<PAGE> 1
<TABLE>
<S> <C>
UNITED STATES OMB Number: 3235-0145
SECURITIES AND EXCHANGE COMMISSION Expires: August 31, 1999
WASHINGTON, D.C. 20549 Estimated averge burden
hours per response 14.90
</TABLE>
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
AMERICAN ELECTROMEDICS CORP.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.10 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
025569-203
- --------------------------------------------------------------------------------
(CUSIP Number)
JOHN M. LIVIAKIS, 2420 "K" ST., #220, SACRAMENTO, CA 95816, (916) 448-6084
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 16, 1998
- --------------------------------------------------------------------------------
(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 Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Section 240.13d-7
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 other provisions of the Act (however, see the
Notes).
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY
VALID OMB CONTROL NUMBER.
SEC 1746 (2-98)
<PAGE> 2
SCHEDULE 13D
CUSIP No. 025569-203
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only).
LIVIAKIS FINANCIAL COMMUNICATIONS, INC. 68-0311399
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO, WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,500,000
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY None
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,500,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,500,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
<PAGE> 3
SCHEDULE 13D
CUSIP No. 025569-203
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only).
Robert B. Prag
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO, 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
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
500,000
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,500,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 500,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
1,500,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,000,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE> 4
1. SECURITY AND ISSUER.
The title of the class of equity securities to which this statement
relates is common stock, par value $.10 per share (the "Common Stock"), issued
by American Electromedics Corp., a Delaware corporation (the "Corporation"). The
principal offices of the Corporation are located at 13 Columbia Drive, Suite 18,
Amherst, New Hampshire 03031.
2. IDENTITY AND BACKGROUND.
This statement is filed by Liviakis Financial Communications, Inc., a
California corporation ("LFC"), and Robert B. Prag ("RBP"). LFC's principal
business is as a consultant in the areas of financial and investor public
relations, investor communications, and corporate finance. LFC's principal
business and principal office address is 2420 "K" Street, Suite 220, Sacramento,
California 95816.
LFC's President is John M. Liviakis ("JML"), its Senior Vice President
is RBP, and its Treasurer, Chief Financial Officer and Secretary is Renee A.
Liviakis ("RAL"). JML, RBP and RAL are the only executive officers of LFC. The
activities associated with these positions constitute the principal occupation
and employment of JML, RBP and RAL. JML, RBP and RAL are LFC's only directors,
and JML and RAL are its sole stockholders. JML, RBP and RAL are citizens of the
United States, and their business address is LFC's principal business address
listed above.
During the last five years, none of LFC, JML, RBP and RAL has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and during such period none of them has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, the
result of which was to subject such person to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This Schedule 13D is being filed to report (i) 750,000 shares of Common
Stock issued by the Corporation to LFC on or about March 16, 1998, (ii) 250,000
shares of Common Stock issued by the Corporation to RBP on or about March 16,
1998, (iii) 750,000 shares of Common Stock which LFC could first acquire on
March 16, 1998 pursuant to a Common Stock Purchase Warrant dated March 15, 1998
issued by the Corporation to LFC (the "LFC Warrant"), and (iv) 250,000 shares of
Common Stock which RBP could first acquire on March 16, 1998 pursuant to a
4
<PAGE> 5
Common Stock Purchase Warrant dated March 15, 1998 issued by the Corporation to
RBP (the "RBP Warrant" and collectively with the LFC Warrant, the "Warrants").
Pursuant to the Warrants, LFC and RBP may purchase shares of Common Stock at an
exercise price of $1.00 per share through March 16, 2002.
The 750,000 shares of Common Stock and 250,000 shares of Common Stock
issued to LFC and RBP, respectively, were issued pursuant to a Consulting
Agreement dated February 19, 1998 and effective as of March 16, 1998 by and
between the Corporation and LFC (the "Consulting Agreement"). The Warrants were
also issued pursuant to the Consulting Agreement. Under the Consulting
Agreement, LFC undertakes to perform certain investor communications, financial
and investor public relations, corporate finance and related services for the
Corporation. A copy of the Consulting Agreement is attached hereto as Exhibit
"A".
To the extent LFC exercises the LFC Warrant, it presently intends to
utilize its working capital. To the extent RBP exercises the RBP Warrant, he
presently intends to utilize his personal funds. Copies of the LFC Warrant and
the RBP Warrant are attached hereto as Exhibits "B" and "C", respectively.
4. PURPOSE OF TRANSACTION.
The 1,000,000 shares of Common Stock and the Warrants were issued to LFC
and RBP pursuant to the Consulting Agreement in consideration for consulting
services to be performed by LFC for the Corporation.
LFC and RBP have acquired and intend to hold the shares of Common Stock
so acquired for investment purposes. To the extent LFC and RBP exercise the
Warrants, each presently intends to acquire and hold the shares of Common Stock
so purchased for investment purposes. LFC and RBP may also acquire additional
shares of Common Stock for investment purposes from time to time, although they
do not have any present plans to do so.
LFC and RBP have no plans or proposals which relate to or would result
in: any extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Corporation or any subsidiary of the Corporation; the
sale or transfer of a material amount of assets of the Corporation or any of its
subsidiaries; any change in the Corporation's present Board of Directors or
management; any material change in the present capitalization or dividend policy
of the Corporation; any material change in the Corporation's business or
corporate structure; any changes in the Corporation's charter, bylaws, or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Corporation by any
5
<PAGE> 6
person; a class of securities of the Corporation being delisted from a national
securities exchange or ceasing to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; a class of
equity securities of the Corporation becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or any similar action.
5. INTEREST IN SECURITIES OF THE ISSUER.
LFC has the sole power to direct the vote or disposition of the 750,000
shares of Common Stock owned by LFC. Pursuant to the LFC Warrant, LFC has the
right to purchase up to 750,000 shares of Common Stock from the Corporation
through March 16, 2002 at an exercise price of $1.00 per share of Common Stock.
LFC would expect to have the sole power to direct the vote or disposition of any
shares of Common Stock acquired by LFC pursuant to the LFC Warrant or otherwise.
LFC would exercise its power to direct the vote or disposition of such
securities through its officers and directors, JML, RBP and RAL.
RBP has the sole power to direct the vote or disposition of the 250,000
shares of Common Stock owned by RBP. Pursuant to the RBP Warrant, RBP has the
right to purchase up to 250,000 shares of Common Stock from the Corporation
through March 16, 2002 at an exercise price of $1.00 per share of Common Stock.
RBP would expect to have the sole power to direct the vote or disposition of any
shares of Common Stock acquired by RBP pursuant to the RBP Warrant or otherwise.
LFC disclaims any beneficial interest in any shares of Common Stock
owned by RBP or which RBP has the right to acquire. RBP disclaims any beneficial
interest in any shares of Common Stock owned by LFC or which LFC has the right
to acquire, other than such beneficial interest that arises out of RBP's service
as an officer and director of LFC.
The 750,000 shares of Common Stock that LFC owns, and as to which LFC
has the sole power to direct the vote or disposition, represent approximately
12.4% of that class of securities. The 750,000 shares of Common Stock that LFC
has the right to acquire through the exercise of the LFC Warrant, and as to
which LFC would expect to have the sole power to direct the vote or disposition,
also represent approximately 12.4% of that class of securities. The 1,500,000
shares of Common Stock that LFC either owns or has the right to acquire through
the exercise of the LFC Warrant, and as to which LFC either has or would expect
to have the sole power to direct the vote or disposition, represent
approximately 24.8% of that class of securities.
6
<PAGE> 7
The 250,000 shares of Common Stock that RBP owns, and as to which RBP
has the sole power to direct the vote or disposition, represent approximately
4.5% of that class of securities. The 250,000 shares of Common Stock that RBP
has the right to acquire through the exercise of the RBP Warrant, and as to
which RBP would expect to have the sole power to direct the vote or disposition,
also represent approximately 4.5% of that class of securities. The 500,000
shares of Common Stock that RBP either owns or has the right to acquire through
the exercise of the RBP Warrant, and as to which RBP either has or would expect
to have the sole power to direct the vote or disposition, represent
approximately 9.0% of that class of securities.
