CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), effective as of April 23, 1999 is
entered into by and between American Electromedics Corp., a Delaware corporation
(herein referred to as the "Company") and AMERICAN FINANCIAL COMMUNICATIONS, a
sole proprietorship (herein referred to as the "Consultant").
RECITALS
WHEREAS, Company is a publicly held corporation with its common stock
traded on the OTC Bulletin Board; and
WHEREAS, Consultant has experience in the area of 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 investor relations and to
represent the company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as to
the Company's current and proposed activities;
NOW THEREFORE, in consideration of the promises and the mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant to act in
a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing on April 23, 1999 and ending on
November 14, 1999.
2. Duties of Consultant. The Consultant agrees that it will generally provide
the following specified consulting services through its officers and employees
during the term specified in Section 1.:
(a) Advise and assist the Company in developing and implementing
appropriate plans and materials for presenting the Company and its business
plans, strategy and personnel to the financial community, establishing an image
for the Company in the financial community, and creating the foundation for
subsequent financial public relations efforts;
(b) Introduce the Company to the financial community;
(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 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 the price of the Company's common stock, nor the
trading volume of the Company's common stock hereunder will in no way measure
Consultant's performance of its duties. It is also understood that the Company
is entering into this Agreement with American Financial Communications, Inc.
("AFC"), a corporation and not any individual member of AFC, and with such,
Consultant will not be deemed to have breached this Agreement if any member,
officer or director of AFC leaves the firm or dies or becomes physically unable
to perform any meaningful activities during the term of the Agreement, provided
the Consultant otherwise performs its obligations under this Agreement. The
Company shall have the right to request that any of Consultant's employees or
outside independent contractors, if any, not perform any services for the
Company contemplated hereunder on behalf of Consultant.
4. Remuneration. As full and complete compensation for services described in
this Agreement, the Company shall compensate AFC (herein referred to as
"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 200,000 of the Company's Common Stock ("Common Stock"). This
Commencement Bonus shall be issued to the Consultant immediately 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 200,000 shares of stock issued as a Commencement
Bonus, therefore, constitute payment for Consultant's agreement to
represent the Company and are a nonrefundable, non-apportionable, and
non-ratable retainer; such shares of Common Stock are not a prepayment for
future services. If the Company decides to terminate this Agreement prior
to November 14, 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 paid to it hereunder. 100,000 shares of
Common Stock issued pursuant to this Agreement shall be issued in the name
of Xxxxxxx Xxxxxxxxx and 100,000 shares of Common Stock issued pursuant to
this Agreement shall be issued in the name of Xxxxxxx Xxxxxxxxx(Xxxxxxx
Xxxxxxxxx and Xxxxxxx Xxxxxxxxx hereinafter referred to as "Consultants").
The Company agrees that all shares issuable to Consultants hereunder shall
carry "piggyback registration rights" whereby such shares will be included
in the next appropriate registration statement filed by the Company. The
Company further agrees that it will use its best efforts to file a
registration statement by September 30, 1999. Consultants agree that
neither will sell nor transfer during the term of this Agreement any of the
200,000 shares of the Company's stock issued to Consultants hereunder.
4.2 Consultants acknowledge that the shares of Common Stock 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. In addition, Consultant agrees that, during the term hereof neither
it, nor its officers or affiliates shall directly or indirectly, acquire or
dispose of any securities of Company without the Company's written consent.
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 acknowledge 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 purchaser 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. Expenses. Consultant agrees to pay for all its expenses (phone, mailing,
labor, etc.) incurred pursuant to this Agreement, 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. All expenses in excess of $500 will
be pre-approved in writing by the Company.
6. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant by the
Company with respect to financial affairs, operations, profitability and
strategic planning of the Company are accurate and Consultant may rely upon the
accuracy thereof without independent investigation. The Company will protect,
indemnify and hold harmless Consultant against any claims or litigation
including any damages, liability, cost and reasonable attorney's fees as
incurred with respect thereto 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.
7. Representations. Consultant represents that it is not required to maintain
any licenses and registrations under federal or any state regulations necessary
to perform the services set forth herein. Consultant acknowledges that, to the
best of its knowledge, the performance of the services set forth under this
Agreement will not violate any rule or provision of any regulatory agency having
jurisdiction over Consultant. Consultant acknowledges that, to the best of its
knowledge, Consultant and its officers and directors are not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws. Consultant further acknowledges that it is not a securities
Broker Dealer or a registered investment advisor. Company acknowledges that, to
the best of its knowledge, that it has not violated any rule or provision of any
regulatory agency having jurisdiction over the Company. 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.
8. Legal Representation. The Company acknowledges that it has been represented
by independent legal counsel in the preparation of this Agreement. Consultant
represents that they
have consulted with independent legal counsel and/or tax, financial and business
advisors, to the extent the Consultant deemed necessary.
9. Status as Independent Contractor. Consultant's engagement pursuant to this
Agreement shall be as independent contractor, and not as an employee, officer or
other agent of the Company. Neither party to this Agreement shall represent or
hold itself out to be the employer or employee of the other. Consultant further
acknowledges the consideration provided herein above 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 nor the Consultant possesses the authority to bind
each other in any agreements without the express written consent of the entity
to be bound.
10. Attorney's Fee. If any legal action or any arbitration or other proceeding
is brought for the enforcement or interpretation of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
or related to this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs in connection
with that action or proceeding, in addition to any other relief to which it or
they may be entitled.
11. Waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.
12. Notices. All notices, requests, and other communications 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 Corp.
Xxxxxxx Xxxxxxxxx, President
00 Xxxxxxxx Xxxxx, Xxxxx 0
Xxxxxxx, XX 00000
To the Consultant: American Financial Communications
Xxxxxxx Xxxxxxxxx & Xxxxxxx Xxxxxxxxx, Proprietors
0000 "X" Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
It is understood that either party may change the address to which notices
for it shall be addressed by providing notice of such change to the other party
in the manner set forth in this paragraph.
14. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of California.
The parties agree
that Sacramento County, CA will be the venue of any dispute and will have
jurisdiction over all parties.
15. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, or relating to Consultant's activities
or remuneration under this Agreement, shall be settled by binding arbitration in
California, in accordance with the applicable rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator(s) shall be
binding on the parties and may be entered in any court having jurisdiction
thereof. The provisions of Title 9 of Part 3 of the California Code of Civil
Procedure, including section 1283.05, and successor statutes, permitting
expanded discovery proceedings shall be applicable to all disputes that are
arbitrated under this paragraph.
16. Complete Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof. This Agreement and its terms may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
AGREED TO:
"Company" American Electromedics Corp.
Date: ____________ By: ___________________________________
Xxxxxxx Xxxxxxxxx,
President & Its Duly Authorized Officer
"Consultant" AMERICAN FINANCIAL COMMUNICATIONS
Date:_____________ By:__________________ ____________________
Xxxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxxxx
