-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CjBe01AG1xKGaP+3Nlyhipn43sAmHGkb2PihUJndrEsYziiZfxrb6hEhh4hH7M5L 3aqBXs/ij9tJ4QXWPYVdow== 0000950120-99-000443.txt : 19991203 0000950120-99-000443.hdr.sgml : 19991203 ACCESSION NUMBER: 0000950120-99-000443 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19991115 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ELECTROMEDICS CORP CENTRAL INDEX KEY: 0000352281 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 042608713 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-09922 FILM NUMBER: 99767758 BUSINESS ADDRESS: STREET 1: 13 COLUMBIA DR STE 5 CITY: AMHERST STATE: NH ZIP: 03031 BUSINESS PHONE: 6038806300 MAIL ADDRESS: STREET 1: 13 COLUMBIA DR STREET 2: STE 18 CITY: AMHERST STATE: NH ZIP: 03031 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported) -- November 15, 1999. ----------------- AMERICAN ELECTROMEDICS CORP. --------------------------- (Exact name of registrant as specified in its charter) Delaware 0-9922 04-2608713 - -------------------------------------------------------------------------------- (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) Incorporation) 13 Columbia Drive, Suite 5, Amherst, New Hampshire 03031 - -------------------------------------------------------------------------------- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code - (603) 880-6300 -------------- Not Applicable -------------- (Former Name or Former Address, if changed since last report) ITEM 5. OTHER EVENTS. - --------------------- American Electromedics Corp. (the "Company") recently consummated several agreements described below whereby it eliminated all outstanding shares of its Series A Convertible Preferred Stock (the "Series A Preferred Stock") and Series B Convertible Preferred Stock (the "Series B Preferred Stock"). Effective November 15, 1999, the Company closed an agreement (the "Fukushima Agreement") with Jim Fukushima, a director and Vice Chairman of the Company, whereby Mr. Fukushima purchased 800,000 shares of the Company's Common Stock, par value $.10 per share (the "Common Stock"), a three-year warrant to purchase up to 300,000 additional shares of the Common Stock at an exercise price of $2.00 per share and a 5% ownership interest in Rosch GmbH Medizintechnik ("Rosch"), the Company's German subsidiary, through a sub-participation contract with Andy Rosch, the general manager of such subsidiary, in exchange for a payment of $2,000,000. The proceeds were used principally for the cash payments described in the following paragraphs. For further information on the Fukushima Agreement, see Exhibit 10.1 hereto. Effective November 17, 1999, pursuant to a Securities Exchange Agreement (the "Exchange Agreement") with the holder (the "Series A Holder") of the Company's outstanding 2,400 shares of Series A Preferred Stock, the Company made a cash payment of $840,000, issued 2,228,312 shares of Common Stock and issued a Promissory Note and Security Agreement (the "Secured Note") in the principal amount of $1,050,000 in exchange for (i) the conversion of 1,350 shares of Series A Preferred Stock and the accrued dividends on all outstanding Series A Preferred Stock, (ii) the redemption of 700 shares of Series A Preferred Stock and (iii) the exchange of 350 shares of Series A Preferred Stock for the Secured Note. The Secured Note is non-interest bearing, due in full on the earlier to occur of (i) five business days of the closing date of the initial public offering in Germany of Rosch or (ii) April 30, 2000, secured by certain intellectual property rights of the Company, and the principal amount may be reduced to $700,000 if the average closing bid price of the Company's Common Stock for the five trading days prior to maturity exceeds $3.00 per share. For further information on the Exchange Agreement and the Secured Note, see Exhibits 10.2 and 10.3 hereto. Effective November 16, 1999, pursuant to an agreement (the "Preferred B Agreement") with the holders of the Company's outstanding 1,170 shares of Series B Preferred Stock, the Company redeemed all such shares, together with all accrued and unpaid dividends, penalties and redemption premiums, for the payment of $1,170,000 and the issuance of 369,000 shares of Common Stock. For further information on the Preferred B Agreement, see Exhibit 10.4 hereto. Also effective November 18, 1999, pursuant to an agreement (the "Concord Agreement") with Concord Effekten AG ("Concord"), the Company sold 1,333,333 shares of Common Stock to Concord for a purchase price of $1,000,000. For further information on the Concord Agreement, see Exhibits 10.5 and 99.2 hereto. As a result of the above transactions, as of November 22, 1999, the Company had no shares of its Preferred Stock outstanding and 14,561,600 shares of Common Stock outstanding. 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS --------------------------------- (c) Exhibits. 10.1 Letter Agreement, dated October 21, 1999, between the Company and Jim Fukushima. 10.2 Securities Exchange Agreement, dated November 17, 1999, between Jubilee Investors LLC and the Company. 10.3 Promissory Note and Security Agreement, dated November 17, 1999, between the Company and Jubilee Investors LLC. 10.4 Agreement, dated as of November 1, 1999, among the Company, Sovereign Partners LP, Dominion Capital Fund LTD and Canadian Advantage L.P. 10.5 Letter Agreement, dated November 15, 1999, between the Company and Concord Effekten AG. 99.1 Press Release, dated November 30, 1999. 99.2 Press Release, dated December 2, 1999. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. American Electromedics Corp. --------------------------- (Registrant) By: /s/ Michael T. Pieniazek ------------------------------------- Michael T. Pieniazek, President December 2, 1999 4 EXHIBIT INDEX ------------- EXHIBIT - ------- 10.1 Letter Agreement, dated October 21, 1999 between the Company and Jim Fukushima. 10.2 Securities Exchange Agreement, dated November 17, 1999, between Jubilee Investors LLC and the Company. 10.3 Promissory Note and Security Agreement, dated November 17, 1999, between the Company and Jubilee Investors LLC. 10.4 Agreement, dated as of November 1, 1999, among the Company, Sovereign Partners LP, Dominion Capital Fund LTD and Canadian Advantage L.P. 10.5 Letter Agreement, dated November 15, 1999, between the Company and Concord Effekten AG. 99.1 Press Release, dated November 30, 1999. 99.2 Press Release, dated December 2, 1999. 5 EX-10 2 EXHIBIT 10.1 Exhibit 10.1 October 21, 1999 American Electromedics Corp. 13 Columbia Drive, Suite 5 Amherst, NH 03031 Attn: Michael T. Pieniazek, President Gentlemen: This letter sets forth the terms and conditions of the agreement relating to the purchase by Jim Fukushima (the "Purchaser") from American Electromedics Corp., a Delaware Corporation (the "Corporation"), of a 5% (percent) interest of the Corporation s subsidiary. Rosch GmbH Medizintechnik ("Rosch GmbH") and 800,000 shares (the "Shares") of common stock, par value $.10 per share, of the Corporation. 1. The Purchaser hereby purchases from the Corporation, and the Corporation hereby sells to the Purchaser, the 5% (percent) interest of Rosch GmbH and the Shares, for an aggregate purchase price of two million dollars ($2,000,000.00), (the "Purchase Price"), subject to the terms and conditions herein. The Purchaser is hereby delivering via a wire transfer to the Corporation for the Purchase Price, payment to be received by November 12, 1999, and upon receipt thereof the Corporation is delivering to the Purchaser a certificate representing the Shares and an ownership of 5% (percent) of Rosch GmbH effected through a Sub-Participation Contract executed between the Purchaser and Mr. Andy Rosch (Exhibit 1). The Corporation shall also issue, to the Purchaser, a three-year Warrant to purchase of 300,000 shares of its common stock, par value $.10 per share, at an exercise price of $2.00 share. 2. The Purchaser represents and warrants to the Corporation that: 2.1 The Purchaser is aware that the Shares and the common stock underlying the Warrant have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), is aware of the restrictions on sale or transfer thereunder, and acknowledges that an appropriate restrictive legend will be set forth on, and a stop transfer order will be placed against, the certificate evidencing the Shares to be issued to the Purchaser. However, the Corporation agrees that it shall include the Shares and the common stock underlying the Warrant in a pre-effective amendment to the registration statement filed by the Corporation on Form SB-2 on March 31, 1999 (File No. 333-75399). 2.2 The Purchaser has received and reviewed the Corporation s Form 10-KSB for the fiscal year ended July 31, 1999 and Forms 10-KSB for the fiscal quarters ended October 31. 