The 1,000,000 shares of Common Stock that LFC and RBP in the aggregate
own, and as to which either LFC or RBP has the sole power to direct the vote or
disposition, represent approximately 15.9% of that class of securities. The
1,000,000 shares of Common Stock that LFC and RBP in the aggregate have the
right to acquire through the exercise of the Warrants, and as to which either
LFC or RBP would expect to have the sole power to direct the vote or
disposition, also represent approximately 15.9% of that class of securities. The
2,000,000 shares of Common Stock that LFC and RBP in the aggregate either own or
have the right to acquire through the exercise of the Warrants, and as to which
LFC or RBP either has or would expect to have the sole power to direct the vote
or disposition, represent approximately 31.7% of that class of securities.
In each case, the calculation of the percentage of the class of Common
Stock is based on the 4,303,136 shares of Common Stock reported by the
Corporation to be outstanding as of December 17, 1997 in its Quarterly Report on
Form 10-QSB for the quarterly period ended October 31, 1997, as adjusted to give
effect to the issuance after such date of an aggregate of 1,000,000 shares to
LFC and RBP as reported herein.
During the past sixty days, LFC, JML, RAL and RBP have not engaged in
any transactions in Common Stock, other than pursuant to the Consulting
Agreement as described herein.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
The Corporation entered into the Consulting Agreement with LFC in
consideration for consulting services to be performed by LFC pursuant to the
Consulting Agreement from March 15, 1998 through March 15, 1999. In the
Consulting Agreement and in the Warrants, the Corporation grants to LFC and RBP
certain rights to have shares of Common Stock registered under the Securities
Act of 1933, as amended.
7
<PAGE> 8
Except for the Consulting Agreement and the Warrants, there are no
contracts, arrangements, understandings or relationships between the persons
named in Item 2 above and any person with respect to any securities of the
Corporation.
7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Consulting Agreement, dated February 19, 1998 and effective
as of March 16, 1998, by and between the Corporation and LFC.
Exhibit B - Common Stock Purchase Warrant dated March 15, 1998 issued by
the Corporation to LFC.
Exhibit C - Common Stock Purchase Warrant dated March 15, 1998 issued by
the Corporation to RBP.
Exhibit D - Agreement of LFC and RBP pursuant to Rule 13d- 1(f).
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 22, 1998 LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ John M. Liviakis
----------------------------------------
John M. Liviakis, President
/s/ Robert B. Prag
-------------------------------------------
Robert B. Prag
8
<PAGE> 9
EXHIBIT "A"
CONSULTING AGREEMENT
This consulting Agreement (the "Agreement"), effective as of March 16,
1998, is entered into by and between AMERICAN ELECTROMEDICS CORPORATION, a
Delaware corporation (herein referred to as the "Company") and LIVIAKIS
FINANCIAL COMMUNICATIONS, INC., a California corporation (herein referred to as
the "Consultant").
RECITALS
WHEREAS, Company is a publicly held corporation with its common stock
traded through the OTC Bulletin Board; and
WHEREAS, Consultant has experience in the area of corporate finance,
investor communications and financial and investor public relations; and
WHEREAS, Company desires to engage the services of Consultant to assist
and consult with the Company in matters concerning corporate finance and to
represent the company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as to
the Company's current and proposed activities;
NOW THEREFORE, in consideration of the promises and the mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant
to act in a consulting capacity to the Company, and the Consultant hereby agrees
to provide services to the Company commencing March 15, 1998 and ending on March
15, 1999.
2. Duties of Consultant. The Consultant agrees that it will generally
provide the following specified consulting services through its officers and
employees during the term specified in Section 1:
a. Advise and assist the Company in developing and implementing
appropriate plans and materials for presenting the Company and its business
plans, strategy and personnel to the financial community, establishing an image
for the Company in the financial community, and creating the foundation for
subsequent financial public relations efforts;
b. Introduce the Company to the financial community;
9
<PAGE> 10
c. With the cooperation of the Company, maintain an awareness
during the term of this Agreement of the Company's plans, strategy and
personnel, as they may evolve during such period, and advise and assist the
Company in communicating appropriate information regarding such plans, strategy
and personnel to the financial community;
d. Assist and advise the Company with respect to its (i)
stockholder and investor relations, (ii) relations with brokers, dealers,
analysts and other investment professionals, and (iii) financial public
relations generally;
e. Perform the functions generally assigned to
investor/stockholder relations and public relations departments in major
corporations, including responding to telephone and written inquiries (which may
be referred to the Consultant by the Company); preparing or reviewing press
releases, reports and other communications with or to shareholders, the
investment community and the general public; advising with respect to the
timing, form, distribution and other matters related to such releases, reports
and communications; and consulting with respect to corporate symbols, logos,
names, the presentation of such symbols, logos and names, and other matters
relating to corporate image;
f. Upon the Company's approval, disseminate information regarding
the Company to shareholders, brokers, dealers, other investment community
professionals and the general investing public;
g. Upon the Company's approval, conduct meetings, in person or by
telephone, with brokers, dealers, analysts and other investment professionals to
advise them of the Company's plans, goals and activities, and assist the Company
in preparing for press conferences and other forums involving the media,
investment community professionals and the general investment public;
h. At the Company's request, review business plans, strategies,
mission statements budgets, proposed transactions and other plans for the
purpose of advising the Company of the investment community implications
thereof; and,
i. Otherwise perform as the Company's financial relations and
public relations consultant.
3. Allocation of Time and Energies. The Consultant hereby promises to
perform and discharge well and faithfully the responsibilities which may be
assigned to the Consultant from time to time by the officers and duly authorized
representatives of the Company in connection with the conduct of its financial
and investor public relations and communications activities, so long as such
activities are in compliance with applicable securities laws and regulations.
Consultant shall diligently and thoroughly
10
<PAGE> 11
provide the consulting services required hereunder. Although no specific
hours-per-day requirement will be required, Consultant and the Company agree
that Consultant will perform the duties set forth hereinabove in a diligent and
professional manner. The parties acknowledge and agree that a disproportionately
large amount of the effort to be expended and the costs to be incurred by the
Consultant and the benefits to be received by the Company are expected to occur
upon and shortly after, and in any event, within two months of the effectiveness
of this Agreement. It is explicitly understood that Consultant's performance of
its duties hereunder will in no way be measured by the price of the Company's
common stock, nor the trading volume of the Company's common stock. It is also
understood that the Company is entering into this Agreement with Liviakis
Financial Communications, Inc. ("LFC"), a corporation and not any individual
member of LFC, and with such, Consultant will not be deemed to have breached
this Agreement if any member, officer or director of LFC leaves the firm or dies
or becomes physically unable to perform any meaningful activities during the
term of the Agreement, provided the Consultant otherwise performs its
obligations under this Agreement.
4. Remuneration. As full and complete compensation for
services described in this Agreement, the Company shall compensate
Consultant as follows:
4.1 For undertaking this engagement and for other good and
valuable consideration, the Company agrees to issue and deliver to the
Consultant a "Commencement Bonus" payable in the form of 1,000,000 shares of the
Company's common stock (the "Common Stock") and 1,000,000 warrants (the
"Warrants") entitling the Consultant the right to purchase shares of the
Company's Common Stock. The form and content of the Warrant agreement is
attached hereto and referenced as "Exhibit A." Among other things, the Warrants
will contain the following terms and conditions:
1. the Warrants will be exercisable at a price of
One Dollar ($1.00);
2. the Warrants will be for a term of four (4)
years;
3. the Warrants will contain no call and/or
redemption provisions;
4. the Warrants will contain "piggyback registration
rights" such that the shares of common stock issuable upon the exercise
of the Warrants will be included in the next appropriate registration
filed by the Company, which shall be filed by the Company no later than
October 1, 1998. All registration costs shall be borne solely by the
Company; and
11
<PAGE> 12
5. the Warrants shall be exercisable at anytime
during the term of the Warrants and shall contain a "cashless
exercise" provision.
