EXHIBIT 1
CONVERSION AGREEMENT
AN AGREEMENT made the 23rd day of April , 1996 by and
between the Preferred Stockholder (hereinafter "Holder") whose name
is subscribed below and InMedica Development Corporation, a Utah
corporation, with its principal place of business at 495 East 4500
South, Suite 230, Salt Lake City, Utah, (hereinafter, "InMedica" or
the "Company").
RECITALS
Whereas Holder owns 5,243 shares of the Series A Convertible
Preferred Stock, par value $4.50 per share, (the "Preferred Stock")
of InMedica; and
Whereas the Preferred Stock by its terms is presently
convertible to common stock of the Company at the conversion rate
of six shares of common stock per one share of Preferred Stock; and
Whereas the undersigned Holder has given notice of conversion
as required by the Articles of Incorporation of the Company and is
entitled to 31,458 shares of the Common Stock of the Company (the
"Shares") in exchange for the 5,243 Preferred shares presently held
by him; and
Whereas the undersigned Holder is knowledgeable regarding the
business, and affairs of the Company, has had opportunity to ask
and receive answers to questions regarding the Company, and has
reviewed or had opportunity to review disclosure documents
regarding the Company and now considers himself to be fully
informed and in possession of every material fact he deems
necessary in order consider the exercise of his conversion rights
with respect to the Preferred Stock;
NOW THEREFORE, in consideration of the mutual agreements
contained herein, the parties agree as follows:
1. Exchange. Holder hereby exhanges his 5,243 Preferred
shares for 31,458 restricted common shares of InMedica as permitted
by the Articles of Incorporation of the Company. Holder will
deliver a signed copy of this agreement and his Preferred Stock
Certificate endorsed in blank to the Company.
2. Issuance of Shares. Upon receipt by the Company of
this signed Agreement and the Preferred Stock certificate of the
Holder, the Company will issue to Holder 31,458 restricted common
shares, $.001 par value, of the Company.
3. Effective Date. Holder and the Company agree that
the exchange transaction contemplated by this Agreement, shall be
effective upon the acceptance by the Company of the Holders'
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Agreement, notwithstanding the actual date of delivery of the stock
certificate representing the Shares.
4. Conditions. The consummation of the exchange
transaction contemplated by this Agreement is expressly conditioned
upon the satisfaction or waiver of the following conditions
precedent and subsequent:
4.1 The full and due execution and delivery of this Agreement by
Holder and the Company;
4.2 The execution and delivery by Holder of the Questionnaire
attached to this Agreement as Exhibit "F" and made a part hereof;
4.3 The continued accuracy and validity of the representations and
warranties of Holder set forth in Section 5 and elsewhere in this
Agreement;
4.4 The approval of this Agreement by InMedica;
5. Representations and Warranties of Holder. Holder hereby
agrees, represents and, to the extent the context shall require,
warrants to the Company as set forth below and agrees that such
agreements, representations and warranties shall expressly survive
the consummation of the exchange transaction contemplated hereby
and shall be unaffected by any investigation made by any party at
any time:
5.1 Holder understands that the Preferred Stock is being exchanged
and the Shares are being issued without registration under the
Federal Securities Act of 1933, as amended (the "Federal Act"), in
reliance upon an exemption or exemptions available under the
Federal Act, including those available under Section 3(a)(9) and/or
Section 4(2) and/or Regulation D thereof. Holder further
understands that the Preferred Stock is being exchanged and the
Shares are being issued pursuant to an exemption from the
registration provisions of the applicable state laws and
understands that the availability of the exemption or exemptions
from registration and qualification under the Federal Act and the
state laws depend in part upon the accuracy of certain of the
representations, declarations and warranties contained herein, and
those which are made in the Questionnaire attached as Exhibit "F"
hereto, executed by Holder with the intent that the same may be
relied upon by the Company in determining Holder's suitability as
an investor in the Company. Holder further acknowledges that this
transaction has not been and will not be reviewed by the Securities
and Exchange Commission nor by the securities administrator of any
state.
5.2 Holder is a resident and domiciliary, not a temporary or
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transient resident, of the State shown as part of Holder's address
in Holder's Questionnaire.
5.3 Holder is acquiring the Shares to be issued for investment and
not with a view to the public resale or distribution thereof. The
undersigned has no contract, undertaking, agreement or arrangement
with any person to sell, transfer or pledge to such person or
anyone else the Shares or any portion thereof or interest therein,
and the undersigned has no present plans to enter into such
contract, undertaking, agreement or arrangement.
5.4 Holder acknowledges that the certificate evidencing the
Shares, and any and all replacements thereof, shall bear and be
subject to legends in substantially the following form affecting
the transferability of the Shares and that the Company will place
appropriate stop transfer orders with its transfer agent:
"The shares of stock evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and have
been issued in reliance upon one or more exemptions from the
requirements for such registration including an exemption for non-public
offerings. Accordingly, the sale, transfer, pledge, hypothecation or other
disposition of the shares evidenced hereby or any portion thereof or
interest therein may not be accomplished in the absence of an effective
registration statement under that act, or an opinion of counsel satisfactory
in form and substance to the Company to the effect that such a registration
is not required."
