-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QtWsk954/MeWrkScC8hiKWlC7AkiZA9ECTepUulx9Dnqg5NQB7x5hQpidu8jnHnm 4fB2Cw0qPt+ackTUNA+ovA== 0000939802-04-001175.txt : 20041215 0000939802-04-001175.hdr.sgml : 20041215 20041215171711 ACCESSION NUMBER: 0000939802-04-001175 CONFORMED SUBMISSION TYPE: PRER14C PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20041215 DATE AS OF CHANGE: 20041215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INMEDICA DEVELOPMENT CORP CENTRAL INDEX KEY: 0000726037 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 870397815 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRER14C SEC ACT: 1934 Act SEC FILE NUMBER: 000-12968 FILM NUMBER: 041205641 BUSINESS ADDRESS: STREET 1: 825 N 300 WEST CITY: SALT LAKE CITY STATE: UT ZIP: 84103 BUSINESS PHONE: 8012639190 MAIL ADDRESS: STREET 1: P O BOX 27557 STREET 2: 495 EAST 4500 SOUTH SUITE 230 CITY: SALT LAKE CITY STATE: UT ZIP: 84127 FORMER COMPANY: FORMER CONFORMED NAME: INMED DEVELOPMENT CORP DATE OF NAME CHANGE: 19840815 PRER14C 1 sch14ca2-121504.txt SCHEDULE 14C Information Statement Pursuant to Section 14(c) of the Securities Act of 1934 (Amendment No. 2 ) Check appropriate box: [x] Preliminary Information Statement [ ] Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2) [ ] Definitive Information Statement INMEDICA DEVELOPMENT CORPORATION Name of Registrant as Specified in its Charter Payment of Filing Fee (check applicable box) [ ] No fee required [ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11 1) Title of each class of securities to which transaction applies - None 2) Aggregate number of securities to which transaction applies - None 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11(c)(2) Total Amount: How Determined: . 4) Proposed maximum aggregate value of transaction: 5) Total Fee paid: [x] fee paid previously with preliminary materials [ ] check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount previously paid: 2) Form, schedule or registration statement number: 3) Filing party 4) Date filed 1 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ___________________ TO THE SHAREHOLDERS OF INMEDICA DEVELOPMENT CORPORATION: The Special Meeting of Shareholders of InMedica Development Corporation (the "Company") will be held at ___ pm local time, ________________ in the _________ Room at the Little America Hotel, 500 South Main Street, Salt Lake City, Utah to consider and vote upon the following proposals: 1. The approval of the sale and issuances of the stock of MicroCor (an 80% owned subsidiary of InMedica) in order to fund continued development of the hematocrit technology, being a potential sale of all or substantially all of the assets of the Company. 2. The election of five directors (Larry E. Clark, Ralph Henson, Richard Bruggeman, Sheng Jung (Robert S.) Chiang and Mao-Song Lee) to serve for one year or until a successor is elected and qualified 3. Ratification of the appointment of Robison Hill & Co. as the independent public accountants of the corporation. Information regarding the matters to be acted on at the Special Meeting is contained in the Information Statement accompanying this Notice. Shareholders of record as of ________________________ are entitled to notice of and to vote at the Shareholders' Meeting. Shareholders are or may be entitled to dissenter's rights as to proposal number 1 above. BY ORDER OF THE BOARD OF DIRECTORS Salt Lake City, Utah Larry E. Clark, Chairman _____________ 2004 2 INMEDICA DEVELOPMENT CORPORATION 825 North 300 West, Suite N132 Salt Lake City, Utah 84103 801-521-9300 INFORMATION STATEMENT This Information Statement is being furnished to shareholders of InMedica Development Corporation, a Utah corporation, ("InMedica" or the "Company"), in connection with a Special Meeting of its shareholders to be held on ___________________ at ____ pm, local time, in the __________ Room at the Little America Hotel, 500 South Main Street, Salt Lake City, Utah, and at any adjournment thereof (the "Meeting"). At the Meeting, InMedica shareholders will be asked (1) to approve the sale and issuances of the stock of MicroCor, Inc. (an 80% owned subsidiary of InMedica) to Wescor, Inc. in order to fund continued development of the Company's hematocrit technology, (2) to elect five directors to serve for one year or until a successor is elected and qualified, and (3) to ratify the selection of Robison Hill & Co. as the Company's independent public accountants. This Information Statement and Notice of Meeting are first being mailed to shareholders of InMedica on or about ___________, 2004. Notice is also being mailed to preferred shareholders of InMedica although they have no voting rights at the meeting. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY Only holders of record of InMedica Common Stock (also referred to herein as "common shares" or "shares") as of the close of business on ___________ 2004 (the "Record Date") will be entitled to notice of and to vote at the Meeting. As of the Record Date, there were 16,382,993 shares of InMedica Common Stock issued and outstanding. Holders of a majority of the outstanding shares in person or by proxy must be present in order to establish a quorum to conduct business at the meeting. The affirmative vote of the holders of a majority of such shares present is required to elect directors and to approve the sale and issuances of the stock of MicroCor, Inc. (an 80% owned subsidiary) to Wescor, Inc. in order to fund continued development of the Company's hematocrit technology. Each holder of common shares is entitled to one vote for each share held. If a holder of shares present at the meeting abstains from voting, the shares will still be counted towards the presence of a quorum. Cumulative voting is not permitted. 3 FIRST PROPOSAL: TO APPROVE THE SALE AND ISSUANCES OF THE STOCK OF MICROCOR, INC. (AN 80% OWNED SUBSIDIARY OF INMEDICA) TO WESCOR, INC. IN ORDER TO FUND CONTINUED DEVELOPMENT OF THE COMPANY'S HEMATOCRIT TECHNOLOGY SUMMARY TERM SHEET InMedica Development Corporation ("InMedica") conducts research and development of medical technology to measure human hematocrit by non-invasive means (the "hematocrit technology"). On September 7, 2004, InMedica entered into a Joint Development Agreement (the "Agreement") to fund further development of the hematocrit technology by the sale of stock in MicroCor, Inc., it's 80% owned subsidiary and principal asset, to Wescor, Inc., a medical technology company located in Logan, Utah. . Chi Lin owns the additional 20% of MicroCor and also agreed to the sale. MicroCor owns four patents granted on the hematocrit technology. Further all other technology rights of InMedica and Chi Lin in the hematocrit technology are being transferred or licensed to MicroCor. BACKGROUND OF THE SALE PROPOSAL. Throughout 2003 InMedica's board of directors explored a number of possible means to complete the development of its hematocrit technology (ie. develop a prototype of the hematocrit device with FDA clearance - the "FDA cleared prototype"). Three large medical device companies (with annual revenues in the range of $90 million to $8 billion per year) were orally contacted by members of the board of directors and asked about their interest in completing the project, however, none were willing to consider the project until the Company had an FDA cleared prototype. The InMedica board also orally contacted five smaller companies (with annual revenues in the $4 to $16 million range), two of which were local companies, who might partner to complete the project. However, all of these smaller companies, except one local company, were already at capacity with other projects. The other local company, Wescor, Inc., was initially contacted by Ralph Henson, director and CEO of InMedica in July, 2003. The contact was made following a call from a Wescor board member indicating that Wescor was looking for a medical technology project. Conversations followed with Wescor's CEO, Wayne Barlow, its VP of Research and Development, Dennis Briscoe and its Vice President, Reed Crockett. Wescor expressed interest in the project (ie. the development of the hematocrit technology through the FDA cleared prototype stage and through the final stage of first production run of units for sale) and advised the Company that it had the engineering resources and capability to do the work. As of January 28, 2004, Wescor and InMedica finalized a letter of intent (the "Letter of Intent") and as of February 1,2004, a loan agreement (the "Loan Agreement"). The Letter of Intent provided that InMedica would discontinue the search for development partners and other funding sources for the hematocrit technology. In exchange, Wescor agreed to loan monies under the Loan Agreement to InMedica for three purposes: (1) administrative expenses up to $25,000 per 4 month for three months (later extended through July, 2004) to be used to pay ongoing salaries, legal, accounting and other Company administrative expenses; the loan was to be evidenced by a promissory note called the "Overhead Note;" (2) Wescor agreed to loan up to $20,011 to InMedica to pay accrued but unpaid Company expenses evidenced by a promissory note called the "Accrued Expense Note;" and (3) Wescor agreed to loan up to $200,000 to InMedica for technology modification expenses incurred by Wescor but only expenses incurred with the advance approval of InMedica and to be evidenced by a note known as the "Technology Modifications Note." The notes bear interest at the prime rate as announced from time to time by the Wall Street Journal. The Letter of Intent was a non-binding expression of mutual intent to negotiate the terms of a possible business venture between the companies regarding the development of the hematocrit technology. The Letter of Intent further provided that in the event a definitive agreement was not reached, the amounts owing on the Overhead Note would be forgiven. Amounts advanced under the Accrued Expense Note and the Technology Modications Note, however would not be forgiven and were secured by a security interest in 50% of the Company's revenues from commercialization of the hematrocrit technology, if and when achieved. Further, unpaid balances of principal and accrued interest under any of the notes is convertible to restricted common stock of InMedica at $.10 per share at Wescor's discretion. Beginning with the signing of the Letter of Intent and the Loan Agreement, Wescor advanced $108, 970 on the Overhead Note over a period of seven months and $10,171 on the Accrued Expenses Note. No advances were made on the Technology Modifications Note. InMedica subsequently repaid the advances on the Accrued Expenses Note which now has a zero balance. During discussions from January to September, 2004, InMedica's board members, Larry Clark, Ralph Henson and Richard Bruggeman, and the Wescor principals, identified above, negotiated the terms of the proposed sale of MicroCor stock pursuant to the Agreement. When the parties signed a definitive Agreement effective September 7, 2004 , the Company became obligated to repay the Overhead Note according to its terms. As of September 30, 2004, $111,972 was owing on the Overhead Note Including accrued interest. The Overhead Note is due and payable April 1, 2005. However Wescor deducts 20% ($3,000 per month) of each stock payment it makes to InMedica and applies the payment to retirement of the Overhead Note. (See "Description of Agreement." A conversion of the principal and accrued interest owing on the Overhead Note as of September 30, 2004 would have resulted in the issuance of 1,119,720 restricted shares or 6.4% of the issued and outstanding common stock of InMedica However, to date, Wescor has not given notice of intent to convert the note. During the negotiations, InMedica determined to permit Wescor to assume day to day control of the development of the hematocrit technology because InMedica has only two part-time employees, a President and a CFO, and no technical staff. The Company has principally relied on contracts with outside developers to advance the development of the hematocrit technology. Wescor, on the other hand, has the required resources to manage the day to day operations of a company whose focus is the development of medical products. InMedica retains overall control of MicroCor through its ownership and control of MicroCor's Board of Directors. In the event Wescor discontinued efforts to develop the hematocrit technology, InMedica would again pursue the business plan described in Management's Discussion and Analysis (See Form 10QSB for the period ended September 30, 2004.) 5 The sale of the MicroCor stock will be a sale of all or substantially all of the assets of InMedica, pursuant to the terms of the Agreement, assuming Wescor is successful in completion of development of the hematocrit technology and successfully exercises its option to purchase the MicroCor stock held by InMedica and Chi Lin.. A copy of the Agreement is attached as Exhibit A. Certain terms of the Agreement are set forth below: PARTIES: InMedica Development Corporation - Seller 825 N. 300 West, Suite N132 Salt Lake City, Utah 84103 Telephone: 801-521-9300 Chi Lin Technology Company, Ltd. - Seller 717 N. 71 Te Lun Road, Jen Te Hsian Tainan County, Taiwan, R.O.C. Telephone: 011-886-06-279-1194 Wescor, Inc. - Buyer 459 South Main Street Logan, Utah 84321 USA Telephone: 435-752-6011 MicroCor, Inc. - Asset to be sold 825 N. 300 West, Suite N132 Salt Lake City, Utah 84103 Telephone: 801-521-9300 EFFECTIVE DATE: o The effective date is of the Agreement is September 7, 2004, subject to shareholder approval. o Larry Clark (Chairman and Director of the Company), Ralph Henson (Director and CEO of the Company), Richard Bruggeman (Director and CFO of the Company), and Chi Lin (principal shareholder of the Company) are required by the Agreement to vote their shares in favor of approving this transaction. Collectively these four shareholders own a majority of the issued and outstanding stock of InMedica (See "Common Stock Ownership"). Clark, Henson, Bruggeman and Chi Lin are affiliates of the Company but have no affiliation with Wescor or with one another, other than their service as officers and directors of the Company. Chi Lin has appointed two members of the board of directors of the Company. TERMS: o As of September 7, 2004, InMedica and Chi Lin sold, a total of 15% of MicroCor stock to Wescor (12% sold by InMedica and 3%sold by Chi Lin) for $375,000. The purchase price was paid $30,000 down with the balance due in installments over 18 months. See "Description of Agreement. 6 o Wescor assumed day to day management of MicroCor as of September 7, 2004 and agreed to use its best efforts at its expense to develop the hematorcrit technology. Wescor's management of MicroCor and the Agreement may be terminated by InMedica if Wescor fails to complete any development Phase (See "POTENTIAL MICROCOR STOCK ISSUANCES TO WESCOR") or if Wescor defaults in payments to InMedica or Chi Lin. In the event of such termination, Wescor would remain obligated to complete payment for the initial 15% of the stock of MicroCor pursuant to the installments described below (See " DESCRIPTION OF AGREEMENT"). However if the Agreement is terminated prior to shareholder approval, the sale of the MicroCor stock would be rescinded and InMedica and Chi Lin would be obligated to repay amounts received from Wescor. o Through potential additional MicroCor stock issuances to Wescor, Wescor may earn up to 49% total ownership of MicroCor by funding and conducting additional development of hematocrit technology in three Phases over 18 months. The 18 month period may be extended in six month increments by the MicroCor board of directors. See "POTENTIAL MICROCOR STOCK ISSUANCES TO WESCOR." o Upon successful completion of the second phase (ie. FDA cleared prototype) and again upon successful completion of the third Phase (ie. first production of units for sale), Wescor has an option to purchase the remaining MicroCor shares from Chi Lin and InMedica for 90% of an appraised value or 90% of a value suggested by Wescor, subject to a fairness opinion obtained by InMedica. Wescor selects the appraiser with the consent of InMedica and Chi Lin. The Company and Chi Lin will then have a "trump option" to purchase Wescor's ownership of MicroCor stock at an increased price. See "Options To Buy Remaining MicroCor Stock." o MicroCor has granted InMedica and Chi Lin an annual royalty of 4% of the first $5,000,000 of sales and licensing revenues received from the hematocrit technology, 3% of sales and licensing revenues exceeding $5,000,000 but less than $20,000,000 and 2% of sales and licensing revenues in excess of $20,000,000. The sellers are also entitled to twenty five percent (25%) of all royalty revenues received by MicroCor on further licensing of the hematocrit technology. A minimum royalty of $200,000 per year is payable by MicroCor commencing 18 months from September 7, 2004, to be split 80%-20% between InMedica and Chi Lin. (See "Royalty Rights.") o Pro Form Financial Statements are attached showing the effect of the sale on InMedica As the attached financial statements indicate, the sale has been accounted for as a sale of an investment and partial interest in InMedica's consolidated subsidiary. 