Filed with Securities and Exchange Commission November 15, 1996
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 31, 1996
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Informedics, Inc.
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(Exact name of registrant as specified in its charter)
Oregon 2-86360 93-0750571
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
4000 Kruse Way Place, Bldg 3, Suite 210, Lake Oswego, OR 97035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(503) 697-3000
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N/A
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
As disclosed in a press release filed with the Securities and Exchange
Commission on October 8, 1996 on Form 8-K, Informedics, Inc. ("Informedics")
sold its ClinicManager practice management product line to Adaptive Health
Systems of Washington, Inc. ("Adaptive") effective October 31, 1996.
The sale occurred pursuant to an Asset Purchase Agreement between
Informedics and Adaptive dated as of September 30, 1996 (the "Asset Purchase
Agreement"). The assets sold include the ClinicManager software, together with
certain associated copyrights, trademarks, customer lists and contract rights.
The purchase price for the assets was $500,000, a sum determined by
negotiation between the parties. Adaptive paid $50,000 in cash at closing, and
the balance will be paid in deferred payments over 60 months, subject to certain
adjustments and possible acceleration as provided in the Asset Purchase
Agreement.
The foregoing description of the Asset Purchase Agreement is qualified in
its entirety by reference to the copy of same attached hereto as Exhibit 2.1.
Item 7. Financial Statements and Exhibits. Page
----
(a) Financial Statements of Businesses Acquired.
Inapplicable
(b) Pro Forma Financial Information. 6
<PAGE>
The following pro forma information pertaining to the Company and the
ClinicManager product line is filed herewith:
Pro Forma Unaudited Balance Sheet as of July 31, 1996 7
Pro Forma Unaudited Statement of Operations for the
fiscal year ended October 31, 1995 9
Pro Forma Unaudited Statement of Operations for the
Nine Months ended July 31, 1996 10
Notes to Pro Forma Financial Statements (Unaudited) 11
(c) Exhibits.
The following exhibits are being filed herewith:
2.1 Asset Purchase Agreement dated as of September 30,
1996, between Informedics and Adaptive (omitting
all exhibits*). 13
2.2 Addendum to Asset Purchase Agreement dated as of
September 30, 1996. 29
* A list of all exhibits is provided with the Asset Purchase Agreement. The
undersigned Registrant hereby agrees to furnish supplementally to the
Commission a copy of any omitted exhibit to the Asset Purchase Agreement upon
request.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INFORMEDICS, INC.
Date: November 15, 1996 By:/s/ Dale E. Conner
----------------------------------------
Dale E. Conner
Vice President and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
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Exhibit No. Page
- ----------- ----
2.1 Asset Purchase Agreement, dated as of September 30,
1996, between Informedics and Adaptive
(omitting all exhibits*). 13
2.2 Addendum to the Asset Purchase Agreement dated as
of September 30, 1996. 29
* A list of all exhibits is provided with the Asset Purchase Agreement. The
undersigned Registrant hereby agrees to furnish supplementally to the
Commission a copy of any omitted exhibit to the Asset Purchase Agreement upon
request.
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
On October 31, 1996, Informedics, Inc. (the "Company") sold its ClinicManager
product line to Adaptive Health Systems of Washington, Inc. ("Adaptive") for
$500,000. Under the terms of the sale, Adaptive paid the Company $50,000 at
closing and is required to pay the remaining balance in 60 equal payments of
$7,500 per month, subject to acceleration based upon certain events as described
in the Asset Purchase Agreement. In addition to acquiring the software and
certain fixed assets associated with the ClinicManager product line, Adaptive
extended offers of employment to ten employees of the Company who provide
customer service to the ClinicManager customers.
The following unaudited pro forma financial statements for the Company have been
prepared based upon certain pro forma adjustments to the historical financial
statements. The pro forma financial statements should be read in conjunction
with the notes thereto and the historical financial statements of the Company.
The accompanying pro forma balance sheet as of July 31, 1996 has been prepared
as if the sale of the Company's ClinicManager product line to Adaptive was
consummated as of that date. The accompanying pro forma statements of operations
for the year ended October 31, 1995 and the nine months ended July 31, 1996 have
been prepared as if the sale to Adaptive was consummated as of November 1, 1994.
The pro forma financial statements do not purport to be indicative of the
results which would actually have been obtained had the sale to Adaptive been
completed on the dates indicated or which may be obtained in the future.