5.5 Holder further understands and agrees that if he desires to
make any transfer of the Shares, the Company is in a position to
impede such transfer through prior stop orders placed with its
transfer agent or otherwise and that the Company will promptly
remove such impediments placed by it only when:
(i)The Company has received a satisfactory opinion of counsel to
the effect that the proposed transfer does not require registration
or qualification pursuant to the Federal Act or the state laws by
reason of an exemption provided thereunder and a representation and
agreement of the proposed transferee in form and substance
satisfactory to the Company, and the Company shall have advised
Holder that such opinion, representation and agreement are
satisfactory to the Company; or
(ii) The Company has received a satisfactory opinion of counsel to
the effect that the proposed transfer complies with the provisions
of Rule 144 under the Federal Act and the Company shall have
advised the Holder that such counsel and such opinion are
satisfactory to the Company; or
(iii) A Registration statement covering the proposed transfer has
been filed with the Securities and Exchange Commission and has been
declared effective.
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5.6 Holder agrees that, in any event, Holder will not attempt to
dispose of the Shares or any portion or interest therein, unless
and until the Company has determined to its satisfaction that the
proposed disposition does not violate the registration or
qualification requirements of the Federal Act or applicable state
laws.
5.7 Holder understands that the Company has no obligation or
intention to register or qualify the Shares in order to permit
sales thereof in accordance with the registration or qualification
provisions of the Federal Act or the applicable state laws.
5.8 Holder hereby agrees to indemnify the Company and its
officers, directors, agents and attorneys and to hold the Company
and such persons harmless from any liability, costs or expenses
(including reasonable attorneys' fees) arising as a result of the
sale or distribution of the Shares or any portion thereof or
interest therein by him in violation of the Federal Act or
applicable state laws.
5.9 Holder agrees to indemnify the Company and its officers and
directors, agents and attorneys and to hold the Company and such
persons harmless from and against any and all loss, damage,
liabilities, costs or expenses (including reasonable attorneys'
fees) to which they may be put or which they may have incurred by
reason of or in connection with any misrepresentation made by
Holder, for any breach of any of Holder's warranties or Holder's
failure to fulfill any of Holder's covenants or agreements under
this Agreement.
5.10 Holder hereby confirms that all statements in the Holder's
Questionnaire attached as Exhibit "F" hereto were and remain true
and correct and undertakes to immediately notify the Company of any
material changes occurring thereto prior to consummation of this
exchange transaction.
5.11 Holder acknowledges that Holder and/or Holder's professional
advisor have had the opportunity to ask questions of, and receive
answers from the Company, and has/have had access to all
information concerning the terms and conditions of this exchange
and the financial and operating condition of the Company and to
obtain additional information to verify the accuracy of such
information. Further, Holder has reviewed the disclosure materials
included herewith, including the financial statements contained
therein and is familiar with their contents and further
acknowledges that Holder has had the opportunity and access to
obtain further information from the Company regarding such
financial, business and management information. Disclosure
materials attached hereto are as follows:
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Form 10-KSB for the Year Ended 12/31/95 ..........Exhibit A
Articles of Incorporation of InMedica Development
Corporation, including Series "A" Preferred Stock
Amendment.........................................Exhibit B
Bylaws of InMedica Development Corporation........Exhibit C
Additional Material Information...................Exhibit D
Risk Factors......................................Exhibit E
Questionnaire.....................................Exhibit F
5.12 Holder understands that, as indicated above, the Shares to be
issued will be restricted securities and, as such, and in addition
to the other restrictions described above, the Shares may be
subsequently transferred only in accordance with the provisions of
Rule 144 under the Federal Act which requires, among other things,
that the Shares be held for not less than two years, known as the
"holding period", including the tacking of any prior holding period
permitted by Rule 144.
5.13 Holder understands that by its terms, this exchange is made
at the option of the Holder, and the Holder, is free to accept or
reject this Exchange Agreement.
5.14 The number of shares of the Preferred Stock held by Holder as
of the date shown, is accurate and represents the full number of
shares of the Preferred Stock held by the Holder and that all
dividends owning on the Preferred Stock have been paid in full and
Holder waives and forever relinquishes any dividends on the
Preferred Stock accruing during the second quarter of 1995 and
thereafter.
5.15 Holder understands that the Company's Chief Executive Officer
purchased from Allan L. Kaminsky, then CEO of the Company,
1,000,000 shares of the Company's common stock for $100,000 ($.10
per share) during April, 1995 and that other transactions or
exchanges in the securities of the Company have occured in which
the common stock of the Company was valued at substantially less
than the arbitrary $.75 per share conversion ratio utilized in this
transaction (see Exhibit A, Form 10-KSB for the year ended December
31, 1995, "Preferred Stock," "Debentures" and "Price Range for
Common Stock").