1998, January 31, 1999 and April 30, 1999, has been advised of the Corporation s recent sale of 4r-).990/o of its interest in Rosch GmbH Medizintechnik, and has had the opportunity to discuss the business, affairs and financial prospects of the Corporation with management of the Corporation and ha,-, made an informed decision regarding the purchase of 5% (percent) of Rosch GmbH and the Shares. 2.3 The Purchaser is an "accredited investor" as such term s defined in Regulation D under the Securities Act. The Purchaser is also a Director of the Corporation. 2.4 The Purchaser acknowledges that an investment in the Corporation is highly speculative, that such investment is consistent with his investment objectives and income prospects, and that he has adequate means for providing for his current financial needs, has no need for liquidity in the investment herein, and is able to bear the risk of loss of his entire investment in the Shares. 3. The Corporation represents and warrants to the Purchaser that: 3.1 The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The authorized capital stock of the Corporation is 20,000,000 shares of Common Stock, of which 9-830,955 are issued and outstanding, and 1,000,000 shares of Preferred Stock, $.0l par value, of which 2,400 shares of Series A Preferred Stock and 1. 170 shares of Series B Preferred Stock are issued and outstanding. Shares of ( common Stock are reserved for stock options and warrants and conversion of the Series A and Series B Preferred Stock. 3.2 The Corporation has the full power and authority to enter into this Agreement and to sell the 5% (percent) of Rosch GmbH and Shares, and that the Corporation s execution. delivery and performance under this Agreement has been duly authorized by all necessary action. 3.3 The Shares has been duly authorized, and upon receipt of the Purchase Price will be fully paid and nonassessable. 4. This letter sets forth the entire agreement between the parties hereto as to the subject matter herein, and cannot be amended, modified or terminated except by an agreement in writing executed by the parties hereto. In the event any provision of this letter is invalid or unenforceable. the remainder of this letter shall be construed without taking into effect such invalid or unenforceable provision. This letter shall be governed by the laws of the State of Delaware. 5. The Purchaser does hereby release and forever discharge the Corporation, and its directors, officers, shareholders, agents, employees and affiliates and their successors, assigns. heirs and administrators from all actions, causes of actions, claims and demands whatsoever, whether known or unknown, in law or equity, whether statutory or common law- whether federal, state, local, foreign or other-wise related to or arising out of the Sub-Participation Contract between the Purchaser and Mr. Andy Rosch and all other agreements related to the Sub-Participation Contract, and any and all fees and expenses relating thereto, which against the Corporation ever had, now has, or hereafter may have, by reason of any matter, cause or thing whatsoever. Please signify your agreement to the foregoing by executing and returning the original of this letter. Very truly yours, By: /s/ Jim Fukushima ---------------------- Jim Fukushima 17662 Irvine Blvd. Suite #20 Tustin, CA 92780 954695826 ---------------------- (Tax Identification No,) Agreed to this 11th day of November, 1999 AMERICAN ELECTROMEDICS CORP. By: /s/ Michael T. Pieniazek --------------------------------- Michael T. Pieniazek, President *Subject to approval of the Corporation's Board of Directors EX-10 3 EXHIBIT 10.2 Exhibit 10.2 SECURITIES EXCHANGE AGREEMENT SECURITIES EXCHANGE AGREEMENT, made this 17th day of November 1999, between Jubilee Investors LLC (the "Investor"), a Delaware limited liability company, located at One World Trade Center, Suite 4563, New York, New York 10048 and American Electromedics Corp. (the "Company"), a Delaware corporation, located at 13 Columbia Drive, Suite 5, Amherst, New Hampshire 0303 1. WITNESSETH: ----------- WHEREAS, the Investor is the holder of 2,400 shares of Convertible Preferred Stock, Series A of the Company (the "Preferred Shares"); WHEREAS, the Company wishes to exchange a promissory note and security agreement (the "Note") attached hereto as Exhibit A, in the principal amount of $1,050,000 (subject to adjustment as specified in such Note) maturing on April 30, 2000 and secured by certain intellectual property rights of the Company (the "Collateral"), for 350 Preferred Shares (the "Exchange Shares") held by the Investor with an aggregate stated value of $350,000-, WHEREAS, the Investor wishes to convert 1,000 Preferred Shares (the "Initial Conversion Preferred Shares"), plus accrued dividends on all 2,400 Preferred Shares in the amount of $400,000, into a number of shares of common stock (the "Common Stock"), par value $. 10, of the Company (the "Initial Conversion Shares") pursuant to terms of the Certificate of Designation of Series and Determination of Rights and Preferences of Convertible Preferred Stock, Series A of the Company (the "Certificate of Designation"); WHEREAS, the Investor wishes to convert an additional 350 Preferred Shares (the "Additional Conversion Preferred Shares" and together with the Initial Conversion Preferred Shares, the "Conversion Preferred Shares), into 350,000 shares of Common Stock (the "Additional Conversion Shares" and together with the Initial Conversion Shares, the "Conversion Shares") pursuant to terms of the Certificate of Designation; and WHEREAS, the Company wishes to redeem and the Investor agrees to sell to the Company 700 Preferred Shares (the "Redemption Shares") for an aggregate price of $840,000 in cash (the "Redemption Price"). NOW, THEREFORE, in consideration of the premises, agreements, representations, warranties and covenants herein contained, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Exchange of Securities, Redemption Shares. Subject to ----------------------------------------- the terms and conditions of this Agreement, the Company and the Investor each agree to simultaneously deliver to the other the Note, in the case of the Company, and the Exchange Shares, in the case of the Investor, on November 17, 1999 (the "Closing"). Subject to the terms and conditions of this Agreement, each of the Company and the Investor agrees to simultaneously deliver to the other, the Redemption Price and the Conversion Shares, in the case of the Company, and the Redemption Shares, in the case of the Investor on date of the Closing. 2. Conversion of Preferred Shares. Subject to the terms ------------------------------ and conditions of this Agreement and the Certificate of Designation, the Investor agrees to convert the Conversion Preferred Shares into Conversion Shares and, upon conversion, the Company shall deliver such freely transferable Conversion Shares via DWAC to an account specified by the Investor. 3. Restriction on Sales of Additional Shares. The Company ----------------------------------------- shall not, directly or indirectly, without the prior written consent of the Investor, offer, sell, offer to sell, contract to sell or otherwise dispose of any of its securities, issued or sold at a discount to the market value of such securities or securities exchangeable for or convertible into shares of Common Stock at a price per share less than the market price per share at the time of such exchange, conversion or issuance, for a period of time beginning on the date of this Agreement and ending on the Maturity Date (as such term is defined in the Note) (the "Lock-Up Period"); provided, however, that notwithstanding the restrictions in this Section 3 the Company may offer, sell or issue its Common Stock at a fixed price per share equal to at least fifty percent (500/o) of the market price of the Common Stock at the time of any such offer, sell or issuance. 