<PAGE>
PRO FORMA BALANCE SHEET
(Unaudited)
July 31, 1996
--------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
ASSETS:
Cash $ 349,369 $ 45,930 $ 395,299
Accounts Receivable, less allowance
for doubtful accounts of $46,964 666,343 - 666,343
Inventories, Prepaid Expenses
and Other Current Assets 78,054 (5,000) 73,054
Income Taxes Receivable 57,746 - 57,746
Deferred Income Taxes 213,435 - 213,435
Current Portion of Long-Term
Accounts Receivable 11,928 - 11,928
Current Portion of Note Receivable - 87,218 87,218
----------- ----------- -----------
Total Current Assets 1,376,875 128,148 1,505,023
----------- ----------- -----------
Fixed Assets, Net 246,310 (3,355) 242,955
Long-Term Accounts Receivable 45,724 - 45,724
Note Receivable - 273,549 273,549
Software Development Costs, Net 595,210 (245,678) 349,532
Purchased Software, Covenants
Not to Compete and Other Assets 67,889 - 67,889
Deferred Income Taxes 589,495 (3,337) 586,158
----------- ----------- -----------
$ 2,921,503 $ 149,327 $ 3,070,830
=========== =========== ===========
<PAGE>
LIABILITIES & STOCKHOLDERS' EQUITY:
Accounts Payable and Accrued Expenses $ 351,449 $ 1,930 $ 353,379
Revolving Line of Credit 100,000 - 100,000
Deferred Revenue 1,409,137 - 1,409,137
Current Portion of Deferred Gain on
Sale of Assets - 43,407 43,407
Current Portion of Deferred Rent 13,033 - 13,033
----------- ----------- -----------
Total Current Liabilities 1,873,619 45,337 1,918,956
Deferred Gain on Sale of Assets - 98,629 98,629
Deferred Rent 33,669 - 33,669
----------- ----------- -----------
Total Liabilities 1,907,288 143,966 2,051,254
Preferred Stock, $0.01 par value:
authorized 5,000,000 shares; no
shares outstanding - -
Common Stock, $0.01 par value:
authorized 15,000 shares; shares
outstanding 2,647,193 26,472 - 26,472
Capital in Excess of Par Value 1,911,416 - 1,911,416
Note Receivable from Stockholder (22,000) - (22,000)
Accumulated Deficit (901,673) 5,361 (896,312)
----------- ----------- -----------
Total Stockholders' Equity 1,014,215 5,361 1,019,576
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,921,503 $ 149,327 $ 3,070,830
=========== =========== ===========
See accompanying notes to pro forma financial statements
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
(Unaudited)
Year Ended October 31, 1995
--------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
REVENUE:
Product Sales $ 1,908,079 $ (414,784) $ 1,493,295
Customer Service and Support 3,243,468 (530,204) 2,713,264
----------- ----------- -----------
Total Revenue 5,151,547 (944,988) 4,206,559
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of Products Sold 734,857 (259,151) 475,706
Cost of Customer Service and Support 2,757,960 (789,932) 1,968,028
Selling & Administrative Expenses 1,999,094 (446,818) 1,552,276
Depreciation & Amortization 1,642,541 (302,143) 1,340,398
----------- ----------- -----------
Total Costs and Expenses 7,134,452 (1,798,044) 5,336,408
----------- ----------- -----------
Operating Loss (1,982,905) 853,056 (1,129,849)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest Expense (901) - (901)
Interest Income 53,441 41,740 95,181
Gain on Sale of Assets - 36,300 36,300
Other Expense (9,411) - (9,411)
----------- ----------- -----------
Total Other Income 43,129 78,040 121,169
----------- ----------- -----------
LOSS BEFORE INCOME TAXES (1,939,776) 931,096 (1,008,680)
INCOME TAX BENEFIT (762,286) 357,168 (405,118)
----------- ----------- -----------
NET LOSS $(1,177,490) $ 573,928 $ (603,562)
=========== =========== ===========
See accompanying notes to pro forma financial statements
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
(Unaudited)
Nine Months Ended July 31, 1996
--------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
REVENUE:
Product Sales $ 1,173,945 $ (382,234) $ 791,711
Customer Service and Support 2,659,892 (424,330) 2,235,562
----------- ----------- -----------
Total Revenue 3,833,837 (806,564) 3,027,273
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of Products Sold 538,563 (262,441) 276,122
Cost of Customer Service and Support 2,190,275 (637,817) 1,552,458
Selling & Administrative Expenses 1,548,580 (314,070) 1,234,510
Depreciation & Amortization 338,733 (11,996) 326,737
----------- ----------- -----------
Total Costs and Expenses 4,616,151 (1,226,324) 3,389,827
----------- ----------- -----------
Operating Loss (782,314) 419,760 (362,554)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest Expense (7) - (7)
Interest Income 11,652 41,988 53,640
Gain on Sale of Assets - 18,493 18,493
Other Expense (71) - (71)
----------- ----------- -----------
Total Other Income 11,574 60,481 72,055
----------- ----------- -----------
LOSS BEFORE INCOME TAXES (770,740) 480,241 (290,499)
INCOME TAX BENEFIT (292,893) 184,220 (108,673)
----------- ----------- -----------
NET LOSS $ (477,847) $ 296,021 $ (181,826)
=========== =========== ===========
See accompanying notes to pro forma financial statements
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
The following adjustments were made to the historical financial statements to
arrive at the pro forma financial statements:
Cash. Reflects the down payment of $50,000 less payment of accrued vacation to
employees who were hired by Adaptive.
Inventories, prepaid expenses and other current assets. Reflects a decrease in
inventories resulting from estimated write-down of inventory related to the
ClinicManager product line.
Current portion of notes receivable and notes receivable. Reflects the present
value of the payments due from Adaptive in future periods. Under the Agreement,
Adaptive is required to pay the Company $7,500 per month for sixty months or
$450,000. The notes receivable balance at July 31, 1996 represents the present
value of such payments, assuming an interest rate of 9.25% (the current
borrowing rate of the Company). If certain events occur in future periods, the
payment terms will be accelerated to where the purchase price of $500,000 is due
from Adaptive within one year from the date of the sale.