This Commencement Bonus shall be issued to the Consultant promptly
following execution of this Agreement and shall, when issued and delivered to
Consultant, be fully paid and non-assessable. The Company understands and agrees
that Consultant has foregone significant opportunities to accept this engagement
and that the Company derives substantial benefit from the execution of this
Agreement and the ability to announce its relationship with Consultant. The
1,000,000 shares of Common Stock and the 1,000,000 Warrants issued as a
Commencement Bonus, therefore, constitute payment for Consultant's agreement to
represent the Company and are a nonrefundable, non-apportionable, and
non-ratable retainer; such Warrants are not a prepayment for future services. If
the Company decides to terminate this Agreement prior to March 15, 1999 for any
reason whatsoever, it is agreed and understood that Consultant will not be
requested or demanded by the Company to return any shares of Common Stock or
Warrants paid to it hereunder. 750,000 shares of the Common Stock and 750,000 of
the Warrants issued pursuant to this Agreement shall be evidenced by a stock
certificate and warrant agreement(s) issued in the name of Liviakis Financial
Communications, Inc. and 250,000 shares of the Common Stock and 250,000 of the
Warrants issued pursuant to this Agreement shall be evidenced by a stock
certificate and warrant agreement(s) issued in the name of Robert B. Prag
("Prag").
4.2 Consultant and Prag (hereinafter referred to as
"Consultants") acknowledge that the shares of Common Stock and Warrants to be
issued pursuant to this Agreement (collectively, the "Shares") have not been
registered under the Securities Act of 1933, and accordingly are "restricted
securities" within the meaning of Rule 144 of the Act. As such, the Shares may
not be resold or transferred unless the Company has received an opinion of
counsel reasonably satisfactory to the Company that such resale or transfer is
exempt from the registration requirements of the Act.
4.3 In connection with the acquisition of the Shares hereunder,
the Consultants represent and warrant to the Company as follows:
(a) Consultants acknowledge that the Consultants have been
afforded the opportunity to ask questions of and receive answers from
duly authorized officers or other representatives of the Company
concerning an investment in the Shares, and any additional information
which the Consultants have requested.
(b) Consultants' investment in restricted securities is
reasonable in relation to the Consultants' net worth, which is in excess
of ten (10) times the Consultants'
12
<PAGE> 13
cost basis in the Shares. Consultants have had experience in investments
in restricted and publicly traded securities, and Consultants have had
experience in investments in speculative securities and other
investments which involve the risk of loss of investment. Consultants
acknowledge that an investment in the Warrants is speculative and
involves the risk of loss. Consultants have the requisite knowledge to
assess the relative merits and risks of this investment without the
necessity of relying upon other advisors, and Consultants can afford the
risk of loss of their entire investment in the Warrants. Consultants are
(i) accredited investors, as that term is defined in Regulation D
promulgated under the Securities Act of 1933, and (ii) a purchaser
described in Section 25102(f)(2) of the California Corporate Securities
Law of 1968, as amended.
(c) Consultants are requiring the Shares for the
Consultants' own account for long-term investment and not with a view
toward resale or distribution thereof except in accordance with
applicable securities laws.
5. Financing "Finder's Fee". It is understood that in the event
Consultant introduces Company, or its nominees, to a lender or equity purchaser,
not already having a preexisting relationship with the Company, with whom
Company, or its nominees, ultimately finances or causes the completion of such
financing, Company agrees to compensate Consultant for such services with a
"finder's fee" in the amount of 2.5% of total gross funding provided by such
lender or equity purchaser, such fee to be payable in cash. This fee will be in
addition to any fees payable by Company to any other intermediary, if any, which
shall be per separate agreements negotiated between Company to any other
intermediary. It is also understood that in the event Consultant introduces
Company, or its nominees, to an acquisition candidate, either directly or
indirectly through another intermediary, not already having a preexisting
relationship with the Company, with whom Company, or its nominees, ultimately
acquires or causes the completion of such acquisition, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
2% of total gross consideration provided by such acquisition, such fee to be
payable in cash. This will be in addition to any fees payable by Company to any
other intermediary, if any, which shall be per separate agreements negotiated
between Company and such other intermediary. It is specifically understood that
Consultant is not nor does it hold itself out to be a Broker/Dealer, but is
rather merely a "Finder" in reference to the Company procuring financing sources
and acquisition candidates. The obligation contained in this Section 5 will
expire one year after the termination of this Agreement.
5.1 It is further understood that Company, and not Consultant, is
responsible to perform any and all due diligence on
13
<PAGE> 14
such lender, equity purchaser or acquisition candidate introduced to it by
Consultant under this Agreement, prior to Company receiving funds or closing on
any acquisition. However, Consultant will not introduce any parties to Company
about which Consultant has any prior knowledge of questionable, unethical or
illicit activities.
5.2 Company agrees that said compensation to Consultant shall be
paid in full at the time said financing or acquisition is closed. Moreover, said
compensation will be a condition precedent to the closing of such funding or
acquisition and Company shall execute any and all documents necessary to effect
said compensation.
5.3 As further consideration to Consultant, Company, or its
nominees, agrees to pay with respect to any financing or acquisition candidate
provided directly or indirectly to the Company by any lender or equity purchaser
covered by this Section 5, during the period of one year from the date of this
Agreement, a fee equal to Consultant equal to that outlined in Section 5 herein.
5.4 Consultant will notify Company of introductions it makes for
potential sources of financing in a timely manner (within approximately 3 days
of introduction) via facsimile memo. If Company has a preexisting relationship
with such nominee and believes such party should be excluded from this
Agreement, then Company will notify Consultant immediately of such circumstance
via facsimile memo.
6. Expenses. Consultant agrees to pay for all its expenses (phone,
mailing, labor, etc.), other than extraordinary items (travel required by/or
specifically requested by the Company, luncheons or dinners for large groups of
investment professionals, mass faxing to a sizable percentage of the Company's
constituents, investor conference calls, print advertisements in publications,
etc.) approved by the Company prior to its incurring an obligation for
reimbursement.
7. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant by the
Company with respect to financial affairs, operations, profitability and
strategic planning of the Company are accurate and Consultant may rely upon the
accuracy thereof without independent investigation. The Company will protect,
indemnify and hold harmless Consultant against any claims or litigation
including any damages, liability, cost and reasonable attorney's fees as
incurred with respect thereto ("Damages") resulting from Consultant's
communication or dissemination of any said information, documents or materials
not designated by the Company to the Consultant as "confidential" or "Company
private,"
14
<PAGE> 15
excluding any such claims or litigation resulting from Consultant's
communication or dissemination of information not provided or authorized by the
Company. To the extent feasible, the Company agrees to make Consultant an
additional insured on any and all commercial liability and directors and
officers liability insurance policies and to provide Consultant with current
Certificates of Insurance reflecting the same.
8. Representations. Consultant represents that it is not required to
maintain any licenses and registrations under federal or any state regulations
necessary to perform the services set forth herein. Consultant acknowledges
that, to the best of its knowledge, the performance of the services set forth
under this Agreement will not violate any rule or provision of any regulatory
agency having jurisdiction over Consultant. Consultant acknowledges that, to the
best of its knowledge, Consultant and its officers and directors are not the
subject of any investigation, claim, decree or judgment involving any violation
of the SEC or securities laws. Consultant further acknowledges that it is not a
securities Broker/Dealer or a registered investment advisor. Company
acknowledges that, to the best of its knowledge, that it has not violated any
rule or provision of any regulatory agency having jurisdiction over the Company
that would have a material adverse effect on the Company. Company acknowledges
that, to the best of its knowledge, Company is not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws.