4. Representations and Warranties of the Company. --------------------------------------------- The Company represents and warrants to the Investor that: a. Organization, Authorization. The Company is a --------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the Company's subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction. Each of the Company and its subsidiaries is duly qualified as a foreign corporation in all jurisdictions in which the failure to so qualify would have a material adverse effect on the Company and its subsidiaries taken as a whole. Each of the Company's subsidiaries is a direct or indirect wholly-owned subsidiary of the Company, except for those subsidiaries listed on Schedule 4(a), which schedule includes the Company's ownership interest (as a percentage) in each such non- wholly owned subsidiary. The Company has full corporate power and authority to enter into this Agreement and the other documents contemplated hereby and to carry out the transactions contemplated hereby and thereby. The Company has taken all required action by law to authorize the execution and delivery of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby, and this Agreement and the other documents contemplated hereby is a valid and binding obligation of the Company enforceable against it in accordance with its terms, subject as to enforcement only- (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors' rights generally; and (ii) to general principles of equity. b. Capitalization. On the date hereof, the authorized -------------- capital of the Company consists of 20,000,000 shares of Common Stock, par value $.10 per share, of which 10,630,955 shares of Common Stock are issued and outstanding and 1,000,000 shares of Preferred Stock, par value $.0l per share of which 2,400 shares of Series A Convertible Preferred Stock and 1, 170 shares of Series B Convertible Preferred Stock are issued and outstanding. Schedule 4(b) hereto sets forth all of the options, warrants and convertible securities of the Company (the "Derivative Securities") owned by persons who are neither officers or directors of the Company which are outstanding on the date hereof, for which the holder (together with any affiliates) has the right to receive (in the aggregate) 100,000 or more shares of Common Stock, including in each case (i) the name and class of such Derivative Securities, (ii) the issue date of such Derivative Securities, (iii) the number of shares of Common Stock of the Company into which such Derivative Securities are convertible as of the date hereof, (iv) the conversion or exercise price or prices of such Derivative Securities as of the date hereof and (v) the expiration date of any conversion or exercise rights held by the owners of such Derivative Securities. c. Concerning the Conversion Shares. When issued the --------------------------------- Conversion Shares shall be duly and validly issued, fully paid and non-assessable, and will not subject the holder thereof to personal liability by reason of being such a holder. There are no preemptive rights of any stockholder of the Company, as such, to acquire the Conversion Shares. d. Reporting Company Status. The Company's Common Stock ------------------------ is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). e. Transaction Documents. This Agreement and the Note --------------------- (collectively, the "Transaction Documents"), and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Company- each of the Transaction Documents when executed and delivered by the Company will each be a valid and binding agreement of the Company, enforceable in accordance with their respective terms, except to the extent that enforcement of each of the Transaction Documents may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. f. Non-contravention. The execution and delivery of this ----------------- Agreement, and each of the other Transaction Documents, and the consummation by the Company of the other transactions contemplated by this Agreement and each of the other Transaction Documents, does not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, the Certificate of Incorporation of the Company, or any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company or any of its subsidiaries is a party or by which they or any of their properties or assets are bound, or any material existing applicable law, rule, or regulation or any applicable decree, judgment or order of any court, or United States federal or state regulatory body, administrative agency, or any other governmental body having jurisdiction over the Company, its subsidiaries, or any of their properties or assets, except such conflict, breach or default which would not have a material adverse effect on the transactions contemplated by this Agreement or by the other Transaction Documents. g. Approvals. No authorization, approval or consent of --------- any court, governmental body, regulatory agency, self-regulatory organization, stock exchange or market or the shareholders of the Company is required to be obtained by the Company for the entry into or the performance of this Agreement and the other Transaction Documents, except such authorizations, approvals and consents that have been obtained, copies of which have been furnished to the Investor. h. SEC Filings. None of the reports or documents filed by ----------- the Company with the Commission since January 1, 1999 contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein, or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. i. Absence of Certain Changes. Except as set forth in the -------------------------- Company's Annual Report on Form 10-KSB for the year ended July 31, 1999 (the "1999 Annual Report") and herein, there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, outstanding securities or results of operations of the Company. j. Full Disclosure. There is no fact known to the Company --------------- (other than general economic conditions known to the public generally) that has not been disclosed to the Investor that (i) could reasonably be expected to have a material adverse effect upon the condition (financial or otherwise) or the earnings, business affairs, properties or assets of the Company or (ii) could reasonably be expected to materially and adversely affect the ability of the Company to perform its obligations pursuant to the Transaction Documents. k. Title to Properties, Liens and Encumbrances. The ------------------------------------------- Company and its subsidiaries has good and marketable title to all of its properties and assets, both real and personal, and has good title to all its leasehold interests, in each case subject to the following exceptions: (i) mortgages, pledges, liens, security interests, conditional sale agreements, encumbrances or charges created in the ordinary course of business and (ii) the encumbrances created pursuant to the Note. 1. Patents and Other Proprietary Rights. The Company and ------------------------------------ its subsidiaries own outright, free and clear of all liens, claims and other encumbrances, except liens created by the Note, the following patents and trademarks: (i) United States Patent No. 5,704,91 1, "Needleless Hypodermic Injection System", (ii) United States Patent No. 5,569,189, "Needleless Hypodermic Injector", and (iii) INJEX SYSTEM (unregistered trademark) (collectively, the "Intellectual Property"). The Intellectual Property is all of the material intellectual property owned by the Company and its subsidiaries. The only intellectual property that the Company or any of its subsidiaries has sold, assigned, licensed or otherwise transferred to Rosch GmbH Medizentechnik ("Rosch") is the European Patent Application No. 96936299.5 "Hypodermic Jet Injector". The Company and its subsidiaries have sufficient title, ownership or license to use all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes free and clear of all liens (except liens created by the Note), necessary for the conduct of their respective businesses as now conducted, and such business does not conflict with or constitute an infringement on the rights of others. m. Permits. The Company and its subsidiaries have all ------- franchises, permits, licenses and any similar authority necessary for the conduct of their respective businesses as now conducted, the lack of which would materially and adversely affect the business or financial condition of the Company or any of its subsidiaries. The Company is not in default in any material respect under any of such Franchises, permits, licenses or similar authority. n. Absence of Litigation. Except as set forth in the --------------------- Company's 1999 Annual Report and as disclosed in Schedule 4(n), there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company or any of its subsidiaries, in which an unfavorable decision, ruling or finding would have a material adverse effect on the properties, business, condition (financial or other) or results of operations of the Company and its subsidiaries, taken as a whole, or the transactions contemplated by the Transaction Documents, or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, the Transaction Documents. o. No Default. Neither the Company nor any of its ---------- subsidiaries is in default in the performance or observance of any material obligation, covenant or condition contained in any material indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it or its property may be bound. p. Transactions with Affiliates. Except as disclosed in ---------------------------- the 1999 Annual Report and the Company's Preliminary Proxy Statement for the 1999 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on November 5, 1999 (the "1999 Preliminary Proxy Statement"), there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors or affiliates that, had they existed on July 31, 1999, would have been required to be disclosed in the 1999 Annual Report other than the sale of 5% of Rosch GmbH Medizintechnik, 800,000 shares of Common Stock and a warrant to purchase 300,000 shares of Common Stock sold to a director of the Company for $2,000,000. q. Taxes. All