SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): October 1, 2002
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INTEGRAL SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Charter)
5000 Philadelphia Way, Lanham, Maryland 20706-4417
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(Address of Principal Executive Offices)
Maryland 0-18603 52-1267968
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Registrant's telephone number, including area code: (301) 731-4233
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On October 1, 2002, Integral Systems, Inc., a Maryland corporation
("Integral"), completed the acquisition of Real Time Logic, Inc., a Colorado
corporation ("RT Logic"). Pursuant to an Agreement and Plan of Reorganization
dated October 1, 2002, by and among Integral, RT Logic, ISI Merger Corp., a
Colorado corporation that is a wholly owned subsidiary of Integral ("ISI"), each
of the individuals designated as a Major Shareholder on Exhibit 1 attached
thereto and Randal E. Culver as Shareholders' Representative (the
"Reorganization Agreement"), RT Logic was merged with and into ISI Merger Corp.
(the "Merger"), with ISI as the surviving corporation. In connection with the
Merger, ISI Merger Corp. changed its corporate name to Real Time Logic, Inc.
Under the Reorganization Agreement, the base purchase price payable to
the shareholders of RT Logic by Integral consisted of $13.25 million in cash and
683,870 shares of Integral common stock, par value $.01 per share (the "Integral
Common Stock"), of which approximately $1.5 million in cash and 77,447 shares of
Integral Common Stock were placed in escrow to secure certain indemnification
obligations of the RT Logic shareholders contained in the Reorganization
Agreement. Integral used working capital to finance the cash portion of the base
purchase price.
The Reorganization Agreement also provides that the shareholders of RT
Logic may be entitled to receive additional consideration in the form of excess
purchase price and contingent purchase price.
The excess purchase price will equal the amount (up to $1 million) by
which the shareholder equity reflected on a balance sheet for RT Logic dated as
of the closing date of the Merger exceeds $9,000,000. Fifty percent (50%) of any
excess purchase price will be payable in cash and fifty percent (50%) will be
payable in shares of Integral Common Stock (valued at $19.375 per share).
The contingent purchase price will be payable in the event that RT
Logic's business meets certain earnings performance targets during a period of
up to four (4) years following the Merger. Fifty percent (50%) of any contingent
purchase price will be payable in cash and fifty percent (50%) thereof will be
payable in shares of Integral Common Stock. Any Integral Common Stock issued in
connection with the contingent purchase price will be valued based on a
30-trading-day average leading up to the end of each applicable earnout period.
The contingent purchase price is subject to claims by Integral under the
indemnification provisions of the Reorganization Agreement.
The amount and type of Merger consideration was determined on the basis
of arm's length negotiations between Integral and RT Logic. It is intended that
the transaction be treated as a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended.
Patrick R. Woods, Vice President, Government Programs, of Integral,
served as an independent director of RT Logic from June 26, 2000 until the
Merger and held approximately 0.3% of the outstanding shares of RT Logic common
stock at the effective time of the Merger.
The description contained in this Item 2 of the Reorganization
Agreement and the transactions contemplated thereby is qualified in its entirety
by reference to the full text of the Reorganization Agreement, which is attached
hereto as Exhibit 2.1.
A copy of the press release dated October 9, 2002, regarding the
consummation of the Merger is attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements required to be filed by Item 7(a) as
part of this current report on Form 8-K will be filed by amendment not later
than December 16, 2002.
(b) Pro Forma Financial Information.
The pro forma financial information required to be filed by Item
7(b) as part of this current report on Form 8-K will be filed by amendment not
later than December 16, 2002.
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Reorganization dated October 1, 2002, by
and among Integral Systems, Inc., Real Time Logic, Inc., ISI
Merger Corp., each of the individuals designated as a Major
Shareholder on Exhibit 1 attached thereto and Randal E. Culver as
Shareholders' Representative.
Exhibit 99.1 Press Release.
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.
INTEGRAL SYSTEMS, INC.
By: /s/ Thomas L. Gough
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Thomas L. Gough
President and Chief Operating Officer
Date: October 16, 2002
EXHIBIT INDEX
Exhibit
Number Description
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2.1 Agreement and Plan of Reorganization dated October 1, 2002, by and
among Integral Systems, Inc., Real Time Logic, Inc., ISI Merger
Corp., each of the individuals designated as a Major Shareholder on
Exhibit 1 attached thereto and Randal E. Culver as Shareholders'
Representative.
99.1 Press Release.