CONSULTING AGREEMENT
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This Consulting Agreement (the "Agreement"), dated on February
19, 1998 and 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
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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
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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
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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;
(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 press releases for the Company with the
Company's involvement and approval 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 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
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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 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 firms 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
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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 ("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 excercible 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,
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 non-refundable, 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 of the
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 that Act.
4.3 In connection with the acquisition of 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' 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 acknowledges that an investment in the Shares 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 his
entire investment in the Shares. Consultants are (i) accredited
investors, as that term is defined in Regulation D promulgated
under the Securities Act of 1933, and (ii) a purchases described
in Section 25102 (f) (2) of the California Corporate Securities
Law of 1968, as amended.
(c) Consultants are acquiring 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
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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 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 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 be a Broker/Dealer, but is rather
merely a "Finder" in reference to the Company procuring financing
sources and acquisition candidates.
5.1 It is further understood that Company, and not
Consultant, is responsible to perform any and all due diligence
on 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 financing 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 to Consultant equal to that outlined in Section "5" herein.
5.4 Consultant will notify Company of introductions it
make for potential sources of financing or acquisitions 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
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(phone, mailing, labor, etc.), other than extraordinary items
(travel required by/or specifically requested by the Company,
luncheons or dinners to 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
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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 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",
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
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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. 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
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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
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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.
11. Attorney's Fee. If any legal action or any arbitration or
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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
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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
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hereunder shall be deemed to be duly given if sent 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
Amherst, 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
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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
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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. Miscellaneous Conditions. Company and Consultant each
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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
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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
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Michael Pieniazek, President & CEO
& Its Duly Authorized Officer
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 2/19/98 By: /s/ John M. Liviakis /s/ Robert B. Prag
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John M. Liviakis Robert B. Prag
President Sr. Vice
President