applicable tax returns required to be filed ----- by the Company and each of its subsidiaries have been filed, or if not yet filed have been granted extensions of the filing dates which extensions have not expired, and all taxes, assessments, fees and other governmental charges upon the Company, its subsidiaries, or upon any of their respective properties, income or franchises, shown in such returns and on assessments received by the Company or its subsidiaries to be due and payable have been paid, or adequate reserves therefor have been set up if any of such taxes are being contested in good faith; or if any of such tax returns have not been filed or if any such taxes have not been paid or so reserved for, the failure to so file or to pay would not in the aggregate have a material adverse effect on the business or financial condition of the Company and its subsidiaries, taken as a whole. r. Investment Company Act. The Company is not conducting, ---------------------- and does not intend to conduct its business in a manner which it would become, an "investment company" as defined in Section 3(a) of the Investment Company Act of 1940, as amended. s. Validity, Perfection and Priority of Security Interest. ------------------------------------------------------ By complying with Section 5 of the Note and by delivery all certificates or instruments, if any, representing or evidencing the Collateral to the Investor, the Company and its subsidiaries will have created a valid and duly perfected security interest, in favor of the Investor for the benefit of the Investor as security for the due and punctual payment of the full principal amount due under the Note, in all Collateral and proceeds of such Collateral, which security interest may be perfected by filing UCC financing statements. Upon the Company's execution and delivery of the Note and the related instruments and upon the filing of related UCC financing statements, the security interest of the Investor in the Collateral shall rank first in priority. Other than financing statements or other similar documents perfecting the security interests of the Investor, no financing statements or similar documents covering all or any part of the Collateral are on file or of record in any government office in any jurisdiction in which such filing or recording would be effective to perfect a security interest in such Collateral. t. Full Disclosure. The representations and warranties of --------------- the Company and its subsidiaries set forth in the Transaction Documents do not contain any untrue statement of a material fact or omit any material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading. 5. Representations and Warranties of the Investor. ---------------------------------------------- The Investor represents and warrants to the Company that: a. Organization, Authorization. The Investor is a limited --------------------------- liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Investor has full corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The Investor has taken all required action by law to authorize the execution and delivery of this Agreement and the transactions contemplated hereby, and this Agreement is a valid and binding obligation of the Investor enforceable against it in accordance with its terms, subject as to enforcement only: (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors' rights generally-, and (ii) to general principles of equity. b. Title to Exchange Shares; Liens and Encumbrances. The ------------------------------------------------ Investor has good and marketable title to the Exchange Shares and the Redemption Shares, and upon transfer will be free and clear from any pledge, lien or other encumbrance. c. Company Information. The Investor is aware of the ------------------- business affairs of the Company and has received the 1999 Annual Report and 1999 Preliminary Proxy Statement and has had the opportunity to discuss the Company's present business and future plans with the executive officers of the Company. 6. Conditions to the Investor's Obligations to Exchange ---------------------------------------------------- the Exchange Shares. ------------------- (a) The Company shall have redeemed, purchased or acquired and cancelled all outstanding shares (1, 170) of its Series B Preferred Stock for a price of $1,170,000 and 369,000 shares of Common Stock. (b) The Company and its subsidiaries shall have executed the Note and the UCC financing statements and, further, the Company agrees to deliver the UCC financing statements to Investor's Counsel within two (2) business days following the date hereof. (c) The Company shall have paid the legal fees and other expenses of the Investor incurred in connection with the documentation and negotiation of the Transaction Documents, which amount shall not exceed $20,060. (e) The Company shall have delivered an Officer's Certificate certifying that the representations and warranties made by the Company in Section 4 of this Agreement are true and correct. 7. Governing Law, Miscellaneous. This Agreement shall be ---------------------------- governed by and interpreted in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement or any of the Transaction Documents, and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of this Agreement. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or enforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. This Agreement shall inure to the benefit of, and be binding upon the successors and assigns of each of the parties hereto. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof 8. Further Assurances. Each party shall do and perform, ------------------ or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of the Transaction Documents and the consummation of the transactions contemplated hereby and thereby, 9. Releases. (a) Upon payment in full to the Investor, or -------- with respect to legal fees, Investor's counsel, of all amounts owing under this Agreement (not including payment due under the Note), the Investor shall release and forever discharge the Company, its subsidiaries and its directors, officers, shareholders, agents, employees and affiliates and their successors, assigns, heirs and administrators (collectively, the "Releasees") from all actions, causes of action, claims and demands whatsoever, whether known or unknown, in law or equity, whether statutory or common law, whether federal, state, local, foreign or otherwise related to or arising out of the Securities Purchase Agreement and all other agreements related to the Investor's purchase of the Preferred Shares and investment in the Company, and any and all fees and expenses related thereto, which against the Company and its Releasees the Investor ever had, now has or hereafter may have, by reason of any matter, cause or thing whatsoever; provided, however, that the foregoing -------- release shall not, in any way, release the Company or any Releasee from any actions, causes of action, claims and demands whatsoever, whether known or unknown, in law or equity, whether statutory or common law, whether federal, state, local, foreign or otherwise that the Investor may have or assert as (i) a holder of the Company's common stock as to matters arising subsequent to the date hereof or (ii) as a holder of the Note, against the Company or any such Releasee from the date hereof. (b) Upon execution of this Agreement and delivery of the Redemption Shares, the Company shall release and forever discharge the Investor, its subsidiaries and its directors, managers, officers, shareholders, agents, employees and affiliates and their successors, assigns, heirs and administrators (collectively, the "Investor Releasees") from all actions, causes of action, claims and demands whatsoever, whether known or unknown, in law or equity, whether statutory or common law, whether federal, state, local, foreign or otherwise related to or arising out of the Securities Purchase Agreement and all other agreements, which against the Investor and the Investor Releasees the Company ever had, now has or hereafter may have, by reason of any matter, cause or thing whatsoever. 