7 o No opinion, report or appraisal relating to the fairness of the sales of the MicroCor stock to Wescor has been obtained by the Company. The terms of the transactions are based on the negotiations described above See "BACKGROUND OF THE SALE PROPOSAL." INCOME TAX CONSEQUENCES. For U.S. federal income tax purposes, the sale is expected to result in the recognition of a gain of $60,000 by InMedica. However the Company's cumulative net operating losses can be used to offset the amount of the taxable gain on the sale, and as a result we expect to pay no federal income taxes on the sale. Further, the sale transaction will result in no capital gain or loss for the InMedica shareholders and no distribution to shareholders in connection with the transaction is anticipated. Accordingly, the sale should not result in a taxable event under U.S. federal income tax laws for InMedica shareholders in the United States. The foregoing does not address any state or local tax consequences. Our shareholders are advised to consult with their tax advisors for a more detailed analysis of any federal, state or local tax consequences. GENERAL. The Agreement is subject to a condition that the sale of MicroCor stock described in the Agreement be approved by the shareholders of InMedica. Shareholder approval must occur within 45 days of the effective date, although the time for approval has been extended. An additional requirement of the Agreement is that Chi Lin, Larry E. Clark, Richard Bruggeman and Ralph Henson (who collectively own more than 50% of the outstanding stock of InMedica) have each agreed and are required to vote their shares in favor of the transaction ONCE APPROVED, NO FURTHER SHAREHOLDER APPROVAL WILL BE SOUGHT BY INMEDICA RELATING TO THIS AGREEMENT AND THE BOARD OF DIRECTORS AND OFFICERS OF INMEDICA WILL BE AUTHORIZED TO CARRY OUT THE SALE OF OWNERSHIP AND ISSUANCES OF THE MICROCOR STOCK PURSUANT TO THE TERMS OF THE AGREEMENT (except that if a merger transaction were agreed to by the parties, then approval of such transaction would be submitted to the shareholders at a later date). As a result, the Agreement will result in the disposition of part or all of the ownership of MicroCor by InMedica, depending on the stage when the Agreement is either terminated or concluded. There is no assurance that Wescor will be successful in developing the hematrocrit technology or that it will continue the development project to conclusion. THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1, APPROVING THE SALE OF OWNERSHIP AND THE ISSUANCES OF THE MICROCOR STOCK AS DESCRIBED HEREIN IN ORDER TO FUND ADDITIONAL DEVELOPMENT OF THE HEMATOCRIT TECHNOLOGY. DESCRIPTION OF AGREEMENT. Effective September 7, 2004, InMedica and MicroCor entered into the Agreement pursuant to which Wescor, a Utah medical technology company ("Wescor") has agreed to purchase 15% of the issued and outstanding common stock of MicroCor on a pro-rata basis from InMedica (selling 12%) and from Chi Lin Technology Co, Ltd of Tainan, Taiwan (selling 3%), ("Chi Lin") for $375,000. Prior to the consummation of the transaction InMedica held 80% of the issued and outstanding common stock of MicroCor and Chi Lin owned 20%. Following shareholder approval of the transaction, InMedica will initially hold 68%, Chi Lin will initially hold 17% and Wescor will initially hold 15% of the issued and outstanding stock of MicroCor. The purchase monies will be paid $300,000 to InMedica and $75,000 to Chi Lin, payable $30,000 down and the 8 balance in installments over 18 months. Twenty percent of each payment made to InMedica will be applied to outstanding debt owing from InMedica to Wescor in the amount of $111,972 at September 30, 2004. The debt to Wescor is for repayment of operating expenses advanced by Wescor to InMedica during the negotiation of the Agreement. See "BACKGROUND OF THE SALE PROPOSAL." POTENTIAL MICROCOR STOCK ISSUANCES TO WESCOR. In the event Wescor is successful in producing a working prototype using the hematocrit technology, capable of meeting FDA GMP requirements suitable for conducting clinical trials (Phase1), MicroCor will issue 500,000 additional restricted shares of MicroCor stock to Wescor. Thereafter if Wescor completes clinical trials and obtains the FDA's clearance to market such products (Phase 2), 500,000 additional restricted shares of MicroCor stock will be issued to Wescor by MicroCor. Then, upon manufacturing and initial introduction into the US market of such products (Phase 3), MicroCor will issue to Wescor an additional 700,000 restricted shares of its stock, giving Wescor a total of 49% of the issued and outstanding stock of MicroCor. These additional shares to be issued to Wescor will be in consideration of each Phase of development work by Wescor. The determination of Wescor's completion of the above three Phases will be made by MicroCor's board which is controlled by InMedica. In the event of a disagreement between the parties as to fulfillment of the above standards, the parties intend to negotiate in good faith to resolve the matter. The number of shares to be issued by MicroCor to Wescor for services has been determined during a process of arms length negotiation between InMedica and Wescor. Among other things, during such negotiations, the board of directors of InMedica considered the need for funding to continue development of the Company's hematocrit technology, the Company's present financial condition (ie. lack of cash flow, limited capital assets and limited borrowing capacity) and the reputation and experience of Wescor in development of medical technology. Based on these considerations, the board concluded that, in its judgment, the Agreement should be pursued. OPTIONS TO BUY REMAINING MICROCOR STOCK. Upon completion of Phase 2,and again upon completion of Phase 3, Wescor will have the option to purchase all (but not less than all) the remaining stock of MicroCor from InMedica and Chi Lin, for 90 days. The buyout price to Wescor for the remaining MicroCor shares will be 90% of an appraised value or of a value suggested by Wescor. Wescor will choose the appraiser subject to the right of InMedica and Chi Lin to object to the selection. In the case of an objection Wescor will make another selection until the parties are in agreement. Following receipt of Wescor's notice of appraised value or suggested value, InMedica and Chi Lin will have the right to obtain a fairness opinion at their expense, before acting on Wescor's offer. The fairness opinion of the value of the MircoCor stock will be obtained from a business valuation expert, chosen by InMedica and Chi Lin, as to which Wescor has no reasonable objection. If the fairness opinion reports that Wescor's appraised or suggested value is not within a fair range, Wescor's option to purchase the balance of the MicroCor stock from Chi Lin and InMedica will terminate. However, if Wescor's appraised or suggested value is determined by the fairness opinion to be within a fair range, InMedica and Chi Lin will still have the opportunity to acquire the complete ownership of MicroCor through a 9 "trump" option allowing them to offer to purchase all of the shares of MicroCor owned by Wescor at 110% of Wescor's appraised value or suggested value. In such case, Wescor may chose to sell its ownership of MicroCor to InMedica and Chi Lin or may revive its first option by a notice to InMedica and Chi Lin increasing the purchase price so as to be based on at least 110% of the valuation used as the trump option value by InMedica and Chi Lin. This option procedure, bidding between the parties for the right to purchase all of the MicroCor stock, may be repeated as many times as is necessary until a purchaser has been determined. If Wescor is ultimately the purchaser, the Agreement will terminate except for the royalty rights of InMedica and Chi Lin. Wescor has also been granted a right of first refusal in the event of a bona fide third party offer to acquire MicroCor. ROYALTY RIGHTS. MicroCor has granted certain revenue royalty rights to InMedica and Chi Lin under the Agreement based on future annual revenues from the hematocrit technology and calculated as follows: Annual royalties will equal the sum of four percent (4%) of the first $5,000,000 in sales and licensing revenues, three percent (3%) of sales and licensing revenues in amounts exceeding $5,000,000 but not exceeding $20,000,000, and two percent (2%) of sales and licensing revenues in amounts exceeding $20,000,000; plus (ii) twenty five percent (25%) of all royalty revenues (revenues from licensing of the hematocrit technology to others). The total royalties are split between InMedica and Chi Lin with InMedica receiving a percentage of total royalties equal to a fraction, the numerator of which is the total world revenues from sales of the hematocrit technology, less the revenues from sales in Asia; and the denominator of which is the total world revenues from sales. The Chi Lin royalty is a percentage of total royalties equal to a fraction, the numerator of which is revenue from sales in Asia; and the denominator of which is the total world revenues from sales. Asia is defined to mean Australia, New Zealand and the countries of Asia (including without limitation, Indonesia, Malaysia and the island countries of the Western Pacific Rim; but excluding Russia, Turkey and the countries of the Middle East from Iran and to the west). Further, a minimum royalty of $200,000 per year begins 18 months after the effective date and is payable by MicroCor to InMedica and Chi Lin on an 80%-20% basis without regard to whether actual sales have been made. However in the event that any party (including Wescor) or a third party acquires eighty percent control of MicroCor, the new control party has the right to buy out the royalty rights from InMedica and Chi Lin for $1,000,000 or 100% of five times the sum of the minimum royalty payments for the immediately preceding 12 months, whichever is greater. The buyout proceeds would be shared 80%-20% by InMedica and Chi Lin. As a part of the transaction, InMedica transferred all of its rights in the non-invasive hematocrit technology to MicroCor and Chi Lin licensed to MicroCor all rights relating to the non-invasive technology owned by Chi Lin on a royalty free basis (other than those royalties referred to in the preceding paragraph). Further, Wescor assumed the responsibility to manage the day to day affairs of MicroCor and to continue the development of the non-invasive hematocrit technology. However Wescor's management of MicroCor and the Agreement may be terminated if no prototype has been developed in 12 months, or if no FDA clearance is obtained within 18 months, or if no first production has begun within 24 months or if Wescor has not fulfilled payment obligations under the contract. The 24 month period may be extended in the discretion of InMedica's board of directors. 10 DIRECTOR APPOINTMENTS. Chi Lin is a principal shareholder of InMedica and has the right to nominate two directors to serve on InMedica's board of directors. During the term of the Joint Development Agreement, InMedica will continue to appoint three of five members of the board of directors of MicroCor and Chi Lin and Wescor will each be entitled to appoint one board member. WESCOR. Wescor is a privately held company engaged in developing, manufacturing, and marketing medical instruments, appliances, and related products for the diagnostic laboratory market for more than three decades. Wescor's Biomedical Products Division has established a reputation for quality products as well as quality technical support for its products. Wescor is a leader in the laboratory diagnosis of cystic fibrosis with its Macroduct(R) and Nanoduct(R) Sweat Testing Systems. The Aerospray(R) family of automatic slide stainer-cytocentrifuges of Wescor are widely used in hematology and microbiology laboratories, providing the newest technology in microscope slide staining as well as cytocentrifugation. Wescor is also a leader in osmometry with its Vapro(R) Vapor Pressure Osmometer. The Wescor Membrane Osmometer makes a direct measurement of Colloid Osmotic Pressure in whole blood or serum. CONSULTING FEES. Prior to the transaction with Wescor, Ralph Henson, President of InMedica, was a full time employee of MicroCor. Since September 7, 2004, Wescor has paid Ralph Henson a temporary consulting fee of $5,000 per month for three quarters of his working time. The temporary consulting arrangement with Mr. Henson was first discussed with Wescor after the Joint Development Agreement was signed on September 7, 2004. Beginning December 1, 2004, the consulting fee was discontinued and Mr. Henson became a three-quarter time salaried employee of MicroCor. He will continue to serve as President of InMedica and will be paid for one-quarter of his time by InMedica. No change in his total reported salary is expected. DISSENTERS' RIGHTS. Shareholders of InMedica, including the holders of the Preferred Shares, are entitled under Utah law to dissent from approval of Proposal 1 (the sale of the MicroCor stock) and obtain payment from the Company of the fair value of shares held by the shareholder. "Fair value" of a dissenter's shares means the value of the shares immediately before the corporate action to which the dissenter objects, excluding any appreciation or depreciation in value on account of anticipation of the corporate action. HOWEVER, UPON COMPLIANCE WITH THE DISSENTER'S RIGHTS PROVISIONS DESCRIBED BELOW, DISSENTERS MAY NOT IMMEDIATELY RECEIVE CASH PAYMENT FOR THEIR SHARES due to provisions of the Utah Code that prohibit redemptions of shares in cash where the corporation "would not be able to pay its debts as they become due in the usual course of business" or "the corporation's total assets would be less than the sum of its total liabilities" (Utah Code Annotated 16-10a-640(3)). The Board of Directors has determined that if any significant number of shareholders exercised dissenter's rights, the Company would likely be unable to pay its debts as they come due and its liabilities may exceed its assets. IN SUCH CASE, THE BOARD OF DIRECTORS MAY LEGALLY ONLY BE ABLE TO ISSUE PROMISSORY NOTES TO ANY DISSENTING SHAREHOLDERS FOR THE FAIR VALUE OF THEIR SHARES, THE INTEREST AND PRINCIPAL OF WHICH WOULD BE PAYABLE ONLY AT AN UNDETERMINED FUTURE DATE AND ONLY IF AND WHEN FUNDS ARE LEGALLY AVAILABLE FOR PAYMENT AS PROVIDED IN THE UTAH CODE. The issuance of such notes would be subject to compliance with the 11 registration or exemption provisions of the Securities Act of 1933 and such notes would likely be restricted securities that would not be transferable without compliance with the requirements of the Securities Act of 1933. The principal amount of the notes would be determined based on the fair value of the dissenter's stock as of the meeting date. A copy of Utah Code Annotated 16-10a-1320 providing for notice of dissenter's rights is set forth below: 16-10A-1320. NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed corporate action creating dissenters' rights under Section 16-10A-1302 is submitted to a vote at a shareholders' meeting, the meeting notice must be sent to all shareholders of the corporation as of the applicable record date, whether or not they are entitled to vote at the meeting. The notice shall state that shareholders are or may be entitled to assert dissenters' rights under this part. The notice must be accompanied by a copy of this part and the materials, if any, that under this chapter are required to be given the shareholders entitled to vote on the proposed action at the meeting. Failure to give notice as required by this subsection does not affect any action taken at the shareholders' meeting for which the notice was to have been given. (2) If a proposed corporate action creating dissenters' rights under Section 16-10A-1302 is authorized without a meeting of shareholders pursuant to Section 16-10A-704, any written or oral solicitation of a shareholder to execute a written consent to the action contemplated by Section 16-10A-704 must be accompanied or preceded by a written notice stating that shareholders are or may be entitled to assert dissenters' rights under this part, by a copy of this part, and by the materials, if any, that under this chapter would have been required to be given to shareholders entitled to vote on the proposed action if the proposed action were submitted to a vote at a shareholders' meeting. Failure to give written notice as provided by this subsection does not affect any action taken pursuant to Section 16-10A-704 for which the notice was to have been given. Enacted by Chapter 277, 1992 General Session In order to assert dissenter's rights, a shareholder must cause InMedica to receive a written notice of his/her intent to demand payment for shares if Proposal number 1 is approved. Further, the attempted exercise of dissenter's rights will be invalid if the "dissenter" votes in favor of Proposal number 1. The dissenter must also have been a shareholder at the time the vote was taken on Proposal number 1. A shareholder that does not satisfy the three requirements stated in this paragraph is not entitled to payment for shares. The content of the Company's notice of dissenter's rights is specified by Utah Code Annotated 16-10a-1322 as follows: 16-10A-1322. DISSENTERS' NOTICE. (1) If proposed corporate action creating dissenters' rights under Section 16-10A-1302 is authorized, the corporation shall give a written dissenters' notice to all shareholders who are entitled to demand payment for their shares under this part. (2) The dissenters' notice required by Subsection (1) must be 12 sent no later than ten days after the effective date of the corporate action creating dissenters' rights under Section 16-10A-1302, and shall: (a) state that the corporate action was authorized and the effective date or proposed effective date of the corporate action; (b) state an address at which the corporation will receive payment demands and an address at which certificates for certificated shares must be deposited; (c) inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received; (d) supply a form for demanding payment, which form requests a dissenter to state an address to which payment is to be made; (e) set a date by which the corporation must receive the payment demand and by which certificates for certificated shares must be deposited at the address indicated in the dissenters' notice, which dates may not be fewer than 30 nor more than 70 days after the date the dissenters' notice required by Subsection (1) is given; (f) state the requirement contemplated by Subsection 16-10A-1303(3), if the requirement is imposed; and (g) be accompanied by a copy of this part. Enacted by Chapter 277, 1992 General Session The demand from the dissenter must (1) be in writing and may use the form attached hereto as Exhibit B for that purpose; (2) must include with the demand, the original certificates for the shares in accordance with the terms of the dissenter's notice; (3) must certify that the shareholder acquired beneficial ownership of the shares before the date of the first announcement (September 8, 2004) to the news media or shareholders of the terms of the proposed corporate action creating the dissenter's rights and (4) must certify in writing whether he or the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before