SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 3,
1996
INMEDICA DEVELOPMENT CORPORATION
(Exact name of registrant as specified in charter)
Utah 0-12968 87-0397815
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
60 South 600 East, Suite 150
Salt Lake City, Utah 84102
(Address of principal executive offices)
Registrant's telephone number, including area code: (801)521-9300
(Former name or former address, if changed since last report)
ITEM 5. Other Events
During August, 1996, Dr. Allan Kaminsky orally advised a member of the
Company's board of directors that he would no longer pursue obtaining control of
the Company by a proxy contest or litigation. Dr. Kaminsky subsequently sent a
letter dated September 6, 1996 to Mr. Larry E. Clark offering his continued
efforts on behalf of the Company, without cash compensation, in exchange for
certain commitments by the Company, which included a right exercisable by Dr.
Kaminsky to appoint five persons to the Board of Directors (in the event he was
able to develop a device which could measure hematocrit within certain ranges)
and rights for Dr. Kaminsky to purchase one million or more shares of stock in
the Company at 50% of market value (in the event the Company achieved the
ability to fabricate a marketable product or executed a merger/acquisition). The
letter advised the Company that if Dr. Kaminsky did not receive a reply from the
Company by September 16, 1996 that he would "irreversibly" sever any association
with the Company (employment, consulting and advisory). After considering Dr.
Kaminsky's proposal, the Company determined to make no response to the letter
and considers its association with Dr. Kaminsky to be terminated and that his
435,000 options have expired. However, Dr. Kaminksy continues to be a principal
shareholder of the Company; see Form 10KSB for the year ended 1995, "Principal
Shareholders".
Effective September 3, 1996, the Company entered into a consulting contract
with Ruben Engineering, Paul Ruben and Calvin Ruben for engineering consulting
services relating to the development of its hematocrit technology. The contract
grants the Rubens a total of 300,000 options to purchase the common stock of the
Company for $1.16 per share. A block of 200,000 options become exercisable and
vest 25,000 per quarter beginning December 1, 1996. An additional 100,000
options become exercisable and non-forfeitable on the date satisfactory clinical
trials have been completed on the hematocrit technology. All options are
immediately exercisable and non-forfeitable if the FDA approves the Company's
hematocrit technology or if InMedica is sold or acquired or the non-invasive
hematocrit technology is sold or acquired. Pursuant to the agreement, the Rubens
agree to complete the construction of six prototypes for the Company for the
previously agreed upon price of $50,000 and to continue to consult with InMedica
for a period of at least two years, for a minimum of 8 hours per week at $80 per
hour. The Rubens are continuing research and development efforts on the
Company's technology.
ITEM 7. Exhibits
Agreement dated September 3, 1996 between InMedica
Development Corporation and Paul Ruben dba Ruben Engineering and
Calvin Ruben
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SIGNATURE
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.
INMEDICA DEVELOPMENT CORPORATION
(Registrant)
By: /s/ Larry E. Clark
Larry E. Clark, President
DATED: September 20, 1996
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CONSULTING AND OPTION AGREEMENT
An Agreement made as of the 3rd day of September, 1996 by and between
InMedica Development Corporation, a Utah corporation doing business at 60 South
600 East, Suite 150, Salt Lake City, Utah 84102 (hereinafter called "InMedica")
and Paul Ruben, dba Ruben Engineering and Calvin Ruben (collectively hereinafter
called "Ruben Engineering") with address at 741 East Litson, Murray, Utah 84107.
RECITALS
Whereas InMedica has previously engaged Ruben Engineering to complete
certain work on its non-invasive hematocrit project; and
Whereas the parties now desire to formalize their relationship for further
work and to grant certain stock options to Ruben Engineering as additional
compensation and incentive to complete work which has been commenced for
InMedica and to continue additional work;
Now therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Options. InMedica hereby grants to Paul and Calvin Ruben options to
purchase 300,000 shares of the common stock of InMedica subject to the vesting
requirements described in paragraphs a and b, below. All options shall be
allocated one third to Calvin Ruben and two thirds to Paul Ruben. The options
are exercisable for One Dollar and Sixteen Cents ($1.16) per share on the
following terms and conditions:
(a) Subject to the vesting schedule shown below, 200,000 options may be
exercised during a five year period beginning on the day of execution of this
agreement by Ruben Engineering giving 5 days prior notice to InMedica, together
with a check for the exercise price and a purchaser questionnaire and
representation letter in a form approved by counsel to InMedica. Upon receipt of
the notice, questionnaire, representation letter and check, InMedica shall
within five days instruct the transfer agent to issue the common shares as to
which the option has been exercised. Such share certificates shall bear a
restrictive legend and shall not be subject to resale except if registered or
pursuant to an exemption from registration under the securities
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laws. Each quarter following the grant of the foregoing 200,000 options, 25,000
options shall become exercisable and non- forfeitable on the following schedule:
Total Exercisable & Percent Exercisable
Date Non-Forfeitable Options Non-Forfeitable
- -------------------------------------------------------------
September 1, 1996 0 0
December 1, 1996 25,000 12.5%
March 1, 1997 50,000 25.0%
June 1, 1997 75,000 37.5%
September 1, 1997 100,000 50.0%
December 1, 1997 125,000 62.5%
March 1, 1998 150,000 75.0%
June 1, 1998 175,000 87.5%
September 1, 1998 200,000 100.0%
Exercisable options shown in the table above assume previously vested options
have not been exercised.
