EXHIBIT 10.1
                                                        ------------







                           ASSETS PURCHASE AGREEMENT


                                 by and between


                       AMERICAN ELECTROMEDICS CORPORATION

                                      and

                            RSCH GMBH MEDIZINTECHNIK

                                on the one side

                                      and


                             MAICO DIAGNOSTIC GMBH

                               on the other side

                   ------------------------------------------

                                   April 1999

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CONTENTS:

ARTICLE 1:      DEFINITIONS
ARTICLE 2:      SALE AND PURCHASE OF THE ASSETS
ARTICLE 3:      PRODUCT RIGHTS
ARTICLE 4:      TRADE NAME, SERVICE MARKS AND TRADE MARKS
ARTICLE 5:      OPERATING ASSETS
ARTICLE 6:      STOCK IN TRADE
ARTICLE 7:      CUSTOMER INFORMATION AND GOODWILL
ARTICLE 8:      LIABILITIES
ARTICLE 9:      PURCHASE PRICE
ARTICLE 10:     PAYMENT OF THE PURCHASE PRICE
ARTICLE 11:     REPRESENTATIONS AND WARRANTIES OF THE VENDOR
ARTICLE 12:     REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
ARTICLE 13:     COVENANTS OF THE VENDOR
ARTICLE 14:     COVENANTS OF THE PURCHASER
ARTICLE 15:     CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
ARTICLE 16:     CONDITIONS PRECEDENT TO OBLIGATIONS OF THE VENDOR
ARTICLE 17:     CLOSING
ARTICLE 18:     TERMINATION
ARTICLE 19:     SURVIVAL AND REMEDY; INDEMNIFICATION
ARTICLE 20:     USE OF NAME
ARTICLE 21:     NON-COMPETITION AND CONFIDENTIALITY
ARTICLE 22:     MISCELLEANOUS


<PAGE>

IN CONSIDERATION OF THE FACT THAT  American  Electromedics  Corporation, who for
                                   several years has been engaged in developing,
                                   manufacturing and selling proprietary medical
                                   and dental products, wishes to sell certain
                                   tangible and intangible assets which hitherto
                                   have been utilized exclusively in the
                                   Company's Audiometrics Division or otherwise
                                   relate to the development, manufacture,
                                   distribution, marketing or sale by the
                                   company of certain products, and;

WHEREAS                            Maico  Diagnostic  GmbH,  wishes to purchase
                                   these  assets and to continue the
                                   development,  manufacturing,  distribution,
                                   marketing and sale of these products;

THEN THIS


                           ASSETS PURCHASE AGREEMENT


          HAS BEEN MADE BY AND BETWEEN ON THE ONE SIDE


                       AMERICAN ELECTROMEDICS CORPORATION

                          13 Columbia Drive, Suite 18
                          Amherst, New Hampshire 03031
                            United States of America

                                      and

                           it's 100% owned affiliate
                           Rosch GmbH Medizintechnik
                                  Alt-Buckow 6
                            D-12349 Berlin, Germany

             (hereinafter collectively referred to as the "Vendor")

                                      AND
<PAGE>

                             MAICO DIAGNOSTIC GMBH
                                   Rohrdamm 7
                                  Siemensstadt
                            D-13629 Berlin, Germany

                  (hereinafter referred to as the "Purchaser")

                               ON THE OTHER SIDE.

IN  CONSIDERATION  OF THE COVENANTS,  REPRESENTATIONS  AND WARRANTIES  CONTAINED
HEREIN, THE PARTIES HAVE AGREED AS FOLLOWS:


                                   ARTICLE 1

                                  DEFINITIONS

     1.1.  Agreement:  "Agreement" means this Assets Purchase  Agreement between
the parties named in the opening statement above together with all schedules and
exhibits  hereto,  as it may be amended from time to time in accordance with its
terms.

     1.2. Acquired Assets:  "Acquired Assets" shall have the meaning given to it
in Clause 2.1. hereof.

     1.3.  Closing:  "Closing" shall mean the  consummation of the  transactions
contemplated herein in accordance with Article 17 hereof.

     1.4.  Closing  Date:  "Closing  Date" means the date where the Vendor shall
sell, assign,  transfer and deliver the Acquired Assets to the Purchaser and the
Purchaser shall purchase,  acquire, take assignment and delivery of the Acquired
Assets  from the Vendor;  the  Closing  Date being  determined  in Clause  17.1.
hereof.

     1.5. Customer  Information:  "Customer  Information" shall have the meaning
given to it in Clause 7.1. hereof.

     1.6. Execution Date: "Execution Date" means the date on which the Agreement
is duly signed by both parties.

     1.7.  Governmental  Authority:  "Governmental  Authority"  shall  mean  the
Government  of the United  States or any other country or any state or political
subdivision thereof and any entity exercising executive, legislative,  judicial,
regulatory or  administrative  functions or  pertaining to government  and other
quasi-governmental entities established to perform such functions.
<PAGE>

     1.8. Laws: "Laws" shall mean any law, statute, regulation, ordinance, rule,
order, decree, judgement, consent decree, settlement,  agreement or governmental
requirement  enacted,  promulgated,  entered  into,  agreed  or  imposed  by any
Governmental Authority.

     1.9.  Material  Adverse  Change:  "Material  Adverse  Change"  shall mean a
material  adverse  change in the  conditions of the Acquired  Assets,  or in the
ability  of the  Purchaser  to own  the  Acquired  Assets,  or to  continue  the
development, manufacturing,  distribution, marketing or sale of the New Products
or other products  manufactured  by the Purchaser on basis of the Product Rights
following the Closing.

     1.10.  Material  Adverse  Effect.  "Material  Adverse  Effect" shall mean a
material  adverse  effect on the  conditions of the Acquired  Assets,  or on the
ability  of  the  Purchaser  to own  the  Acquired  Assets  or to  continue  the
development, manufacturing,  distribution, marketing or sale of the New Products
or other products  manufactured  by the Purchaser on basis of the Product Rights
following the Closing.

     1.11. New Products:  "New  Products"  shall have the meaning given to it in
Clause 6.1.(i) hereof.

     1.12. Operating Assets:  "Operating Assets" shall have the meaning given to
it in Article 5 hereof.

     1.13.  Product Rights:  "Product Rights" shall have the meaning given to it
in Article 3 hereof.

     1.14.   Purchase  Price:   "Purchase   Price"  shall  mean  the  amount  of
consideration  payable by the Purchaser in exchange for the Acquired  Assets and
shall be US$ 600,000.00.

     1.15. Service Marks:  "Service Marks" shall have the meaning given to it in
Clause 4.2. hereof.

     1.16.  Spare Parts:  "Spare  Parts"  shall have the meaning  given to it in
Clause 6.1. (ii) hereof.

     1.17.  Trade Marks:  "Trade  Marks"  shall have the meaning  given to it in
Clause 4.2. hereof.

     1.18. Trade Name: "Trade Name" shall have the meaning given to it in Clause
4.1. hereof.


<PAGE>

                                   ARTICLE 2

                        SALE AND PURCHASE OF THE ASSETS

     2.1. Subject to the terms and conditions of this Agreement,  on the Closing
Date the Vendor shall sell,  assign,  transfer and deliver to the  Purchaser and
the Purchaser shall purchase,  acquire, take assignment and delivery of, certain
tangible and  intangible  assets owned by the Vendor,  which  hitherto have been
utilised in the  Vendor's  Audiometrics  Division or which  otherwise  relate to
certain products which hitherto have been developed, manufactured,  distributed,
market or sold by the Vendor on basis of the Product Rights specified in Article
3 hereof. The assets sold, assigned,  transferred and delivered to the Purchaser
hereunder  include  only those assets  specified in Article 3 through  Article 7
hereof (collectively referred to as the "Acquired Assets").