that date. A copy of a form to be used in demanding payment is attached hereto as a part of Exhibit B or the dissenter may use another writing. THE DISSENTER'S DEMAND MUST BE SUBMITTED TO THE COMPANY ON OR BEFORE_____________. THE HOLDERS OF MORE THAN 50% OF THE ISSUED AND OUTSTANDING STOCK OF INMEDICA ARE CONTRACTUALLY COMMITTED TO VOTE IN FAVOR OF PROPOSAL 1. AS A RESULT, THE EFFECTIVE DATE OF THE DISSENTER'S NOTICE ATTACHED AS EXHIBIT B WILL BE______________, THE DATE OF APPROVAL OF THE TRANSACTION, WHICH COMMENCES THE 30 DAY PERIOD FOR DISSENTERS TO EXERCISE THEIR RIGHTS. Required disclosures relating to the notice are included in this Information Statement. A dissenter who has demanded payment retains all rights as a shareholder (except the right to transfer the shares) until the effective date of the corporate action (________________) after which the dissenter has only the right to receive payment for his/her shares. A shareholder who does not demand payment and deliver his/her share certificates to the Company by the date set in the dissenter's notice is not entitled to payment for the shares. Where a record holder holds all or part of its shares in InMedica on behalf of a nominee or beneficial owner, then the record holder may dissent as to less than all of the shares it holds of record, by giving written notice to InMedica identifying each dissenter's name and address and the number of shares as to which dissenter's rights are exercised by that beneficial owner. In such cases the shares held by the dissenting beneficial owner and the balance of the 13 shares held by the record holder will be treated as if the shares had been registered in different names. However the dissenting beneficial owner must dissent as to all shares the dissenter holds, directly or indirectly in the Company. And, the dissenter must assure that each record holder holding shares on the dissenter's behalf provides its consent to the dissent not later than the date on which the beneficial shareholder asserts dissenter's rights. Upon receipt of the demand for payment and the certificates for the shares, the Company shall pay the Company's estimate of the fair value of the shares, plus interest from the meeting date. Payment is governed by Utah Code Annotated 16-10a-1325 as follows: 16-10A-1325. PAYMENT. (1) Except as provided in Section 16-10A-1327, upon the later of the effective date of the corporate action creating dissenters' rights under Section 16-10A-1302, and receipt by the corporation of each payment demand pursuant to Section 16-10A-1323, the corporation shall pay the amount the corporation estimates to be the fair value of the dissenter's shares, plus interest to each dissenter who has complied with Section 16-10A-1323, and who meets the requirements of Section 16-10A-1321, and who has not yet received payment. (2) Each payment made pursuant to Subsection (1) must be accompanied by: (a) (i) (A) the corporation's balance sheet as of the end of its most recent fiscal year, or if not available, a fiscal year ending not more than 16 months before the date of payment; (B) an income statement for that year; (C) a statement of changes in shareholders' equity for that year and a statement of cash flow for that year, if the corporation customarily provides such statements to shareholders; and (D) the latest available interim financial statements, if any; (ii) the balance sheet and statements referred to in Subsection (i) must be audited if the corporation customarily provides audited financial statements to shareholders; (b) a statement of the corporation's estimate of the fair value of the shares and the amount of interest payable with respect to the shares; (c) a statement of the dissenter's right to demand payment under Section 16-10A-1328; and (d) a copy of this part. (Enacted by Chapter 277, 1992 General Session) In the event a dissenter has not accepted an offer made by a corporation under Section 16-10A-1327, the dissenter may notify the Company in writing of his/her own estimate of the fair value of the shares and demand payment of the estimated amount, plus interest, less any payment made by the Company if: (1) the dissenter believes that the amount paid or offered by the Company is less than the fair value of the shares; or (2) the Company fails to make payment within 60 days after the date set by the corporation as the date by which it must receive the payment demand; or (3) the corporation, having failed to take the proposed corporate action creating dissenters' rights, does not return the deposited certificates. However a dissenter waives the right to demand payment of his own estimate of the value of the shares unless he causes the Company to receive the 14 notice of his demand for payment of a different value within 30 days after the Company made or offered payment for his shares. If a dissenter's demand for payment of a different valuation than that offered by the Company remains unresolved, the Company shall commence a proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and the amount of interest. If the Company does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unresolved the amount demanded. FINANCIAL STATEMENTS See the pro-forma financial statements included with this information statement. Audited financial statements for the Company's year ended December 31, 2003 and unaudited statements for the period ended September 30, 2004 are incorporated by reference to the Company's Form 10KSB/A#1 for the year ended December 31, 2003 and the Company's Form 10QSB for the nine months ended September 30, 2004, copies of which accompany this Information Statement. SECOND PROPOSAL: TO ELECT THE BOARD OF DIRECTORS The Company is proposing that five directors be elected to serve until a successor is elected and qualified as follows: Larry E. Clark, Ralph Henson, Richard Bruggeman, Sheng Jung (Robert S.) Chiang and Mao-Song Lee. Additional information for your consideration in connection with the election of directors follows: COMMON STOCK OWNERSHIP The following table shows the common stock ownership of nominees, directors, officers, and principal shareholders of the Company as of December 10, 2004. Nature of Number of Name and Position Ownership Shares Owned Percent Chi Lin Technologies Direct 5,328,204 1 32.5% 717 No. 71, Te Lun RD Jen Te Hsian Tainan County, Taiwan Principal Shareholder - ------------------------- 1 - Excludes the right to purchase shares sufficient to maintain its 33 1/3% ownership interest in the Company in the event of the issuance of additional shares, such as the proposed issuance of shares to management under the subscription agreements and the 400,000 shares recently issued to Larry Clark (See "Management Indebtedness and Transactions") 15 Larry E. Clark Direct 1,828,000 2 Chairman & Nominee Indirect 769,025 3 ------- Total 2,597,025 15.9% Ralph Henson Direct 225,000 4 1.4% President, Director Chief Executive Officer & Nominee Richard Bruggeman Direct 174,387 5 1.1% Director, Chief Indirect 464,975 6 2.8% Financial Officer Options 75,000 .5% -------- ----- & Nominee Total 714,362 4.3% Sheng Jung Chiang Indirect * 7 Director & Nominee Mao-Song Lee Indirect * 8 Director & Nominee Wescor, Inc. Direct - 459 South Main Street Indirect - Logan, Utah 84321 USA Conversion Rights 1,119,720 9 6.4% All Executive Officers Direct and and Directors as a Indirect 8,789,591 53.6% group (5 persons) Options 75,000 .4% --------- -------- Total 8,864,591 53.9% - ------------------------- 2 - Excludes subscription to purchase 440,000 restricted shares of common stock (See "Management Indebtedness and Transactions." 3 - Shares held by Larry Clark and Jacquelyn Clark as Trustees of the Larry and Jacquelyn Clark Family Trust 4 - Excludes subscription to purchase 240,000 restricted shares of common stock (See "Management Indebtedness and Transactions." 5 - Includes 400 shares held in individual IRAs and 4,620 shares held by Mr. Bruggeman as Trustee of a family trust. Excludes subscription to purchase 101,000 restricted shares of common stock (See "Management Indebtedness and Transactions." Excludes subscriptions 6 - Shares held by Mrs. Bruggeman. 7 - Mr. Chiang is vice president of Chi Lin Technologies Co. Ltd. which holds 5,328,204 shares. Chi Lin also has anti-dilution rights to acquire an additional 524,983 restricted common shares at a price of $.10 per share incident to the issuance of stock to certain members of management (See "Management Indebtedness and Transactions.") 8 - Dr.Lee is vice president of Chi Lin Technologies Co. Ltd. which holds 5,328,204 shares. Chi Lin also has anti- dilution rights to acquire an additional 524,983 restricted common shares at a price of $.10 per share incident to the issuance of stock to certain members of management (See "Management Indebtedness and Transactions.") 9 - Based on unexercised conversion rights at September 30, 2004. 16 Shares shown in the forgoing table as directly owned are owned beneficially and of record, and such record shareholder has sole voting, investment, and dispositive power. Calculations of the percentage of shares in the foregoing table assumes the exercise of options, to which the percentage relates. Percentages calculated for totals assume the exercise of options or conversion rights comprising such totals. The Company has relied upon the latest filing on Form 13D furnished to the Company for total shares held by principal shareholders. See also "Management Indebtedness and Transactions" for a description of a transaction in which certain members of management will acquire an additional 1,181,000 restricted shares or 7.6% of the common stock of InMedica for $.10 per share. CHANGE IN CONTROL. Effective May 10, 2001 the Company sold 5,328,204 shares of its common stock to Chi Lin Technology Co. Ltd. of Taiwan, Republic of China., pursuant to a Stock Purchase Agreement (the "Agreement"). The Company also caused its wholly owned subsidiary, MicroCor, Inc. to sell 29,420 shares of its common stock to Chi Lin. Following the transaction Chi Lin owned one third of the issued and outstanding stock of the Company and 20% of the issued and outstanding stock of MicroCor. Funds for the purchase of the stock came from the working capital of Chi Lin. The Agreement also granted Chi Lin anti-dilution rights permitting it to purchase additional shares to maintain its one third percentage ownership in the event InMedica issues additional shares. Chi Lin has further rights to receive additional shares to maintain its percentage ownership in the event outstanding options are exercised. The agreement also gives Chi Lin the right to nominate two of five directors to InMedica's board of directors. InMedica may not increase the size of the board to more than five without the prior consent of Chi Lin. Effective December 21, 2001 the Company appointed two directors nominated by Chi Lin. DIRECTORS AND EXECUTIVE OFFICERS At the meeting, five directors are to be elected to hold office for one year or until their successors are elected and qualified. The persons named in the table below are nominees for director. Name Age Director Since Larry E. Clark 82 1995 Ralph Henson 59 1999 Richard Bruggeman 49 1995 Sheng Jung Chiang 58 2001 Mao-Song Lee 56 2002 Certain information follows regarding the executive officers and directors of InMedica and their business backgrounds for at least the last five years. 17 LARRY E. CLARK - Chairman of the Board since April 1995. Mr. Clark was president of Clark-Knoll & Associates, Inc., a Denver, Colorado management consulting firm specializing in mergers and acquisitions from 1963 to 1969. He served as president of Petro-Silver, Inc., a small public company based in Salt Lake City, Utah, which engaged in the oil and gas business from 1970 to 1975. Beginning in 1975 and continuing to December, 2003, Mr. Clark was president of Larry Clark & Associates, a private company which engaged in a corporate mergers and acquisitions business or business consulting. In 1981, Mr. Clark formed Hingeline-Overthrust Oil & Gas, Inc., a Utah public company, which merged with Whiting Petroleum Corporation of Denver, Colorado in December 1983. Mr. Clark served as a director of Whiting Petroleum from 1983 until 1992 when Whiting Petroleum merged with IES Industries and Mr. Clark returned to full time employment as president of Larry Clark & Associates. Mr. Clark was President of InMedica from April 1995 until December, 1999. Mr. Clark graduated from the U.S. Merchant Marine Academy with a BS degree in Naval Science in 1943 and received a degree in Business Administration from the University of Wyoming in 1948. RALPH HENSON - Director, President and Chief Executive Officer of the Company since December 1999. Prior to his employment with InMedica, Mr. Henson worked from 1996 until 1999 as Director of Sales and acting Director of Clinical Programs of In-line Diagnostics of Farmington, Utah. He was also employed from 1987 to 1994 with Mallinckrodt Medical in sales and marketing, including service as Export Sales and Marketing Manager for Mallinckrodt Sensor Systems of Hannef, Germany. From 1994 to 1995 he was national sales manager with HemoCue, Inc. of Mission Viejo, California. RICHARD BRUGGEMAN - Director and Secretary/Treasurer and Chief Financial Officer of the Company since April, 1995 and full time employee of the Company during 2002. Since 2003, Mr. Bruggeman has been employed part time with Kitchen Resource, Inc., a Utah based firm distributing kitchen appliances. He was employed part time or full time as Controller of Kitchen Specialties, Inc. from 1993 to December, 2001, a Salt Lake City firm distributing kitchen appliances in the United States and Canada.. From 1986 until 1993 he was employed by the Company's subsidiary, MicroCor, Inc. as financial manager. During the period 1983-1985, he was a sole practitioner in accounting and from 1981-1983 he was employed by the Salt Lake City public accounting firm of Robison Hill & Co. He has since had no affiliation with that accounting firm. He graduated from the University of Utah in 1981 with a B.S. degree in accounting. SHENG JUNG (ROBERT S.) CHIANG - Director of the Company since May, 2001. Mr. Chiang was vice president and secretary general of Onking Chain Store Co. Ltd., a company organized in the Republic of China (hereinafter "Taiwan") from November, 1988 through June, 2000 when he became the Vice President of Chi Lin Technology Co. Ltd, a Taiwanese company. He has been employed with Chi Lin Technology since June, 2000. Mr. Chiang has a BA from the National Chen Chi University and an MBA from the National Taiwan University. 18 MAO-SONG LEE - Director of the Company since December, 2002. Since February, 2001 he has been employed full time by Chi Lin Technology Co. Ltd. as Technical Vice President. From August, 1998 until January, 2001 he was General Manager, Pilot Plants for Union Chemical Laboratories, Industrial Technology Research Institute of the Republic of China (Taiwan). During the period 1994-1997 he was Director of the Engineering Plastics Division for Union Chemical Laboratories, Industrial Technology Research Institute. From 1983 until 1991 he was Director of the Polymer Division, Union Chemical Laboratories, Industrial Technology Research Institute. He received a B.S. and M.S. from the National Cheng Kung University of Taiwan in 1970 and 1972, respectively. He also received a Ph.D. and an M.B.A. from the National Tsing Hua University of Taiwan in 1987 and from the National Cheng Chi University in 1994, respectively. Each director serves until the next annual meeting of shareholders or until a successor is elected and qualified. Officers serve at the pleasure of the board of directors. No arrangement or understanding exists between any officer or director and any other person pursuant to which he was nominated or elected as director or selected as an officer, except the Stock Purchase Agreement with Chi Lin Technologies Co. Ltd. (See "Change in Control"). Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of equity securities of the Company. Officers, directors and shareholders holding greater than ten percent are required to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of the copies of any such reports furnished to the Company, during the fiscal year ended December 31, 2003, and thereafter, all Section 16(a) filing requirements applicable to officers, directors and shareholders holding greater than ten percent were complied with. BOARD OF DIRECTORS MEETINGS AND ATTENDANCE AT SHAREHOLDER MEETINGS The Company does not have nominating or audit committees of the Board. The full board conducts the function of an audit committee. There was one meeting of the Board of Directors held during the fiscal year ended December 31, 2003 and there have been two meeting of the board of directors during 2004. Messrs. Chiang and Lee were unable to attend one of the board meetings. All directors attended the last annual shareholder meeting of the Company. The Company expects all directors to be in attendance at shareholder meetings and attempts to schedule meetings at a time when all directors will be able to attend, however conflicting schedules, particularly with the two directors from Taiwan may on occasion preclude their attendance at shareholder meetings which are held in the United States. AUDIT COMMITTEE FINANCIAL EXPERT The Company's board of directors does not have an "audit committee financial expert," within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, serving on its audit 19 committee. The board of directors believes that all members of its audit committee are financially literate and experienced in business matters, and that one or more members of the audit committee are capable of (i) understanding generally accepted accounting principles ("GAAP") and financial statements, (ii) assessing the general application of GAAP principles in connection with our accounting for estimates, accruals and reserves, (iii) analyzing and evaluating our financial statements, (iv) understanding our internal controls and procedures for financial reporting; and (v) understanding audit committee functions, all of which are attributes of an audit committee financial expert. However, the board of directors believes that there is not any audit committee member who has obtained these attributes through the experience specified in the SEC's definition of "audit committee financial expert." Further, like many small companies, it is difficult for the Company to attract and retain board members who qualify as "audit committee financial experts," and competition for these individuals is significant. The board believes that its current audit committee is able to fulfill its role under SEC regulations despite not having a designated "audit committee financial expert." NOMINATING COMMITTEE The full board of directors of the Company functions as a nominating committee to select potential additional directors of the Company. The board has not specifically designated a separate nominating committee because all five members of the board of directors desire to be involved in the selection of any new director. The board does not have a specific charter to govern its actions as a nominating committee, nor are any members of the board "independent". Due to the relatively small size of the Company, the risks associated with service on the board of a public company and the limited or negligible compensation available to such directors, the Company considers it unlikely that a qualified person would serve on the board who was truly independent. However, the board's unwritten policy for consideration of potential members of the board nominated by shareholders is to seriously consider any potential board member that has personal relationships and/or expertise that might be beneficial to the Company's business. The Company has in the past and expects to continue in the future to be interested in discussions with persons interested in the Company's business and able to make a significant contribution to the success of the Company's technology. Shareholders that desire to introduce persons to the Company's board of directors should contact Larry E. Clark, Chairman of the Board or Ralph Henson, Chief Executive Officer of the Company with any suggestions or recommendations for director. These persons may be reached through the Company's office telephone 801-521-9300 during regular business hours. A copy of the resume of any candidates should be submitted with the inquiry. At the present time, the Company is not actively searching for additional board members, however members of the board are interested in meeting qualified persons. Qualified persons normally would be persons that have at least a college education and professional or technical experience in the medical products industry. The Company is especially interested in persons with fund raising contacts or technology development contracts. Generally shareholder nominees would be evaluated in the same manner as any other nominee. The nominees identified on the Company's current proposal for election of directors were each originally nominated by the Company's chief executive officer or by 20 Chi Lin Technologies, Co. Ltd, which has the contractual right to nominate two directors. Specifically, Larry E. Clark became a director upon the nomination of Alan Kaminsky who was then CEO and a 5% plus shareholder. Messrs Henson and Bruggeman were each nominated by Mr. Clark while Mr. Clark was serving as CEO and while Mr. Clark was a 10% plus shareholder. Messrs.Chiang and Lee were nominated by Chi Lin, a principal shareholder and control person of the Company, owning approximately 33 1/3% of the stock of the Company. SECURITY HOLDER COMMUNICATIONS Shareholders of the Company may communicate directly with the board of directors by contacting the Company's offices during regular business hours. The Company's telephone number is 801-521-9300. Communications to individual directors may be made by mail addressed to the director care of InMedica Development Corporation at the Company's offices 825 North 300 West, Suite N132, Salt Lake City, Utah 84103. EXECUTIVE COMPENSATION The table below discloses the compensation of the chief executive officer of the Company during the three fiscal years ended December 31, 2003: Annual Compensation Long Term Compensation Restricted Stock Common Stock Awards Underlying Name Year Salary Bonus Options Other - -------------------------------------------------------------------------------- Ralph Henson (CEO) 2003 $ 24,000 - - - - Ralph Henson (CEO) 2002 $ 96,000 - - - - Ralph Henson (CEO) 2001 $ 86,333 - - - $15,000 10 - -------------------------- 10 - Value of shares issued for services. Compensation of officers and employees is determined by the Board of Directors. Officers, Ralph Henson and Richard Bruggeman are also members of the Board of Directors. During 2004 Mr. Henson has been compensated in the amount of $46,664, through September, 2004. Since the beginning of the last fiscal year, there have been no stock options or stock appreciation rights granted to or exercised by officers named in the executive compensation table. The Company presently has no plan for the payment of any annuity or pension retirement benefits to any of its officers or directors, and no other remuneration payments, contingent or otherwise, are proposed to be paid in the future to any officer or director, directly or indirectly. InMedica executed employment contracts with its Chief Executive 21 Officer, Ralph Henson, and its Chief Financial Officer, Richard Bruggeman, on April 25, 2001. Mr. Henson's contract employed him full time for the period April 1, 2001 until March 31, 2003. Compensation payable for his services was $7,000 per month during 2001 and $8,000 per month for the balance of the contract. Mr. Bruggeman's contract provided for his part time employment as the Chief Financial Officer of the Company from April 1, 2001 until March 31, 2003. He had the right to increase the employment to full time if warranted by the Company's business, at a compensation to be negotiated. Compensation under the contract was $3,500 per month during 2001 and $4,000 per month for the remaining term of the contract. The Company entered into a consulting contract with Larry E. Clark, its Chairman, effective April 1, 2001, pursuant to which the Company compensates the Chairman $2,000 per month in consulting fees. Fees under the contract are presently being accrued. (See "Management Indebtedness and Transactions") DIRECTORS' COMPENSATION Directors may be compensated at the rate of $100 for attendance at each board meeting, but did not receive compensation for meetings during the last three years. MANAGEMENT INDEBTEDNESS AND TRANSACTIONS No officer, director, nominee for director, or associate of any such officer, director or nominee has been, since the beginning of the last fiscal year, or is presently indebted to the Company. There have been no transactions since the beginning of the Company's last fiscal year, nor are there any proposed transactions, in which any officer, director, nominee or principal security holder has a direct or indirect material interest, except as described herein and in the disclosure below: Effective September 27, 2004 Larry E. Clark, Ralph Henson and Richard Bruggeman each subscribed to purchase shares of the Company in the following amounts respectively: 840,000, 240,000, and 101,000 at a price of $.10 per share. The closing bid price on the date of subscription was $.10 per share. The Subscription exercise is contingent on the Company paying each of the three individuals the amount of their accrued but unpaid wages or consulting fees in the amounts of $84,000, $34,998, and $16,002, respectively. The 1,181,000 shares to be purchased will constitute 7.6% of the issued and outstanding stock of the Company, acquired for total consideration of $118,100. THIRD PROPOSAL: TO RATIFY APPOINTMENT OF INDEPENDENT ACCOUNTANTS RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS The independent accounting firm selected and being recommended for the current fiscal year is Robison Hill & Co. Representatives of Robison Hill & Co. 22 are expected to be present at the Annual Meeting of Shareholders and will have an opportunity to make a statement if they desire to do so and will be expected to be available to respond to appropriate questions. The independent public accounting firm which conducted the audit of the financial statements of InMedica for the most recent fiscal year was Robison Hill & Co. The following is a summary of the fees billed to us by Robison, Hill & Company for professional services rendered for the years ended December 31, 2003 and 2002: Service 2003 2002 - ------------------------------ ------------------ ------------------ Audit Fees $ 12,100 $ 9,890 Audit-Related Fees - - Tax Fees 300 575 All Other Fees - - ------------------ ------------------ Total $ 12,400 $ 10,465 ================== ================== AUDIT FEES. Consists of fees billed for professional services rendered for the audits of our consolidated financial statements, reviews of our interim consolidated financial statements included in quarterly reports, services performed in connection with filings with the Securities & Exchange Commission and related comfort letters and other services that are normally provided by Robison, Hill & Company in connection with statutory and regulatory filings or engagements. TAX FEES. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions. Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors The Audit Committee, is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services as allowed by law or regulation. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specifically approved amount. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees incurred to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. The Audit Committee pre-approved 100% of the Company's 2003 audit fees, audit-related fees, tax fees, and all other fees to the extent the services occurred after May 6, 2003, the effective date of the Securities and Exchange Commission's final pre-approval rules. 23 During the registrant's two most recent fiscal years and any subsequent interim period there were no disagreements with accountants on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, or any other disagreements, which disagreement(s) if not resolved to the satisfaction of the former accountant would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports. The former accountants' report for the period of their engagement did not contain an adverse opinion or disclaimer of opinion but were modified for uncertainty as to whether the registrant would continue as a going concern. However, there was no qualification or modification as to audit scope or accounting principles. DELIVERY OF DOCUMENTS TO SECURITY HOLDERS WHO SHARE AN ADDRESS One copy of this information statement and the annual report will be delivered to each security holder who shares the same address, unless the Company has received contrary instructions from one or more of the security holders. Written notification requesting a single copy in lieu of multiple copies or requesting multiple copies in lieu of a single copy should be addressed to InMedica Development Corporation, 825 North 300 West, Suite N132, Salt Lake City, Utah 84103 (telephone: 801-521-9300). SHAREHOLDER PROPOSALS Shareholder proposals intended to be presented at the 2005 Annual Meeting of Shareholders must be received by InMedica at its corporate offices on or before April 5, 2005 in order to be included in the Information Statement relating to that meeting. THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST, COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2003, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUEST FOR SUCH INFORMATION SHOULD BE DIRECTED TO RICHARD BRUGGEMAN, P.O. BOX 27557, SALT LAKE CITY, UTAH 84127. INFORMATION INCORPORATED BY REFERENCE The following documents are incorporated by reference in this Information Statement: 1. Form 10KSB/A#1 of InMedica Development Corporation for the year ended December 31, 2003, SEC file number 000-12968. 2. Form 10QSB of InMedica Development Corporation for the quarter ended September 30, 2004, SEC file number 000-12968. 24 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS Effective September 7, 2004, InMedica Development Corporation ("InMedica") and its subsidiary, MicroCor, Inc. ("MicroCor") entered into a Joint Development Agreement pursuant to which Wescor, Inc., a Utah medical technology company ("Wescor") purchased 15% of the issued and outstanding common stock of MicroCor on a pro-rata basis from InMedica and from Chi Lin Technology Co, Ltd of Tainan, Taiwan, ("Chi Lin") for $375,000. Prior to the consummation of the transaction InMedica held 80% of the issued and outstanding common stock of MicroCor and Chi Lin owned 20%. Following the transaction, InMedica holds 68%, Chi Lin holds 17% and Wescor holds 15% of the issued and outstanding stock of MicroCor. The purchase monies will be paid $300,000 to InMedica and $75,000 to Chi Lin, payable in installments over 18 months. Twenty percent of each payment made to InMedica will be applied to outstanding debt owing from InMedica to Wescor in the amount of $111,972 as of September 30, 2004. If Wescor completes phases 1, 2, and 3 of the Joint Development Agreement, Wescor will be issued 1,700,000 shares of MicroCor common stock following which Wescor would hold 49% of the issued and outstanding stock of MicroCor, InMedica would hold 40.8% and Chi Lin would hold the remaining 10.2%. In addition, upon completion of phase 3, Wescor will have an option to purchase all, 100%, of the remaining issued and outstanding stock of MicroCor from InMedica and Chi Lin. MicroCor has also granted certain royalty and revenue royalty rights to InMedica and Chi Lin. The following unaudited pro forma condensed combined financial statements are based on the above three scenarios as follows: (Contingency 1) the initial sale of 15% of MicroCor; (Contingency 2) the initial sale of 15% plus the sale of an additional 34% of MicroCor for a total of 49% (following completion of phases 1, 2 and 3); and (Contingency 3) the initial sale of 15% plus the additional 34% and the sale of the additional 51% of MicroCor for a total sale of 100% (contingent upon phases 1, 2 and 3 and the exercise by Wescor of its option to buy the remaining 51%) The following unaudited pro forma condensed combined financial statements are based on the consolidated December 31, 2003 audited and September 30, 2004 unaudited historical financial statements of InMedica incorporated by reference herein (See "FINANCIAL STATEMENTS"). The unaudited pro forma condensed combined balance sheet assumes the sale occurred as of September 30, 2004. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2004 presents the results of operations assuming the sale was completed on January 1, 2004. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 presents the results of operations, assuming the sale was effective on January 1, 2003. The unaudited pro forma condensed combined financial statements have been prepared by management of InMedica based on the financial statements incorporated herein. The pro forma adjustments include certain assumptions and preliminary estimates as discussed in the accompanying notes and are subject to change. These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. These pro forma financial statements should be read in conjunction with the accompanying notes and the historical financial information of InMedica (including the notes thereto) incorporated by reference in this filing. See "FINANCIAL STATEMENTS." PF-1 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Contingency 1 - Sale of 15%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- Revenues: $ - $ - $ - Expenses: General & administrative 153,545 - 153,545 Research & development 9,929 - 9,929 ------------------ ------------------- ------------------- Net Loss from Operations (163,474) - (163,474) Other Income (expense) 68,597 8,768 A 77,365 ------------------ ------------------- ------------------- Minority Interest 166,468 - 166,468 ------------------ ------------------- ------------------- Net Income (Loss) $71,591 $8,768 $80,359 Preferred Stock Dividends $(5,674) - $(5,674) ------------------ ------------------- ------------------- Net Income (Loss) to Common Stockholders $65,917 $8,768 $74,685 ================== =================== =================== Income (Loss) per share $ - $ - $ 0.00 ================== =================== =================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-2 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 Contingency 1 - Sale of 15%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------- ------------------- ------------------ Revenues: $ - $ - $ - Expenses: General & administrative 174,203 - 174,203 Research & development 24,723 - 24,723 ------------------- ------------------- ------------------ Net Loss from Operations (198,926) - (198,926) Other Income (expense) 47 11,377 A 11,424 ------------------- ------------------- ------------------ Minority Interest 29,727 17,836 B 47,563 ------------------- ------------------- ------------------ Net Income (Loss) $(169,152) $29,213 $(139,939) Preferred Stock Dividends $(7,566) - $(7,566) ------------------- ------------------- ------------------ Net Income (Loss) to Common Stockholders $(176,718) $29,213 $(147,505) =================== =================== ================== Income (Loss) per share $ (0.01) $ - $ (0.01) =================== =================== ================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-3 UNAUDITED PRO FORMA CONDENSED BALANCE SHEET SEPTEMBER 30, 2004 Contingency 2 - Sale of 49%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- ASSETS Current assets $273,099 - $273,099 Fixed assets (net) 442 - 442 ------------------ ------------------- ------------------- Total Assets $273,541 - $273,541 ================== =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & accrued expenses $78,396 $ - $78,396 Related party payable 84,000 - 84,000 Note payable 108,970 - 108,970 Preferred dividend payable 24,589 - 24,589 ------------------ ------------------- ------------------- Total Current Liabilities 295,955 - 295,955 ------------------ ------------------- ------------------- Minority Interest (62,386) (53,028) A (115,414) ------------------ ------------------- ------------------- Stockholders' Equity: Preferred Stock 94,573 - 94,573 Common stock 15,983 - 15,983 Paid in capital 8,264,260 - 8,264,260 Accumulated deficit (8,334,844) - (8,334,844) 