LETTER OF INTENT
This 28th day of January 2004, INMEDICA DEVELOPMENT CORPORATION, a Utah
corporation ("InMedica") and WESCOR, INC, a Utah corporation ("Wescor") hereby
express their intent to carry out the transactions described below.
R E C I T A L S:
WHEREAS, InMedica is the inventor and owner of certain
proprietary technical information in oral, written, visual and physical form,
related to non-invasive hematocrit (the "Hematocrit Technology");
WHEREAS, certain of the Hematocrit Technology is the subject
of patent applications and/or patents in the United States and the European
community (the "Patent Rights"); and
WHEREAS, InMedica and Wescor wish to pursue certain business
transactions between the parties, including the delivery of the Hematocrit
Technology to Wescor in order to allow Wescor to evaluate the commercial and
technical utility of the Hematocrit Technology, the advancing of certain funds
by Xxxxxx to InMedica, and pursuit of a possible business venture between the
parties, all as more fully described below.
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1. InMedica will deliver to Wescor all of the Hematocrit Technology,
including all prototypes and technical information in the possession of InMedica
and all prototype and technical information in the possession of Medical
Physics, Inc., a consultant to InMedica.
2. Wescor and its technical staff will analyze the Hematocrit
Technology and may undertake modifications and enhancement to the Hematocrit
Technology, with the agreement and approval of InMedica, to improve the
commercial and technical utility of the Hematocrit Technology and the Patent
Rights. In conducting its due diligence on the Hematocrit Technology, Wescor
may, at its discretion, contract with Xx. Xxxx Xxxxxxxx and Dr. Xxxxxx Xxxxx,
principals of Medical Physics, Inc. who have been involved in the development of
the Hematocrit Technology. All Due Diligence relating to the Technology will be
the responsibility of Wescor. Only modifications and improvements agreed to in
advance by InMedica and accepted by InMedica (the "Technology Modification
Expenses") will be subject to any reimbursement of Wescor's expenses which will
be secured by a promissory note as detailed in paragraph 9.
3. Xxxxxx agrees to loan to InMedica during the months of January, February and
March, 2004 an amount of up to $25,000 per month in order to maintain InMedica's
overhead and status as a public company. Xxxxxx has presently agreed to advance
to InMedica those specific amounts identified in the category identified as
Expenses for the months of January, February and March in Exhibit "A" attached
hereto (the "Overhead Advances"). Any modifications to the agreed Overhead
Advances to be advanced by Xxxxxx as identified in Exhibit "A" must be agreed
upon in writing in advance by Xxxxxx and InMedica. Provided, however, that
Wescor may terminate its commitment to loan Overhead Advances to InMedica by
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providing written notice to InMedica. In the event Wescor provides such notice
of termination to InMedica, Wescor shall not be required to loan any more
Overhead Advances to InMedica except those Expenses set forth on Exhibit "A" for
the month during which the notice of termination is sent.
4. Xxxxxx agrees to loan to InMedica during the months of January, February and
March, 2004 an amount of up to $20,011.15 in order to pay InMedica's accrued
expenses as of 12/31/2003, shown as Payables on attached Exhibit "A," (the
"Accrued Expense Advances") not including accrued payroll expenses consulting,
and dividend expenses. Any additions to the agreed Accrued Expense Advances to
be advanced by Xxxxxx as identified in Exhibit "A" must be agreed upon in
writing in advance by Xxxxxx and InMedica.
5. InMedica and Xxxxxx will enter into due diligence and negotiations
to pursue
a possible business venture between the companies. The principal terms of the
anticipated business venture will be negotiated and defined as soon as
practicable, to establish a reasonable basis for decisions of both companies for
expenditures as described in paragraphs 2 and 3.
6. At such time as the parties have negotiated and defined the
principal terms of the anticipated business venture, as discussed in paragraph 5
above, subject to an appropriate level of due diligence, Wescor and InMedica
shall cause to be prepared an Agreement (the "Agreement") pursuant to which the
parties shall enter into a binding contract to conform with the intention of the
parties as expressed in this Letter of Intent and to set forth such other
representations, warranties, covenants and agreements as may be agreed upon by
all parties.