     2.2.  All the  Vendor's  rights,  title and interest in and to the Acquired
Assets shall pass to the  Purchaser on the Closing  Date,  as of which date also
the risk of the Acquired Assets shall pass to the Purchaser.


                                   ARTICLE 3

                                 PRODUCT RIGHTS

     3.1. The Vendor shall sell,  assign and transfer to the  Purchaser  all the
Vendor's rights, title and interest in and to

          (i)     the "Quik Tymp 1 Tympanometer";

          (ii)    the "Quik Tymp 2 Tympanometer/Audiometer";

          (iii)   the "Pilot-Audiometer" (also known as the "Pilot Hearing Test"
                  and to include the embedded model as well as the CD-model);

          (iv)    the "Racecar Tympanometer"

          (v)     the "Hear Man" hearing tester

(hereinafter collectively referred to as the "Product Rights").

<PAGE>

     3.2. The Product Rights, subject to sale hereunder,  shall include, without
limitation, all the Vendor's rights, title and interest in and to

          (i)     all product designs and models, including prototypes;

          (ii)    all product accessories and built-in fixtures, such as, but
                  not limited to, interfaces, boards, printers, eartips,
                  microchips, CD's, tapes and software, including all source
                  codes and other source materials;

          (iii)   all intellectual property rights, know-how, patents, technical
                  specifications, drawings, manuals, instructions, user guides,
                  and research and development materials; and

          (iv)    all displays, brochures and other marketing materials assoc-
                  iated therewith( except marketing material printed by Rosch
                  GmbH Medizintechnik);

to the extent such designs, models, accessories, fixtures, intellectual property
and  marketing  materials  either have been  especially  designed,  developed or
manufactured  by, or on behalf of, or for the use of the  Vendor's  Audiometrics
Division or otherwise relate to the Product Rights.


     3.3. The Vendor shall  assign,  transfer and deliver to the  Purchaser  all
original  specimens  and copies of the designs,  models,  prototypes,  drawings,
technical  specifications,  manuals,  instructions,  user  guides,  research and
development  materials,  software,  source codes and all other source materials,
displays,  brochures and other marketing materials as referred to in Clause 3.2.
hereof  whether such  materials are stored  electronically  or available in hard
copy formats.


                                   ARTICLE 4

                   TRADE NAME, SERVICE MARKS AND TRADE MARKS

     4.1. The Vendor shall sell,  assign and transfer to the  Purchaser  all the
Vendor's  rights,  title  and  interest  in  and  to the  trade  name  "American
Electromedics"  and any logos relating to such trade name (hereinafter  referred
to as the "Trade Name").

<PAGE>

     4.2. The Vendor shall sell,  assign and transfer to the  Purchaser  all the
Vendor's rights,  title and interest in and to the trade marks and service marks
"TympanometerTM", "Quick Tymp(" and "Pilot(" and any logos and goodwill relating
to  or  associated  with  such  trade  marks  and  service  marks   (hereinafter
collectively referred to as the "Trade Marks" or the "Service Marks" as the case
may be). The Vendor has recently  applied for a  registration  of the trade mark
"TympanometerTM"  and the Vendor  undertakes  with the Purchaser to finalize the
registration as soon as possible.


     4.3. The Vendor shall execute and deliver to the Purchaser,  or to agencies
designated  by  the  Purchaser,  separate  documents  of  assignment  in a  form
reasonably  requested by the  Purchaser to give effect to the  assignment of the
Trade Name,  Service Marks and Trade Marks and of any registration of such Trade
Name, Service Marks and Trade Marks.


                                   ARTICLE 5

                                OPERATING ASSETS

     5.1. The Vendor shall sell,  assign,  transfer and deliver to the Purchaser
at the address of the Vendor all the Vendor's rights,  title and interest in and
to all  operating  assets,  such as, but not limited to,  machinery,  equipment,
tools  and  fixtures,   which  hitherto  have  been  utilised  in  the  Vendor's
Audiometric  Division  and which to a large  degree are  specified in Schedule 1
which is attached  hereto and  incorporated  by  reference as if fully set forth
herein (hereinafter referred to as the "Operating Assets").

                                   ARTICLE 6

                                 STOCK IN TRADE

     6.1. The Vendor shall sell,  assign,  transfer and deliver to the Purchaser
at the address of the Vendor:

          (i)     all new products which have been manufactured by the Vendor on
                  basis of the Product Rights and which are physically existing
                  in the inventory of the Vendor on the Closing Date (herein-
                  after referred to as the "New Products"); and

          (ii)    all accessories and fixtures to the New Products which are
                  physically existing in the inventory of the Vendor on the
                  Closing Date (hereinafter referred to as the "Spare Parts").

<PAGE>

     6.2.  The  Vendor  and the  Purchaser  have  carried  out a joint  physical
stock-taking   prior  to  the  Closing  Date  for  purpose  of  determining  and
identifying  the total stock of New Products and Spare Parts to be taken over by
the Purchaser. All New Products and Spare Parts have been packed in sealed boxes
by the Vendor and the Purchaser at the address of the Vendor.


     6.3.  The stock of New  Products  and the stock of Spare Parts have,  on an
item by item basis,  been finally priced in accordance with the calculation made
as of March 31st, 1999 together with the list showing items on the way from AMER
to Rsch; the result of which is shown in Schedule 2 which is attached hereto and
incorporated by reference as if fully set forth herein.


     6.4. The parties  agree that as a general  rule the New Products  have been
priced at net book  value,  whereas  the Spare  Parts have been priced at ten to
fifty (10 - 50)  percent of net book  value.  A reserve  for  obsolete  and slow
moving items already has been reflected. Not withstanding the aforementioned the
parties  agree that the Vendor shall deliver ten (10) product items of the "Hear
Man"  hearing  tester and thirty (30)  product  items of the "Hear Man"  hearing
tester with light mechanical defects to the Purchaser free of charge.

     6.5.  If the  number of  products  making up the stock of the New  Products
exceeds the number of similar  products  actually  sold by the Vendor during the
last twelve (12) calendar  months prior to the Closing  Date,  then a reserve of
ninety (90) percent of the net book value of such surplus stock shall be taken.




                                   ARTICLE 7

                       CUSTOMER INFORMATION AND GOODWILL

     7.1.  The Vendor  shall  sell and  deliver to the  Purchaser  the  Vendor's
complete   customer   files  (except  files  on  German   customers)  and  other
documentation  about former,  existing and  potential  customers of the Vendor's
Audiometric  Division;  such customer files and other  documentation to include,
but not being  limited  to,  copies  of all  existing  customer  correspondence,
internal  memos,   customer  contact   information,   sales  figures  and  sales
statistics, discounts and rebates, special customer arrangements,  contracts and
all such other information  which in the reasonable  opinion of the Purchaser is
relevant to the Purchaser's ability to maintain, secure and develop the business
relationship  with the customers (the "Customer  Information");  a transcript of
the  Vendor's  customer  database  being  attached  hereto  as  Schedule  3  and
incorporated by reference as if fully set forth herein. All Customer Information
stored  electronically  in the Vendor's  "Goldmine"  software database system or
other  database  systems of the Vendor shall be  delivered  to the  Purchaser on
tape, CD or in such other  electronic  readable  format as the  Purchaser  shall
reasonably request.

<PAGE>

     7.2. The Vendor shall  assign,  transfer and deliver to the  Purchaser  all
customer purchase orders for the supply of New Products or Spare Parts which the
Vendor has  received  from  customers  on or prior to the Closing Date and which
have not been fulfilled by the Vendor as of the Closing Date.


     7.3. The Vendor and the Purchaser agree that the  consideration  payable by
the  Purchaser  in return for taking over the Customer  Information  and pending
customer purchase orders, cf. Clause 7.2. hereof, reflects, on the Closing Date,
the fair market value of the goodwill  attached to the business  activity of the
Vendor, which is subject to the sale and purchase under this Agreement.