Fixed assets, net. Reflects the elimination of the fixed assets sold to
Adaptive.
Software development costs, net. Reflects the reduction in capitalized software
development costs for the ClinicManager software sold to Adaptive.
Deferred income taxes. Reflects the reduction in the tax net operating loss
carryforward resulting from the gain on the initial down payment received from
Adaptive, offset by the write-down of inventories as previously discussed.
Accounts payable and accrued expenses. Increase resulting from accrual of
estimated selling expenses, offset by a reduction in accrued vacation pay as
discussed in "Cash" above.
Deferred gain on sale of assets. Increase resulting from using the installment
method for recognizing the gain on the sale of assets to Adaptive. Based upon
the current financial condition of Adaptive and the extended payment terms of
the sale, there is no reasonable basis for estimating the degree of
collectibility.
<PAGE>
Accumulated deficit. Decrease resulting from the after-tax recognition of the
gain on the sale of assets to Adaptive, offset by the write-down of the
inventory, as discussed above.
Total revenue. Reflects elimination of product sales and customer service and
support revenue that was generated by the ClinicManager product line.
Cost of products sold. Reflects elimination of the costs associated with product
sales that were generated by the ClinicManager product line.
Cost of customer service and support. Reflects the elimination of direct
expenses, salaries and related costs, associated with providing customer service
and support for the ClinicManager product line.
Selling and administrative expenses. Reflects the elimination of direct
expenses, salaries and related costs, associated with sales and administration
of the ClinicManager product line. Certain overhead expenses that were allocated
to the ClinicManager product line, such as rent, were not entirely eliminated,
as such expenses will continue to be incurred by the Company.
Depreciation and amortization. Reflects the decrease in depreciation and
amortization of the fixed assets, software development costs and purchased
software that were sold to Adaptive.
Interest income. Reflects additional interest income from funds generated from
the improvement in the Company's operating results and from the sale of certain
assets to Adaptive.
Gain on sale of assets. Reflects the gain from the sale of certain assets to
Adaptive, accounted for under the installment method, as discussed in "Deferred
gain on sale of assets" above.
Income tax benefit. Reflects the income tax effect of the pro forma adjustments
to the statement of operations using the Company's statutory tax rate.
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
between
INFORMEDICS, INC.
and
ADAPTIVE HEALTH SYSTEMS OF WASHINGTON, INC.
September 30, 1996
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
EFFECTIVE DATE: September 30, 1996
BETWEEN: Informedics, Inc. ("Seller")
AND: Adaptive Health Systems
of Washington, Inc. ("Buyer")
Background
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A. Buyer is engaged in the development, marketing and support of computer
software for various medical practice management applications. Seller is engaged
in the development, marketing and support of software under the name
ClinicManager for medical practice management applications.
B. This Agreement sets forth the terms of an agreement between Buyer and
Seller under which Buyer will purchase and Seller will sell certain assets of
Seller's ClinicManager division, including certain software and related
intellectual property rights, contracts and customer lists.
C. The exhibits hereto are numbered to correspond to the section numbers
below.
Agreement
---------
1. Purchase and Sale. On the terms and subject to the conditions of this
Agreement, on the Closing Date (as defined in Section 14.1), Seller shall sell,
convey, assign, transfer, and deliver to Buyer, and Buyer shall purchase and
accept from Seller, the following tangible and intangible assets of Seller
(collectively referred to as the "Assets"):
1.1 Software. Subject to limitations specified below in this Section
1.1, all of Seller's computer software products related to Seller's software
known as ClinicManager, including the following related assets (collectively
referred to herein as the "Software"):
(a) Subject to Section 4.3, source code for the Software (in a
language and form readable and understandable by humans) both in printed
form and encoded on a magnetic medium for the main "C" code for all
versions of the Software currently installed in customer base plus in
progress, alpha or beta releases of the core product, and all OS and
communications shell scripts;
<PAGE>
(b) Object code of the Software (in binary form);
(c) Seller's existing documentation, user guides and manuals,
programmer's guides and manuals, sales literature and all collateral
material unique to the Software (the "Documentation");
Seller has developed certain derivative works from the Software, including,
without limitation, the software products known as OPEL, OMEN and INTRAMED.NET
(the "Retained Software"). Seller retains all rights to the Retained Software,
including, without limitation, all intellectual property rights thereto.
1.2 Customer List. All ClinicManager related information concerning
Seller's customers for the Software set forth on Exhibit 1.2, which as to each
installation of the Software sets forth: name; address; installation date;
specific product or product module and version installed; and whether the
customer holds a current support and maintenance agreement and its payment
terms.
1.3 Prospect List. Information concerning any active prospective
customers for the Software. Active prospective customers shall be defined as
those entities whom the Seller has contacted within the past 60 days about the
licensing, installation and/or support of the Software, but who have not
executed a contract as of the Closing Date. Exhibit 1.3 sets forth the names,
contact persons and addresses of active prospective customers for the Software.