53,028 A 53,028 ------------------ ------------------- ------------------- Total Stockholders' Equity (Deficit) 39,972 53,028 93,000 ------------------ ------------------- ------------------- Total Liabilities and Stockholders' Equity $273,541 - $273,541 ================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-4 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Contingency 2 - Sale of 49%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- Revenues: $ - $ - $ - Expenses: General & administrative 153,545 - 153,545 Research & development 9,929 850,000 C 859,929 ------------------ ------------------- ------------------- Net Loss from Operations (163,474) (850,000) (1,013,474) Other Income (expense) 68,597 8,768 A 77,365 ------------------ ------------------- ------------------- Minority Interest 166,468 141,498 B 307,966 ------------------ ------------------- ------------------- Net Income (Loss) $71,591 $(699,734) $(628,143) Preferred Stock Dividends $(5,674) - $(5,674) ------------------ ------------------- ------------------- Net Income (Loss) to Common Stockholders $65,917 $(699,734) $(633,817) ================== =================== =================== Income (Loss) per share $ - $ - $ (0.04) ================== =================== =================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-5 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 Contingency 2 - Sale of 49%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------- ------------------- ------------------ Revenues: $ - $ - $ - Expenses: General & administrative 174,203 - 174,203 Research & development 24,723 850,000 C 874,723 ------------------- ------------------- ------------------ Net Loss from Operations (198,926) (850,000) (1,048,926) Other Income (expense) 47 11,377 A 11,424 ------------------- ------------------- ------------------ Minority Interest 29,727 561,465 B 591,192 ------------------- ------------------- ------------------ Net Income (Loss) $(169,152) $(277,158) $(446,310) Preferred Stock Dividends $(7,566) - $(7,566) ------------------- ------------------- ------------------ Net Income (Loss) to Common Stockholders $(176,718) $(277,158) $(453,876) =================== =================== ================== Income (Loss) per share $ (0.01) $ - $ (0.03) =================== =================== ================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-6 UNAUDITED PRO FORMA CONDENSED BALANCE SHEET SEPTEMBER 30, 2004 Contingency 3 - Sale of 100%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- ASSETS Current assets $273,099 $(191) B $272,908 1,020,000 C 1,020,000 Fixed assets (net) 442 - 442 ------------------ ------------------- ------------------- Total Assets $273,541 $1,019,809 $1,293,350 ================== =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & accrued expenses $78,396 - $78,396 Related party payable 84,000 - 84,000 Note payable 108,970 - 108,970 Preferred dividend payable 24,589 - 24,589 ------------------ ------------------- ------------------- Total Current Liabilities 295,955 - 295,955 ------------------ ------------------- ------------------- Minority Interest (62,386) 62,386 B - ------------------ ------------------- ------------------- Stockholders' Equity: Preferred Stock 94,573 - 94,573 Common stock 15,983 - 15,983 Paid in capital 8,264,260 - 8,264,260 Accumulated deficit (8,334,844) (62,577) B (8,397,421) 1,020,000 C 1,020,000 ------------------ ------------------- ------------------- Total Stockholders' Equity (Deficit) 39,972 957,423 997,395 ------------------ ------------------- ------------------- Total Liabilities and Stockholders' Equity $273,541 $1,019,809 $1,293,350 ================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-7 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Contingency 3 - Sale of 100%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- Revenues: $ - $ - $ - Expenses: General & administrative 153,545 (86,526) D 67,019 Research & development 9,929 (9,929) D - ------------------ ------------------- ------------------- Net Loss from Operations (163,474) 96,455 (67,019) Other Income (expense) 68,597 8,768 A 77,365 ------------------ ------------------- ------------------- (11,202) D (11,202) Minority Interest 166,468 (166,468) D - ------------------ ------------------- ------------------- Net Income (Loss) $71,591 $(72,447) $(856) Preferred Stock Dividends $(5,674) - $(5,674) ------------------ ------------------- ------------------- Net Income (Loss) to Common Stockholders $65,917 $(72,447) $(6,530) ================== =================== =================== Income (Loss) per share $ - $ - $ 0.00 ================== =================== =================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-8 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 Contingency 3 - Sale of 100%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------- ------------------- ------------------ Revenues: $ - $ - $ - Expenses: General & administrative 174,203 (123,958) D 50,245 Research & development 24,723 (24,723) D - ------------------- ------------------- ------------------ Net Loss from Operations (198,926) 148,681 (50,245) Other Income (expense) 47 (47) C - Other Income (expense) 11,377 A 11,377 ------------------- ------------------- ------------------ Minority Interest 29,727 (29,727) D - ------------------- ------------------- ------------------ Net Income (Loss) $(169,152) $130,284 $(38,868) Preferred Stock Dividends $(7,566) - $(7,566) ------------------- ------------------- ------------------ Net Income (Loss) to Common Stockholders $(176,718) $130,284 $(46,434) =================== =================== ================== Income (Loss) per share $ (0.01) $ - $ 0.00 =================== =================== ================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-9 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (1) GENERAL Pursuant to the sale, InMedica will receive $300,000, with $30,000 paid on closing and $270,000 paid in monthly installments of $15,000 plus interest at prime plus 2% in exchange for shares of InMedica's Majority owned subsidiary MicroCor. As a special provision of the agreement InMedica will payback to WesCor 20% of the initial payment of $30,000 and 20% of each monthly payment as payment on the amounts previously loaned to InMedica by WesCor. (2) PRO FORMA ADJUSTMENTS The adjustments to the accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2004, are described below: (A) Record additional minority interest resulting from sale of MicroCor stock. (B) Remove 100% of MicroCor. (C) Record sale of 100% of remaining interest in MicroCor stock at an assumed price of $.50 per share for a total of $1,020,000, based on the selling price of the initial 15%, and assuming the $1,020,000 is paid in full at time of exercise. The adjustments to the accompanying unaudited pro forma condensed combined statements of operations for the year ended December 31, 2003 and the nine months ended September 30, 2004 are described below: (A) Record interest income on note receivable. (B) Record additional minority interest. (C) Record issuance of 1,700,000 shares of MicroCor common stock in exchange for research and development expenses, estimated at $.50 per share. (D) Remove 100% of MicroCor. PF-10 EX-10 2 sch14ca2-121504ex10_1.txt Exhibit A - Joint Development Agreement JOINT DEVELOPMENT AGREEMENT This JOINT DEVELOPMENT AGREEMENT ("Agreement") is entered into effective as of the "Effective Date" (as defined below), by and between INMEDICA DEVELOPMENT CORPORATION, a Utah corporation ("InMedica"), CHI LIN TECHNOLOGY CO., LTD. (formerly known as Chi Lin Plastics Industrial Co., Ltd.), a corporation duly organized and existing under the laws of the Republic of China ("Chi Lin"), MICROCOR, INC., a Utah corporation ("MicroCor"), and WESCOR INC., a Utah corporation ("Wescor"). The "Effective Date" shall be the date on which the last of the above-named parties executes this Agreement as evidenced by the dates set forth on the signature page hereof. RECITALS InMedica is a medical products research and development company. Through its subsidiary, MicroCor, it has developed a method for measuring hematocrit non-invasively (without drawing blood) and has applied for and received four (4) patents from the U.S. Patent and Trademark Office. As of December 12, 1995, MicroCor's application for a patent entitled "Method and Apparatus for Non-Invasively Determining Hematocrit" was allowed by the U.S. Patent and Trademark Office, and such patent issued on June 18, 1996, as Patent No. 5,526,808 with a term of 17 years and an expiration date of June 18, 2013. MicroCor has been issued three additional patents, Patent No. 5,642,734, Patent No. 6,128,518 and Patent No. 6,766,191, each of which claims priority from October 4, 1990, the date of the first patent's filing, and each of which has an expiration date of October 4, 2010. Pursuant to a Development, Licensing and Manufacturing Agreement dated May 10, 2001 (the "2001 Agreement"), Chi Lin and InMedica pursued additional development on the non-invasive hematocrit technology. The methods and procedures to measure hematocrit non-invasively, including without limitation, the patents and technologies incorporated in the patents and patent applications described above and the development work pursued by Chi Lin and/or InMedica, are collectively referred to herein as the "Hematocrit Technology." InMedica is a publicly traded corporation. Chi Lin is a major shareholder of InMedica, owning one-third of the issued and outstanding shares of InMedica's common stock. MicroCor is a privately held corporation with 5,000,000 shares of common stock (the "MicroCor Stock") authorized under its Articles of Incorporation and no other class or series of stock authorized. InMedica and Chi Lin own all of the issued and outstanding shares of the MicroCor Stock (147,101 shares), with InMedica owning 117,681 shares (80%) and Chi Lin owning 29,420 shares (20%). In order to facilitate further development of the Hematocrit Technology described in this Agreement, InMedica and Chi Lin propose to transfer, assign, or license their respective interests in the Hematocrit Technology to MicroCor. 1 Wescor employs or has access to researchers and engineers to develop medical devices, equipment and products based on the Hematocrit Technology (the "Products"), and to conduct clinical trials of such products with the results thereof to be submitted to the U.S. Food and Drug Administration (the "FDA") to obtain clearance for marketing in the United States. It has the financial and managerial assets and experience to be capable of managing the process of developing and manufacturing the Products. The parties desire to enter into this Agreement with the intent of accomplishing the following purposes (as more fully described below): (1) to transfer to MicroCor all rights relating to the Hematocrit Technology now owned by InMedica; (2) to license to MicroCor all rights relating to the Hematocrit Technology now owned by Chi Lin; (3) to provide for the sale to Wescor of a portion of the shares of the MicroCor Stock owned by InMedica and Chi Lin; (4) to assign to Wescor the rights and duties of managing the operations of MicroCor; (5) to assign to Wescor the rights and duties to continue, or to cause MicroCor to continue, the development of the Hematocrit Technology and to thereby earn additional shares of the MicroCor Stock in phases upon (a) the completion of a working prototype of the Products capable of meeting FDA requirements, (b) the completion of clinical trials for such Products, submission of the results thereof to the FDA, and obtaining the FDA's clearance to market such Products, and (c) manufacturing and initial introduction into the U.S. market of such Products; (6) to provide for the granting of an option to Wescor to purchase the MicroCor Stock held by InMedica and Chi Lin upon completion of the final two phases (described in (b) and (c) above) of the development of the Products; (7) to provide for the granting of a right of first refusal to Wescor in the event MicroCor or its shareholders receive a bona fide offer to acquire MicroCor or its assets; and (8) to provide for an option on the part of InMedica and Chi Lin to purchase Wescor's MicroCor Stock in the event the exercise of the option granted to Wescor is deemed to be at a price that is too low. AGREEMENT In consideration of the foregoing recitals, the mutual covenants described herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: 1. Ownership and Licensing of Hematocrit Technology. 1.1 Transfer of Hematocrit Technology. InMedica hereby transfers, assigns and conveys to MicroCor all of its right, title and interest in and to the Hematocrit Technology and any derivative thereof, including, without limitation, ownership, licensing, marketing, sales, distribution and manufacturing rights. The foregoing transfer, assignment and conveyance is intended by the parties to cover all of the rights, title and interests of InMedica in the Hematocrit Technology and any derivative thereof, whether such rights, title or interests are held jointly or separately by InMedica, and whether such rights, title or interests are in and to a part or whole of any element 2 of the Hematocrit Technology. The obligation of InMedica to transfer, assign and convey as described in this Section 1.1 shall include, but not be limited to, the obligation to cause any agents, independent contractors and research partners (including Medical Physics, Inc., and Billings & Associates) to transfer, assign and convey to MicroCor any such rights in the Hematocrit Technology, including rights to government grants. The parties acknowledge and agree that no royalty or other compensation is due or payable to InMedica arising from the Hematocrit Technology or any Product developed therefrom, except as expressly set forth herein in Section 6. Upon execution of this Agreement, InMedica acknowledges and agrees that the 2001 Agreement is hereby superceded and terminated and that all obligations of the parties thereunder have been performed, waived, fulfilled, or otherwise relieved. 1.2 License of Hematocrit Technology. Chi Lin hereby grants to MicroCor, its successors and assigns, an exclusive, worldwide, royalty-free right and license (the "Chi Lin License") in and to all of its right, title and interest in and to the Hematocrit Technology and any derivative thereof, to make, have made, use, sell, offer to sell, and import Products and to practice methods covered by or included in the Hematocrit Technology for the life of any protectable rights in the Hematocrit Technology. MicroCor shall have the right to sublicense, assign or transfer the Chi Lin License to third parties. The Chi Lin License is intended by the parties to cover all of the rights, title, and interests of Chi Lin in the Hematocrit Technology and any derivative thereof, whether such rights, title, or interests are held jointly or separately by Chi Lin, and whether such rights, title, or interests are in and to a part or whole of any element of the Hematocrit Technology. Chi Lin agrees that it shall take all actions reasonably necessary to maintain the rights included within the Chi Lin License and to diligently and vigorously defend and protect such rights from infringement, improper use, depreciation, or other loss of right due to the acts of third parties or the public in general, including, without limitation, pursuing appropriate patents and other applicable protections; provided, however, that any and all reasonable and appropriate costs and expenses incurred in the defense and protection of such rights, including but not limited to legal fees, shall be borne by MicroCor if Chi Lin obtains MicroCor's prior written consent before incurring any such costs and expenses, which consent shall not be unreasonably withheld in view of the cost involved and in view of MicroCor's products, business and marketing practices, and business and marketing plans. Notwithstanding the foregoing, Chi Lin has no obligations to take any action to protect or defend any right included within the Chi Lin License if MicroCor does not consent to bear the costs and expenses to be incurred in such defense and protection. Chi Lin further agrees that it shall take no action, with respect to the rights included within the Chi Lin License, that would have the effect of negatively impacting the right of MicroCor to use exclusively, such rights. In the event Chi Lin or MicroCor learns of any event, any act of a third party, or any action or proceeding, whether such event, act or action has occurred, been commenced or is being threatened, that would negatively impact the rights included within the Chi Lin License (a "Negative Action"), then such party shall give the other party written notice of such Negative Action. Chi Lin agrees to retain counsel acceptable to MicroCor, at MicroCor's expense and with MicroCor's prior written consent, to take all reasonable and necessary steps to protect or defend against such Negative Action. If Chi Lin fails to retain counsel or to take other reasonable and necessary protective and defensive actions within five (5) business days following the date MicroCor delivers written notice to Chi Lin requesting such actions, MicroCor shall have the right, at its own expense, to take such actions in the name of Chi Lin or in MicroCor's 3 own name, as may be appropriate. Nothing herein shall authorize MicroCor to settle such Negative Actions without the prior written consent of Chi Lin, if by any such settlement Chi Lin is obligated to make any monetary payment, to assume any other obligation, to part with any property or any interest therein, to be subject to any injunction, or to grant any license or any right included within the Chi Lin License. Notwithstanding the foregoing, Chi Lin has no obligations to take any action to protect or defend against any Negative Action if MicroCor does not consent to bear the costs and expenses to be incurred in such defense and protection, nor does Chi Lin have any obligations to take any action to defend against any action, threat, claim or proceeding alleging that the Products have infringed any patent or other intellectual property right of any third party due to any causes other than the rights included within the Chi Lin License. The obligation of Chi Lin to license the rights included within the Chi Lin License shall include, but not be limited to, the obligation to cause any agents, independent contractors, and research partners (including Medical Physics, Inc., and Billings & Associates) to similarly license to MicroCor any such rights. The parties acknowledge and agree that the rights included within the Chi Lin License do not include any rights in new developments, discoveries or other intellectual property rights developed or discovered as a result of future work done by MicroCor or Chi Lin, their agents, independent contractors, and research partners after the execution of this Agreement pursuant to any government grants concerning the Hematocrit Technology, and that all such developments, discoveries and intellectual property rights shall be the sole property of MicroCor. The rights included within the Chi Lin License include, without limitation, any rights still remaining under any licenses granted to it under the 2001 Agreement to sell and distribute the Products in "Asia," as defined in Section 6.2.4. The parties acknowledge and agree that no royalty or other compensation is due or payable to Chi Lin arising from the Hematocrit Technology or any Product developed therefrom, except as expressly set forth herein in Section 6. Upon execution of this Agreement, Chi Lin acknowledges and agrees that the 2001 Agreement is hereby superceded and terminated and that all obligations of the parties thereunder have been performed, waived, fulfilled, or otherwise relieved. 