9. Legal Representation. The Company acknowledges that it has been
represented by independent legal counsel in the preparation of this Agreement.
Consultant represents that they have consulted with independent legal counsel
and/or tax, financial and business advisors, to the extent the Consultant deemed
necessary.
10. Status as Independent Contractor. Consultant's engagement pursuant
to this Agreement shall be as independent contractor, and not as an employee,
officer or other agent of the Company. Neither party to this Agreement shall
represent or hold itself out to be the employer or employee of the other.
Consultant further acknowledges the consideration provided hereinabove is a
gross amount of consideration and that the Company will not withhold from such
consideration any amounts as to income taxes, social security payments or any
other payroll taxes. All such income taxes and other such payment shall be made
or provided for by Consultant and the Company shall have no responsibility or
duties regarding such matters. Neither the Company or the Consultant possess the
authority to bind each other in any agreements without the express written
consent of the entity to be bound.
15
<PAGE> 16
11. Attorneys' Fees. If any legal action or any arbitration or other
proceeding is brought for the enforcement or interpretation of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with or related to this Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs in
connection with that action or proceeding, in addition to any other relief to
which it or they may be entitled.
12. Waiver. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
13. Notices. All notices, requests, and other
communications hereunder shall be deemed to be duly given if send
by U.S. mail, postage prepaid, addressed to the other party at the
address as set forth herein below:
To the Company: American Electromedics Corporation
Mr. Michael Pieniazek, President & CEO
13 Columbia Drive, Suite 18
Amhert, NH 03031
To the Consultant: Liviakis Financial Communications, Inc.
John M. Liviakis, President
2420 K Street, Suite 220
Sacramento, CA 95816
It is understood that either party may change the address to which
notices for it shall be addressed by providing notice of such change to the
other party in the manner set forth in this paragraph.
14. Choice of Law, Jurisdiction and Venue. This Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
California. The parties agree that Sacramento County, CA will be the venue of
any dispute and will have jurisdiction over all parties.
15. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the alleged breach thereof, or relating to Consultant's
activities or remuneration under this Agreement, shall be settled by binding
arbitration in California, in accordance with the applicable rules of the
American Arbitration Association, and judgment on the award rendered by the
arbitrator(s) shall be binding on the parties and may be entered in any court
having jurisdiction thereof. The provisions of Title 9 of Part 3 of the
California Code of Civil Procedure, including section 1283.05, and successor
statutes, permitting expanded discovery proceedings shall be applicable to all
disputes that are arbitrated under this paragraph.
16
<PAGE> 17
16. Miscellaneous Conditions. Company and Consultant each agree to the
following terms and conditions:
a) The Company shall arrange that all insiders agree to a six month
lockup agreement, which would include all officers and directors.
17. Complete Agreement. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof. This Agreement and its terms
may not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
AGREED TO:
"Company" AMERICAN ELECTROMEDICS CORPORATION
Date: By:/s/ Michael Pieniazek
------------------- -----------------------------------------
Michael Pieniazek, President & CEO
& Its Duly Authorized Officer
"Consultants" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 2/10/98 By:/s/John M. Liviakis /s/Robert B. Prag
------------------- ------------------- --------------------
John M. Liviakis Robert B. Prag
President Sr. Vice President
17
<PAGE> 18
EXHIBIT "B"
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN AND WILL NOT BE, AS OF THE TIME OF ISSUANCE, REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE LAW, AND MAY NOT BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT. THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE
WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
AMERICAN ELECTROMEDICS CORPORATION
COMMON STOCK PURCHASE WARRANT
Expiring March 16, 2002
Date: March 15, 1998
This Common Stock Purchase Warrant, made as of the 15th day of March,
1998, by and between AMERICAN ELECTROMEDICS CORPORATION, a Delaware corporation,
having its principal executive offices at 13 Columbia Drive; Suite 18, Amherst,
NH 03031 (the "Company"), and Liviakis Financial Communications, Inc., having a
principal business address at 2420 "K" Street; Suite 220, Sacramento, California
95816.
WITNESSETH:
This Warrant is exercisable at any time, or from time to time, from
March 16, 1998 up to and including 5:00 p.m. Eastern daylight time, on March 16,
2002.
1. Warrant.
This certifies that, Liviakis Financial Communications, Inc., or assigns
("Warrant Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to Seven Hundred Fifty Thousand (750,000) fully
paid and nonassessable shares of Common Stock of the Company ("Common Stock") at
an exercise price of One Dollar ($1.00) per share ("Exercise Price"). The
Exercise Price and number of shares of Common Stock issuable upon exercise
hereof shall be subject to adjustment as provided in this Warrant.
2. Exercise Price.
The exercise price shall be One Dollar ($1.00) per share of Common
Stock. The Company shall pay all original issue or transfer taxes on the
exercise of this Warrant and all other fees and expenses incurred by the Company
in connection herewith.
18
<PAGE> 19
3. Exercise of Warrant.
All of the Warrants granted hereby shall first become exercisable on
March 16, 1998. Subject to the provisions of Paragraph 4 hereof, such Warrants
shall be exercisable in whole or in part at any time and from time to time from
March 16, 1998 through 5:00 p.m. Eastern daylight time on March 16, 2002.
In order to exercise the Warrant granted hereunder in whole or in part,
the Warrant Holder shall deliver to the Company a written notice substantially
in the form of Notice of Exercise of Warrant To Purchase Shares attached hereto,
delivery to be initially via facsimile and thereafter effected by personal
delivery, by overnight courier or by registered or certified mail, return
receipt requested, addressed to the Company at its principal office. Such notice
shall specify the number of Shares which the Warrant Holder is purchasing under
the Warrant Agreement herein granted and shall be accompanied by either:
(i) payment (in the form of cash or certified or bank cashier's
check) for the Shares so being purchased at the exercise price so specified in
the form of Notice of Exercise of Warrant to Purchase Shares and therefor as
specified in Paragraph 2 above; or
(ii) Warrant Holder's written direction to the Company to retain
as consideration for the warrant exercise that number of Shares (rounded upward
to the next highest full Share) so being purchased which have an aggregate value
equal to the product derived by multiplying (a) the number of Shares so being
purchased by (b) the exercise price so specified in the form of Notice of
Exercise of Warrant to Purchase Shares and therefor as specified in Paragraph 2
above, such Shares to be valued for such purposes at the closing price of the
Shares in the principal market in which Shares trade on the trading day
preceding the date on which such notice is delivered to the Company.
As soon as practicable thereafter but in any event within five (5)
business days after the Company shall cause to be delivered to the Warrant
Holder certificates issued in the Warrant Holder's name evidencing (x) in the
case payment of the exercise price pursuant to (i) above the full number of
Shares as to which this warrant was exercised by the Warrant Holder or (y) in
the case of payment of the exercise price pursuant to (ii) above the number of
Shares remaining after subtracting from the full number of Shares as to which
this warrant was exercised by Warrant Holder that number of Shares which the
Company is to retain pursuant to (ii) above. Warrant Holder shall be considered
to be the holder and owner of the Shares to be evidenced by such certificates as
of the close of business on the date Company received the notice of exercise
accompanied by payment, as contemplated herein, without regard to the date of
actual issuance of the certificate(s) representing such Shares.
19
<PAGE> 20
4. Divisibility and Non-Assignability of the Option.
(a) The Optionee may exercise the option herein granted in whole or in
part at any time and from time to time, subject to the provisions of Paragraph 3
above, with respect to any whole number of Shares included therein, but in no
event may an option be exercised as to less than ten thousand (10,000) Shares at
any one time, except for the remaining Shares covered by the option of less than
ten thousand (10,000).
(b) The Optionee may not give, grant, sell, exchange, transfer legal
title, pledge, assign or otherwise encumber or dispose of the options herein
granted or any interest therein, and the options herein granted, or any of them,
shall be exercisable only by the Optionee or its legal successors, unless such
transfer, sale or assignment is agreed to in writing by the Grantor.