1.4 Intellectual Property. All "Intellectual Property Rights" (as
hereinafter defined) with respect to the Software, excluding any such rights
with respect to the Retained Software. The term "Intellectual Property Rights"
means all industrial and intellectual property rights including, without
limitation, the ClinicManager trademark and any applications for, or
registrations of, such trademark, copyrights, and copyright registration
applications, if any.
1.5 License Agreements. All license and other agreements under which
customers have or claim rights to use the Software, the Documentation or any
other Intellectual Property Rights. Attached as Exhibit 1.5 are examples of
license contracts between Seller and its customers. Buyer acknowledges that
Seller has granted to Paragon Concepts, Inc. of Houston, Texas the non-exclusive
right to distribute the Software in the state of Texas.
1.6 Support Contracts for the Software. All of Seller's right, title
and interest in and to the support and maintenance agreements under which
Seller's customers are obligated to make payments for support and maintenance of
the Software.
<PAGE>
Attached as Exhibit 1.6 are examples of support and maintenance contracts
between Seller and its customers.
1.7 Support Contracts for Hardware. All of Seller's right, title and
interest in and to the support and maintenance agreements under which Seller's
customers are obligated to make payments for support and maintenance of computer
hardware used in connection with the Software.
1.8 Timeshare Contracts. All of Seller's right, title and interest in
and to contracts under which Seller's customers are obligated to make payments
for access to Seller's Timeshare system in connection with use of the Software
(the "Timeshare Customers"). Exhibit 1.8 sets forth, with respect to each
outstanding contract with the Timeshare Customers, the following information:
customer name; address; and contract origination date. Attached as Exhibit 1.8.1
is an example of the Timeshare contracts between Seller and its customers.
1.9 Timeshare Equipment. All equipment currently housing the Timeshare
Customers. Exhibit 1.9 lists all such items being transferred to Buyer hereunder
as of the close of business on the day preceding the effective date of this
Agreement.
2. Assumption of Certain Liabilities. In connection with the purchase of
the Assets, on the Closing Date Buyer will assume the following liabilities of
Seller:
2.1 Warranty Obligations. Buyer will assume Seller's obligations under
warranties held by customers of the Software. Such warranties are limited to the
warranties contained in the license agreements between Seller and each customer.
2.2 Support and Maintenance Obligations. Buyer will assume Seller's
obligations to support and maintain the Software and related hardware pursuant
to outstanding agreements with customers of the Software. Buyer's obligations
hereunder will include any prepaid portions of such contracts, subject to
reduction of the purchase price if the prepaid portion of such agreements
exceeds $24,550 for the 12-month period immediately following the Closing Date.
In the event of such excess, the purchase price will be decreased by the
difference between (a) the total prepaid portion of the contracts for the
12-month period and (b) $24,500. The decreased purchase price shall be reflected
in reduced installment payments as described in the example in Section 4.2.
2.3 Timeshare Contracts. Buyer will assume Seller's contractual
obligations to the Timeshare Customers.
<PAGE>
3. Buyer's Offer to Retain Certain Employees of Seller.
3.1 Buyer shall make written offers to retain employees of Seller who
are currently in the positions listed on attached Exhibit 3.1.
3.2 Buyer shall assume all obligations to pay each employee who
becomes an employee of Buyer pursuant to Section 3.1 for all paid time off,
including vacation, sick leave and personal leave accrued by such employee as of
the Closing Date (up to the maximum length permitted by Buyer's current employee
policy) ("Paid Time Off"). From and after the Closing Date, in accordance with
Buyer's vacation, sick leave and personal leave benefits accrual policy in
effect from time to time, each of Seller's employees who is hired by Buyer will
accrue additional Paid Time Off on the same accrual schedule as other similarly
situated employees of Buyer. Such employees will be given credit in determining
their accrual rate for the years of employment with Seller. Attached as Exhibit
3.2 is a summary of accrued Paid Time Off for the employees to whom Buyer will
offer employment as provided in this Section 3.
3.3 Seller agrees to encourage its employees to accept Buyer's offer
of employment as described in this Section 3.
4. Purchase Price. Subject to adjustment as provided in Section 4.2 below,
the purchase price for the Assets shall be $500,000, payable as follows:
4.1 Payment.
(a) The parties anticipate that Buyer will enter into a form of
acquisition or business combination agreement with The Medical Manager
Corp., Inc., a Florida corporation ("MMC"), following or followed by an
initial public offering of equity securities by MMC. If Buyer is acquired
by MMC and such offering has occurred prior to the Closing Date, Buyer will
pay Seller $250,000 by cashier's check or certified funds at the Closing
and $250,000 in twelve monthly installments of $20,833.33 beginning one
month following the Closing and on the first day of each month thereafter.
(b) Subject to Section 4.1(c) below, if MMC does not acquire Buyer and
the offering does not occur prior to the Closing Date, Buyer will pay
Seller $50,000 by cashier's check or certified funds at the Closing and
$450,000 in sixty monthly installments of $7,500 beginning one month
following the Closing and on the first day of each month thereafter.
