foregoing is acceptable to you, please indicate
your acceptance by countersigning this letter where indicated.
Sincerely,
/s/ Marcus Rowan
-------------------------
Marcus Rowan
Agreed and Accepted this
1st day of October 1997
/s/ Alan Gelband
----------------------------
Alan Gelband
The Alden Foundation
by: /s/ Alan Gelband
-------------------------
Alan Gelband Co. Defined Benefit Pension Plan
by: /s/ Alan Gelband
-------------------------
<PAGE>
EXHIBIT A
October 1, 1997
American Electromedics Corp.
13 Columbia Drive, Suite 18
Amherst, New Hampshire
Attention: Board of Directors
Gentlemen:
I hereby tender my resignation as a director of American
Electromedics Corp. effective upon the closing of the Letter
Agreement, dated October 1, 1997, between Marcus Rowan and me for
my sale of the Company's securities.
Very truly yours,
Alan Gelband
<PAGE>
EXHIBIT B
To all to whom these Presents shall come or may Concern,
Know That Alan Gelband as Releasor, for good and valuable
consideration received from American Electromedics Corp., a
Delaware corporation, as Releasee, receipt whereof is hereby
acknowledged, releases and discharges the Releasee, Releasee's
heirs, executors, administrators, successors and assigns from all
actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills specialties, covenants,
contracts, controversies, agreements, promises, variances,
trespasses, damages, judgements, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which against
the Releasee, the Releasor, Releasor's heirs, executors,
administrators, successors and assigns ever had, now have or
hereafter can, shall or may, have for, upon, or by reason of any
matter, cause or thing whatsoever from the beginning of the world
to the day of the date of this Release.
The words "Releasor" and "Releasee" include all releasors
and all releasees under this Release.
This Release may not be changed orally.
IN WITNESS WHEREOF, the Releasor has hereunto set
Releasor's hand and seal the 1st day of October, 1997.
In presence of
____________________ L.S.
STATE OF COUNTY OF
On October 1, 1997, before me ______________________________
personally came Alan Gelband to me known, and known to me to be
the individual described in, and who executed the foregoing
Release, and duly acknowledged to me that he executed the same.
____________________
<PAGE>
EXHIBIT C
October 1, 1997
Mr. Alan Gelband
575 Madison Avenue
Suite 700
New York, New York 10022
Standstill Agreement
--------------------
Dear Mr. Gelband:
This letter agreement sets forth the terms of our
agreement with respect to any direct and/or indirect ownership or
acquisition by you, Alan Gelband ("Gelband"), of any Voting
Securities (as defined below) of American Electromedics Corp., a
Delaware corporation (the "Company"). The Company and you
acknowledge, respectively, that the consideration for entering
into and delivering this letter agreement is your sale of 500,000
shares of the Company's Common Stock to some investors and the
issuance and delivery by the Company to you of a General Release
simultaneous with such sale.
For the purposes of this letter agreement, the
following definitions shall apply: "Common Stock" means the
Common Stock, par value $.10 per share of the Company or any
securities of the Company issued in substitution thereof;
"affiliate" of a person means a person that directly or
-----------
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such person and,
to the extent not otherwise within this definition, a member of
such person's immediate family; "control" means the power to
direct or cause the direction of the management or policies of a
person whether through ownership of securities, by contract or
otherwise; "person" means and includes an individual, a
--------
partnership; a joint venture, a corporation, a group, a trust, an
estate, an unincorporated organization or association, and any
"person" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); "immediate
----------
family" of a person means a son or daughter of such person or a
-------
descendent of either, a stepson or stepdaughter of such person,
the father or mother of such person or an ancestor of either, a
stepfather or stepmother of such person or a spouse of such
person; for the purpose of determining whether any of the
foregoing relations exists, a legally adopted child of a person
shall be considered a child of such person by blood; and "Voting
-------
Securities" includes the Common Stock, and any other securities
----------
of the Company entitled to vote generally for the election of
directors or any securities having the right to convert into such
securities or any option or rights to acquire any of the
foregoing, now or hereafter outstanding.
1. Gelband covenants and agrees with the Company that
he will not in his name, nor will he permit any affiliate over
which he exercises control (including but not limited to The
Alden Foundation and Alan Gelband Co. Defined Contribution
Pension Plan), without the prior consent of the Company's Board
of Directors specifically expressed in a resolution adopted by a
majority of the directors of the Company, for a period of two (2)
years following the date of this letter agreement (the "Agreement
Term") to:
(a) Own or acquire or offer to acquire, directly
or indirectly, of record or beneficially, by
purchase or otherwise, any Voting Securities in
aggregate amount at any time exceeding the greater
of (I) 150,000 shares of Common Stock (as the
shares are presently constituted) or (II) two (2%)
percent of the issued and outstanding shares of
Common Stock (excluding treasury shares); or
(b) Seek representation on the Board of Directors of
the Company or solicit proxies with respect to Voting
Securities under any circumstances; submit proposals
for the vote of stockholders of the Company; or become
a "participant" in any "election contest" relating to
the election of directors of the Company (as such terms
are used on the date hereof in Rule 14a-11 of
Regulation 14A under the Exchange Act); or
(c) Enter into any joint venture, partnership, voting
arrangement or other understanding or otherwise act in
concert with any other person for the purpose of
acquiring, holding or voting of any Voting Securities;
(d) Take any action (or permit any investment banker,
attorney, accountant or any other representative
retained by him to take any action a part of such
retention), directly or indirectly, to acquire or
affect a change of control of the Company or initiate
contact with any person or entity in an effort to
solicit, encourage or assist such person or entity in a
takeover proposal. As used in this paragraph,
"takeover proposal" shall mean any proposal for a
merger or other business combination involving the
Company or for the acquisition of a substantial equity
interest in the Company or a substantial portion of the
Company's assets.