5. Stock as Investment.
By accepting this Warrant, the Warrant Holder agrees that it is Warrant
Holder's intention to purchase Shares hereunder for investment and without any
view towards the resale or distribution thereof. In the event Shares to be
issued upon the election to purchase shares under this Warrant have not been
registered at the time of proposed issuance under the Securities Act of 1933, as
amended (the "Securities Act"), the Warrant Holder shall deliver to the Company
at the time of such issuance a written representation that warrant holder is
acquiring such Shares in good faith for investment purposes only and not for
resale or distribution. Company may place a "stop transfer" order with respect
to such Shares with its transfer agent and place an appropriate restrictive
legend on the stock certificate(s) evidencing such Shares, in order to prevent
transfer unless such Shares are registered under the Securities Act or an
exemption from the registration requirements of the Securities Act is
applicable.
6. Conditions to Issuance of Shares.
The Company shall issue and deliver certificates for Shares purchased
upon the exercise of any portion of the Warrant granted hereunder.
7. Registration Rights.
(a) If, at any time during the exercise period hereof and the three (3)
years following any exercise hereunder, the Company proposes to file a
registration statement with respect to any class of securities (other than
pursuant to a registration statement on Forms S-4 or S-8 or any successor form)
under the Securities Act, the Company shall notify the Warrant Holder at least
twenty (20) days prior to the filing of such registration statement and will
offer to include in such registration statement all or any portion
20
<PAGE> 21
of the shares of Common Stock then owned by the Warrant Holder or which the
Warrant Holder then has the right to acquire, whether pursuant to this Warrant
or otherwise (collectively the "Shares"). In a written notice to be delivered to
the Company within twenty (20) days after receipt of any such notice from
Company, the Warrant Holder shall state the number of Shares that it wishes to
register for resale and distribution publicly under the proposed registration
statement. The Company will use its best efforts, through its officer,
directors, auditors and counsel in all matters necessary or advisable, to file
at least one (1) such registration statement by October 1, 1998. The Company
will also use its best efforts, through its officers, directors, auditors and
counsel in all matters necessary or advisable, to include within the coverage of
each such registration statement (except as hereinafter provided) the Shares
that Warrant Holder has advised company that Warrant Holder wishes to register
pursuant to such registration statement for resale and distribution, to
prosecute each such registration statement diligently to effectiveness, and to
cause such registration statement to become effective as promptly as
practicable. In that regard, the company makes no representation or warranties
as to its ability to have any registration statement declared effective.
All registrations requested pursuant to this Paragraph 7(a) are referred
to herein as "Piggyback Registrations." In the event the Company is advised by
the staff of the SEC, NASDAQ or any self-regulatory or state securities agency
that the inclusion of the Shares will prevent, preclude or materially delay the
effectiveness of a registration statement filed, the Company, in good faith, may
amend such registration statement to exclude the Shares without otherwise
affecting the Warrant Holder's rights to any other registration statement
herein.
(i) Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and if the
underwriter thereof advises the Company in writing that in its opinion the
number of Shares requested to be included in such registration statement exceeds
the number that can be sold in such offering without materially adversely
affecting the distribution of such securities by the company, then the Company
will include in such registration statement first, the securities that the
Company proposes to sell and second, the securities requested to be included in
such registration statement by selling securityholders, such right to inclusion
being apportioned pro rata among the Warrant Holder and the other holders of any
other securities requesting registration according to the market value of Shares
and other securities requested to be registered.
Notwithstanding the above, if any such underwriter shall advise the
Company in writing that the distribution of the Shares being included in the
registration statement concurrently with the securities being registered by the
Company would materially
21
<PAGE> 22
adversely affect the distribution of such securities by the Company, then the
Warrant Holder shall delay its offering and sale for such period ending on the
earliest of (a) 180 days following the effective date of the Company's
registration statement, (b) the earliest date that, in the opinion of such
underwriter, such adverse effect would no longer be caused, or (c) such date as
the Company, managing underwriter and Warrant Holder shall otherwise agree. In
the event of such delay, the Company shall file such supplements and
post-effective amendments and take any such other actions as may be necessary or
appropriate to permit such Warrant Holder to make its proposed offering and sale
for a period of at least ninety (90) days commencing immediately following the
end of such period of delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company, the underwriter and the Warrant Holder. Notwithstanding the foregoing,
the Company shall not be required to include Shares within the coverage of a
registration statement being filed pursuant to this Paragraph 7(a)(i) if, in the
opinion of counsel for both the Company and Warrant Holder, all of the Shares
proposed to be registered may be immediately transferred pursuant to the
provisions of Rule 144 under the Securities Act.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary on behalf of holders of securities of
the Company in writing that in its opinion the number of Shares requested to be
included in such registration statement exceeds the number which can be sold in
such offering without materially adversely affecting the distribution of such
securities, then the Company will include in such registration statement the
securities requested to be included in such registration statement by selling
securityholders on a pro rata basis, with such rights to inclusion being
apportioned among the Warrant Holder and the other holders of any other
securities requesting registration according to the market value of Shares and
other securities requested by them, respectively, to be registered.
Notwithstanding the foregoing, the Company shall not be required to include
Shares within the coverage of a registration statement being filed pursuant to
this Paragraph 9(a)(ii) if, in the opinion of counsel for both the Company and
Warrant Holder, all of the Shares proposed to be registered may be immediately
transferred pursuant to the provisions of Rule 144 under the Securities Act.
(b) If at any time after October 1, 1998 and prior to the third (3rd)
anniversary of the earlier of the expiration of the Warrant herein granted and
the purchase of the final Shares remaining subject to such Warrant Shares issued
or issuable upon exercise of the Warrant herein granted are not then registered
under one or more Piggyback Registrations and then covered by a prospectus
complying with the requirements of the Securities Act, the Warrant Holder may by
written notice to the Company require Company to file a registration statement
under the Securities Act covering such Shares as Warrant Holder may specify in
such notice.
22
<PAGE> 23
Warrant Holder shall be entitled so to require Company to file a registration
statement pursuant to this Paragraph 7(b) on only one (1) occasion. The Company
will file such a registration statement within ninety (90) days of receipt of
such notice; and thereafter will prosecute such registration statement
diligently to effectiveness; will cause such registration statement to become
effective as promptly as practicable; will promptly file all such supplements
and post-effective amendments to such registration statement and take any such
other actions as may be necessary or appropriate to make available to Warrant
Holder on as continuous a basis as is practicable a prospectus meeting the
requirements of the Securities Act through the earliest of (a) the date on which
the final Shares have been sold and distributed by Warrant Holder, (b) the date
on which, in the opinion of counsel for both the Company and Warrant Holder, all
of the Shares which Warrant Holder then holds may be immediately transferred
pursuant to the provisions of Rule 144 under the Securities Act, and (c) March
16, 2004. In that regard, the Company makes no representations or warranties as
to its ability to have any registration statement or post-effective amendment
thereto declared effective.
(c) In the event of any registration of a security pursuant to this
Paragraph 7, the Company shall indemnify the Warrant Holder and its officers and
directors against all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented) relating
to such registration, or caused by any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading in light of the circumstances under which they are made
unless such statement or omission was made in reliance upon and in conformity
with information furnished to the Company by the Warrant Holder with expressly
for use therein. The Warrant Holder shall also indemnify the Company, its
officers and directors and each underwriter of the Shares so registered with
respect to losses, claims damages and Shares so registered with respect to
losses, claims damages and liabilities caused by an untrue statement or omission
in reliance upon and in conformity with information furnished by the Warrant
Holder to the Company in writing expressly for use in such registration
statement or prospectus.
(d) All expenses of any registration referred to in this Paragraph 7,
except the fees and disbursement of counsel to the Warrant Holder, underwriting
commissions or discounts and any transfer or other taxes applicable to the
transfer of Shares by the Warrant Holder, shall be borne by the Company.