(c) If MMC acquires Buyer and such offering occurs after the Closing
Date but during the installment payment period specified in Section 4.1(b),
Buyer's payment obligations shall immediately convert to Section 4.1(a)
hereof, subject to appropriate adjustments for payments made pursuant to
Section 4.1(b). For example, if MMC acquires Buyer and such offering occurs
two months after Closing, Buyer's payment obligations would automatically
convert from Section 4.1(b) to 4.1(a). As of two months following the
Closing, Buyer would have paid Seller $65,000 ($50,000 at Closing plus two
payments of $7,500). Buyer would then promptly pay Seller $226,666.66
(i.e., the additional $200,000 that would have been due at Closing plus the
additional $13,333.33 that would have been due each of the two months
<PAGE>
following Closing. Thereafter, Buyer would make ten installment payments
to Seller of $20,833.33 per month.
4.2 Adjustments to Purchase Price. The parties anticipate that the
revenue from hourly based support and contracts with the Timeshare Customers and
customers for software and hardware support described in Sections 1.6, 1.7 and
1.8 will be approximately $245,500 for the six-month period immediately
following the Closing Date. Buyer agrees to use its best efforts to retain all
such customers. If the actual revenue from such hourly based support and
contracts does not deviate by more than five percent from $245,500 (i.e., by
more than $12,275), the purchase price will not be adjusted. If the actual
revenue from such hourly based support and contracts deviates by more than five
percent from $245,500 (i.e., by more than $12,275), the purchase price will be
increased or decreased, dollar for dollar, in an amount that is in excess of the
five percent deviation. Revenue from Seller's customers who convert to Buyer's
products shall be included in the calculation of revenue for purposes of this
Section 4.2. In the event of adjustment of the purchase price as provided in
this Section 4.2, the installment payments specified in Section 4.1(a) or
4.1(b), as applicable and subject to Section 4.1(c), will be adjusted to account
for the deviation. For example, if the actual revenue from the hourly based
support and contracts is $223,225 (i.e., a deviation of $22,275), the purchase
price will be decreased $10,000 ($22,275 minus $12,275), and each of the
remaining installment payments will be reduced to account for the $10,000
reduction. If, for purposes of this example, four installment payments were
remaining, each payment would be reduced by $2,500.
4.3 Title to Source Code. Title to the source code for the Software
will not be transferred to Buyer until Seller has received final payment of the
full purchase price as provided in this Section 4. Seller will have the right to
retain a copy of the source code until title passes as provided in this section.
<PAGE>
4.4 Late Fee and Acceleration.
(a) Buyer acknowledges that late payment by Buyer of any payments due
hereunder will cause Seller to incur costs not contemplated by this
Agreement, the exact amount of which will be extremely difficult to
ascertain. Accordingly, if any payment due under this Agreement is not paid
on or before its due date, Buyer agrees to pay to Seller a late fee of
$500. The parties hereby agree that such late fee represents a fair and
reasonable estimate of the costs incurred by Seller by reason of the late
payment by Buyer. Acceptance of any late charge by Seller shall in no event
constitute a waiver of Buyer's default with respect to the overdue amount
in question, nor prevent Seller from exercising any other rights and
remedies.
(b) If any payment due under this Agreement is not paid within three
business days of its due date, then unless cured within two business days
of written demand for payment by Seller, the entire remaining balance of
payments shall become immediately due and payable and shall therefore bear
interest at ten percent per annum until paid in full.
5. Programming and Related Services Provided by Seller. During the 120-day
period immediately following the Closing, Seller shall provide to Buyer, for no
additional consideration, up to 250 hours of programming and related services.
Such services may include bug fixes, engineering level technical support,
mandatory electronic billing changes to currently supported carriers, electronic
conversions from Seller's software products and data base to Buyer's software
products and data base, and electronic interfaces to other products of Seller
such as the OMEN software. Seller shall have sole discretion to assign such
service personnel, and Seller shall not be obligated to assign more .5 FTE to
the provision of such services at any given time. During the twelve-month period
immediately following the Closing, Buyer may purchase from Seller additional
programming and related services over and above the 250 hours at $75 per hour.
6. Collection of Accounts Receivable. Exhibit 6.1 sets forth certain
information about Seller's existing accounts receivable from sales or support
payments with respect to ClinicManager. Buyer agrees to use its best efforts to
collect Seller's accounts receivable existing at the Closing Date during the
120-day period following the Closing and to forward to Seller weekly all amounts
collected during such 120-day period. If during the 120-day period Buyer makes a
collection from a customer listed on Exhibit 6.1 who also owes money to Buyer
pursuant to a new account receivable, Buyer shall first apply the amount
collected to payment of Seller's account receivable and thereafter apply any
remaining amount to the payment of Buyer's account receivable.
<PAGE>
Following such 120-day period, Buyer shall have no further obligation or
authority to collect Seller's accounts receivable, and Seller may initiate
appropriate collection activity as it deems appropriate.
7. Representations and Warranties of Seller. Except as disclosed in
Exhibits attached to this Agreement, Seller represents and warrants to Buyer as
follows:
7.1 Corporate Status. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of Oregon.
7.2 Authority Relative to Agreement. The execution, delivery and
performance of this Agreement by Seller has been duly and effectively authorized
by all necessary corporate action and votes or consents of Seller and its board
of directors. This Agreement has been duly executed by Seller and is a valid,
legally binding and enforceable obligation of Seller, subject only to the effect
of bankruptcy, insolvency or other laws generally affecting creditors' rights.