2. MicroCor Finances and Capital Structure. InMedica shall take all reasonable action, or cause MicroCor to take all reasonable action, as soon as is reasonably practicable before or upon the execution of this Agreement to (i) terminate any agreements, resolve any disputes, pay any liabilities and perform any obligations of MicroCor existing as of the time immediately prior to the effectiveness of this Agreement such that, after the transfer described in Section 1, MicroCor's only assets and liabilities shall be the Hematocrit Technology and the related rights and duties described in or reasonably arising from this Agreement; (ii) effect a restructuring and split of the issued and outstanding shares of the MicroCor Stock so that immediately after such restructuring and split the total outstanding shares of MicroCor will be 2,500,000 shares with InMedica owning 2,000,000 shares and Chi Lin owning 500,000 shares of the MicroCor Stock; and (iii) recall all certificates representing issued and outstanding shares of MicroCor Stock and re-issue new certificates to the holders of such shares in the new share amounts described in the preceding clause (ii) and include on such new certificates a conspicuous reference to the existence of this Agreement and the fact that it restricts the transfer of the shares and affects the management of MicroCor. All certificates representing shares of the MicroCor Stock issued during the term of this 4 Agreement shall include a conspicuous reference to the existence of this Agreement and the fact that it restricts the transfer of the shares and affects the management of MicroCor. Chi Lin shall reasonably cooperate with InMedica to the extent necessary to accomplish the purposes described in this Section. 3. Stock Restrictions. During the term of this Agreement: 3.1. Transfers Prohibited. Without obtaining the prior written consent of all parties hereto, each of InMedica, Chi Lin and Wescor shall be prohibited from transferring, conveying, pledging, hypothecating or otherwise assigning, and each of InMedica, Chi Lin and Wescor hereby covenants and warrants that it shall not transfer, convey, pledge, hypothecate or otherwise assign, any part or all of its interest in any shares of the MicroCor Stock, whether now held or hereafter acquired, to or for the benefit of any party or third party except as expressly provided herein. The provisions of this Section are subject to the provisions of Section 3.4. 3.2. Newly Authorized or Issued Stock Prohibited. Without obtaining the prior written consent of all parties hereto, MicroCor shall be prohibited from authorizing or issuing, and MicroCor hereby covenants and warrants that it shall not authorize or issue, any shares of MicroCor Stock or any shares of any other class or series of the capital stock of MicroCor to or for the benefit of any party or third party except as expressly provided herein. 3.3. MicroCor Board Composition. During the term of this Agreement, regardless of the number of shares of MicroCor Stock held by the parties, the Board of Directors of MicroCor shall consist of exactly five (5) directors, three (3) of whom shall be chosen by InMedica, one (1) of whom shall be chosen by Chi Lin, and the remaining one (1) director shall be chosen by Wescor. InMedica, Chi Lin and Wescor shall take all necessary action, in their capacities as shareholders of MicroCor, to accomplish the foregoing provisions of this Section. Only upon the written consent of InMedica, Chi Lin and Wescor, may the size or composition of MicroCor's Board of Directors be changed during the term of this Agreement. 3.4. Right of First Refusal. The provisions of this Section 3.4 shall apply in the event the parties have received an offer for the acquisition of MicroCor that InMedica and Chi Lin have approved and intend to accept (an "Acquisition Offer"). An Acquisition Offer must be a bona fide offer from a qualified third party to (i) purchase all of the outstanding MicroCor Stock, (ii) purchase all or substantially all the assets of MicroCor, or (iii) merge or otherwise combine MicroCor with one or more entities upon the consummation of which the holders of MicroCor Stock immediately prior thereto would hold less than 50% of the shares of the voting stock or other ownership interests in the surviving entity. The value equivalent in the case of a merger or combination or where the consideration is other than cash as set forth in the Acquisition Offer must be supported by a fairness opinion rendered by a recognized business valuation expert. Upon the receipt of an Acquisition Offer, InMedica and Chi Lin shall give Wescor written notice (the "Acquisition Offer Notice") thereof and of their intent to accept the Acquisition Offer. InMedica and Chi Lin hereby grant Wescor a right of first refusal (the "First Refusal Right") to purchase all (but not less than all) of the MicroCor Stock held by both InMedica and Chi Lin. Any First Refusal Right shall exist from the date the 5 Acquisition Offer Notice is delivered to Wescor and shall expire sixty (60) days thereafter. To exercise a First Refusal Right, Wescor shall, prior to its expiration, give InMedica and Chi Lin written notice (the "Exercise Notice") of Wescor's intent to exercise the First Refusal Right. The terms of such First Refusal Right shall be as follows: 3.4.1. Purchase Price. The purchase price of InMedica's and Chi Lin's MicroCor Stock shall be calculated as: (x) the total number of shares of MicroCor Stock held by InMedica and Chi Lin divided by the total number of outstanding shares of MicroCor Stock, (y) multiplied by the purchase price (or its value equivalent in the case of a merger or combination or where the consideration is other than cash) set forth in the Acquisition Offer, (z) multiplied by 90%. 3.4.2. Purchase Terms. Terms for payment of the purchase price shall be, at Wescor's option, either: (i) twenty percent (20%) of the purchase price paid within 60 days following the delivery of the Exercise Notice, and the balance paid in equal monthly payments over twelve (12) months (beginning one month following the 20% payment), with such balance bearing interest at an annual rate of two percent (2%) plus the Prime Rate; or (ii) payment terms that are no less favorable to InMedica and Chi Lin than they would be for the acquirer as set forth in the Acquisition Offer. As used in this Agreement, the term "Prime Rate" shall mean the "prime rate" as reported in the Wall Street Journal on the date closest to the date the installment payments begin. 3.4.3. Merger Alternative. As an alternative to the payment of the purchase price, InMedica, Chi Lin and Wescor agree to negotiate in good faith to attempt to agree upon a merger of InMedica, MicroCor and Wescor. In such a merger, the value attributed to MicroCor shall be the purchase price (or value equivalent) in the Acquisition Offer without reducing by multiplying by 90% as described in clause (z) of Section 3.4.1; the respective values attributed to InMedica and Wescor shall be established by a fairness opinion rendered by a recognized business valuation expert, as to whom none of the parties has a reasonable objection. 3.4.4. Agreement Terminated. In the event the First Refusal Right is exercised, this Agreement shall be terminated except for the royalty provisions described in Section 6, which shall survive. 3.5 Disclosure of Potential Acquisition Transactions. Each of InMedica, Chi Lin and Wescor covenant and agree that during the term of this Agreement if it intends to solicit an offer or if it receives an offer or other indication of interest from a third party that is reasonably likely to develop into a serious offer or agreement to purchase or acquire a substantial portion of the assets of MicroCor or of the MicroCor Stock, or to combine or merge with MicroCor (a "Potential Acquisition Transaction"), then it shall give the other parties to this Agreement notice of such solicitation, offer or interest as soon as is reasonably possible and shall continue to give 6 such other parties notice of changes or developments in the negotiations concerning such Potential Acquisition Transaction. Such notices shall include details as to the terms of such Potential Acquisition Transactions. The parties agree that if a party hereto shall fail to give the notices required under this Section the Potential Acquisition Transaction shall not be entered into without the written consent of any party who did not receive the required notice. The parties acknowledge that during the term of this Agreement each party is permitted to solicit offers from and communicate interest to third parties concerning Potential Acquisition Transactions, although the consummation of such transactions can only be accomplished pursuant to the express terms set forth in other sections of this Agreement. Nothing in this Section shall be interpreted to give a party any right to enter into a transaction that is otherwise prohibited by this Agreement. 4. Wescor Purchase of MicroCor Stock. 4.1. From InMedica. InMedica hereby sells to Wescor and Wescor hereby purchases from InMedica 300,000 shares of MicroCor Stock. As partial consideration for such purchase and sale, Wescor shall pay InMedica $300,000 as follows: (i) $30,000 upon the execution of this Agreement, and (ii) 18 monthly payments of $15,000 with the first such monthly payment due and payable on the first day of the month following the Effective Date and each successive monthly payment due on the first day of each successive month until all 18 payments are made. 4.2. From Chi Lin. Chi Lin hereby sells to Wescor and Wescor hereby purchases from Chi Lin 75,000 shares of MicroCor Stock. As partial consideration for such purchase and sale, Wescor shall pay Chi Lin $75,000 as follows: (i) $7,500 upon the execution of this Agreement, and (ii) 18 monthly payments of $3,750 with the first such monthly payment due and payable on the first day of the month following the Effective Date and each successive monthly payment due on the first day of each successive month until all 18 payments are made. 4.3. Special Provision for Repayment of Loan to InMedica. InMedica and Wescor acknowledge and agree that Wescor has loaned InMedica certain sums of money which remain outstanding as of the date this Agreement is executed (the "Wescor Loans"). InMedica shall pay Wescor 20% of each installment payment (including the initial payment due upon execution) due from Wescor to InMedica under Section 4.1 as partial performance of its repayment obligations of the Wescor Loans. At InMedica's election, InMedica may direct Wescor to pay only 80% of each such installment payment in satisfaction of InMedica's obligation under this Section. 5. Management of MicroCor; Issuance of New Stock; Options to Acquire Remainder of MicroCor. 5.1. Management Rights and Duties of Wescor. InMedica, Chi Lin and Wescor, as the current and future (pursuant to the terms of this Agreement) majority shareholders of MicroCor, agree that upon execution of this Agreement Wescor shall assume the management of MicroCor as described in this Section 5.1. 7 5.1.1. Rights and Duties. Wescor shall have the right and obligation to manage the day-to-day operations of MicroCor, including the hiring and firing of its officers and employees and contracting for employees or independent contractors. Wescor shall use its best efforts with all reasonable speed and efficiency to develop or cause MicroCor to develop the Products as described herein. Wescor's obligation to fund the expenses of MicroCor's operations ("Wescor Funding Obligations") shall be as follows: (i) Wescor shall not be responsible for funding expenses related solely to manufacturing or sales and marketing operations ("Manufacturing and Sales Expenses"); (ii) except to the extent that expenses are reasonably includable as Manufacturing and Sales Expenses, Wescor shall be responsible for and shall contribute funds to MicroCor to pay expenses incurred by MicroCor for research and development of the Products ("R&D Expenses"), including, but not limited to, costs related to development of the Prototype (as defined below), costs related to obtaining FDA Clearance (as defined below), and R&D Expenses related to First Production (as defined below). Notwithstanding the fact that Wescor has no obligation to fund Manufacturing and Sales Expenses, Wescor agrees to exercise its commercially reasonable best efforts to arrange for the financing of the Manufacturing and Sales Expenses and of any royalty payment obligations under Section 6 ("Wescor Financing Commitment"), subject to approval of the Board of MicroCor. In arranging for any such financing, Wescor shall not be obligated to loan any funds itself or to separately guarantee or provide separate security for any such loans which are arranged for MicroCor by Wescor. 5.1.2. Board Authority. MicroCor's Board reserves the authority to approve or disapprove actions by MicroCor (or by Wescor on MicroCor's behalf) (i) to acquire or dispose of capital assets, or to incur capital expenditures or debt if such actions would involve in the aggregate more than $20,000 during any 12-month period; (ii) to contract with a third party to perform part or all of the manufacturing, marketing and selling functions necessary to accomplish the intent of this Agreement; or (iii) to assign, transfer, license, sub-license, pledge as collateral, mortgage, hypothecate or otherwise encumber part or all of the Hematocrit Technology or any other intellectual property interest owned by or licensed to MicroCor. MicroCor (or Wescor on MicroCor's behalf) shall not take any action described in the preceding sentence without first delivering to all members of MicroCor's Board written notice of its intent to take such action. If no Board member objects within fifteen (15) business days of receipt of such notice by delivering a written notice to Wescor, Wescor may proceed to take such action. If a Board member objects, Wescor shall not take such action until after the Board has acted to determine whether to consent to such action. In addition to other forms of notice permitted by this Agreement, the giving of notices and communicating of objections described in this Section may be accomplished by facsimile machine transmission or by email if a confirmation of successful delivery or transmission is received by the sender. 8 5.1.3. Termination of Management Duties. If not earlier terminated hereunder, if (i) no Prototype has been completed (as defined and described in Section 5.2) by the date that is twelve (12) months following the Effective Date, (ii) no FDA Clearance (as described in Section 5.3) has been received by the date that is eighteen (18) months following the Effective Date (subject to the extension of such period pursuant to Section 5.3), (iii) there has been no First Production (as defined in Section 5.4.1) of a Product by the date that is twenty four (24) months following the Effective Date (subject to the extension of such period pursuant to Section 5.3), or (iv) Wescor has not fulfilled the Wescor Funding Obligations within a reasonable period following the date such obligations become due from time to time, then the Board of Directors of MicroCor shall have the right to review Wescor's actions in fulfilling its obligations to manage MicroCor, and shall have the right to make such changes in the management as it deems appropriate. The parties acknowledge and agree that such changes may, in the Board's discretion, include termination of this Agreement, in which case the Board of Directors of MicroCor shall thereafter have complete and autonomous control over the management and operations of MicroCor. The parties further acknowledge and agree that a failure by Wescor to comply with its covenants under the Wescor Financing Commitment may result in MicroCor's Board assuming the rights and duties pertaining to the Wescor Financing Commitment and terminating Wescor's rights and duties thereunder. 5.2. Development of FDA Prototype; Stock Purchase and Issuance. Wescor shall use its best efforts with all reasonable speed and efficiency to develop, or cause MicroCor to develop, a prototype or prototypes of the Product(s) (the "Prototype") suitable for conducting the clinical trials necessary to prepare for submission or the Product(s) to the FDA for regulatory review and marketing clearance. Upon such completion of the Prototype, MicroCor shall issue to Wescor, 500,000 new shares of MicroCor Stock. The consideration for the shares issued to Wescor shall be the amounts contributed to MicroCor to fund the Wescor Funding Obligations incurred to the date of completion of the Prototype. Such shares shall be deemed fully paid and not subject to any assessment. 