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7. InMedica agrees not to (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to the acquisition
of any rights in the Hematocrit Technology, any capital stock or other voting
securities, or any substantial portion of the assets, of InMedica (including any
acquisition structured as a merger, consolidation, or share exchange), or (ii)
participate other than with Wescor in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing (collectively, the "Stand-Off"). InMedica will notify Wescor
immediately if any person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing. InMedica will deal exclusively with Wescor
notwithstanding any third party proposals. The Stand Off will expire on April 1,
2004, unless extended by agreement of InMedica and Wescor or unless terminated
earlier by Wescor by written notice of termination to InMedica as provided in
paragraph 3 above.
8. InMedica and Wescor will exchange all necessary and appropriate
information regarding each company, including all available financial
information, in order to allow the principals of both companies to investigate
the terms of a possible business venture.
9. The Overhead Advances from Wescor to InMedica, the Accrued Expense
Advance, and any Technology Modification Expenses will be evidenced by
convertible promissory notes which will bear interest at an annual rate equal to
the prime rate published on a daily basis in the Wall Street Journal (the
"Overhead Note", the "Accrued Expense Note" and the "Technology Modifications
Note"). The resolution of the Notes will be specified in the Agreement. In the
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event the Agreement is not executed, the Overhead Note will be forgiven, but,
the Accrued Expense Note and Technology Modifications Note shall continue and
will be repaid by InMedica pursuant to its terms. The Accrued Expense Note and
the Technology Modifications Note shall be secured by an assignment and security
interest granted to Wescor covering 50% of all proceeds received by InMedica in
the future from any commercial use of the Hematocrit Technology. The security
interest shall be evidenced by a Security Agreement and related UCC-1 financing
statement (the "Security Documents"). Provided, however, at Wescor's option, any
or all of the Notes may be converted into shares of InMedica stock based on a
conversion price of $.10 per share.
10. InMedica will not be responsible for any of Wescor's Due Diligence
Expenses except the Technology Modification Expenses as described in Paragraph
2, above.
11. As soon as practicable, before Wescor advances any of the Overhead
Advances, Accrued Expense Advance or the Technology Modification Expenses,
Wescor and InMedica shall cause to be prepared the Overhead Note, the Accrued
Expense Note, the Technology Modifications Note and the Security Documents,
which shall be executed by InMedica as a condition of the advancement of the
Overhead Advances, Accrued Expense Advance, and the Technology Modification
Expenses by Xxxxxx.
12. Except for the Overhead Advance, the Accrued Expense Advance and
the Technology Modification Expenses as described above, each party hereto shall
pay all of its own costs associated with consummation of the Agreement unless
such costs are expressly assumed by the other party in writing.
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13. All parties will use their best efforts to proceed to a closing of
the transactions contemplated herein as soon as reasonably practicable. Xxxxxx
and InMedica acknowledge that execution of the Agreement will be conditioned
upon the results of their respective due diligence investigations. The parties
further acknowledge that not all matters to be set out in the Agreement are
mentioned in this Letter of Intent. The results of due diligence and the advice
of professionals engaged by each party may result in additional terms not set
out herein.
14. The existence and terms and conditions of this Letter of Intent are
strictly confidential and may not be disclosed to anyone other than to the
directors, officers and advisers of InMedica and Xxxxxx who shall have fiduciary
or legal responsibilities to keep such information confidential, unless
disclosure is required by applicable securities laws. The parties acknowledge
and agree that they are parties to a mutual non-disclosure agreement, and
continue to be bound by the terms thereof.
15. This Letter of Intent is only an expression of intent by the
parties to enter into binding contracts as soon as practicable. Except for
paragraphs 7, 9 and 14 above, this letter itself does not constitute a contract,
and no person, firm, company or corporation may take any action or refrain from
taking any action to its or their detriment in reliance upon such expression.
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INMEDICA:
InMedica DEVELOPMENT CORPORATION,
a Utah Corporation
By: /s/ Xxxxx Xxxxxx
Its: President
WESCOR:
WESCOR, INC, a Utah Corporation
By: /s/ Xxxxx X. Xxxxxx
Its: President/CEO
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