7.3 Title to Assets. Seller has good and marketable title to all of
the Assets, free and clear of all Encumbrances (as hereinafter defined). The
term "Encumbrances" means and includes security interests, mortgages, liens,
pledges, reservations, restrictions, clouds on title, and rights of first
refusal.
7.4 Intellectual Property Rights. To Seller's knowledge, the
manufacture, marketing, license, sale or use of the Software will not violate
any license or agreement with any third party or infringe any intellectual
property rights of any other party.
7.5 Litigation. To Seller's knowledge, there is no action, proceeding
or investigation pending or threatened, which might result in any material
adverse change in the Assets.
8. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller as follows:
8.1 Corporate Status. Buyer is a corporation duly organized and
validly existing under the laws of the state of Washington.
8.2 Authority Relative to Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly and effectively authorized
by all necessary corporate action. This Agreement has been duly executed by
Buyer and is a valid, legally binding and enforceable obligation of Buyer,
<PAGE>
subject only to the effect of bankruptcy, insolvency or other laws generally
affecting creditors' rights.
8.3 Effect of Agreement. The execution, delivery and performance of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or termination of any
provision of, or constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of the properties or assets of Buyer
pursuant to, any indenture, mortgage, deed of trust, lease, contract, agreement
or other instrument to which Buyer is a party, or by which Buyer or any of its
assets or properties are bound, and will not result in a violation of Buyer's
Articles of Incorporation or Bylaws.
8.4 Financial Statements. The financial statements of Buyer for the
years ended December 31, 1994 and 1995 and for the 8-month period ended August
31, 1996, which Buyer has delivered to Seller: (i) were prepared from the books
and records of Buyer in accordance with generally accepted accounting principals
consistently applied; (ii) fairly present the Buyer's financial condition and
the results of its operations as of the relevant dates thereof and for the
periods covered thereby; and (iii) contain and reflect all necessary adjustments
and accruals for a fair presentation of such financial condition and results of
operations for the periods covered by the financial statements.
9. Seller's Covenants. Seller agrees that, except as Buyer may otherwise
consent in writing, during the period between the execution of this Agreement
and the Closing Seller will:
9.1 Preserve Assets. Use its best efforts to preserve the Assets.
9.2 Relationships with Employees, Customers and Suppliers. Use its
best efforts to preserve Seller's relationships with its employees that work
directly in connection with the Assets and to preserve relationships with
customers of and suppliers of the Assets.
10. Buyer's Covenants. Seller agrees that, except as Seller may otherwise
consent in writing, during the period between the execution of this Agreement
and Closing Buyer will make written employment offers to not less than eight of
Seller's employees for positions specified on Exhibit 3.1; the terms of such
written offers of employment shall be in compliance with the requirements of
Section 3.
<PAGE>
11. Announcements. Subject to Seller's obligations under federal and state
securities laws, the parties agree to cooperate with respect to the issuance of
statements to customers of the Software and employees of Seller's ClinicManager
division regarding this Agreement.
12. Conditions To Buyer's Obligations. The obligations of Buyer under this
Agreement are subject to the satisfaction at or prior to the Closing of each of
the following conditions, unless expressly waived in writing by Buyer:
12.1 Representations True. The representations and warranties of
Seller contained herein shall be true and correct as of the Closing Date.
12.2 Compliance with Covenants. Seller shall have complied with all
covenants and conditions contained in this Agreement to be performed or complied
with by it at or prior to the Closing.
12.3 Officer's Certificate. Seller shall have furnished to Buyer a
certificate, dated the Closing Date, signed by Seller's President to the effect
that the conditions specified in this Section 12 have been satisfied and that
each of the representations and warranties by Seller in this Agreement is true
and correct as of the Closing Date.
12.4 Resolutions. Buyer shall have received a copy of the resolutions
of Seller's Board of Directors, certified by Seller's Secretary and in form and
substance satisfactory to Buyer, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
13. Conditions to Seller's Obligations. The obligations of Seller under
this Agreement are subject to the satisfaction at or prior to the Closing of
each of the following conditions, unless expressly waived by Seller:
13.1 Representations True. The representations and warranties of Buyer
shall be true and correct as of the Closing Date.
13.2 Compliance with Covenants. Buyer shall have complied with all
covenants and conditions contained in this Agreement to be performed or complied
with by it at or prior to Closing.
13.3 Officer's Certificate. Buyer shall have furnished to Seller a
certificate, dated the Closing Date, signed by Buyer's President to the effect
that each of the conditions specified in this Section 13 have been satisfied and
<PAGE>
that each of the representations and warranties of Buyer contained in this
Agreement is true and correct as of the Closing Date.
13.4 Resolutions. Seller shall have received a copy of the resolutions
of Buyer's Board of Directors, certified by Buyer's Secretary and in form and
substance satisfactory to Seller, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
13.5 Other Conditions. The written offers of employment described in
Sections 3.1 and 10 shall have been executed by Buyer and delivered to Seller on
behalf of the offeree employees.