                                   ARTICLE 8

                                  LIABILITIES

     8.1.  Neither  the  Purchaser  nor any of its  affiliates  shall  assume or
otherwise be liable in respect of, or be deemed to have assumed, or otherwise be
liable in respect of, any debt,  claim,  obligation  or other  liability  of the
Vendor or any of its affiliates whatsoever,  such as liabilities under rebate or
bonus arrangements prior to the Closing, product guarantees,  customer claims or
the like, relating to products manufactured,  distributed, market or sold by the
Vendor,  or relating to other  activities or services carried out by the Vendor,
prior to the Closing.


     8.2. The Purchaser  shall not assume or otherwise take over from the Vendor
any obligations or liabilities towards any of the Vendor's employees.

<PAGE>

                                   ARTICLE 9

                                 PURCHASE PRICE

     9.1. In  consideration  of the transfer by the Vendor of all rights,  title
and  interest in and to - and delivery of - the  Acquired  Assets the  Purchaser
shall pay - in United  States  Dollars - $ 600,000.00  (i.e.  Sixhundredthousand
00/100 United States Dollars) to the Vendor (the "Purchase Price"); the Purchase
Price being specified as follows:

          (a)     Product Rights, Trade Name, Service
                  Marks, Trade Marks, Operating Assets
                  and Goodwill, cf. Article 3, Article 4,
                  Article 5 and Article 7 hereof            $  460,000.00

          (b)     Stock in Trade, re. Article 6 hereof      $  140,000.00
                                                            -------------
                  The Purchase Price in total               $  600,000.00
                                                            =============

     9.2.  The parties  agree that the  Purchase  Price of the  Acquired  Assets
reflects  the fair  market  value as of the  Closing  Date,  having  taking into
consideration,  on an item by item basis, the original cost price, the estimated
remaining useful lifetime and the actual condition of the individual asset.



                                   ARTICLE 10

                         PAYMENT OF THE PURCHASE PRICE

          10.1. The Purchase Price shall be paid to the Vendor as follows:

          (a) On the Closing Date the Purchaser  shall pay to the Vendor in cash
     - by wire  transfer  or  banker's  check  - an  amount  of US$  500,000.00;
     provided,  however,  that all the conditions precedent set forth in Article
     15 hereof shall have been satisfied on or prior to the Closing Date;

          (b) On the eight (8)  calendar  day  following  the  Closing  Date the
     Purchaser  shall pay in cash - by wire  transfer  or  banker's  check - the
     balancing amount of US$ 100,000.00 to the Vendor;  provided,  however, that
     all the conditions precedent set forth in Article 15 hereof shall have been
     satisfied prior to the execution of such payment.

<PAGE>

                                   ARTICLE 11

                  REPRESENTATIONS AND WARRANTIES OF THE VENDOR

          11.1. The Vendor represents and warrants to the Purchaser as follows:

          (a) Due  Incorporation.  The  Vendor is a public  company  limited  by
     shares,  duly organised and validly existing under the Laws of the State of
     Delaware  (USA) and is operating in accordance  with all  applicable  legal
     requirements,  permits and consents. The Vendor is not insolvent,  bankrupt
     or subject to any insolvency procedure.

          (b) Due  Authorisation.  The  Vendor  has  full  corporate  power  and
     authority  to enter  into this  Agreement  and to perform  its  obligations
     hereunder. The execution, delivery and performance of this Agreement by the
     Vendor  have  been  duly and  validly  approved  by the  Vendor's  Board of
     Directors  and  shall not  violate  any  provision  of its  Certificate  of
     Incorporation.

          (c) No Default. The execution,  delivery and performance by the Vendor
     of this Agreement and all other instruments,  agreements,  certificates and
     documents  contemplated  hereby do not and will not violate, or result in a
     breach or default  of, or cause an event of default  under,  any  mortgage,
     lease, agreement,  license, instrument, order, judgement or decree to which
     the Vendor is a party.

          (d) Title to Properties.  The Vendor has good and marketable title to,
     is the lawful owner of, and has the full right to sell,  convey,  transfer,
     assign and deliver all of the Acquired Assets. The Acquired Assets are free
     and clear of any encumbrance or restriction  whatsoever.  At the end of the
     Closing the Vendor  will convey the  Acquired  Assets to the  Purchaser  by
     deeds,  bill of sale,  certificates  of title and instruments of assignment
     and transfer  effective to vest in the Purchaser,  and the Purchaser  shall
     have good and valid  record  and  marketable  title to all of the  Acquired
     Assets, free and clear of any encumbrance or restriction whatsoever created
     by the Vendor.

          (e) Condition of Source  Materials and other  Property.  All technical
     specifications,  manuals, instructions, user guides, software, source codes
     and all other  source  materials  referred  to in Clause  3.3.  hereof  are
     up-to-date  and have been  developed  and  maintained  in  compliance  with
     applicable standards of good practice. All New Products and Spare Parts are

<PAGE>

     free from defects (except for the thirty (30) defect product items referred
     to in Clause 6.4.,  third  sentence),  and the Operating Assets are in good
     operating  condition  and repair  (with the  exception  of normal  wear and
     tear),  and are free from defects  other than such minor  defects as do not
     interfere with the continued use thereof or materially adversely affect the
     resale value thereof.

          (f)  Accurate  Descriptions.  The  description  in Clause  3.1. of the
     Product  Rights and the  description  of the Trade Name,  Service Marks and
     Trade  Marks  in  Clause  4.1.  and  Clause  4.2  is a  true  and  accurate
     description of the Product Rights and of the Trade Name,  Service Marks and
     Trade Marks.

          (g)  Intellectual  Property.  All of the Product  Rights,  Trade Name,
     Service Marks and Trade Marks is owned by the Vendor, free and clear of any
     encumbrances  or  restrictions,  whatsoever.  To the best  knowledge of the
     Vendor all the Trade Marks,  the Service Marks and the Trade Name have been
     properly registered with the relevant authorities. The New Products and any
     other products  manufactured  by the Vendor on basis of the Product Rights,
     and any process,  method,  design or material it employs, or the marketing,
     sale and use of any such product or any service associated herewith, do not
     infringe any trade mark,  service mark,  trade name,  patent,  copyright or
     confidential  or  proprietary  rights of  another,  and the  Vendor has not
     received  any notice  contesting  its rights to use or utilize  the Product
     Rights,  the Trade Marks,  the Service Marks or the Trade Name.  The Vendor
     has not granted any  license in respect of the  Product  Rights,  the Trade
     Marks,  the Service  Marks or the Trade Name.  None of the Product  Rights,
     Trade  Name,  Service  Marks or Trade  Marks is the  subject of any pending
     adverse  claim or, to the best  knowledge  of the  Vendor,  any  threatened
     litigation or claim of infringement and there is no pending or (to the best
     of the Vendor's knowledge) threatened claim, action, suit, investigation or
     proceeding  of  any  kind  challenging,  alleging  or  asserting  that  any
     registration was improperly or invalidly granted or is otherwise invalid.

          (h) Sufficiency of Assets.  The Purchaser's use of the Acquired Assets
     after the Closing Date will not be dependent upon any intellectual property
     rights owned by the Vendor and not  assigned to the  Purchaser by virtue of
     this  Agreement,  neither will any such use be  dependent  upon any license
     granted by any third party.

          (i) No other  Agreement.  Except for sales of New  Products  and Spare
     Parts in the ordinary course of business, neither the Vendor nor any of its
     wholly owned  subsidiaries has any agreement or arrangement with respect to
     the sale or other disposition of any of the Acquired Assets.