10. Notices. Any notice required or permitted hereunder ------- shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days advance written notice to each of the other parties hereto. COMPANY: AMERICAN ELECTROMEDICS CORP. 13 Columbia Drive Suite 5 Amherst, New Hampshire 03031 ATTN.: Michael Pieniazek Tel.: (603) 880-6300 Fax: (603) 880-6390 with copies to: THELEN, REID & PRIEST LLP 40 West 57th Street New York, NY 10019 ATTN.: Bruce Rich Tel.: 212-603-6780 Fax: 212-603-2001 INVESTOR: JUBILEE INVESTORS LLC c/o WEC ASSET MANAGEMENT LLC One World Trade Center Suite 4563 New York, New York 10048 ATTN.: Daniel Saks Tel.: 212-775-9299 Fax: 212-775-9311 with copies to: MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104 ATTN.: Jeffrey S. Marcus, Esq. Tel.: 212-468-8000 Fax: 212-468-7900 IN WITNESS WHEREOF, this Agreement has been duly executed by each of the undersigned as of the date first written above. AMERICAN ELECTROMEDICS CORP. By: /s/ Michael T. Pieniazek --------------------------- Name: Michael T. Pieniazek Title: President EQUIDYNE SYSTEMS, INC. By: /s/ Michael T. Pieniazek --------------------------- Name: Michael T. Pieniazek Title: Secretary JUBILEE INVESTORS LLC By: /s/ Daniel Saks ---------------------------- Name: Daniel Saks Title: Managing Director EX-10 4 EXHIBIT 10.3 Exhibit 10.3 PROMISSORY NOTE AND SECURITY AGREEMENT $1,050,000.00 November 17, 1999 FOR VALUE RECEIVED, AMERICAN ELECTROMEDICS CORP., a Delaware corporation ("Maker"), hereby promises to pay to the order of JUBILEE INVESTORS LLC, a Delaware limited liability company (hereinafter called "Payee"), the principal sum of ONE MILLION FIFTY THOUSAND DOLLARS ($1,050,000) (the "Principal Amount") in lawful money of the United States of America. The Principal Amount shall be payable in full on the earlier to occur of (i) within five business days of the closing date of the initial public offering of the Maker's German subsidiary, Rosch GmbH Medizintechnik ("Rosch"), out of proceeds raised in such financing or (ii) April 30, 2000 (the "Maturity Date"). If the average Closing Bid Price for the shares of common stock of the Maker exceeds $3.00 per share for the five (5) trading days prior to the Maturity Date, then the Principal Amount payable hereunder shall be reduced to $700,000. The term "Closing Bid Price" means, for the Maker's common stock as of any date, the closing bid price on the principal securities exchange or trading market where the Maker's common stock is listed or traded as reported by Bloomberg, L.P. ("Bloomberg"), or, if applicable, the closing bid price of the Maker's common stock in the over-the- counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for the Maker's common stock by Bloomberg, then the average of the bid prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price of the Maker's common stock cannot be calculated on such date on any of the foregoing bases, the Closing Bid Price of the Maker's common stock on such date shall be the fair market value as mutually determined by the Maker and Payee. "Trading day" shall mean any day on which the Maker's common stock is traded for any period on the principal securities exchange or other securities market on which the common stock is then being traded. The following additional terms shall govern this Promissory Note and Security Agreement (this "Note"): 1. This Note is executed and delivered to Payee by Maker in exchange for 350 shares of Convertible Preferred Stock, Series A of the Maker held by Payee as more fully set forth in the Securities Exchange Agreement, dated November 17, 1999, between Maker and Payee (the "Securities Exchange Agreement"). 2. This Note may be prepaid in part from time to time or in full at any time in cash without penalty. All prepayments shall be applied to the reduction of principal. The parties agree that imputed interest is included in the principal amount of this Note. 3. All cash distributions, license fees, royalties and other revenue or consideration received in respect of, or cash proceeds received on the sale or license of, the Collateral (as hereinafter defined) shall be applied, at the option of the Payee, to the prepayment of the entire unpaid Principal Amount of this Note and Maker shall deliver to Payee all such amounts promptly upon receipt thereof, provided, however, that for every $2 of the Principal Amount that is repaid pursuant to this section there shall be a reduction to the Principal Amount of an additional $ 1. 4. Principal shall be paid in lawful currency of the United States, in immediately available funds via wire transfer to an account designated by Payee, or at such other place or to such other person as Payee may designate in a written notice to Maker. 5. As security for the full, prompt and complete payment of all principal on this Note, Maker hereby pledges, assigns and grants to Payee a continuing first priority security interest valid throughout the world, except as expressly limited, in the intellectual property listed on Schedule A (the "Collateral"). Until all amounts secured thereby shall have been repaid in full, the Maker shall execute such further documents and instruments and take such further steps as may be required by Payee to perfect and protect such security interest. Maker shall bear any costs related to the perfection and protection of such security interest. 6. Each of the following shall constitute an "Event of Default" within the meaning of this Note: (a) Maker shall fail or refuse to make payment in full of the Principal Amount due hereunder on the Maturity Date; (b) Maker or any subsidiary of Maker (as principal, guarantor or other surety) shall default in the payment when due of any debt or obligation when due or within any applicable period of grace of any amount of principal, premium or interest on a debt or obligation that is outstanding in a principal amount in the aggregate of at least $250,000; (c) Maker shall default in the performance of any material covenant in this Note or in the Securities Exchange Agreement or if any material representation or warranty made in this Note or in the Securities Exchange Agreement shall have proved to have been false or incorrect in any respect on the date as of which made or shall omit to state any material fact necessary to make the representation and warranty not misleading; provided that before any such event shall become an Event of Default, the Payee shall give written notice to the Maker and the Maker shall have ten (10) days from the receipt of such notice to cure any such event or condition; or (d) (i) Maker or any of its subsidiaries shall make a general assignment for the benefit of its creditors, (ii) entry of a final order adjudicating Maker or any of its subsidiaries bankrupt, (iii) the filing of a voluntary petition by Maker or any of its subsidiaries under any of the provisions of the United States bankruptcy code or similar laws of any jurisdiction, (iv) the filing of any answer or other pleading admitting the material allegations of any petition filed against Maker or any of its subsidiaries in any bankruptcy, insolvency or other such proceeding, (v) the filing of a petition against Maker or any of its subsidiaries under any of the provisions of any bankruptcy laws of the United States or similar laws of any jurisdiction and the failure of such petition to be dismissed within sixty (60) calendar days, (vi) the petition for, or the appointment of, or possession by, a custodian, receiver, liquidator, trustee or sequestrator (or other similar official) of Maker or any of its subsidiaries or any substantial part of its or any such subsidiary's properties or assets, (vii) Maker or any of its subsidiaries shall take any corporate action in furtherance of any of the foregoing, (viii) Maker or any of its subsidiaries shall be generally unable to pay its debts as they mature; or (ix) a final judgment shall be rendered against Maker or any of its subsidiaries for the payment of money at least $250,000 in the aggregate and such judgment shall not be discharged or execution thereon stayed pending appeal within 60 calendar days of entry of such judgment, or, in the event of such a stay, such judgment shall not be discharged within 60 calendar days after such stay expires. 7. Upon the occurrence and during the continuance of an Event of Default, the unpaid Principal Amount of this Note shall automatically, without any action on the part of Payee, become immediately due and payable, in each case without presentment, demand, protest or any notice of any kind, all of which are hereby waived. Upon the occurrence of an Event of Default, Payee, in addition to any other rights it may have, shall have the right at any time and from time to time to sell, resell, assign, license, sublicense and deliver, in its discretion, all or any of the Collateral in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein. Payee may purchase all or any of the Collateral being sold. Payee shall give Maker at least ten (10) calendar days' prior notice of the time and place of any public or private sale and of the time after which any private sale or other disposition is to be made, which notice Maker agrees is reasonable. Payee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Maker shall pay all reasonable out-of-pocket costs and expenses of every kind for sale or delivery, including reasonable attorneys' fees, and after deducting such costs and expenses from the proceeds of sale, Payee shall apply any remainder to the payment of the indebtedness or obligations of Maker under or in respect of this Note. The balance, if any, remaining after payment in full of all of such expenses and indebtedness shall be paid to Maker, subject to any duty of Payee imposed by law to the holder of any subordinate security interest in the Collateral known to Payee. Payee, in addition to all other rights or remedies which it may have, shall have all of the rights and remedies of a secured party upon default under the Uniform Commercial Code of the State of New Hampshire and under any other applicable law. Payee may exercise any or all of the rights which it may have in the Collateral in any order, from time to time, and shall not be obligated to exercise any of such rights. No failure to exercise any right shall operate as a waiver and no waiver, consent or agreement given in any instance shall adversely affect the rights of Payee in any other instance. 