14. Closing.
14.1 Date and Place. The consummation of the purchase and sale
contemplated hereby (herein referred to as the "Closing") shall occur on or
about October 31, 1996, in Portland, Oregon at the offices of Seller's legal
counsel, at a time agreed upon by the parties. The date and hour of the Closing
are sometimes referred to herein as the "Closing Date."
14.2 Delivery at Closing by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following in form and substance
satisfactory to counsel for Buyer:
(a) One or more bills of sale, assignments and other instruments of
conveyance covering all of the Assets, transferring the Assets to Buyer
free and clear of all Encumbrances;
(b) The officer's certificate called for by Section 12.3;
(c) The certified copy of resolutions called for by Section 12.4; and
(d) Such other documents, instruments or certificates as may be
necessary to perfect or consummate the transfer contemplated hereby.
14.3 Delivery at Closing by Buyer. At the Closing, Buyer shall deliver
to Seller the following in form and substance satisfactory to counsel for
Seller:
(a) A cashier's check or certified funds in the applicable amount as
provided in Section 4.
<PAGE>
(b) An executed counterpart of each of the written offers of
employment referenced in Section 13.5;
(c) The officer's certificate called for by Section 13.3;
(d) The certified copy of resolutions called for by Section 13.4; and
(e) Such other documents, instruments or certificates as may be
necessary to perfect or consummate the transfer contemplated hereby.
15. Termination Provisions.
15.1 Termination. This Agreement may be terminated without liability
on the part of any party to the other, on or before the Closing Date, only as
follows:
(a) Consent. By the unanimous consent of the parties;
(b) Failure of Condition. By Buyer if Seller fails to comply with the
provisions of Section 12. By Seller if Buyer fails to comply with the
provisions of Section 13. Buyer or Seller shall give the other prompt
written notice of a termination pursuant to this Section 15.1(b).
15.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 15.1, all further obligations of the parties
under this Agreement shall terminate without further liability. In the event of
the termination of this Agreement for any reason, Buyer will return to Seller
all documents, work papers and other materials obtained from Seller relating to
the transactions contemplated hereby. Buyer acknowledges that following such
termination Buyer's obligations of confidentiality will survive as specified in
that certain Confidentiality Agreement between the parties, dated August 16,
1996, a copy of which is attached as Exhibit 15.2,
16. Risk of Loss. Seller shall bear all risk of loss with respect to the
Assets on and prior to the Closing Date. Buyer shall bear the risk of loss after
the Closing Date.
17. Post-Closing Cooperation. Each of the parties covenants and agrees that
it shall execute, acknowledge and deliver all further assignments, consents,
transfers and other instruments as may be reasonably required to protect and
permit the enjoyment of the rights, benefits and interests conveyed and to be
conveyed pursuant to the terms of this Agreement, and to appropriately carry out
and perform the transactions contemplated hereby. The parties will cooperate
<PAGE>
with each other following the Closing in order to effectuate and carry out this
Agreement, including cooperation in connection with the movement of timeshare
equipment to Buyer's location.
18. Monthly Reports and Audit Rights. Buyer shall keep accurate records of
all activity with respect to (a) revenue from (i) hourly based support of the
Software and (ii) contracts described in Sections 1.6, 1.7 and 1.8 (the
"Revenue"), and (b) collection of Seller's accounts receivable as provided in
Section 6 ("Collections"). Buyer shall provide Seller with monthly summaries of
the Revenue and Collections, including customer names, amounts of Revenues and
Collections, and transaction dates. At any time during the thirty-month period
following the Closing, Seller shall have the right to audit the books and
records of Buyer in order to verify that Buyer has performed its obligations in
accordance with Sections 4.2 and 6. If any audit reveals that Buyer has (a) not
accurately recorded the Revenue in an amount that would require an adjustment in
the purchase price in favor of Seller as provided in Section 4, or (b) underpaid
Seller with respect to Collections, Buyer shall pay Seller the underpayment
amount within three days of notification of such underpayment. If any audit
reveals that Buyer has underpaid Seller by an amount equal to or greater than
five percent of any amount owed with respect to the Revenue or Collections
during any one-month period, Buyer shall also reimburse Seller for the costs
associated with the audit.
19. Miscellaneous.
19.1 Survival of Warranties. The representations and warranties herein
shall survive the Closing for a period of one year.
19.2 Broker's Fees. Each party represents that no broker or finder has
acted for it in connection with this Agreement or the transactions contemplated
hereby, and that no broker or finder is entitled to any fee or other commission
in respect thereof.
19.3 Waivers and Amendments. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties hereto. The
waiver by a party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach. Any condition to
the obligation to close under this Agreement may be waived in writing by the
party in whose favor the condition operates, whereupon the obligations of the
parties under this Agreement shall be construed as if such condition or
conditions waived were not included herein.
<PAGE>
19.4 Expenses. The parties shall pay their own expenses incurred in
connection with the negotiation and preparation of this Agreement and supporting
documents.
19.5 Notices. All notices, requests, demands and other communications
which are required or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally, sent by
facsimile or sent by first-class mail, postage prepaid:
If to Seller: Informedics, Inc.
4000 Kruse Way Place
Building 3, Suite 210
Lake Oswego, OR 97035
Attention: President
With a copy to: Tonkon, Torp, Galen,
Marmaduke & Booth
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, OR 97204
Attention: Ronald L. Greenman
If to Buyer: Adaptive Health Systems
of Washington, Inc.