2. Gelband acknowledges and agrees that the Company
would be irreparably damaged in the event any of the provisions
of this letter agreement were not performed by him in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the Company shall be entitled to an
injunction or injunctions to redress breaches of this letter
agreement and to specifically enforce the terms and provisions
hereof in any state thereof having subject matter jurisdiction,
in addition to any other remedy to which such party may be
entitled, at law or in equity.
3. This letter agreement sets forth the entire
agreement between us with respect to the subject matter herein,
and cannot be amended, modified or terminated except by an
agreement in writing executed by both of us.
4. This letter agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
If the foregoing correctly sets forth our agreement,
kindly sign and return to us the enclose copy of this letter
agreement.
American Electromedics Corp.
By: ________________________
Agreed to:
_______________________________
Alan Gelband
<PAGE>
EXHIBIT D
To all to whom these Presents shall come or may Concern,
Know That American Electromedics Corp, a corporation
organized under the laws of the State of Delaware, as Releasor,
for good and valuable consideration received from Alan Gelband,
as Releasee, receipt whereof is hereby acknowledged, releases and
discharges the Releasee, Releasee's heirs, executors,
administrators, successors and assigns from all actions, causes
of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses,
damages, judgements, extents, executions, claims, and demands
whatsoever, in law, admiralty or equity, which against the
Releasee, the Releasor, Releasor's heirs, executors,
administrators, successors and assigns ever had, now have or
hereafter can, shall or may, have for, upon, or by reason of any
matter, cause or thing whatsoever from the beginning of the world
to the day of the date of this Release.
Whenever the text hereof requires, the use of singular
number shall include the appropriate plural number as the text of
the within instrument may require.
This Release may not be changed orally.
IN WITNESS WHEREOF, the Releasor has caused this
Release to be executed by its duly authorized officers and its
corporate seal to be hereunto affixed on October 1, 1997.
In presence of:
_________________________
By_______________________
STATE OF COUNTY OF
On October ___, 1997, before me ____________________________
personally came ____________________________ to me known, who, by
me duly sworn, did depose and say that deponent resides at ______
________________________________ that deponent is the ___________
of American Electromedics Corp., the corporation described in,
and which executed the foregoing Release, that deponent knows the
corporate seal of the corporation, that the seal affixed to the
Release is the corporate seal, that it was affixed by order of
the board of the corporation; and that deponent signed deponent's
name by like order.
____________________
<PAGE>
EXHIBIT E
SCHEDULE I
----------
HOLDER PRINCIPAL AMOUNT
------ ----------------
1. LGD Corporation 30,000
2. Alden Foundation 19,500
3. Alan Gelband Co. Defined
Contribution Pension Plan 18,000
4. John M. Camp III 20,400
5 Alan Feldman 40,000
========
$127,900
SCHEDULE II
-----------
1. JBR Trust No. 4 $ 30,000
2. Stanley I. Aber 12,000
3. Mark Mamolen 30,000
4. John McMahon 30,000
5. Jonathan F. Boucher 30,000
6. Thomas Hardy 20,100
========
$152,100
<PAGE>
EXHIBIT F
October , 1997
[Holder Name and Address]
Dear __________:
Please be advised that pursuant to an agreement with
Alan Gelband, the undersigned hereby offers to purchase from you
(the "Offer") your American Electromedics Corp. 14% Convertible
Subordinated Debenture due October 31, 1999 for the principal
amount thereof plus accrued interest through September 30, 1997,
or an amount of $_________ (the "Purchase Price"). The Offer will
remain open until October __, 1997.
In order to effect the purchase of your Debenture and
other Debentures pursuant to the Offer, I have placed funds in an
escrow account with the law firm of Reid & Priest LLP (the
"Escrow Agent"). Upon receipt in proper form by the Escrow Agent
of your Debenture and supporting documents as noted below, the
Escrow Agent will be instructed to send to you promptly a check
in payment of the full amount of the Purchase Price.
Should you decide to accept the Offer, you must deliver
your Debenture to the Reid & Priest Escrow Account, 40 West 57th
Street, New York, New York, 10019, Attention: Bruce A. Rich, Esq.
together with i) a completed Assignment Form (found at the end of
the Debenture), and ii) representations and warranties that you
(a) have good and marketable title to the Debenture, free and
clear of any lien or restriction except those restrictions
imposed by the Securities Act of 1933, as amended; (b) have full
authority to sell the Debenture; and (c) are familiar with the
financial condition and current developments of the Company.