(e) Following the exercise of the Warrant hereunder, the Warrant Holder
shall promptly advise the Company when Warrant Holder no longer holds any shares
acquired through the exercise of Warrants granted hereunder, and upon the
request of the Company,
23
<PAGE> 24
the Warrant Holder shall advise the Company from time to time of the number of
Shares then held by Warrant Holder which were acquired through the exercise of
Warrants granted hereunder.
8. Adjustments Upon Changes in Capitalization.
(a) In the event of changes in the outstanding Common Stock of the
Company by reason of stock dividends, stock splits, reverse stock splits,
recapitalization's, consolidations, combinations, exchanges of shares,
separations, reorganizations, liquidation's or any similar events or events
having similar consequences, the number and class of Shares as to which the
Warrant may be exercised shall be correspondingly adjusted so that for the same
aggregate exercise price the Warrant Holder shall be entitled to acquire the
securities and other property Warrant Holder would have held if Warrant Holder
had exercised its rights to purchase shares under this Warrant Agreement for the
number of Shares under consideration prior to the first of such events to occur
and continued to hold such Shares and all other securities and other property
issued with respect thereto in connection with such events. No adjustments shall
be made with respect to cash dividends or non-liquidating dividends payable in
property other than cash, so long as Company provides Warrant Holder with
written notice of any such proposed dividend at least fifteen (15) days prior to
the record date for such dividend. Company shall also give Warrant Holder prompt
written notice of any event resulting in an adjustment under this Paragraph
8(a), including a detailed computation of such adjustment.
(b) Any adjustment in the number and kind of Shares and other securities
shall apply proportionately to only the unexercised portion of the Warrant at
the time of the event given rise to the adjustment. If fractions of a Share
would result from any such adjustment, the adjustment shall be revised to the
next higher whole number of Shares so long as such increase does not result in
the holder of the Warrant being deemed to own more than 5% of the total combined
voting power or value of all classes of stock of the Company or its
subsidiaries, in which case the adjustment shall be revised to the next lower
whole number of Shares.
9. Effect of Mergers, Consolidations or Sales of Assets.
In the event Company should propose to merge or consolidate with, or
engage in some other form of business combination with, any other corporation or
entity on a basis in which Company is not to be the surviving entity, then as a
condition precedent to proceeding with such merger, consolidation or other
business combination, the Company shall require the surviving entity to assume
and perform all of Company's obligations under the right to acquire the same
securities and property for the Warrant exercise price specified herein as
Warrant Holder would have received if Warrant Holder had exercised the Warrant
immediately prior to such
24
<PAGE> 25
merger, consolidation or other business combination. To the extent the above may
be inconsistent with Sections 424(a)(1) and (2) of the Code, the above shall be
deemed interpreted so as to comply therewith.
10. No Rights in Warrant Stock.
Warrant Holder shall have no rights as a shareholder in respect of
Shares as to which the Warrant hereunder shall not have been exercised and
payment made as herein provided.
11. Effect Upon Employment.
This Agreement does not give the Warrant Holder any right to employment
by, or any other relationship with, the Company.
12. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns.
13. Miscellaneous.
This Agreement shall be construed under the laws of the State of
California applied to agreements made and to be performed entirely within such
State. Headings have been included herein for convenience of reference only and
shall not be deemed a part of this Agreement. The Company shall pay any and all
documentary, stamp or other transactional taxes attributable to the issuance or
delivery of shares of Common Stock of the Company upon exercise of all or part
of this Warrant.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"Company" AMERICAN ELECTROMEDICS CORPORATION
By: /s/Michael T. Pieniazek
--------------------------------
Michael Pieniazek, CEO &
Its Duly Authorized Officer
25
<PAGE> 26
NOTICE OF EXERCISE OF WARRANT TO PURCHASE SHARES
To: AMERICAN ELECTROMEDICS CORPORATION
The undersigned hereby irrevocably subscribes for _________ shares of
the Common Stock, $0.01 par value per share, of AMERICAN ELECTROMEDICS
CORPORATION, a Delaware corporation, at One Dollar ($1.00) per share, pursuant
to and in accordance with the terms and conditions of a Warrant dated March 15,
1998 by and between AMERICAN ELECTROMEDICS CORPORATION and Liviakis Financial
Communications, Inc. (the "Warrant").
The undersigned hereby makes payment in the form of (check one):
____ Cash. $________ cash or certified bank cashier's check
____ Cashless Exercise. The Company is hereby directed to retain as
consideration for the Shares subscribed for herein, a portion of those shares as
computed pursuant to Paragraph 3, "Exercise of Warrant" of the Warrant.
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City State Zip Code
Date:__________________ _____________________________
Signature
Social Security or Taxpayer I.D. Number:_________________________
26
<PAGE> 27
EXHIBIT "C"
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN AND WILL NOT BE, AS OF THE TIME OF ISSUANCE, REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE LAW, AND MAY NOT BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT. THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE
WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
AMERICAN ELECTROMEDICS CORPORATION
COMMON STOCK PURCHASE WARRANT
Expiring March 16, 2002
Date: March 15, 1998
This Common Stock Purchase Warrant, made as of the 15th day of March,
1998, by and between AMERICAN ELECTROMEDICS CORPORATION, a Delaware corporation,
having its principal executive offices at 13 Columbia Drive; Suite 18, Amherst,
NH 03031 (the "Company"), and Robert B. Prag, having a principal business
address at 2420 "K" Street; Suite 220, Sacramento, California 95816.
WITNESSETH:
This Warrant is exercisable at any time, or from time to time, from
March 16, 1998 up to and including 5:00 p.m. Eastern daylight time, on March 16,
2002.
1. Warrant.
This certifies that, Robert B. Prag, or assigns ("Warrant Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company up
to Two Hundred Fifty Thousand (250,000) fully paid and nonassessable shares of
Common Stock of the Company ("Common Stock") at an exercise price of One Dollar
($1.00) per share ("Exercise Price"). The Exercise Price and number of shares of
Common Stock issuable upon exercise hereof shall be subject to adjustment as
provided in this Warrant.
2. Exercise Price.
The exercise price shall be One Dollar ($1.00) per share of Common
Stock. The Company shall pay all original issue or transfer taxes on the
exercise of this Warrant and all other fees and expenses incurred by the Company
in connection herewith.
27
<PAGE> 28
3. Exercise of Warrant.
All of the Warrants granted hereby shall first become exercisable on
March 16, 1998. Subject to the provisions of Paragraph 4 hereof, such Warrants
shall be exercisable in whole or in part at any time and from time to time from
March 16, 1998 through 5:00 p.m. Eastern daylight time on March 16, 2002.
In order to exercise the Warrant granted hereunder in whole or in part,
the Warrant Holder shall deliver to the Company a written notice substantially
in the form of Notice of Exercise of Warrant To Purchase Shares attached hereto,
delivery to be initially via facsimile and thereafter effected by personal
delivery, by overnight courier or by registered or certified mail, return
receipt requested, addressed to the Company at its principal office. Such notice
shall specify the number of Shares which the Warrant Holder is purchasing under
the Warrant Agreement herein granted and shall be accompanied by either:
(i) payment (in the form of cash or certified or bank cashier's
check) for the Shares so being purchased at the exercise price so specified in
the form of Notice of Exercise of Warrant to Purchase Shares and therefor as
specified in Paragraph 2 above; or
(ii) Warrant Holder's written direction to the Company to retain
as consideration for the warrant exercise that number of Shares (rounded upward
to the next highest full Share) so being purchased which have an aggregate value
equal to the product derived by multiplying (a) the number of Shares so being
purchased by (b) the exercise price so specified in the form of Notice of
Exercise of Warrant to Purchase Shares and therefor as specified in Paragraph 2
above, such Shares to be valued for such purposes at the closing price of the
Shares in the principal market in which Shares trade on the trading day
preceding the date on which such notice is delivered to the Company.