<PAGE>

          (j) Brokers.  Neither the  Purchaser or any affiliate of the Purchaser
     has or shall have any liability or otherwise  suffer or incur any loss as a
     result of or in  connection  with any  brokerage  or finder's  fee or other
     commission of any third party retained by the Vendor in connection with any
     of the transactions contemplated by this Agreement.



                                   ARTICLE 12

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

          12.1.  The Purchaser  hereby  represents and warrants to the Vendor as
     follows:

          (a)  Due   Incorporation.   The  Purchaser  is  a  "Gesellschaft   mit
     beschrnkter Haftung",  i.e. a company limited by shares, duly organised and
     validly  existing  under the Laws of Germany and is operating in accordance
     with all applicable legal requirements, permits and consents. The Purchaser
     is not insolvent, bankrupt or subject to any insolvency procedure.

          (b) Due  Authorisation.  The  Purchaser has full  corporate  power and
     authority  to enter  into this  Agreement  and to perform  its  obligations
     hereunder. The execution, delivery and performance of this Agreement by the
     Purchaser have been duly and validly  approved by the Purchaser's  Board of
     Directors   and  shall  not  violate  any  provision  of  its  Articles  of
     Association.

          (c)  No  Default.  The  execution,  delivery  and  performance  by the
     Purchaser  of  this  Agreement  and  all  other  instruments,   agreements,
     certificates and documents contemplated hereby do not and will not violate,
     or result in a breach or default  of, or cause an event of  default  under,
     any mortgage, lease, agreement,  license,  instrument,  order, judgement or
     decree to which the Purchaser is a party.

          (d) Brokers.  Neither the Vendor or any affiliate of the Vendor has or
     shall have any liability or otherwise  suffer or incur any loss as a result
     of or in connection with any brokerage or finder's fee or other  commission
     of any third party retained by the Purchaser in connection  with any of the
     transactions contemplated by this Agreement.
<PAGE>


          (e)  Litigation.  The  Purchaser  is not  subject  to any  litigation,
     decree,  etc.  which would prevent it from entering into this  Agreement or
     purchasing the Acquired Assets.


                                   ARTICLE 13

                            COVENANTS OF THE VENDOR

          13.1.  The Vendor  agrees that,  except as otherwise  required by this
     Agreement, from the Execution Date to the Closing Date:

          (a)  Implementing  Agreement.  Subject  to the  terms  and  conditions
     hereof,  the  Vendor  shall take all  action  required  of it to fulfil its
     obligations  under  the  terms of this  Agreement  and  shall  use its best
     efforts to facilitate the  consummation  of the  transactions  contemplated
     hereby.

          (b) Access to Information  and  Facilities.  The Vendor shall give the
     Purchaser and the Purchaser's representatives access during normal business
     hours to all of the facilities,  properties, books, contracts,  commitments
     and  records  of the  Vendor  and  shall  make the  Vendor's  officers  and
     employees  available  to  the  Purchaser  and  its  representatives  as the
     Purchaser  and its  representatives  shall  from  time  to time  reasonably
     request.  The  Purchaser  and its  representatives  shall be furnished  the
     information and documentation  concerning the Vendor's Audiometric Division
     and  the  Acquired  Assets  which  the  Purchaser  or  its  representatives
     reasonably request.

          (c)  Preservation  of  Relationships.  The  Vendor  shall use its best
     efforts to preserve the present good will and advantageous relationships of
     the Vendor with customers,  suppliers,  independent  contractors and others
     material to the  continued  operation of the business  activity  subject to
     transfer hereunder.

          (d) Consents and  Approvals.  The Vendor shall use its best efforts to
     obtain all consents,  approvals,  certificates and other documents required
     in connection  with the performance by the Vendor of this Agreement and the
     consummation of the transactions contemplated hereby. The Vendor shall make
     all  filings,  applications,  statements  and  reports to all  Governmental
     Authorities  which are  required to be made prior to the Closing Date by or
     on behalf of the Vendor or any of its affiliates pursuant to any applicable
     Law in connection  with this  Agreement and the  transactions  contemplated
     hereby.
<PAGE>

          (e) Preservation of Acquired Assets.  Except in the usual and ordinary
     course of business the Vendor shall not sell, lease, abandon or dispose of,
     or agree to sell, lease, abandon or dispose of, any of the Acquired Assets,
     or suffer or permit the creation of any lien.

          (f)  Compliance  with Laws.  The Vendor  shall  duly  comply  with all
     material Laws  applicable to the Acquired  Assets or as may be required for
     the valid and effective transfer and assignment of the Acquired Assets.


          13.2.  The Vendor  agrees that,  except as otherwise  required by this
     Agreement, following the Closing Date:

          (a) On-site Training of Personnel. The Vendor shall - free of charge -
     provide qualified on-site product training to the Purchaser's  personnel on
     locations in Minneapolis,  the United States, and in Berlin, Germany, to an
     extent  reasonable  requested by the Purchaser;  that being understood that
     such free on-site  training shall be provided by the Vendor within a period
     of two (2)  months  from the  Closing  Date and shall not in the  aggregate
     exceed a maximum of forty (40) hours of training.


                                   ARTICLE 14

                           COVENANTS OF THE PURCHASER

          14.1. The Purchaser agrees that, except as otherwise  required by this
     Agreement, from the Execution Date to the Closing Date:

          (a)  Implementing  Agreement.  Subject  to the  terms  and  conditions
     hereof,  the Purchaser  shall take all action  required of it to fulfil its
     obligations  under  the  terms of this  Agreement  and  shall  use its best
     efforts to facilitate the  consummation  of the  transactions  contemplated
     hereby.

          (b) Consents and Approvals.  The Purchaser  shall use its best efforts
     to  obtain  all  consents,  approvals,  certificates  and  other  documents
     required  in  connection  with the  performance  by the  Purchaser  of this
     Agreement and the consummation of the transactions contemplated hereby. The
     Purchaser shall make all filings,  applications,  statements and reports to
     all  Governmental  Authorities  which are  required to be made prior to the
     Closing  Date by or on behalf  of the  Purchaser  or any of its  affiliates
     pursuant to any  applicable  Law in connection  with this Agreement and the
     transactions contemplated hereby.
<PAGE>

          (c) Confidentiality.  Except as required by Law or by any Governmental
     Authority,  all  non-public  information  supplied  by  the  Vendor  or its
     representatives  to the Purchaser  pursuant to Clause 13.1.(b) or otherwise
     shall be  maintained  in strict  confidence  by the Purchaser in accordance
     with the procedures which the Purchaser uses to protect its own information
     of a similar  nature,  and in the event that this  Agreement is terminated,
     upon the Vendor's written request,  all written  materials  provided by the
     Vendor and its  representatives  to the Purchaser  shall be returned to the
     Vendor,  and the  Purchaser  shall make no further use of such  information
     whatsoever.


                                   ARTICLE 15

              CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER

          15.1.  The  obligations  of the  Purchaser  under this  Agreement  are
     subject to the  satisfaction  or waiver by the  Purchaser of the  following
     conditions precedent on or before the Closing Date:

          (a)  Warranties  True as of Both  Execution Date and Closing Date. The
     representations  and  warranties  of the  Vendor  made in Article 11 hereof
     shall  be true  and  accurate  in all  material  respects  on and as of the
     Execution Date, and shall also be true in all material respects (except for
     such changes as are  contemplated by the terms of this Agreement) on and as
     of the Closing Date with the same force and effect as though made on and as
     of the Closing Date.

          (b) Compliance with Agreements and Covenants. The Vendor shall, in all
     material respects, have performed all of its obligations and agreements and
     complied  with  all of its  covenants  contained  in this  Agreement  to be
     performed and complied with by it on or prior to the Closing Date.