8. Maker shall pay to Payee all costs and expenses incurred by Payee (including reasonable attorney's fees and expenses) in connection with the enforcement hereof. The payment of all such amounts shall constitute additional indebtedness of Maker hereunder, and payment thereof shall be secured by the Collateral. 9. The remedies provided herein in favor of Payee shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of Payee existing at law or in equity. Payee shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody thereof of any securities representing such Collateral that are actually in its possession. 10. Upon payment in full of all indebtedness of Maker hereunder, Maker shall be entitled to the return of all of the Collateral which has not been used or applied as provided herein and Payee shall return this Note to Maker. 11. This Note shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely in such State , except to the extent that the laws of the State of New Hampshire shall govern the security interest created hereby, and any proceeding relating to this Note or any other indebtedness secured may be brought only in the federal or state courts sitting in New York, to the jurisdiction and venue of which the parties hereby submit. The parties waive trial by jury in any such proceeding. This Note may not be altered or amended, except by a writing duly signed by the party against whom such alteration or amendment is sought to be enforced. 12. Maker hereby waives presentment for payment, demand, notice of dishonor, notice of protest and protest and diligence in taking any action to collect amounts due hereunder. [THIS SPACE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, this Promissory Note and Security Agreement is executed by the parties as of the date first appearing above. AMERICAN ELECTROMEDICS CORP. By /s/ Michael T. Pieniazek -------------------------- Name: Michael T. Pieniazek Title: President EQUIDYNE SYSTEMS, INC. By /s/ Michael T. Pieniazek -------------------------- Name: Michael T. Pieniazek Time: Secretary ACKNOWLEDGED AND AGREED: ------------------------ JUBILEE INVESTORS LLC By: WEC ASSET MANAGEMENT LLC, Manager By /s/ Daniel Saks --------------------------------- Name: Daniel Saks Time: Managing Director SCHEDULE A ---------- The security interest granted herein shall extend to all intellectual property of the Maker and its subsidiaries, excluding Rosch GmbH Medizintechnik, but otherwise including without limitation the following: 1. PATENTS ------- (a) United States Patent No. 5,704,91 1, "Needleless Hypodermic Injection System" and any other related existing or future letters patent and applications for letters patent, including all patent applications in preparation for filing anywhere in the world owned by or assigned to the Maker or its subsidiaries throughout the world (b) United States Patent No. 5,569,189, "Needleless Hypodermic Injector" and any other related existing or future letters patent and applications for letters patent, including all patent applications in preparation for filing anywhere in the world owned by or assigned to the Maker or its subsidiaries throughout the world. (c) Any other existing or future letters patent and applications for letters patent, including all patent applications in preparation for filing anywhere in the world owned by or assigned to the Maker or its subsidiaries throughout the world. (d) All patent licenses. (e) All reissues, divisions, continuations, continuations- in-part, extensions, renewals, and reexaminations of any of the items described in items (c) and (d) above. (f) All proceeds of, and rights associated with, the foregoing (including license royalties and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, including any patent or patent application referred to above and for breach or enforcement of any patent license. II. TRADEMARKS, SERVICE MARKS AND TRADENAMES ---------------------------------------- (a) INJEX SYSTEM (unregistered trademark) DYNACAM (unregistered trademark) (b) All trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks or logos (collectively, "Trademarks") now existing anywhere in the world or hereafter adopted or acquired, whether currently in use or not, all registrations and recordings thereof, and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof or any foreign country. (c) All licenses of Trademarks to or by Maker or its subsidiaries. (d) All reissues, extensions or renewals of any of the items described in clauses (b) or (c) above (e) All goodwill of the business connected with the use of, and symbolized by the items described in, clauses (a), (b) and (c) above. (f) All proceeds of, and rights associated with, the foregoing, including any claim by the Maker or its subsidiaries against third parties for past, present or future infringement or dilution of any Trademark, including for registrations and licenses in connection with any Trademark or for injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license. III COPYRIGHTS ---------- All of the Maker's or the Maker's subsidiaries' right title and interest in and to the following: all copyrights, whether statutory or common law, registered or unregistered, now or hereafter in force throughout the world, including all of the Maker's or the Maker's subsidiaries' right, title and interest in any United States Copyrights registered in the United States Copyright Office or any other registered copyrights registered anywhere else in the world and including all applications for registration of, whether pending or in preparation, all copyright licenses, including all rights to sue for past, present and future infringements of any such license, all rights corresponding thereto throughout the world, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of any suits related to the above. IV. TRADE SECRETS ------------- All of the Maker's or the Maker's subsidiaries' right, title and interest in and to the following: common law and statutory trade secrets and all other confidential or proprietary information and know-how, now or hereafter owned or licensed or used in or contemplated at any time for use in the business of the Maker or the Maker's subsidiaries (collectively, "Trade Secrets"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, all Trade Secret licenses, and the right to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license. EX-10 5 EXHIBIT 10.4 Exhibit 10.4 AGREEMENT --------- THIS AGREEMENT, dated as of November 1, 1999, is entered into by and between American Electromedics Corp. (the "Company"), Sovereign Partners LP ("Sovereign"), Dominion Capital Fund LTD. ("Dominion"), and Canadian Advantage L.P. ("Canadian", and together with Sovereign and Dominion, hereinafter the "Preferred Holder"). WHEREAS, the Company and the Preferred Holder have entered into a Securities Purchase Agreement, dated as of February 2, 1999 (the "Securities Purchase Agreement"), and a Registration Rights Agreement, dated as of February 2, 1999 (the "Registration Rights Agreement"), pursuant to which the Preferred Holder purchased 1,600 shares of the Company Series B Convertible Preferred Stock (the "Preferred Stock"); WHEREAS, the Company and the Preferred Holder desire to agree to terms pursuant to which the Company will redeem the Preferred Stock; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Preferred Holder hereby agree as follows: 1. The Preferred Holder currently holds 1, 170 shares of Preferred Stock (the "Holders Preferred Stock"), as set forth on Schedule I hereto, and shall not issue any conversion notices to ---------- convert any shares of Preferred Stock and shall not sell any shares of the Company s Common Stock (the "Common Stock") until November 15, 1999. 