Notwithstanding the foregoing vesting schedule, upon FDA approval of the
InMedica non-invasive hematocrit technology, all 200,000 options shall become
immediately exercisable and non-forfeitable without regard to continued
employment thereafter or agreement to consult with InMedica of Ruben
Engineering. Should Ruben Engineering choose to terminate this agreement prior
to FDA approval or September 1, 1998, all unvested options shall be forfeited.
(b) 100,000 additional options shall become exercisable and non-forfeitable
for a term of five (5) years from a date on which satisfactory clinical trials
have first been completed by InMedica on the hematocrit technology.
"Satisfactory clinical trials" shall mean that the technology determines human
hematocrit with an RMS error of no more than 2 hematocrit points using a random
sampling of 50 patients. Upon completion of satisfactory clinical trials, the
100,000 options referred to in this paragraph may be exercised during the term
thereof by Ruben Engineering giving 5 days prior notice to InMedica, together
with a check for the exercise price and a purchaser questionnaire and
representation letter in a form approved by counsel to InMedica. Upon receipt of
the notice, questionnaire, representation letter and check, InMedica shall
within five days instruct the transfer agent to issue the common shares as to
which the option has been exercised. Such shares shall bear a restrictive legend
and shall not be subject to resale except if registered or pursuant to an
exemption from registration under the securities laws. Should Ruben Engineering
choose to terminate this agreement prior to the satisfactory completion of
clinical trials, the 100,000 options hereunder shall be forfeited.
(c) In the event that InMedica is sold or acquired by another company, or
InMedica's non-invasive hematocrit technology is sold or transferred to another
company (excluding non-exclusive licensing agreements) while this agreement is
in force, all 300,000 options will become exercisable and non-forfeitable.
2. Consulting Agreement. Ruben Engineering agrees to consult with InMedica
for a period of not less than two years from the date hereof regarding
InMedica's non-invasive hematocrit technology. Ruben Engineering personnel shall
be available to consult with and perform engineering services for InMedica as
required for a minimum of eight (8) hours per week during the period of this
Agreement. In addition to the options referred to in paragraph 1, Ruben
Engineering shall be paid an hourly rate of $80 per hour for all services
rendered hereunder.
3. Effect on Existing Agreement. Ruben Engineering has previously agreed
with InMedica to build a prototype of an hematocrit measuring device on or
before November 1, 1996 and five additional copies of the prototype on or before
November 14, 1996 in consideration of $50,000 to be paid by the Company. The
prior agreement shall be incorporated into this agreement, except that the
services previously contracted for shall be included by Ruben Engineering in the
price previously agreed to. Any work outside the scope of the prior agreement
shall be paid at the hourly rate referred to in paragraph 2.
4. Confidentiality. Ruben Engineering and its owners consultants and
employees shall concurrently with the execution of this agreement each sign and
agree to be bound by the Confidentiality and Non-competition agreement a copy of
which is attached hereto as Exhibit A.
5. Term. This agreement shall continue for a period of two years and may be
renewed for subsequent one year periods for additional consulting services by
mutual agreement of the parties.
6. General. (a) This agreement contains the entire agreement between the
parties on the subject matter (including those agreements expressly incorporated
herein by reference) and can only be changed or modified by written agreement
between the parties.
(b) Any notices or other communications under this agreement shall be in
writing, shall be deemed to have been legally given and delivered when sent
certified mail, return receipt requested to the addresses set forth above.
(c) In the event any provision or any part of any provision of this
agreement shall be held invalid, illegal or unenforceable, such holding shall
not affect any other provision or any part of the same provision which can be
given effect without the invalid provision or any part thereof.
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(d) This agreement may be executed in one or more counterparts each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Any party hereto found by a court of competent jurisdiction to have
breached this agreement shall be liable to the prevailing party for costs and
attorneys fees.
IN WITNESS WHEREOF the parties have executed this agreement as of the
date first above written.
InMedica Development Corporation
/s/ Larry E. Clark
By Larry E. Clark, President
Ruben Engineering
/s/ Paul Ruben
By Paul Ruben, Proprietor
/s/ Paul Ruben
Paul Ruben, Individually
/s/ Calvin Ruben
Calvin Ruben, Individually
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