          (c)  Agreements.  The Purchaser  shall have entered  into,  signed and
     received all of the following agreements on or prior to the Closing Date:

          (i) An OEM-agreement  with the Vendor (acting by and through Rsch GmbH
     Medizintechnik)  satisfactory to both parties and  substantially  in a form
     similar to the draft  OEM-agreement  which is attached  hereto as Exhibit A
     and  incorporated  by reference as if fully set forth  herein,  whereby the
     Purchaser  - for a term of  three  (3)  years  - is  granted  a  world-wide
     exclusive right to market,  distribute and sell the Vendor's Video-Otoscope
     System to the hearing aid and the ENT markets.
<PAGE>

          (ii) A  supply-agreement  with Entomed AB, being the Vendor's  current
     supplier of the screening  audiometers known as the "K12",  "K15" and "K20"
     (hereinafter  referred  to as the  "K-Audiometers"),  satisfactory  to both
     parties and substantially in a form similar to the wording in the letter to
     Entomed  AB which is  attached  hereto  as  Exhibit B and  incorporated  by
     reference as if fully set forth herein,  providing for the exclusive supply
     of K-Audiometers from Entomed AB to the Purchaser.

          (iii) An  agreement  with the Vendor  (acting by and through Rsch GmbH
     Medizintechnik)  satisfactory  to both parties,  whereby the Vendor assigns
     and transfers to the  Purchaser - free of charge - all the Vendor's  rights
     and  existing  regulatory   documents  concerning  the  current  supply  of
     K-Audiometers from Entomed AB to the Vendor.  Said agreement is attached as
     a part of Exhibit B.

          (d) Documents.  The Purchaser shall have received all of the documents
     and items specified in Clause 17.2 hereof.

          (e) No Material Adverse Change.  No Material Adverse Change shall have
     occurred and no event shall have occurred which in the reasonable judgement
     of the Purchaser may have a Material Adverse Effect.

          (f)  Actions  and   Proceedings.   No  action  or  proceeding  by  any
     Governmental  Authority or other third party shall have been  instituted or
     threatened  which (i) might have a Material  Adverse Effect,  or (ii) would
     enjoin,  restraint or prohibit,  or might result in a substantial damage in
     respect of, this Agreement or the complete consummation of the transactions
     as contemplated hereby, and which would, in the reasonable judgement of the
     Purchaser,  make it inadvisable to consummate such transactions,  and (iii)
     no court  order  shall  have  been  entered  in any  action  or  proceeding
     instituted by any third party which enjoins,  restrains or prohibits,  this
     Agreement or the complete  consummation  of the  transactions  contemplated
     hereby.

<PAGE>

                                   ARTICLE 16

               CONDITIONS PRECEDENT TO OBLIGATIONS OF THE VENDOR

          16.1.  The  obligations of the Vendor under this Agreement are subject
     to the  satisfaction  or waiver by the Vendor of the  following  conditions
     precedent on or before the Closing Date:

          (a)  Warranties  True as of Both  Execution Date and Closing Date. The
     representations  and  warranties of the Purchaser made in Article 12 hereof
     shall  be true  and  accurate  in all  material  respects  on and as of the
     Execution Date, and shall also be true in all material respects (except for
     such changes as are  contemplated by the terms of this Agreement) on and as
     of the Closing Date with the same force and effect as though made on and as
     of the Closing Date.

          (b) Compliance with Agreements and Covenants.  The Purchaser shall, in
     all material respects, have performed all of its obligations and agreements
     and complied  with all of its covenants  contained in this  Agreement to be
     performed and complied with by it on or prior to the Closing Date.

          (c)  Agreements.  The  Vendor  shall  have  received a copy all of the
     following agreements on or prior to the Closing Date:

          (i) A  distributor  agreement  by and  between the  Purchaser  and the
     Vendor (acting by and through Rsch GmbH  Medizintechnik),  satisfactory  to
     both parties and  substantially in a form similar to the draft  distributor
     agreement  which is  attached  hereto  as  Exhibit  C and  incorporated  by
     reference as if fully set forth herein, whereby Rsch GmbH Medizintechnik is
     appointed non-exclusive  distributor of certain of the Purchaser's products
     on the German Market.

          (ii) An agreement by and between the Purchaser and the Vendor  (acting
     by and through Rsch GmbH Medizintechnik),  satisfactory to both parties and
     substantially  in a form similar to the draft  agreement  which is attached
     hereto as Exhibit D and  incorporated  by  reference  as if fully set forth
     herein,  whereby  the  Purchaser  assumes  an  obligation  from  Rsch  GmbH
     Medizintechnik  to purchase a total of 240 items of the Pilot  Hearing Test
     from Meracus GmbH before April 1st, 2000.
<PAGE>

          (d) Documents. The Vendor shall have received all of the documents and
     items specified in Clause 17.3. hereof.

          (e)  Actions  and   Proceedings.   No  action  or  proceeding  by  any
     Governmental  Authority or other third party shall have been  instituted or
     threatened  which (i) might have a Material  Adverse Effect,  or (ii) would
     enjoin,  restraint or prohibit,  or might result in a substantial damage in
     respect of, this Agreement or the complete consummation of the transactions
     as contemplated hereby, and which would, in the reasonable judgement of the
     Vendor,  make it inadvisable to consummate such transactions,  and (iii) no
     court order shall have been entered in any action or proceeding  instituted
     by any third party which enjoins, restrains or prohibits, this Agreement or
     the complete consummation of the transactions contemplated hereby.


                                   ARTICLE 17

                                    CLOSING

          17.1.  The Closing  shall take place in the offices of William  Demant
     Holding A/S, at 58 Strandvejen, 2900 Hellerup, Copenhagen, Denmark at 10:00
     a.m.  on the latest of: (a) April 8th,  1999,  (b) such later date to which
     the  parties  hereto  shall  agree,  but in no event later than April 15th,
     1999.


          17.2.  Deliveries  by the Vendor.  At the  Closing,  the Vendor  shall
     deliver to the Purchaser the following:

          (a) A bill of sale

          (b) Originals,  and duly executed  agreements as referred to in Clause
     15.1.(c),(i) and (iii) and in Clause 16.1.(c) hereof;

          (c) Originals,  and duly executed assignments of the customer purchase
     orders as referred to in Clause 7.2. hereof;

          (d) Any instruments of transfer  reasonably  required by the Purchaser
     to evidence the transfer of the Acquired Assets to the Purchaser, including
     assignments  with  respect to the  Property  Rights,  the Trade  Name,  the
     Service Marks and the Trade Marks,  registered,  recorded or filed with any
     Governmental Authority, in a form suitable for registration, recordation or
     filing with such Governmental  Authority, in each case duly executed by the
     Vendor;
<PAGE>

          (e) A certificate  dated the Closing Date, of an executive  officer of
     the  Vendor  certifying  as to the  compliance  by the Vendor  with  Clause
     15.1.(a) and (b);

          (f) A certificate of the Vendor's secretary certifying (i) resolutions
     of the board of directors of the Vendor  approving  this  Agreement and the
     transactions  contemplated hereby, and (ii) the authority of the officer(s)
     signing on behalf of the Vendor;

          (g) A copy of the  Vendor's  charter,  certified  by the  Secretary of
     State in the Vendor's state of incorporation;

          (h) A copy of the Vendor's  charter  reflecting  the amendment of such
     charter to change the Vendor's name to a name  dissimilar  to, and which is
     not susceptible to confusion with, "American Electromedics",  together with
     all filings  required to effectuate such amendment in each country in which
     the Vendor is  qualified  to do business as a foreign  corporation,  all of
     which  shall be  certified  by the  secretary  of the  Vendor.  However the
     Purchaser  has to respect a grace  period  until the  Vendors  1999  Annual
     Meeting of  Shareholders  to be held within four (4) months  after  Closing
     Date.