2. Upon the earlier of (a) closing by the Company of a financing that raises in excess of $2,500,000, or (b) November 15, 1999, (the "Financing Closing Date"), the Company shall redeem the Preferred Holders Preferred Stock for the consideration set forth in Paragraph 3 herein. ----------- 3. Within 5 business days of the Financing Closing Date , the Company shall pay the Preferred Holder the sum consisting of $801,000 in liquidation preference and $369,000 in accrued and unpaid dividends, penalties and redemption premium on the Preferred Stock, payable by wire transfer to the account of the Preferred Holder in the amounts set forth on Schedule I hereto, ---------- and shall issue to the Preferred Holder, in proportion to the amounts set forth on Schedule I hereto, 369,000 shares of Common ---------- Stock (the "Additional Shares"), at a conversion price of $1.00 per share, pursuant to the annexed Conversion Notices dated as of November 15, 1999. Me Preferred Holder shall accept payment of the above as full and final payment of all accrued and unpaid dividends, penalties and the redemption premium on the Preferred Stock. 4. Except with respect to the provisions of 16 and 7 hereof, upon payment of the amounts and delivery of the Additional Shares stated in Paragraph 3, each party hereto, on ----------- behalf of itself and its respective directors, officers, employees, agents, shareholders, partners, affiliates, attorneys and their successors and assigns (collectively "Releasor") shall hereby release and forever discharge every other party, and its directors, officers, shareholders, agents, employees and affiliates and their successors, assigns, heirs and administrators (collectively, the "Releasees") from all actions, causes of actions, claims and demands whatsoever, whether known or unknown, in law or equity, whether statutory or common law, whether federal, state, local, foreign or otherwise related to or arising out of the Securities Purchase Agreement and all other agreements related to the Preferred Holder s purchase of the Preferred Stock and investment in the Company, and any and all fees and expenses relating thereto, which against Releasor ever had, now has, or hereafter may have, by reason of any matter, cause or thing whatsoever against the Releasee. 5. The Preferred Holder shall not sell any of the Additional Shares for a period of 80 days from the Financing Closing Date. 6. The Company agrees that, in the event any Additional Shares are issued with a legend, it will, within three (3) Trading Days after request therefore by the Preferred Holder and the surrender by the Preferred Holder of the certificate representing the Additional Shares, together with such reasonable documentation as may be required by the provisions of Rule 144 under the Securities Act of 1933, provide such Preferred Holder with a certificate or certificates representing such Additional Shares, free from such legend for purposes of a sale in accordance with Rule 144 until a complete exemption is available pursuant to Rule 144(k). The Company may not make any notation on its records or give instructions to any transfer agent of the Company which enlarge the restrictions of transfer set forth in this Section. The Company agrees that with respect to the removal of any restrictive legend or stop transfer order regarding the Additional Shares pursuant to a sale under Rule 144 of the Securities Act of 1933, it will cause its counsel, at the Company s expense, to deliver any necessary legal opinions in respect thereof. 7. As long as the Company is subject to Sections 13(a) and 15(d) of the Exchange Act, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. So long as any of the Preferred Holders owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to such Preferred Holder and make publicly available in accordance with Rule 144(c) promulgated under the Securities Act annual and quarterly financial statements, together with a discussion and analysis of such financial statements in form and substance substantially similar to those that would otherwise be required to be included in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as any other information required thereby, in the time period that such filings would have been required to have been made under the Exchange Act. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act. Upon the request of any such Person, the Company shall deliver to such Person a written certification of a duly authorized officer as to whether it has complied with such requirements. 8. The Preferred Holder represents and warrants to the Company that the Preferred Holder owns the Holders Preferred Stock in the amounts set forth on Schedule I hereto free and clear of any and all claims, liens or other encumbrances, and has not entered into any agreement or understanding to sell, hypothecate, dispose or otherwise transfer any or all of the Holders Preferred Stock. Upon the sale of the Holders Preferred Stock as provided herein, the Company will receive such Stock free and clear of any claim, lien or encumbrance of any third party. 9. The Preferred Holder agrees that notwithstanding the provisions of Section 2.01 of the Registration Rights Agreement, (a) the penalty provision shall no longer be in effect, and (b) the Company shall be permitted to include, without the consent of the Preferred Holder, in any registration statement filed under the Registration Rights Agreement, securities to be offered and sold by the Company or any other holders of the Company s securities. 10. The Preferred Holder or the Company shall have the right to terminate this Agreement on November 16, 1999, if the Company has not closed its planned financing by the close of business on November 15, 1999. 11. This Agreement sets forth the entire agreement among the parties hereto with respect to the subject matter herein, and supersedes any prior agreements except to the extent provided herein, and cannot be amended, modified or terminated except by an agreement in writing executed by the parties hereto. 12. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to conflicts of law. 13. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute a single instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, this Agreement has been duly executed by each of the undersigned. AMERICAN ELECTROMEDICS CORP. By: /s/ Michael T. Pieniazek -------------------------- Name: Michael T. Pieniazek Title: President SOVEREIGN PARTNERS LP By: Southridge Capital Management L.L.C., Gen. Prtn. By: /s/ Stephen Hicks --------------------------- Name: Stephen Hicks Title: President DOMINION CAPITAL FUND LTD. By: /s/ Illegible ---------------------------- Name: INTER CARIBBEAN SERVICES (BAHAMAS) LIMITED Title: Director CANADIAN ADVANTAGE L.P. By: /s/ Mark Valentine ---------------------------- Name: Mark Valentine Title: Pres. VMH Management, GP SCHEDULE I ---------- Name of Holder Number of Shares -------------- ---------------- Sovereign Partners LP 555 Dominion Capital Fund LTD 415 Canadian Advantage L.P. 200 EX-10 6 EXHIBIT 10.5 Exhibit 10.5 November 15, 1999 American Electromedics Corp. 13 Columbia Drive, Suite 5 Amherst, NH 03031 Gentleman: This letter sets forth the terms and conditions of the agreement relating to the purchase by Concord Effekten AG (the "purchaser") from American Electromedica Corp., a Delaware Corporation (the "Corporation"), of 1,333,333 shares (the "Shares") of common stock, par value $.10 per share of the Corporation. The Purchaser hereby purchases from the Corporation, and the Corporation hereby sells to the Purchaser, the Shares at a price of $.75 per Share, or an aggregate purchase price of $1,000,000 (the "Purchase Price"), subject to the terms and conditions herein. The Purchaser is hererby delivering a wire transfer to the Corporation for the Purchase Price, payment to be received by November 18, 1999, and upon receipt thereof the Corporation is delivering to the Purchaser a certificate representing the Shares. 2. The Purchaser represents and warrants to the Corporation that: 2.1 The purchaser is aware that the Share have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), is aware of the restrictions on sale or transfer thereunder, and acknowledges that an appropriate restrictive legend will be set forth on, and a stop transfer order will be placed against, the certificate evidencing the Shares to be issued to the Purchaser. However, the Corporation agrees that it shall include the Shares in a pre-effective amendment to the registration statement filed by the Corporation on Form SB-2 on March 31, 1999 (File No. 333-75399). 2.2 The Purchaser has received and reviewed the Corporation s Form 10-KSB for the fiscal year ended July 31, 1999 and Preliminary Proxy Statement for the 1999 Annual Meeting of Stockholders, and has had the opportunity to discuss the business, affairs and financial prospects of the Corporation with management of the Corporation and has made an informed decision regarding the purchase of the Shares. 2.3 The Purchaser is an "accredited investor" as such term is defined in Regulation D under the Securities Act. 2.4 The Purchaser acknowledges that an investment in the Corporation is highly speculative, that such investment is consistent with his investment objectives and income prospects, and that he has adequate means for providing for his current financial needs, has no need for liquidity in the investment herein, and is able to bear the risk of loss of his entire investment in the Shares. 