As soon as practicable thereafter but in any event within five (5)
business days after the Company shall cause to be delivered to the Warrant
Holder certificates issued in the Warrant Holder's name evidencing (x) in the
case payment of the exercise price pursuant to (i) above the full number of
Shares as to which this warrant was exercised by the Warrant Holder or (y) in
the case of payment of the exercise price pursuant to (ii) above the number of
Shares remaining after subtracting from the full number of Shares as to which
this warrant was exercised by Warrant Holder that number of Shares which the
Company is to retain pursuant to (ii) above. Warrant Holder shall be considered
to be the holder and owner of the Shares to be evidenced by such certificates as
of the close of business on the date Company received the notice of exercise
accompanied by payment, as contemplated herein, without regard to the date of
actual issuance of the certificate(s) representing such Shares.
28
<PAGE> 29
4. Divisibility and Non-Assignability of the Option.
(a) The Optionee may exercise the option herein granted in whole or in
part at any time and from time to time, subject to the provisions of Paragraph 3
above, with respect to any whole number of Shares included therein, but in no
event may an option be exercised as to less than ten thousand (10,000) Shares at
any one time, except for the remaining Shares covered by the option of less than
ten thousand (10,000).
(b) The Optionee may not give, grant, sell, exchange, transfer legal
title, pledge, assign or otherwise encumber or dispose of the options herein
granted or any interest therein, and the options herein granted, or any of them,
shall be exercisable only by the Optionee or its legal successors, unless such
transfer, sale or assignment is agreed to in writing by the Grantor.
5. Stock as Investment.
By accepting this Warrant, the Warrant Holder agrees that it is Warrant
Holder's intention to purchase Shares hereunder for investment and without any
view towards the resale or distribution thereof. In the event Shares to be
issued upon the election to purchase shares under this Warrant have not been
registered at the time of proposed issuance under the Securities Act of 1933, as
amended (the "Securities Act"), the Warrant Holder shall deliver to the Company
at the time of such issuance a written representation that warrant holder is
acquiring such Shares in good faith for investment purposes only and not for
resale or distribution. Company may place a "stop transfer" order with respect
to such Shares with its transfer agent and place an appropriate restrictive
legend on the stock certificate(s) evidencing such Shares, in order to prevent
transfer unless such Shares are registered under the Securities Act or an
exemption from the registration requirements of the Securities Act is
applicable.
6. Conditions to Issuance of Shares.
The Company shall issue and deliver certificates for Shares purchased
upon the exercise of any portion of the Warrant granted hereunder.
7. Registration Rights.
(a) If, at any time during the exercise period hereof and the three (3)
years following any exercise hereunder, the Company proposes to file a
registration statement with respect to any class of securities (other than
pursuant to a registration statement on Forms S-4 or S-8 or any successor form)
under the Securities Act, the Company shall notify the Warrant Holder at least
twenty (20) days prior to the filing of such registration statement and will
offer to include in such registration statement all or any portion
29
<PAGE> 30
of the shares of Common Stock then owned by the Warrant Holder or which the
Warrant Holder then has the right to acquire, whether pursuant to this Warrant
or otherwise (collectively the "Shares"). In a written notice to be delivered to
the Company within twenty (20) days after receipt of any such notice from
Company, the Warrant Holder shall state the number of Shares that it wishes to
register for resale and distribution publicly under the proposed registration
statement. The Company will use its best efforts, through its officer,
directors, auditors and counsel in all matters necessary or advisable, to file
at least one (1) such registration statement by October 1, 1998. The Company
will also use its best efforts, through its officers, directors, auditors and
counsel in all matters necessary or advisable, to include within the coverage of
each such registration statement (except as hereinafter provided) the Shares
that Warrant Holder has advised company that Warrant Holder wishes to register
pursuant to such registration statement for resale and distribution, to
prosecute each such registration statement diligently to effectiveness, and to
cause such registration statement to become effective as promptly as
practicable. In that regard, the company makes no representation or warranties
as to its ability to have any registration statement declared effective.
All registrations requested pursuant to this Paragraph 7(a) are referred
to herein as "Piggyback Registrations." In the event the Company is advised by
the staff of the SEC, NASDAQ or any self-regulatory or state securities agency
that the inclusion of the Shares will prevent, preclude or materially delay the
effectiveness of a registration statement filed, the Company, in good faith, may
amend such registration statement to exclude the Shares without otherwise
affecting the Warrant Holder's rights to any other registration statement
herein.
(i) Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and if the
underwriter thereof advises the Company in writing that in its opinion the
number of Shares requested to be included in such registration statement exceeds
the number that can be sold in such offering without materially adversely
affecting the distribution of such securities by the company, then the Company
will include in such registration statement first, the securities that the
Company proposes to sell and second, the securities requested to be included in
such registration statement by selling securityholders, such right to inclusion
being apportioned pro rata among the Warrant Holder and the other holders of any
other securities requesting registration according to the market value of Shares
and other securities requested to be registered.
Notwithstanding the above, if any such underwriter shall advise the
Company in writing that the distribution of the Shares being included in the
registration statement concurrently with the securities being registered by the
Company would materially
30
<PAGE> 31
adversely affect the distribution of such securities by the Company, then the
Warrant Holder shall delay its offering and sale for such period ending on the
earliest of (a) 180 days following the effective date of the Company's
registration statement, (b) the earliest date that, in the opinion of such
underwriter, such adverse effect would no longer be caused, or (c) such date as
the Company, managing underwriter and Warrant Holder shall otherwise agree. In
the event of such delay, the Company shall file such supplements and
post-effective amendments and take any such other actions as may be necessary or
appropriate to permit such Warrant Holder to make its proposed offering and sale
for a period of at least ninety (90) days commencing immediately following the
end of such period of delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company, the underwriter and the Warrant Holder. Notwithstanding the foregoing,
the Company shall not be required to include Shares within the coverage of a
registration statement being filed pursuant to this Paragraph 7(a)(i) if, in the
opinion of counsel for both the Company and Warrant Holder, all of the Shares
proposed to be registered may be immediately transferred pursuant to the
provisions of Rule 144 under the Securities Act.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary on behalf of holders of securities of
the Company in writing that in its opinion the number of Shares requested to be
included in such registration statement exceeds the number which can be sold in
such offering without materially adversely affecting the distribution of such
securities, then the Company will include in such registration statement the
securities requested to be included in such registration statement by selling
securityholders on a pro rata basis, with such rights to inclusion being
apportioned among the Warrant Holder and the other holders of any other
securities requesting registration according to the market value of Shares and
other securities requested by them, respectively, to be registered.
Notwithstanding the foregoing, the Company shall not be required to include
Shares within the coverage of a registration statement being filed pursuant to
this Paragraph 9(a)(ii) if, in the opinion of counsel for both the Company and
Warrant Holder, all of the Shares proposed to be registered may be immediately
transferred pursuant to the provisions of Rule 144 under the Securities Act.
(b) If at any time after October 1, 1998 and prior to the third (3rd)
anniversary of the earlier of the expiration of the Warrant herein granted and
the purchase of the final Shares remaining subject to such Warrant Shares issued
or issuable upon exercise of the Warrant herein granted are not then registered
under one or more Piggyback Registrations and then covered by a prospectus
complying with the requirements of the Securities Act, the Warrant Holder may by
written notice to the Company require Company to file a registration statement
under the Securities Act covering such Shares as Warrant Holder may specify in
such notice.