          17.3. Deliveries by the Purchaser. At the Closing, the Purchaser shall
     deliver to the Vendor the following:

          (a) The payment of US$ 500,000.00, cf. Clause 10.3. (a) hereof, to the
     Vendor;

          (b) Originals,  and duly executed  agreements as referred to in Clause
     15.1.(c),(i) and (iii) and in Clause 16.1.(c) hereof;

          (c) A certificate  dated the Closing Date, of an executive  officer of
     the Purchaser  certifying as to the compliance by the Purchaser with Clause
     16.1. (a) and (b);

          (d)  A  certificate  of  the  Purchaser's   secretary  certifying  (i)
     resolutions  of the board of  directors  of the  Purchaser  approving  this
     Agreement and the transactions  contemplated hereby, and (ii) the authority
     of the officer(s) signing on behalf of the Purchaser;

          (e) A copy of the  Purchaser's  charter,  certified  by the  Companies
     Registry in the Purchaser's state of incorporation;
<PAGE>

                                   ARTICLE 18

                                  TERMINATION

          18.1.  In entering into this  Agreement,  the Purchaser and the Vendor
     have relied fully upon the  representations,  warranties and covenants made
     and given by the Purchaser and by the Vendor in this  Agreement,  including
     in the Schedules and Exhibits hereto. The representations and warranties of
     the Vendor set forth in Article 11 and of the  Purchaser  in Article 12 are
     made both as of the Execution  Date and as of the Closing Date and shall be
     true and accurate on the Closing Date and on the  Execution  Date; it being
     understood that, where a representation  and warranty is given by reference
     to a particularly  specified date, the representation and warranty shall be
     deemed to have been given on the Execution Date and on the Closing Date but
     only by reference to such particularly specified date.


          18.2.  This Agreement may be terminated at any time on or prior to the
     Closing Date:

          (a) With the mutual consent of the Vendor and the Purchaser; or

          (b) By the Purchaser,  if any of the conditions provided in Article 15
     shall  not have  been  satisfied  on or prior  to the  date  specified  for
     fulfilment thereof, and the Purchaser shall not have waived such failure of
     satisfaction; or

          (c) By the  Vendor,  if any of the  conditions  provided in Article 16
     shall  not have  been  satisfied  on or prior  to the  date  specified  for
     fulfilment  thereof,  and the Vendor  shall not have waived such failure of
     satisfaction; or

          (d) By the  Vendor or the  Purchaser,  if the  Closing  shall not have
     taken  place on or before  May 1, 1999 or such  other  later date as may be
     mutually approved in writing by the Vendor and by the Purchaser.


          18.3. In the event of any termination  pursuant to Clause 18.2. hereof
     (other than pursuant to Clause 18.2.  (a) hereof),  written  notice setting
     forth the reasons thereof shall forthwith be given by the terminating party
     to the other party.


<PAGE>

                                   ARTICLE 19

                      SURVIVAL AND REMEDY; INDEMNIFICATION

          19.1.  Survival.  The  representations  and  warranties of the parties
     hereto  contained  herein  or in any  other  certificate  or other  writing
     delivered pursuant hereto shall survive the Closing and shall expire on the
     first (1)  anniversary  date of the Closing  Date (except for matters as to
     which any indemnified party has made a claim for indemnification under this
     Article 19 on or prior to such date).


          19.2.  Indemnification  by the Vendor.  The Vendor agrees to indemnify
     the Purchaser and each of its affiliates and officers, directors, employees
     and agents against,  and agrees to hold each of them harmless from, any and
     all losses,  damages or expenses,  including  reasonable  attorney's  fees,
     suffered  or  incurred  by them  arising  out of or  relating to any of the
     following:

          (a) Any breach of or any inaccuracy in any  representation or warranty
     made by the Vendor pursuant to this Agreement;

          (b) Any breach of or failure by the Vendor to perform any  covenant or
     obligation of the Vendor set out or contemplated in this Agreement;

          (c) Any products,  including  the New  Products,  produced or services
     performed by the Vendor on or before the Closing Date (and,  in the case of
     products,  including the New Products, produced by the Vendor, whether sold
     by the Vendor on or prior to the  Closing  Date or by the  Purchaser  on or
     after the Closing Date);

          (d) The use,  operation or ownership of any of the Acquired  Assets on
     or prior to the Closing Date; and

          (e) Any claims by or  liabilities  with respect to any employee of the
     Vendor with respect to his or her  employment or  termination of employment
     on or prior to the Closing Date by the Vendor,  including any and all group
     insurance claims,  worker's  compensation claims or liabilities arising out
     of any accidents,  illness or other event which occurred on or prior to the
     Closing Date.

<PAGE>

          19.3.  Indemnification  by the  Purchaser.  The  Purchaser  agrees  to
     indemnify the Vendor and each of its  affiliates  and officers,  directors,
     employees  and agents  against,  and  agrees to hold each of them  harmless
     from,  any  and all  losses,  damages  or  expenses,  including  reasonable
     attorney's fees, suffered or incurred by them arising out of or relating to
     any of the following:

          (a) Any breach of or any inaccuracy in any  representation or warranty
     made by the Purchaser pursuant to this Agreement;

          (b) Any breach of or failure by the  Purchaser to perform any covenant
     or obligation of the Purchaser set out or  contemplated  in this Agreement;
     and

          (c) Any products produced or services performed by the Purchaser on or
     after the Closing Date.


          19.4. Notice of Claims.  Procedure for Indemnification.  Upon becoming
     aware of a claim for indemnification hereunder, the indemnified party shall
     promptly  give notice of such claim to the  indemnifying  party,  providing
     reasonable  details  of how the claim has  arisen  and an  estimate  of the
     amount  the  indemnified  party  reasonably  anticipates  that  it  will be
     entitled to on account of indemnification by the indemnifying party. If the
     indemnifying  party does not object to such  indemnification  claim  within
     thirty (30)  calendar days of receiving  notice  thereof,  the  indemnified
     party  shall be entitle to recover  promptly  the amount of such claim (but
     such recovery shall not limit the amount of any additional  indemnification
     to which the indemnified  party may be entitled to pursuant to Clause 19.2.
     or  Clause  19.3.).  If,  however,   the  indemnifying  party  advises  the
     indemnified party that it disagrees with the indemnified party's claim, the
     parties  shall,  for a period  of  thirty  (30)  calendar  days  after  the
     indemnifying  party  advised the  indemnified  party of such  disagreement,
     attempt  to  resolve  the  difference  and,  failing to do so in such time,
     either party may unilaterally submit the matter to arbitration  pursuant to
     Clause 22.4. hereof.


          19.5.  Third Party's Claims:  Claims asserted by a third party,  which
     the  Vendor  or the  Purchaser  has  determined  may  give  rise  to  claim
     indemnification  pursuant to Clause 19.2 or Clause 19.3.,  shall be subject
     to the following additional procedure and conditions:
<PAGE>

          (a) The indemnified party shall give notice to the indemnifying  party
     of the  occurrence of any event or the  institution  of any claim,  action,
     investigation,  suit or  proceeding  asserted  by a third  party  which the
     indemnified  party has  determined  has given,  or may give,  rise to claim
     indemnification  under Clause 19.2.  or Clause  19.3.  hereof.  Such notice
     shall be given  promptly after the  indemnified  party becomes aware of the
     event or claim so as to allow  the  indemnifying  party to  present  to the
     indemnified  party any  argument  that the  indemnifying  party may wish to
     raise in connection with the defence of such claim; provided, however, that
     where a defence or answer to the asserted claim must be submitted  within a
     specified  period,  failing which shall preclude the indemnified party from
     asserting such defence or giving such answer,  notice of the claim shall be
     given to the indemnifying party no later than at the expiration of one half
     (1/2) of such specified period.