As you are aware, the Company is to reduce the
Conversion Price of the Debentures to $1.00 per share for a
period from October , 1977 through October , 1977, after
which the Conversion Price of $3.75 will be restored. Instead of
accepting my offer to purchase your Debenture, you shall have the
right to convert it at the reduced Conversion price.
Should you have any question, please call the
undersigned at (___) ___-____.
Very truly yours,
Marcus Rowan
EXHIBIT 4
October 1, 1997
Mr. Alan Gelband
575 Madison Avenue
Suite 700
New York, New York 10022
Standstill Agreement
--------------------
Dear Mr. Gelband:
This letter agreement sets forth the terms of our
agreement with respect to any direct and/or indirect ownership or
acquisition by you, Alan Gelband ("Gelband"), of any Voting
Securities (as defined below) of American Electromedics Corp., a
Delaware corporation (the "Company"). The Company and you
acknowledge, respectively, that the consideration for entering
into and delivering this letter agreement is your sale of 500,000
shares of the Company's Common Stock to some investors and the
issuance and delivery by the Company to you of a General Release
simultaneous with such sale.
For the purposes of this letter agreement, the
following definitions shall apply: "Common Stock" means the
Common Stock, par value $.10 per share of the Company or any
securities of the Company issued in substitution thereof;
"affiliate" of a person means a person that directly or
-----------
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such person and,
to the extent not otherwise within this definition, a member of
such person's immediate family; "control" means the power to
direct or cause the direction of the management or policies of a
person whether through ownership of securities, by contract or
otherwise; "person" means and includes an individual, a
--------
partnership; a joint venture, a corporation, a group, a trust, an
estate, an unincorporated organization or association, and any
"person" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); "immediate
----------
family" of a person means a son or daughter of such person or a
-------
descendent of either, a stepson or stepdaughter of such person,
the father or mother of such person or an ancestor of either, a
stepfather or stepmother of such person or a spouse of such
person; for the purpose of determining whether any of the
foregoing relations exists, a legally adopted child of a person
shall be considered a child of such person by blood; and "Voting
-------
Securities" includes the Common Stock, and any other securities
-----------
of the Company entitled to vote generally for the election of
directors or any securities having the right to convert into such
securities or any option or rights to acquire any of the
foregoing, now or hereafter outstanding.
1. Gelband covenants and agrees with the Company that
he will not in his name, nor will he permit any affiliate over
which he exercises control (including but not limited to The
Alden Foundation and Alan Gelband Co. Defined Contribution
Pension Plan), without the prior consent of the Company's Board
of Directors specifically expressed in a resolution adopted by a
majority of the directors of the Company, for a period of two (2)
years following the date of this letter agreement (the "Agreement
Term") to:
(a) Own or acquire or offer to acquire, directly
or indirectly, of record or beneficially, by
purchase or otherwise, any Voting Securities in
aggregate amount at any time exceeding the greater
of (I) 150,000 shares of Common Stock (as the
shares are presently constituted) or (II) two (2%)
percent of the issued and outstanding shares of
Common Stock (excluding treasury shares); or
(b) Seek representation on the Board of Directors of
the Company or solicit proxies with respect to Voting
Securities under any circumstances; submit proposals
for the vote of stockholders of the Company; or become
a "participant" in any "election contest" relating to
the election of directors of the Company (as such terms
are used on the date hereof in Rule 14a-11 of
Regulation 14A under the Exchange Act); or
(c) Enter into any joint venture, partnership, voting
arrangement or other understanding or otherwise act in
concert with any other person for the purpose of
acquiring, holding or voting of any Voting Securities;
(d) Take any action (or permit any investment banker,
attorney, accountant or any other representative
retained by him to take any action a part of such
retention), directly or indirectly, to acquire or
affect a change of control of the Company or initiate
contact with any person or entity in an effort to
solicit, encourage or assist such person or entity in a
takeover proposal. As used in this paragraph,
"takeover proposal" shall mean any proposal for a
merger or other business combination involving the
Company or for the acquisition of a substantial equity
interest in the Company or a substantial portion of the
Company's assets.
2. Gelband acknowledges and agrees that the Company
would be irreparably damaged in the event any of the provisions
of this letter agreement were not performed by him in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the Company shall be entitled to an
injunction or injunctions to redress breaches of this letter
agreement and to specifically enforce the terms and provisions
hereof in any state thereof having subject matter jurisdiction,
in addition to any other remedy to which such party may be
entitled, at law or in equity.
3. This letter agreement sets forth the entire
agreement between us with respect to the subject matter herein,
and cannot be amended, modified or terminated except by an
agreement in writing executed by both of us.
4. This letter agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
If the foregoing correctly sets forth our agreement,
kindly sign and return to us the enclose copy of this letter
agreement.
American Electromedics Corp.
By: /s/ Michael T. Pieniazek
--------------------------
Agreed to:
/s/ Alan Gelband
-----------------------------
Alan Gelband