31
<PAGE> 32
Warrant Holder shall be entitled so to require Company to file a registration
statement pursuant to this Paragraph 7(b) on only one (1) occasion. The Company
will file such a registration statement within ninety (90) days of receipt of
such notice; and thereafter will prosecute such registration statement
diligently to effectiveness; will cause such registration statement to become
effective as promptly as practicable; will promptly file all such supplements
and post-effective amendments to such registration statement and take any such
other actions as may be necessary or appropriate to make available to Warrant
Holder on as continuous a basis as is practicable a prospectus meeting the
requirements of the Securities Act through the earliest of (a) the date on which
the final Shares have been sold and distributed by Warrant Holder, (b) the date
on which, in the opinion of counsel for both the Company and Warrant Holder, all
of the Shares which Warrant Holder then holds may be immediately transferred
pursuant to the provisions of Rule 144 under the Securities Act, and (c) March
16, 2004. In that regard, the Company makes no representations or warranties as
to its ability to have any registration statement or post-effective amendment
thereto declared effective.
(c) In the event of any registration of a security pursuant to this
Paragraph 7, the Company shall indemnify the Warrant Holder and its officers and
directors against all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented) relating
to such registration, or caused by any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading in light of the circumstances under which they are made
unless such statement or omission was made in reliance upon and in conformity
with information furnished to the Company by the Warrant Holder with expressly
for use therein. The Warrant Holder shall also indemnify the Company, its
officers and directors and each underwriter of the Shares so registered with
respect to losses, claims damages and Shares so registered with respect to
losses, claims damages and liabilities caused by an untrue statement or omission
in reliance upon and in conformity with information furnished by the Warrant
Holder to the Company in writing expressly for use in such registration
statement or prospectus.
(d) All expenses of any registration referred to in this Paragraph 7,
except the fees and disbursement of counsel to the Warrant Holder, underwriting
commissions or discounts and any transfer or other taxes applicable to the
transfer of Shares by the Warrant Holder, shall be borne by the Company.
(e) Following the exercise of the Warrant hereunder, the Warrant Holder
shall promptly advise the Company when Warrant Holder no longer holds any shares
acquired through the exercise of Warrants granted hereunder, and upon the
request of the Company,
32
<PAGE> 33
the Warrant Holder shall advise the Company from time to time of the number of
Shares then held by Warrant Holder which were acquired through the exercise of
Warrants granted hereunder.
8. Adjustments Upon Changes in Capitalization.
(a) In the event of changes in the outstanding Common Stock of the
Company by reason of stock dividends, stock splits, reverse stock splits,
recapitalization's, consolidations, combinations, exchanges of shares,
separations, reorganizations, liquidation's or any similar events or events
having similar consequences, the number and class of Shares as to which the
Warrant may be exercised shall be correspondingly adjusted so that for the same
aggregate exercise price the Warrant Holder shall be entitled to acquire the
securities and other property Warrant Holder would have held if Warrant Holder
had exercised its rights to purchase shares under this Warrant Agreement for the
number of Shares under consideration prior to the first of such events to occur
and continued to hold such Shares and all other securities and other property
issued with respect thereto in connection with such events. No adjustments shall
be made with respect to cash dividends or non-liquidating dividends payable in
property other than cash, so long as Company provides Warrant Holder with
written notice of any such proposed dividend at least fifteen (15) days prior to
the record date for such dividend. Company shall also give Warrant Holder prompt
written notice of any event resulting in an adjustment under this Paragraph
8(a), including a detailed computation of such adjustment.
(b) Any adjustment in the number and kind of Shares and other securities
shall apply proportionately to only the unexercised portion of the Warrant at
the time of the event given rise to the adjustment. If fractions of a Share
would result from any such adjustment, the adjustment shall be revised to the
next higher whole number of Shares so long as such increase does not result in
the holder of the Warrant being deemed to own more than 5% of the total combined
voting power or value of all classes of stock of the Company or its
subsidiaries, in which case the adjustment shall be revised to the next lower
whole number of Shares.
9. Effect of Mergers, Consolidations or Sales of Assets.
In the event Company should propose to merge or consolidate with, or
engage in some other form of business combination with, any other corporation or
entity on a basis in which Company is not to be the surviving entity, then as a
condition precedent to proceeding with such merger, consolidation or other
business combination, the Company shall require the surviving entity to assume
and perform all of Company's obligations under the right to acquire the same
securities and property for the Warrant exercise price specified herein as
Warrant Holder would have received if Warrant Holder had exercised the Warrant
immediately prior to such
33
<PAGE> 34
merger, consolidation or other business combination. To the extent the above may
be inconsistent with Sections 424(a)(1) and (2) of the Code, the above shall be
deemed interpreted so as to comply therewith.
10. No Rights in Warrant Stock.
Warrant Holder shall have no rights as a shareholder in respect of
Shares as to which the Warrant hereunder shall not have been exercised and
payment made as herein provided.
11. Effect Upon Employment.
This Agreement does not give the Warrant Holder any right to employment
by, or any other relationship with, the Company.
12. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns.
13. Miscellaneous.
This Agreement shall be construed under the laws of the State of
California applied to agreements made and to be performed entirely within such
State. Headings have been included herein for convenience of reference only and
shall not be deemed a part of this Agreement. The Company shall pay any and all
documentary, stamp or other transactional taxes attributable to the issuance or
delivery of shares of Common Stock of the Company upon exercise of all or part
of this Warrant.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"Company" AMERICAN ELECTROMEDICS CORPORATION
By: /s/Michael T. Pieniazek
---------------------------------
Michael Pieniazek, CEO &
Its Duly Authorized Officer
34
<PAGE> 35
NOTICE OF EXERCISE OF WARRANT TO PURCHASE SHARES
To: AMERICAN ELECTROMEDICS CORPORATION
The undersigned hereby irrevocably subscribes for _________ shares of
the Common Stock, $0.01 par value per share, of AMERICAN ELECTROMEDICS
CORPORATION, a Delaware corporation, at One Dollar ($1.00) per share, pursuant
to and in accordance with the terms and conditions of a Warrant dated March 15,
1998 by and between AMERICAN ELECTROMEDICS CORPORATION and Robert B. Prag (the
"Warrant").
The undersigned hereby makes payment in the form of (check one):
____ Cash. $________ cash or certified bank cashier's check
____ Cashless Exercise. The Company is hereby directed to retain as
consideration for the Shares subscribed for herein, a portion of those shares as
computed pursuant to Paragraph 3, "Exercise of Warrant" of the Warrant.
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City State Zip Code
Date:__________________ _____________________________
Signature
Social Security or Taxpayer I.D. Number:_________________________
35
<PAGE> 36
EXHIBIT "D"
JOINT FILING AGREEMENT
Liviakis Financial Communications, Inc. and Robert B. Prag (collectively
the "Parties" and individually a "Party") hereby agree that they shall file a
single statement on Schedule 13D (as amended from time to time, the "Statement")
with respect to their beneficial ownership of shares of Common Stock (the
"Securities") of American Electromedics Corp., a Delaware corporation, on behalf
of and in satisfaction of the obligations of all of the Parties and that they
shall amend the Statement from time to time as required by rules promulgated
under the Securities Exchange Act of 1934, as amended.
Each of the Parties represents and warrants that such Party is eligible
to use Schedule 13D with respect to information regarding the Securities and
agrees to assume responsibility for the timely filing of the Statement and any
amendments thereto. Each of the Parties hereby assumes responsibility for the
completeness and accuracy of the information concerning such Party contained in
the Statement. No Party shall be responsible for the completeness and accuracy
of the information contained in the Statement concerning the other Parties,
unless such Party knows or has reason to believe that such information is
incomplete or inaccurate. The execution of the Statement, including any
amendment thereto, by one of the Parties shall constitute a representation by
such Party that the information concerning such Party contained therein is
complete and accurate and that such Party neither knows nor has any reason to
believe that the information concerning the other Parties contained therein is
either incomplete or inaccurate.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
In Witness Whereof, the Parties have executed this Joint Filing
Agreement this twenty-second day of March, 1998.
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/John M. Liviakis
-----------------------------------------
/s/Robert B. Prag
--------------------------------------------
Robert B. Prag
36