5.16 Holder acknowledges that the Company makes no representations
or assurances as to the federal or state income tax implications,
either to the Holder or the Company, of this Exchange Agreement.
The Company has offered no opinion or advice in this respect and
Holder acknowledges that the Company and its management have urged
Holder to consult with his professional advisors with respect to
any such tax implications.
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5.17 Holder acknowledges that no representations or assurances
have been given to Holder by the Company or anyone acting in its
behalf as to the continued operations of the Company or the
financial or other success thereof and Holder recognizes that the
Shares represent a speculative investment and involve risk factors
including, but not limited to, those set forth in the Exhibits
hereto including the risk of loss of Holder's entire investment in
the Company.
5.18 Holder has not assigned or transferred the Preferred Stock or
any interest therein and the exchange thereof by Holder under this
Agreement, to the knowledge of Holder, will not result in any
breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation of any lien,
charge or encumbrance on, the Preferred Stock or the Shares
pursuant to any agreement, contract or other instrument to which
the Holder or the Preferred Stock is or may be bound.
5.19 Holder acknowledges that the conversion ratios for the
Exchange of the Preferred Stock for the Shares has been arbitrarily
determined by the Company and bears no relationship to book value,
present or future tangible or intangible assets of the Company or
earnings of the Company or any usual investment criteria.
6. Loss of Priority. Holder acknowledges that under the terms of
the Preferred Stock, conversion is at the option of the Preferred
Stockholder. If the Holder does not convert and execute this
Exchange Agreement, then the Preferred Stock will continue to pay
or accrue dividends at the rate of 8% per annum and the Preferred
Stock would have a preference in any liquidation of the Company
over the common stockholders. If the Holder exchanges the Holder's
Preferred Stock, the Holder forever relinquishes any priority the
Holder would have had as compared to the common shareholders in a
liquidation of the Company.
7. Further Assurances. Each party shall, at any time and from
time to time, at the other's request, execute, acknowledge and
deliver any instrument that may be necessary or proper to carry out
the provisions of this Agreement.
8. Time of the Essence. Time shall be of the essence in
satisfying the terms and conditions of this Agreement.
9. Attorneys' Fees. In the event a dispute arises with respect
to this Agreement, and such dispute is not resolved prior to final
judicial determination, the party prevailing in such dispute shall
be entitled to recover all expenses, including, without limitation,
reasonable attorneys' fees and expenses.
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10. Complete Agreement of the Parties. This Agreement supersedes
any and all other agreements, either oral or in writing, between
the parties with respect to the subject matter hereof and contains
all of the covenants and agreements between the parties with
respect to such subject matter in any manner whatsoever. Each
party to this Agreement acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been
made by any party, or anyone herein, and that no other agreement,
statement or promise not contained in this Agreement shall be valid
or binding. This Agreement may be changed or amended only by an
amendment in writing signed by all of the parties or their
respective successors in interest.
11. Assignment. This Agreement and the rights and obligations of
Holder hereunder are personal to Holder and may not be transferred
or assigned without the prior written consent of the Company.
12. Binding. Subject to the provisions of Section 11 hereof, this
Agreement shall be binding upon and inure to the benefit of the
successors in interest, assigns and personal representatives of the
respective parties.
13. Number and Gender. Whenever the singular number is used in
this Agreement and when required by the context, the same shall
include the plural, and the masculine gender shall include the
feminine and neuter genders and the word "person" shall include
corporation, firm, partnership or other form of association.
14. Failure to Object Not a Waiver. The failure of either party
to this Agreement to object to, or to take affirmative action with
respect to, any conduct of the other which is in violation of the
terms of this Agreement, shall not be construed as a waiver of the
violation or breach or of any future violation, breach or wrongful
conduct.
15. Unenforceable Terms. Any provision hereof prohibited by law
or unenforceable under any applicable law of any jurisdiction shall
as to such jurisdiction be ineffective without affecting any other
provision of this Agreement. To the full extent, however, that the
provisions of such applicable law may be waived, they are hereby
waived to the end that this Agreement be deemed to be a valid and
binding enforceable agreement in accordance with its terms.
16. Miscellaneous Provisions. The various headings and numbers
herein and the groupings of provisions of this Agreement into
separate articles and paragraphs are for the purpose of convenience
only and shall not be considered a part hereof. The language in
all parts of this Agreement shall in all cases be construed in
accordance to its fair meaning as if prepared by all parties to the
Agreement and not strictly for or against any of the parties.
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EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN
/s/ Clinton B. Newman INMEDICA DEVELOPMENT CORPORATION
(Holder Signature)
Clinton B. Newman /s/ Larry E. Clark
(Print Name) By Larry E. Clark, President
EXHIBIT 2