5.3. FDA Clearance. Wescor shall use its best efforts with all reasonable speed and efficiency to conduct and complete, or cause MicroCor to conduct and complete, such actions as are reasonably necessary to gather data and prepare a 510(k) Premarket Notification submission to the FDA covering the Product(s) and to obtain the necessary clearances from the FDA to market such Product(s) in the United States market ("FDA Clearance"). In the event MicroCor's Board of Directors determines that Wescor has acted in good faith in the performance of its obligations to obtain FDA Clearance but such FDA Clearance has not been obtained, and the Board of Directors further determines that it is reasonable to expect that FDA Clearance will be obtained in the future, the Board of Directors may extend for six (6) months the period described in clause (ii) of Section 5.1.3, which extension would also automatically extend the period described in clause (iii). Upon subsequent identical determinations by MicroCor's Board of Directors, additional six-month extensions may be granted in the Board's discretion. 9 5.3.1. Stock Issuance. Upon obtaining FDA Clearance, MicroCor shall issue to Wescor, 500,000 new shares of MicroCor Stock. The consideration for the shares issued to Wescor shall be the amounts contributed to MicroCor to fund the Wescor Funding Obligations incurred to the date of obtaining FDA Clearance. Such shares shall be deemed fully paid and not subject to any assessment. 5.3.2. Option and Trump Option to Acquire MicroCor Stock. Upon obtaining FDA Clearance, Wescor shall have the option (the "Option") to purchase all (but not less than all) of the MicroCor Stock held by InMedica and Chi Lin pursuant to the provisions of this Section 5.3.2. To exercise the Option: a. Notice. Wescor shall deliver a written notice (the "Option Notice") of its election to exercise the Option to both InMedica and Chi Lin within ninety (90) days following receipt of the first formal notice of FDA Clearance of the Product(s). b. Purchase Price. The purchase price under the Option shall be the pro rata portion of the total value of MicroCor attributable to the total shares of MicroCor Stock held by InMedica and Chi Lin (as compared to the total outstanding shares of MicroCor Stock). The value of MicroCor (the "MicroCor Option Value") shall be determined as follows: (i) Wescor may choose to pay for and obtain an appraisal of the value (the "Option Appraisal Value") of MicroCor from a nationally recognized appraisal firm, as to whom neither InMedica nor Chi Lin have a reasonable objection, and the MicroCor Option Value shall equal the Option Appraisal Value multiplied by 90%; or (ii) Wescor may suggest a reasonable value for MicroCor (the "Option Suggested Value"), and the MicroCor Option Value shall equal the Option Suggested Value (not multiplied by 90%). Wescor shall, within thirty (30) days following the delivery of the Option Notice, deliver to InMedica and Chi Lin written notice (the "Option Value Notice") of the MicroCor Option Value and all reports and data that support its determination of such value. InMedica and Chi Lin, at their expense, shall have the right to obtain a fairness opinion ("Fairness Opinion") from a recognized business valuation expert as to whom Wescor has no reasonable objection concerning the Option Appraisal Value or the Option Suggested Value, as appropriate. If the Fairness Opinion determines that either the Option Appraisal Value or the Option Suggested Value, as applicable, is not within a fair range of value, the Option shall terminate. In the event the Option is exercised, any holders of the MicroCor Stock other than InMedica and Chi Lin, who have obtained MicroCor shares in compliance with the provisions of Section 3.1, shall have the right to require Wescor to purchase their MicroCor Stock at the same pro rata price per share. c. Trump Option. Notwithstanding Wescor's 10 right to exercise the Option, upon receipt of the Option Value Notice, or, if a Fairness Opinion is obtained, upon receipt of a Fairness Opinion that does not terminate the Option, InMedica and Chi Lin jointly, or InMedica by itself (but not Chi Lin by itself) shall then have the option (the "Trump Option") to terminate Wescor's Option by purchasing all (but not less than all) of the MicroCor Stock held by Wescor. To exercise the Trump Option, either InMedica or InMedica and Chi Lin together, shall deliver a written notice (the "Trump Option Notice") to Wescor within thirty (30) days following the receipt of the Option Value Notice. In the event a Fairness Opinion is being obtained, the period during which a Trump Option Notice may be given shall extend to thirty (30) days following receipt of such Fairness Opinion. The purchase price under the Trump Option shall be the pro rata portion of the total value of MicroCor attributable to the total shares of MicroCor Stock held by Wescor (as compared to the total outstanding shares of MicroCor Stock). The total value of MicroCor for purposes of the Trump Option shall be 110% of the Option Appraisal Value or the Option Suggested Value, as appropriate, as set forth in Wescor's Option Value Notice. The purchase price under the Trump Option shall be paid to Wescor as follows: 20% within thirty (30) days following the delivery of the Trump Option Notice, and the remainder in equal monthly installments of principle and interest on the first day of each successive month for thirty six (36) months. Interest accruing on such remainder shall be an annual rate equal to two percent (2%) plus the Prime Rate. In the event InMedica and Chi Lin exercise the Trump Option jointly, they shall participate in the same proportions as their individual ownership of MicroCor Stock bears to their aggregate ownership of MicroCor Stock. If the Trump Option is exercised, this Agreement shall then automatically terminate. d. Option Revival. Notwithstanding the provisions of the preceding Paragraph c, Wescor shall have the right to revive an Option (an "Option Revival") terminated by the Trump Option by increasing by at least ten percent (10%) the purchase price provision of the Option and delivering a new Option Value Notice to InMedica and Chi Lin within fifteen (15) days following the delivery of a Trump Option Notice. Such new Option Value Notice shall terminate the Trump Option, and shall be treated as if it were an original Option Value Notice under this Agreement. InMedica, or InMedica and Chi Lin jointly, shall again have the right to exercise the Trump Option pursuant to Paragraph c, based on the increased purchase price provision in the new Option Value Notice. The Option, Trump Option and Option Revival may be repeated as many times as is necessary. e. Option Payment Terms. If a Trump Option Notice is not delivered within the time allowed by InMedica or by InMedica and Chi Lin, the Trump Option shall expire. Wescor shall then be obligated to exercise the Option by paying the purchase price under the Option as follows: 20% within thirty (30) days following the deadline for the Trump Option Notice, and the remainder in equal monthly 11 installments of principle and interest on the first day of each successive month for thirty six (36) months. Interest accruing on such remainder shall be an annual rate equal to two percent (2%) plus the Prime Rate. f. Merger Alternative. As an alternative to the payment of the purchase price under the Option, InMedica, Chi Lin and Wescor agree to negotiate in good faith to attempt to agree upon a merger of InMedica, MicroCor and Wescor. In such a merger, the value attributed to MicroCor shall be 100% of either the Option Appraisal Value or the Option Suggested Value; the respective values attributed to InMedica and Wescor shall be established by appraisals from a recognized appraisal firm, as to whom none of the parties has a reasonable objection. The parties acknowledge that InMedica shall have no obligation to agree to a merger the terms of which are not determined to be fair pursuant to a fairness opinion from a recognized business valuation expert as to whom none of the parties has a reasonable objection. g. Effect on Agreement. If the Option is not exercised, this Agreement shall continue in full force and effect. If the Option is exercised, this Agreement shall be automatically terminated except for the royalty provisions set forth in Section 6, which shall survive, and the Board of Directors of MicroCor shall thereafter have complete and autonomous control over the management and operations of MicroCor. 5.4. Product Launched in Market. After obtaining FDA Clearance of a Product, Wescor shall use its best efforts with all reasonable speed and efficiency to cause MicroCor to begin manufacturing, marketing and selling such Product in the market. The manufacturing, marketing and selling functions shall be the right and responsibility of MicroCor, which may, in the discretion of its Board of Directors, contract with third parties for part or all of the manufacturing, marketing and selling of the Products. 5.4.1. Stock Issuance. Upon the first completed production run of units of the Products for which FDA Clearance has been received and upon preparation of such units for sale (the "First Production"), MicroCor shall issue to Wescor, 700,000 new shares of MicroCor Stock. The consideration for the shares issued to Wescor shall be the amounts contributed to MicroCor to fund the Wescor Funding Obligations incurred to the date of the First Production. Such shares shall be deemed fully paid and not subject to any assessment. 5.4.2. Second Option and Trump Option to Acquire MicroCor Stock. After the First Production and issuance of the shares to Wescor pursuant to section 5.4.1 Wescor shall have a second option (the "Second Option"), subject to the Trump Option, pursuant to the same terms as described above in Section 5.3.2, except that the Second Option shall be triggered by the First Production, and the Second Option 12 Notice shall be delivered within ninety (90) days following the date of the First Production. 5.4.3. Termination of Management. Upon the First Production: (i) Wescor's rights and duties under Section 5.1 to manage MicroCor, including the Wescor Funding Obligations and the Wescor Financing Obligations, shall automatically terminate, (ii) MicroCor shall operate as a stand-alone company subject to the autonomous control of its Board of Directors, and (iii) the size and composition of MicroCor's Board of Directors shall thereafter be determined pursuant to applicable corporate law, provided that the parties to this Agreement hereby agree that shareholders shall have the right to vote their shares cumulatively in subsequent elections of MicroCor's Board of Directors. InMedica, Chi Lin and Wescor shall take all necessary action, in their capacities as shareholders of MicroCor, to accomplish the foregoing provision of this Section. 6. Grant of Royalties. 6.1. Minimum Royalty. MicroCor hereby grants and shall pay to InMedica and Chi Lin a minimum annual royalty (the "Minimum Royalty") as defined and divided below in Sections 6.1.1 and 6.1.2 as a minimum amount until the Revenue Royalty (as defined in Section 6.2) reaches the amounts described below. 6.1.1. InMedica Minimum Royalty. MicroCor hereby grants to InMedica a portion of the Minimum Royalty (the "InMedica Minimum Royalty"). The InMedica Minimum Royalty shall be in the amount of $160,000 per year, but shall be paid in equal monthly royalty payments, with the first such monthly royalty payment beginning and first due on the date that is eighteen (18) months following the Effective Date. The InMedica Minimum Royalty shall have the same term of existence as the Revenue Royalty (as defined in Section 6.2), and shall terminate on the same date the Revenue Royalty terminates. InMedica shall pay Wescor 20% of each such monthly royalty payment due under this Section 6.1.1 as partial performance of its repayment obligations of the Wescor Loans until such time as the Wescor Loans are fully repaid. At InMedica's election, InMedica may direct Wescor to pay only 80% of each such monthly royalty payment with the remaining 20% thereof being credited against InMedica's obligation under the Wescor Loans. 6.1.2. Chi Lin Minimum Royalty. MicroCor hereby grants to Chi Lin the remaining portion of the Minimum Royalty (the "Chi Lin Minimum Royalty"). The Chi Lin Minimum Royalty shall be in the amount of $40,000 per year, but shall be paid in equal monthly royalty payments, with the first such monthly royalty payment beginning and first due on the date that is eighteen (18) months following the Effective Date. The Chi Lin Minimum Royalty shall have the same term of existence as the Revenue Royalty (as defined in Section 6.2), and shall terminate on the same date the Revenue Royalty terminates. 13 6.2. Revenue Royalty. MicroCor hereby grants and shall pay to InMedica and Chi Lin an annual royalty (the "Revenue Royalty") based on "Revenues" (as defined in Section 6.2.1) as divided in Sections 6.2.3 and 6.2.4. The Revenue Royalty shall be effective immediately and shall continue for all Revenues received or accrued through the latest expiration date of the currently existing U.S. Patents on the Hematocrit Technology, which the parties acknowledge and agree include the following U.S. Patents with the following expiration dates: (i) Patent No. 5,526,808 expiring June 18, 2013, (ii) Patent No. 5,642,734 expiring October 4, 2010, (iii) Patent No. 6,128,518 expiring October 4, 2010, and (iv) Patent No. 6,766,191 expiring October 4, 2010. 6.2.1 Revenues Defined. "Revenues" shall mean the sum of (i) Royalty Revenues, and (ii) Sales and Licensing Revenues. a. Royalty Revenues. "Royalty Revenues" shall mean payments received by MicroCor and its assignees and successors in the nature of royalties from licensees, sub-licensees and other third-parties ("Third-Party Licensees") based on sales or other dispositions by Third-Party Licensees of Products or any other goods or services incorporating any portion of the Hematocrit Technology. b. Sales and Licensing Revenues. "Sales and Licensing Revenues" shall mean revenues received by MicroCor and its assignees and successors that are (i) net sales revenues from the sale or other disposition of all Products or any other goods or services incorporating any portion of the Hematocrit Technology, (ii) revenues from the licensing of any portion of the Products or the Hematocrit Technology (where such revenues are not Royalty Revenues), and (iii) any other revenues (but excluding Royalty Revenues) generated by the Products, the Hematocrit Technology, or any right or interest therein. Net sales revenues, as a component of Sales and Licensing Revenues, shall be the invoice price of all Products sold less (i) standard trade discounts and returns actually allowed, (ii) all sales commissions or sales discounts actually allowed, (iii) taxes applicable to such sales, and (iv) shipping charges which are to be paid by MicroCor or its assignees or successors and not separately invoiced. Revenue from only one arms length sale of the same Product unit may be included in Sales and Licensing Revenues, and, in cases where a Product unit is sold more than once, only the revenue from the first arms length sale (the "First Sale") of such Product unit will be included in Sales and Licensing Revenues; that is, revenue from a sale of a Product unit by a purchaser of such unit shall not be included in Sales and Licensing Revenues if the revenue from the sale of such Product unit to the purchaser (or to a prior seller) has already been included in Sales and Licensing Revenues. Further, if the Product or use of the Hematocrit Technology is only a portion of a larger product or system, or if a license is granted to include a Product or use of the Hematocrit Technology in a larger product or system, then only that portion of the revenue reasonably 14 attributable to the Product or Hematocrit Technology (as part of a larger product or system) will be included in Sales and Licensing Revenues. In such instances where a larger product or system is involved, the parties may further agree as to the portion of revenues from such product or system that is to be included in Sales and Licensing Revenues. 6.2.2 Calculation and Payment of Revenue Royalty. The total Revenue Royalty payments payable by MicroCor, including both the InMedica Revenue Royalty (described in Section 6.2.3) and the Chi Lin Revenue Royalty (described in Section 6.2.4) (the "Total Revenue Royalties"), shall be calculated as follows: The sum of (i) in any given calendar year, four percent (4%) of the first $5,000,000 in Sales and Licensing Revenues, three percent (3%) of Sales and Licensing Revenues in amounts exceeding $5,000,000 but not exceeding $20,000,000, and two percent (2%) of Sales and Licensing Revenues in amounts exceeding $20,000,000; plus (ii) twenty five percent (25%) of all Royalty Revenues. Revenue Royalty payments shall be paid by MicroCor to InMedica and/or Chi Lin by the end of each month following the month in which there are any Revenues to which the Revenue Royalty applies. In order to verify the Revenues described in this Section 6.2, MicroCor agrees to make or cause the accounting books and records of MicroCor and its assignees and successors available to InMedica and Chi Lin or to their agents, including independent auditors, in reasonable form and at reasonable times and places. 6.2.3. InMedica Revenue Royalty. MicroCor hereby grants to InMedica a portion of the Revenue Royalty (the "InMedica Revenue Royalty"). The InMedica Revenue Royalty for any given period shall equal the Total Revenue Royalties multiplied by a fraction, the numerator of which is the worldwide Revenues less the "Asian Revenues" (as defined in Section 6.2.4) for such period, and the denominator of which is the worldwide Revenues for such period. The InMedica Revenue Royalty shall be effective immediately and shall continue for all non-Asian Revenues received or accrued through the date of termination of the Revenue Royalty as described in Section 6.2 above. 