3. The Corporation represents and warrants to the Purchaser that: 3.1 The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The authorized capital stock of the Corporation is 20,000,000 shares of Common Stock, of which 10,630,955 are issued and outstanding, and 1,000,000 shares of Preferred Stock, $.01 par value, of which 2,400 shares of Series A Preferred Stock and 1,170 shares of Series B Preferred Stock are issued and outstanding. Shares of Common Stock are reserved for stock options and warrants and conversion of the Series A and Series B Preferred Stock. 3.2 The Corporation has the full power and authority to enter into this Agreement and to sell the Shares, and that the Corporation s execution, delivery and performance under this Agreement has been duly authorized by all necessary action. 3.3 The Shares has been duly authorized, and upon receipt of the Purchase Price will be fully paid and nonassessable. 3.4 The Corporation will be able to remove all outstanding convertible preferred stock within 3 business days of receipt of the Purchase Price. 3.5 The Corporation will send the Purchaser a copy of the certificate representing the Shares issued to the Purchaser by November 18, 1999. 3.6 The Corporation is not aware of any reason that would cause a significant delay in the filing and acceptance by the SEC of the pre-effective amendment to the registration statement on Form SB-2, discussed in Section 2.1 of this agreement. 4. This letter sets forth the entire agreement between the parties hereto as to the subject matter herein, and cannot be amended, modified or terminated except by an agreement in writing executed by the parties hereto. In the event any provision of this letter is invalid or unenforceable, the remainder of this letter shall be construed without taking into effect such invalid or unenforceable provisions. This letter shall be governed by the laws of the State of Delaware. Please signify your agreement to the foregoing by executing, faxing and returning the original of this letter. Very truly yours, CONCORD EFFEKTEN AG By: /s/ Illegible ---------------------- Name: Illegible -------------------- Nibelungenplatz 3 60318 Frankfurt am Main Germany Agreed to this 17th day of November, 1999 AMERICAN ELECTROMEDICS CORP. By: /s/ Michael T. Pieniazek ----------------------------------- Michael T. Pieniazek, President EX-99 7 PRESS RELEASE DATED NOVEMBER 30, 1999 [AMERICAN ELECTROMEDICS CORPORATION LOGO] FOR IMMEDIATE RELEASE - --------------------- CONTACT: Michael T. Pieniazek, Jeffery Lamberson or Richard Carpenter President American Financial Communications American Electromedics Corp. (415) 380-3880 (603) 880-6300 AMERICAN ELECTROMEDICS CORP. ANNOUNCES REDEMPTION/CONVERSION OF ALL SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AMHERST, NEW HAMPSHIRE, November 30, 1999...AMERICAN ELECTROMEDICS CORP. (OTCBB:AMER) announced today that it has closed on agreements with the holders of its Series A and Series B Convertible Preferred Stock ("Preferred Stock"), whereby all outstanding shares of Preferred Stock, plus accrued dividends, were either converted into AMER common stock or redeemed. As a result of the elimination of the Preferred Stock, AMER paid $2,010,000 in cash, and issued 2,597,312 shares of common stock along with a note for $1,050,000. In order to fund the elimination of the Preferred Stock, AMER entered into an agreement with a director of the company, whereby it sold 800,000 shares of common stock, a warrant to purchase 300,000 shares of common stock at an exercise price of $2.00 per share and a 5% interest in its subsidiary, Rosch GmbH Medizintechnik ("Rosch GmbH"), for an aggregate of $2,000,000. Michael Pieniazek, President, stated, "We are extremely pleased to be able to terminate the outstanding Preferred Stock, which had a discount from market price conversion feature, as we believe this had a negative impact on the common stock. In the past, a shortage of capital has, at times, slowed our development activities. We believe this redemption and canceling of all our Preferred Stock will clear the way for us to raise additional working capital sufficient to develop automated production systems for the INJEX(TM) System. The automated systems will allow us to serve a larger market, reduce costs, and work towards improved financial condition and profitability." Rosch GmbH, a partially-owned subsidiary based in Berlin, Germany, and Equidyne Systems, Inc., a wholly-owned subsidiary based in San Diego, CA, are focused on becoming leaders in needle-free drug delivery systems for subcutaneous and intramuscular injections, with Rosch GmbH being responsible for the European market, and Equidyne being responsible for the U.S., Canada, South America and Asia markets. The INJEX(TM) Needle-Free Injector is a spring actuated system that propels a drug, with little or no pain, through the skin in a fraction of a second. INJEX(TM) administered drugs have very effective absorption rates compared to hypodermic needle injections. The System is user friendly, economical and eliminates needle stick and disposal problems. THE STATEMENTS CONTAINED IN THIS NEWS RELEASE THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS THAT MAY INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS CONTAINED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE EFFECT OF LOSSES AND OTHER FACTORS ON THE COMPANY'S CREDIT FACILITIES, BUSINESS AND RESULTS OF OPERATIONS; THE COMPANY'S LIMITED CAPITAL RESOURCES AND ITS ABILITY TO FULFILL ITS EXISTING OBLIGATIONS AND ONGOING CAPITAL NEEDS; RISKS ASSOCIATED WITH EXCESS OR OBSOLETE INVENTORY; THE POTENTIAL IMPAIRMENT OF ASSETS; THE COMPANY'S DEPENDENCE ON KEY CUSTOMERS AND THEIR FINANCIAL VIABILITY; THE IMPACT OF COMPETITION; AND THE COMPANY'S ABILITIES TO EFFECTIVELY MANAGE GROWTH. THESE AND OTHER RISK FACTORS ARE DISCUSSED IN THE COMPANY'S FILINGS ON FORMS 8-K, 10-QSB AND 10-KSB. # # # EX-99 8 PRESS RELEASE DATED DECEMBER 2, 1999 [AMERICAN ELECTROMEDICS CORPORATION LOGO] FOR IMMEDIATE RELEASE - --------------------- CONTACT: Michael T. Pieniazek, Jeffery Lamberson or Richard Carpenter President American Financial Communications American Electromedics Corp. (415) 380-3880 (603) 880-6300 AMERICAN ELECTROMEDICS CORP. ANNOUNCES INVESTMENT BY A GERMAN INVESTMENT BANK AMHERST, NEW HAMPSHIRE, December 2, 1999...AMERICAN ELECTROMEDICS CORP. (OTCBB:AMER) announced today that Concord Effekten AG (Concord), an investment banking firm based in Frankfurt, Germany has made a $1 million investment in American Electromedics Corp. (AMER) which resulted in the issuance of 1,333,333 shares of AMER's common stock. Under an agreement announced earlier, Concord plans to bring Rosch GmbH Medizintechnik ("Rosch GmbH") to the Frankfurt New Market Exchange through an initial public offering (IPO) of its shares in the first quarter of 2000. Michael Pieniazek, President, stated, "We are pleased that Concord has made this additional investment in AMER. We believe that this investment along with their commitment to an IPO for Rosch GmbH clearly demonstrates Concord's belief in the successful future of the INJEX(TM) System worldwide. This additional capital will accelerate our activities to install automated production systems for the INJEX(TM) System which will allow us to serve a larger market, reduce costs, and work towards improved financial condition and profitability." Rosch GmbH, a partially-owned subsidiary based in Berlin, Germany, and Equidyne Systems, Inc., a wholly-owned subsidiary based in San Diego, CA, are focused on becoming leaders in needle-free drug delivery systems for subcutaneous and intramuscular injections, with Rosch GmbH being responsible for the European market, and Equidyne being responsible for the U.S., Canada, South America and Asia markets. The INJEX(TM) Needle-Free Injector is a spring actuated system that propels a drug, with little or no pain, through the skin In a fraction of a second. INJEX(TM) administered drugs have very effective absorption rates compared to hypodermic needle injections. THe System is user friendly, economical and eliminates needle stick and disposal problems. THE STATEMENTS CONTAINED IN THIS NEWS RELEASE THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS THAT MAY INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS CONTAINED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE EFFECT OF LOSSES AND OTHER FACTORS ON THE COMPANY'S CREDIT FACILITIES, BUSINESS AND RESULTS OF OPERATIONS; THE COMPANY'S LIMITED CAPITAL RESOURCES AND ITS ABILITY TO FULFILL ITS EXISTING OBLIGATIONS AND ONGOING CAPITAL NEEDS; RISKS ASSOCIATED WITH EXCESS OR OBSOLETE INVENTORY; THE POTENTIAL IMPAIRMENT OF ASSETS; THE COMPANY'S DEPENDENCE ON KEY CUSTOMERS AND THEIR FINANCIAL VIABILITY; THE IMPACT OF COMPETITION; AND THE COMPANY'S ABILITIES TO EFFECTIVELY MANAGE GROWTH. THESE AND OTHER RISK FACTORS ARE DISCUSSED IN THE COMPANY'S FILINGS ON FORMS 8-K, 10-QSB AND 10-KSB. # # # -----END PRIVACY-ENHANCED MESSAGE-----