          (b) The indemnifying  party shall, upon receipt of the notice referred
     to in Clause  19.5.(a),  be  entitled  to conduct  the  defence,  appeal or
     settlement of such claim,  with counsel  elected by it, by giving notice to
     the indemnified  party of its election to do so within thirty (30) calendar
     days following receipt by it of the notice of the claim or, where a defence
     or  answer to the  asserted  claim  must be  submitted  within a  specified
     period,  failing which shall preclude the indemnifying party from asserting
     such  defence or giving such  answer,  no later than at the  expiration  of
     three quarter (3/4) of such specified  period,  and the  indemnified  party
     shall  thereupon  provide the  indemnifying  party access to the  documents
     relevant  to such  defence,  appeal or  settlement.  In the event  that the
     indemnifying party elects not to conduct the defence,  appeal or settlement
     of such claim,  the  indemnified  party shall have the right to conduct the
     defence thereof or reach a settlement in connection  therewith on behalf of
     and on the account and risk of the indemnifying party.

          (c) Notwithstanding  Clause 19.5.(b) above, in the event that there is
     a reasonable  likelihood that a claim may have a Material Adverse Effect on
     the  interests  of the  indemnified  party (other than as a result of money
     damages  with  respect to which the  indemnified  party will be entitled to
     indemnification  pursuant to Clause 19.2.  or Clause 19.3.  as the case may
     be), the indemnified party shall be entitled to conduct the defence, appeal
     or  settlement of the claim and the  indemnifying  party shall be regularly
     and fully informed of the progress of the proceedings and shall be entitled
     to participate in such defence,  appeal or settlement and to employ counsel
     to assist it in connection therewith.


          19.6. Limitations: The amount of any indemnity shall be subject to the
     following limitations:
<PAGE>

          (a) The amount of any indemnity due by the  indemnifying  party to the
     indemnified  party pursuant to Clause 19.2. or Clause 19.3. hereof shall be
     reduced by:

          (i) the amount of any insurance  payment which the  indemnified  party
     effectively is entitled to receive with respect to the event giving rise to
     the indemnification claim by that party;

          (ii)  the  amount  of any  tax  savings  effectively  obtained  by the
     indemnified  party resulting from  deductibility of the loss giving rise to
     indemnification;   provided,   however,  that  such  tax  savings  are  not
     neutralised by a corresponding tax liability levied on the  indemnification
     received.

          (b) Nothwithstanding any provision of this Agreement to the contrary,

          (i) a party shall not be liable for indemnification to the other party
     until the  aggregate  of all losses,  liabilities  and  damages  (including
     expenses) incurred by such other party exceed US$ 50,000;

          (ii) the Vendor shall not be liable to indemnify the Purchaser for any
     loss,  liability  or damage  (excluding  expenses)  which in the  aggregate
     exceeds US$ 300,000.


                                   ARTICLE 20

                                  USE OF NAME

          20.1.  With effect from the Closing  Date the Vendor shall not use the
     name "American  Electromedics  Corporation" or any other name incorporating
     the words "American Electromedics",  nor shall the Vendor participate in or
     acquire,  directly  or  indirectly,  an  interest  in any  business,  which
     involves  the use of the  name  "American  Electromedics"  or  other  names
     incorporating the name "Electromedics".  Notwithstanding the aforementioned
     the Vendor  shall be entitled to make  minimal use of the name for a period
     of four (4) months following the Closing Date; provided, however, that such
     use of the name by the Vendor shall serve certain  formal and legal matters
     only and shall not in any way,  whatsoever,  be used in connection with any
     competitive commercial activities of the Vendor.

<PAGE>

                                   ARTICLE 21

                      NON-COMPETITION AND CONFIDENTIALITY

          21.1.  The Vendor  agrees not to  undertake  any  activity or to hold,
     directly or  indirectly,  any interest in any business,  wherever  located,
     which in crucial and important  respects must be regarded as competitive to
     the business  activity  subject to sale and purchase under this  Agreement;
     such business  activity being identified as the purchase from producers and
     the sale of products,  which in their function are equal to the audiometers
     and hearing testers covered by this Agreement and are  impedance-meters  on
     pressure   basis.Not   withstanding   the   aforementioned   the  Purchaser
     acknowledges and accepts that American Electromedics  Corporation maintains
     its  current  investment  in Rsch  GmbH  Medizintechnik,  Berlin,  Germany,
     provided,  however,  that Rsch GmbH Medizintechnik  shall not undertake any
     new  business  activities,  which in a broad  sense is  competitive  to the
     business  activity subject to sale and purchase under this Agreement.  This
     non-competition  covenant  is made for a term of 3 (three)  years  from the
     Closing Date.


          21.2.  Notwithstanding Clause 21.1. above the parties agree that for a
     term of six (6) calendar months from the Closing Date the Vendor shall have
     the right to  distribute  and sell the  following  product items of the New
     Products   outside  the  United  States  through  the  Vendor's  own  sales
     organisation:

          (i) Racecar Tymp RC QT1 (cf. Schedule B, pos. No. 1)

          (ii) Racecar Tymp/Audio QT2 (cf. Schedule B, pos. No. 2)

          (iii) QT1 Tymp (cf. Schedule B, pos. No. 4)

          (iv) QT2 Tymp/Audio (cf. Schedule B, pos. No. 6)

          (v) QT2 Tymp/Audio German (cf. Schedule B, pos. No. 7)


          21.3. The right of the Vendor to distribute and sell the product items
     listed in Clause  21.2.  above shall be subject to the  condition  that the
     Vendor shall  repurchase  the product  items from the Purchaser at the same
     unit prices,  which the parties have agreed to in connection  with the sale
     and purchase of the specific  product items under this Agreement as long as
     the items originally have been purchased from the Vendor.

<PAGE>

          21.4.  Notwithstanding  Clause 21.1.  the Parties agree that Rsch GmbH
     Medizintechnik  has the right to market under it's own  responsibility  the
     CD-Hearing   Tester  and  the  K-series   product  items  which  Rsch  GmbH
     Medizintechnik may have in stock on December 31st, 1999. After Closing Date
     and before January 1st, 2000 Rsch GmbH  Medizintechnik  will at the maximum
     from Meracus GmbH purchase 240 units of the CD-Hearing Tester and 315 units
     of the K-series from Entomed AB.


          21.5.  The Vendor  agrees to take all  necessary  steps to  maintain a
     profound  and  complete  secrecy of all  matters  concerning  the  Acquired
     Assets,  which is transferred to the Purchaser  under this Agreement and of
     all matters which the Vendor, besides that, may have become acquainted with
     and which by nature should not be brought to the knowledge of a third party
     except to the extent  required by law.  This covenant is made for a term of
     three (3) years from the Closing Date.


                                   ARTICLE 22

                                 MISCELLEANOUS

          22.1.  Expenses.  Each  party  hereto  shall  bear  its own  expenses,
     including  fees and  expenses  incurred  by them  and/or  their  respective
     advisers,  in connection  with the drafting,  negotiating and completion of
     this Agreement.  Each Party shall each pay own expenses  regarding all use,
     stamp, transfer, service, recording and like taxes or fees, if any, imposed
     by  any  Governmental   Authority  in  connection  with  the  transfer  and
     assignment of the Acquired Assets. If sales taxes apply to this transaction
     the  Parties  agree to split  such taxes  equally to the extend  said taxes
     shall be non-refundable.


          22.2. Taxes. Any consequences in terms of taxation levied on income or
     capital  gains which shall arise out of the  transactions  contemplated  by
     this  Agreement  shall be for the  account  of the party  only to whom such
     consequences have arisen.