6.2.4. Chi Lin Revenue Royalty. MicroCor hereby grants to Chi Lin the remaining portion of the Revenue Royalty (the "Chi Lin Revenue Royalty"). The Chi Lin Revenue Royalty for any given period shall equal the Total Revenue Royalties multiplied by a fraction, the numerator of which is the "Asian Revenues" (as defined below) for such period, and the denominator of which is the worldwide Revenues for such period. "Asian Revenues" shall mean (i) Royalty Revenues received from a Third-Party Licensee for sales or other dispositions made by such Third-Party Licensee in "Asia" (as defined below), (ii) Sales and Licensing Revenues that are net sales revenues from a First Sale made in Asia where, at the time of such First Sale, the seller does not reasonably know that the ultimate sale to the end user will be to a purchaser outside of Asia, (iii) Sales and Licensing Revenues that are net sales revenues from a First Sale made outside of Asia where, at the time of such First Sale, the seller reasonably knows that the ultimate sale to the end user will be to a 15 purchaser in Asia, and (iv) any other Sales and Licensing Revenues that are not net sales revenues that are received from a Third-Party Licensee whose main office or headquarters is located in Asia. "Asia" shall mean the following geographical areas: Australia, New Zealand and the countries of Asia (including without limitation, Indonesia, Malaysia and the island countries of the Western Pacific Rim; but excluding Russia, Turkey and the countries of the Middle East from Iran and to the west). No Chi Lin Revenue Royalty shall be owed for any month in which there are no Asian Revenues. The Chi Lin Revenue Royalty shall be effective immediately and shall continue for all Asian Revenues received or accrued through the date of termination of the Revenue Royalty as described in Section 6.2 above. 6.2.5 Asian Marketing Right. Chi Lin, at its option, and upon giving thirty (30) days written notice to MicroCor, Wescor and InMedica, shall have the right to terminate the Chi Lin Revenue Royalty and the Chi Lin Minimum Royalty permanently in exchange for the exclusive right to distribute and sell the Products in Asia (the "Asian Marketing Right"). Chi Lin shall exercise the foregoing right to exchange the Chi Lin Revenue Royalty and the Chi Lin Minimum Royalty rights for the Asian Marketing Right, if at all, by the date that is eighteen (18) months following the Effective Date. The Asian Marketing Right, if elected, shall then be effective immediately and shall continue through the date of termination of the Revenue Royalty as described in Section 6.2 above. In the event Chi Lin exchanges the Chi Lin Revenue Royalty and the Chi Lin Minimum Royalty rights for the Asian Marketing Right, the InMedica Revenue Royalty payable to InMedica shall be based on only non-Asian Revenues. 6.3. Minimum Royalty Credit. Notwithstanding anything to the contrary in this Section 6, the parties acknowledge and agree that the Revenue Royalty payments are intended to be in place of - and not in addition to - the Minimum Royalty payments, to the extent that the Revenue Royalty payments exceed the Minimum Royalty payments. Accordingly, (i) InMedica Minimum Royalty payments made in any given calendar year shall be a credit against InMedica Revenue Royalty payments in such calendar year, and InMedica Revenue Royalty payments shall only be paid to the extent that they exceed the InMedica Minimum Royalty payments for such calendar year; and (ii) Chi Lin Minimum Royalty payments made in any given calendar year shall be a credit against Chi Lin Revenue Royalty payments in such calendar year, and Chi Lin Revenue Royalty payments shall only be paid to the extent that they exceed the Chi Lin Minimum Royalty payments for such calendar year. 6.4 Royalty Buyout Right. In the event of the occurrence of a "MicroCor Change of Control," the provisions of this Section 6.4 shall apply. "MicroCor Change of Control" shall mean the acquisition by any party or third party of more than eighty percent (80%) of the assets or equity securities of MicroCor, or the merger of MicroCor with any party or third party where the parties to this Agreement own in the aggregate less than twenty percent (20%) of the equity securities of the surviving entity. Upon the occurrence of a MicroCor Change of Control, MicroCor, or its successors or assigns, shall have the right (the "Buyout Right"), notwithstanding any contrary provisions in this Section 6, to purchase and terminate the Minimum Royalty, the Revenue 16 Royalty and, if applicable, the Asian Marketing Right from InMedica and Chi Lin. MicroCor (or its successors or assigns) shall exercise the Buyout Right, if at all, within twelve (12) months following the occurrence of a MicroCor Change of Control by giving InMedica and Chi Lin thirty (30) days prior written notice of its intent to exercise, and by paying to InMedica and Chi Lin, upon the expiration of such thirty (30) days, the following amounts: (i) to InMedica, the greater of: (a) $800,000, or (b) 80% of five (5) times the sum of the Minimum Royalty payments payable for the immediately preceding twelve (12) months plus the Revenue Royalty payments payable for the immediately preceding twelve (12) months; and (ii) to Chi Lin: (A) if Chi Lin has not exercised its option for the Asian Marketing Right, the greater of: (a) $200,000, or (b) 20% of five (5) times the sum of the Minimum Royalty payments payable for the immediately preceding twelve (12) months plus the Revenue Royalty payments payable for the immediately preceding twelve (12) months, or (B) if Chi Lin has exercised its option for the Asian Marketing Right, the greater of: (a) $200,000 or (b) one (1) times the gross revenue Chi Lin has generated in the immediately preceding twelve (12) months through its exercise of the Asian Marketing Right. In order to verify the relevant values described in this Section 6.4, the parties agree that they shall make their accounting books and records available to each other or to the parties' agents, including independent auditors, in reasonable form and at reasonable times and places. 7. Title to Hematocrit Technology. Notwithstanding anything to the contrary contained herein, this Agreement shall not be construed to be a transfer of the Hematocrit Technology to Wescor, and the parties acknowledge and warrant that subject to Section 1 hereof, the Hematocrit Technology is and will be owned by or licensed to MicroCor at all times during the term of this Agreement. The term "Hematocrit Technology" shall include the Hematocrit Technology as presently constituted plus any and all additions, enhancements, improvements, and developments, whether developed or discovered by MicroCor, Wescor, InMedica, Chi Lin, or any employee, agent, contractor, subsidiary, successor or assignee thereof. 8. Disclosure of Hematocrit Technology. InMedica and Chi Lin shall disclose to MicroCor and Wescor all aspects of their existing research and 17 findings, as well as the research and findings in their possession performed by others, with respect to the Hematocrit Technology. MicroCor and Wescor shall keep all such information confidential and shall not disclose any of such information to third parties except to the extent allowed hereunder or required by law. Nothing herein shall be construed to be, and InMedica and Chi Lin hereby expressly disclaim any, warranty or representation as to the current or potential function, success, accuracy, marketability, profitability or possible sales of the Hematocrit Technology or any Products. Wescor and MicroCor hereby acknowledge that they have not relied on any such warranty or representation and further acknowledge that there is a significant amount of risk that the Hematocrit Technology and the Products will not be developable, will not receive FDA Clearance, or cannot be manufactured and marketed profitably, and that there are other significant risk factors involving research, regulatory, business and economic variables over which InMedica and Chi Lin have no control that could negatively impact the success of the Hematocrit Technology and the Products. 9. Condition Precedent. Notwithstanding anything to the contrary contained herein, the rights granted and obligations assumed hereunder are conditioned upon the approval by the shareholders of InMedica of the transactions described herein. InMedica represents and warrants that it shall act with all reasonable speed and diligence to obtain such approval pursuant to all applicable corporate and securities laws and regulations as advised by its legal counsel. Chi Lin, Larry E. Clark, Ralph Henson and Richard Bruggeman covenant and agree that they shall each vote their respective shares of InMedica stock in favor of approving the transactions described herein. InMedica shall deliver to the other parties to this Agreement a written notice of the results of seeking shareholder approval within ten (10) days following the relevant shareholder action. If InMedica delivers a notice stating that its shareholders have not approved the transactions, or if no written notice (regardless of its contents) has been delivered by the date that is forty five (45) days following the date this Agreement is executed by all parties, this Agreement shall automatically terminate. Before the end of such 45-day period (and any successive 45-day extension period), InMedica may deliver a written notice to the other parties extending such deadline by forty five (45) days if the Securities and Exchange Commission has not acted on InMedica's request that the appropriate information statement and/or proxy statement be approved for use in connection with seeking the shareholder approval described in this Section. In the event of such automatic termination, the parties shall take all reasonable actions to return any items, repay any funds or otherwise put each other back into the same situation they were in prior to the execution of this Agreement. 10. Audit of Financial Records. For purposes of confirming performance of obligations under this Agreement, InMedica and Chi Lin shall have the right, at their expense, at all reasonable times and from time to time, to review, or engage an independent auditor to review, the accounting and operational records of MicroCor and Wescor. MicroCor and Wescor shall keep and maintain accurate records of their accounting data that shall reasonably and accurately reflect their operations and shall maintain such records for at least three (3) years following the close of each relevant accounting period. MicroCor and Wescor shall make all such information available to InMedica or Chi Lin upon such party's written request either by providing access thereto at the offices of MicroCor or Wescor, or by copying all such information and delivering it to the requesting party. Either InMedica or Chi Lin shall have the right to terminate this Agreement if either MicroCor or Wescor fails to perform its obligations under this Section, or provides inaccurate or false records under this Section. 18 11. Miscellaneous. 11.1. Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement shall bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated hereby, including all fees and expenses of agents, representatives, counsel, and accountants. 11.2. Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand, (b) sent by facsimile machine, provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service, in each case to the appropriate addresses and facsimile machine telephone numbers set forth below (or to such other addresses and facsimile machine telephone numbers as a party may designate by notice to the other parties): InMedica: Mr. Ralph Henson, President InMedica Development Corporation 825 North 300 West Salt Lake City, Utah 84103 Facsimile No.: (801) 497-9445 Chi Lin: Chi Lin Technology Co. Ltd. Facsimile No.: _______________ MicroCor: Facsimile No.: _______________ Wescor: Facsimile No.: _______________ 19 11.3. Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought only in the state or federal courts located in the County of Salt Lake, State of Utah, and each of the parties hereby consents and agrees to the sole jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. 11.4. Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents and transactions referred to in this Agreement. Each party agrees to use its best efforts in good faith to fulfill its obligations hereunder in a timely and efficient manner. 11.5. Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 11.6. Entire Agreement; Modification. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment. 11.7. Assignment; Successors; No Third-Party Rights. Except for MicroCor's right to sublicense, assign or transfer the Chi Lin License described in Section 1.2, and except for any other rights described in this Agreement that by their express terms are assignable or transferable, no party hereto may assign any of its rights under this Agreement without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or 20 referred to in this Agreement shall be construed to give any person or entity other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns. 11.8. Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. 11.9. Section Headings; Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 11.10. Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 11.11. Governing Law. This Agreement shall be governed by the laws of the State of Utah without regard to conflicts of laws principles. 11.12. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. Execution and delivery of this Agreement by facsimile machine shall be deemed as effective as delivery of an original, signed document. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 21 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date(s) set forth below, to be effective as of the Effective Date defined in Section 9. INMEDICA DEVELOPMENT CORPORATION, a Utah corporation Date: 9/7/04 By: /s/ Ralph Henson ---------- ----------------------------- Name: Ralph Henson ---------------------------------------------- Title: President --------------------------------------------- CHI LIN TECHNOLOGY CO., LTD., a corporation organized and existing under the laws of the Republic of China Date: 2004/9/7 By: /s/ Mao-Song Lee -------- ------------------------------- Name: Mao-Song Lee -------------------------------- Title: President ---------------------------------- MICROCOR, INC., a Utah corporation Date: 9/7/04 By: /s/ Ralph Henson --------- ------------------------------ Name: Ralph Henson ---------------------------------------------- Title: President --------------------------------------------- WESCOR INC., a Utah corporation Date: 7 Sep 2004 By: /s/ Wayne K. Barlow ----- --------------------------- Name: Wayne K. Barlow ------------------------------ Title: President/CEO --------------------------------------------- By signing below, the following individuals indicate their agreement to be bound only by the provisions expressly referring to them in Section 9 of this Agreement, and acknowledge that their agreement to be so bound is supported by adequate consideration. Date:9/5/04 /s/ Larry E. Clark ------------- --------------------------------- LARRY E. CLARK 22 Date: 9/5-04 /S/ RALPH HENSON ------------ ----------------------------------- RALPH HENSON Date: 5 Sept 2004 /S/ RICHARD BRUGGEMAN ------- ------------------------------ RICHARD BRUGGEMAN 23 EX-4 3 sch14ca2-121504ex4_1.txt EXHIBIT B - Dissenter's Notice COMPANY NOTICE TO POTENTIAL DISSENTERS You the shareholder are hereby notified pursuant to section 16-10a-1322 of the Utah Code Annotated effective ________________ as follows: (a) Proposal number 1 relating to the sale of the MicroCor stock was authorized by the shareholders at the Company's annual meeting held ________________; (b) InMedica Development Corporation will receive payment demands for shares and original certificates for shares at the address on the accompanying form to assert dissenter's rights; (c) a form to assert dissenter's rights and demand payment is attached hereto; (d) you must state an address to which payment is to be made on the accompanying form; (e) Your demand and stock certificates must be received by ________________ which is 30 days after the effectiveness of this notice; (f) if the dissenter's notice is submitted on behalf of a nominee or beneficial owner, you must certify that you or the person on whose behalf you asserts dissenters' rights acquired beneficial ownership of the shares before September 8, 2004 (g) see "Dissenter's Rights" in the accompanying Information Statement for a copy of section 16-10a-1322. Dissenters' notice. Effective: ________________ By INMEDICA DEVELOPMENT CORPORATION 1 DISSENTER'S NOTICE FORM (A SIGNED COPY OF THIS NOTICE AND YOUR SHARE CERTIFICATES MUST BE RECEIVED BY INMEDICA AT THE ADDRESS BELOW NOT LATER THAN ________________ IN ORDER TO ASSERT DISSENTER'S RIGHTS) TO: INMEDICA DEVELOPMENT CORPORATION 825 North 300 West, Suite N132 Salt Lake City, Utah 84103 801-521-9300 The undersigned hereby demands payment for his/her shares pursuant to dissenter's rights with respect to the approval of Proposal 1 at the meeting of the Company held ________________. Enclosed are all of the original certificates for shares of InMedica Development Corporation held by the undersigned. The undersigned (jointly and severally) certify that the he/she acquired beneficial ownership of the shares before the date of the first announcement to the news media (September 8, 2004) of the proposed corporate action creating the dissenter's rights or if a record owner on behalf of a beneficial owner or nominee, the record holder certifies that the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before that date. If signed for an entity, the undersigned represents that he/she is duly authorized to sign on behalf of the entity. ________________________________Address for Payment:______________ Your signature as it appears on certificate(s) _______________ Print Name:_________________________ Date:_________________________ ________________________________Address for Payment:______________ Signature of joint owner, if applicable__________________________________ Print Name:_____________________________________________________ Date:____________________________ FOR ENTITIES: NAME OF ENTITY:_________________________ ________________________________Address for Payment______________ Signature ____________________________ Print Name of Signer:______________________________________________ Position with Entity:________________ Date:___________________________ 2 -----END PRIVACY-ENHANCED MESSAGE-----