          22.3.  Notices.  All notices to be given  hereunder  shall be given in
     writing  and shall be deemed to have been  given (a) when sent by  telefax,
     facsimile  or other  wire  transmission  with a  confirmation  copy sent by
     registered mail or (b) three (3) business days after being deposited in the
     post office, certified or registered mail, postage prepaid and addressed as
     follows (or to such other address as one party may notify to the other):
<PAGE>

          (a)     If to the Vendor:       American Electromedics Corporation
                                          13 Columbia Drive
                                          Suite 18
                                          Amherst, New Hampshire 03031
                                          U.S.A.
                                          Telefax No. +1 603 880 6390

                                          For the attention of the "President"


          (b)     If to the Purchaser:    Maico Diagnostic GmbH
                                          Rohrdamm 7
                                          Siemensstadt
                                          D-13629 Berlin
                                          Germany
                                          Telefax No. +49 30 386 29490

                                       For the attention of the  "Geschftsfhrer"


          22.4.   Arbitration.   Any  dispute   regarding   the   understanding,
     interpretation  and  supplementation  of this Agreement,  cannot be brought
     before  the  Ordinary  Courts  of Law  but  shall  be  settled  finally  by
     arbitration in Copenhagen in accordance  with the  provisions  laid down in
     Act No.  181 of the  24th of May,  1972  regarding  Arbitration,  including
     subsequent  amendments  hereto.  The party,  who requests for  arbitration,
     shall in writing  and by  registered  letter  inform the other party of the
     request  for  arbitration,  indicating  the  issues to be  settled  and the
     grounds for actions to be relied on and the name of the arbitrator  decided
     for.  Within thirty (30) calendar days from receipt of the written  request
     for arbitration the other party shall by registered letter inform the first
     party  about the name of the  arbitrator  chosen as well as the  claims and
     objections  to be relied on. In the event  that the time limit is  exceeded
     this  arbitrator  shall be nominated  by the  President of the Maritime and
     Commercial Court in Copenhagen. The arbitrators chosen by the parties shall
     jointly appoint a third  arbitrator as Chairman of the  Arbitration  Court.
     The third arbitrator  shall be a jurist,  who is skilled in Danish contract
     Law. In the event that the arbitrators  chosen by the parties are unable to
     agree on the nomination of the third  arbitrator  within a period of thirty
     (30)  calendar  days from the date that the first party was notified of the
     other party's choice of arbitrator, the third arbitrator shall be nominated
     by the President of the Maritime and Commercial  Court in  Copenhagen.  The
     Arbitration  Court  solely  decides  for all  rules  and  procedures  to be
     followed  with  respect to the  hearing of the case.  The  decision  of the

<PAGE>

     Arbitration Court shall be final,  binding and liable to execution for both
     parties.  The Arbitration Court shall be entitled to decide on the costs of
     the Arbitration Court, including fees to the arbitrators. The parties shall
     be obliged to deposit in advance an amount fixed by the  Arbitration  Court
     as security for the costs of the Arbitration Court. The hearing of the case
     and the  decision of the  Arbitration  Court shall not be  available to the
     general  public.  The  arbitration  proceedings  shall be  conducted in the
     English language.


          22.5.  Limitation of Other  Proceedings.  The Purchaser and the Vendor
     each agrees that it will not file (nor will it cause any party to) file any
     suit, motion, petition or otherwise commence any legal action or proceeding
     which may be submitted to arbitration pursuant to this Agreement (but which
     neither party has theretofore elected to so submit to arbitration, or which
     has been or  currently  is being  arbitrated  pursuant to this  Agreement),
     except in the Maritime and Commercial Court in Copenhagen, Denmark.


          22.6.  Applicable  Law.  This  Agreement  shall  be  governed  by  and
     construed  and  enforced  in  accordance  with the Laws of the  Kingdom  of
     Denmark  without  giving  effect  to the  principles  of  conflicts  of law
     thereof.


          22.7. Interpretation.  Article headings used in this Agreement are for
     convenience  only and shall not affect the meaning or  construction of this
     Agreement.  Schedules and Exhibits to this Agreement shall be considered to
     form part of this Agreement as if fully set forth herein.  Any  information
     disclosed  in one Schedule or Exhibit  shall be deemed to be disclosed  for
     all purposes of this  Agreement and shall  pertain to all Articles  hereof.
     The use of the term "including" or "include" shall in all cases herein mean
     "including,   without   limitation"   or  "include,   without   limitation"
     respectively.


          22.8.  Waivers.  The failure of a party hereto at any time or times to
     require  performance of any provision  hereof shall in no manner affect its
     rights at a later  time to  enforce  the same.  No waiver by a party of any
     condition  or of  any  breach  of any  term,  covenant,  representation  or
     warranty  contained in this Agreement shall be effective unless in writing,
     and no waiver in any one or more instances  shall be deemed to be a further
     or  continuing  waiver of any other  condition or breach of any other term,
     covenant, representation or warranty.

<PAGE>

          22.9. Effect of  Investigations.  Any due diligence  review,  audit or
     other  investigation or inquiry  undertaken or performed by or on behalf of
     the   Purchaser   shall   not   limit,   qualify,   modify   or  amend  the
     representations,  warranties  and  covenants  of, and  indemnities  by, the
     Vendor made or undertaken  pursuant to this Agreement,  irrespective of the
     knowledge  and  information  received (or which should have been  received)
     therefrom by the Purchaser.


          22.10.  Further  Assurances.   Upon  the  reasonable  request  of  the
     Purchaser, the Vendor will on or after the Closing Date execute and deliver
     to the  Purchaser  such other  documents,  releases,  assignments  or other
     instruments  as may be required to effectuate  completely  the transfer and
     assignment to the  Purchaser  of, and to vest fully in the Purchaser  title
     to, each of the Acquired Assets.


          22.11.  Assignment.  This Agreement shall be binding upon and inure to
     the  benefit of the  parties  hereto and their  respective  successors  and
     assigns;  provided,  however,  that the Vendor  shall not assign any of its
     rights or obligations  without the written  consent of the  Purchaser.  The
     Purchaser  may designate any company  within the  Purchaser's  group as its
     Assignee to perform all or part of its  obligations and to benefit from all
     or part of its rights under this  Agreement on or prior to the Closing Date
     or at any time thereafter upon written notice to the Vendor. Performance by
     such  Assignee  of  all  or  part  of  the  Purchaser's  obligations  shall
     constitute such designation, and, in such event, the parties agree that all
     references  herein to "the Purchaser" shall be deemed to be amended,  where
     applicable,  to refer  also or  exclusively,  as the  case may be,  to such
     Assignee; provided, however, that the Purchaser shall remain liable for the
     performance of such Assignee hereunder.


          22.12.  Entire  Understanding.  This  Agreement  sets forth the entire
     agreement  and  understanding  of the  parties  hereto  in  respect  to the
     transactions  contemplated  hereby  and  supersedes  all prior  agreements,
     arrangements  and  understandings  relating to the subject  matter  hereof.
     There has been no representations or statements, oral or written, that have
     been relied on by any party  hereto,  except those  expressly  set forth in
     this Agreement.

          22.13.  Amendment.   This  Agreement  may  be  amended,   modified  or
     supplemented but only in writing signed by all of the parties hereto.



<PAGE>

          IN  WITNESS  WHEREOF,  the  parties  have  hereunder  to  affix  their
     signatures  and execute  this  Agreement in two (2)  counterparts,  each of
     which shall be deemed an original, on the dates written hereunder.


                                                                 THE PURCHASER:

                                                       Date:



                                                  ______________________________
                                      For and on behalf of Maico Diagnostic GmbH







                                                                    THE VENDOR:

                                                       Date:



                                                  ______________________________
                                                            For and on behalf of
                                              American Electromedics Corporation



                                                   _____________________________
                                                            For and on behalf of
                                                       Rosch GmbH Medizintechnik





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