807 South 336th Street
Federal Way, WA 98004
Attention: President
With a copy to: -----------------------
-----------------------
-----------------------
-----------------------
Attention: -----------
or to such other address as a party shall have specified by notice in writing to
the other party.
19.6 Entire Agreement. This Agreement and the Exhibits attached
hereto, constitute the entire agreement between the parties and merge with and
supersede any prior understanding or agreement, whether written or oral, among
the undersigned concerning the sale and purchase of the Assets.
19.7 Binding Effect, Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
legatees or successors; nothing in this Agreement is intended to confer on any
third person any rights, remedies, obligations or a liability under or by reason
of this Agreement.
<PAGE>
19.8 Nonassignability. This Agreement or any rights pursuant hereto
shall not be assignable by any party without the prior written consent of the
other party.
19.9 Attorney Fees. If any action is brought with respect to this
Agreement, or in any appeal therefrom, the prevailing party shall be entitled to
its reasonable attorney fees as determined by the court or courts in which the
action or appeal is tried or heard.
19.10 Governing Law. This Agreement shall be governed by and
interpreted in accordance with Oregon law.
19.11 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
19.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement effective as of the date first written above.
"Seller" INFORMEDICS, INC.
By: /s/ Gerald P. Kelly
-------------------------------------
Gerald P. Kelly
President and Chief Operating Officer
"Buyer" ADAPTIVE HEALTH SYSTEMS
OF WASHINGTON, INC.
By: /s/ Randall H. Rogers
-------------------------------------
Randall H. Rogers
President
<PAGE>
LIST OF OMITTED EXHIBITS
------------------------
Exhibit 1.2 Customer List for the ClinicManager Software
Exhibit 1.3 Prospect List for the ClinicManager Software
Exhibit 1.5 License Contracts for the ClinicManager Software
Exhibit 1.5a Agreement between Informedics, Inc. and Paragon Concepts, Inc.
Exhibit 1.6 Support and Maintenance Contracts for the ClinicManager Software
Exhibit 1.8 Timeshare Customers
Exhibit 1.8.1 Timeshare Contract
Exhibit 1.9 Timeshare Equipment
Exhibit 3.1 Seller's Employees to be Retained by Buyer
Exhibit 6.1 Seller's Accounts Receivable
Exhibit 15.2 Confidentiality Agreement
EXHIBIT 2.2
ADDENDUM A
----------
Addendum to Asset Purchase Agreement between Informedics, Inc. and Adaptive
Health Systems of Washington, Inc. dated September 30, 1996.
The following paragraphs have been redrafted and will be supersede the same
number paragraphs in the principle document.
1.5 License Agreements. All license and other agreements under which
customers have or claim rights to use the Software, the Documentation or any
other Intellectual Property Rights. Attached as Exhibit 1.5 are examples of
license contracts between Seller and its customers. Buyer acknowledges that
Seller has granted to Paragon Concepts, Inc. of Houston, Texas the non-exclusive
right to distribute the Software in the state of Texas. Exhibit 1.5a is a copy
of the agreement between Informedics, Inc. and Paragon Concepts, Inc.
3.2 Seller shall be responsible to pay each employee who becomes an
employee of Buyer pursuant to Section 3.1 for all accrued and unused paid time
off, including vacation, sick leave and personal leave ("Paid Time Off") as of
the Closing Date. From and after the Closing Date, in accordance with Buyer's
vacation, sick leave and personal leave benefits accrual policy in effect, from
time to time, each of Seller's employees who is hired by Buyer will accrue Paid
Time Off on the same accrual schedule as other similarly situated employees of
Buyer. Such employees will be given credit in determining their accrual rate for
the years of employment with Seller.
4.2 Adjustment to Purchase Price. The parties anticipate that the revenue
from ClinicManager Software Support Agreements, ClinicManager Timeshare Service
Agreements, and ClinicManager Hardware Maintenance Agreements as described in
Sections 1.6, 1.7 and 1.8 will be approximately $245,500 for the six month
period immediately following Closing Date. Buyer agrees to use its best efforts
to retain all such customers. If the actual revenue from such contracts does not
deviate by more than five percent from $245,500 (i.e., by more than $12,275),
the purchase price will not be adjusted. If the actual revenue from such
contracts deviates by more than five percent from $245,500 (i.e. $12,275), the
purchase price will be increased or decreased, dollar for dollar, in an amount
<PAGE>
that is in excess of the five percent deviation. In the event that Buyer
converts Seller's customer to Buyer's products, the revenue lost shall be
continue to be counted as revenue for the purposes of this Section 4.2 (i.e. if
Seller's customer has a contract for support at $400 per month and is converted
to Buyer's product, that $400 will continue to be included in the calculation of
revenue for purposes of this Section 4.2). In the event that any of Seller's
customers listed on Exhibit 1.2 cancels their hardware or software support
agreement during the six-month period following Close, then all hourly support
billings by Buyer to said customers shall be counted as revenue for purposes of
this section 4.2. In the event of adjustment of the purchase price as provided
in this Section 4.2, the installment payments specified in Section 4.1(a) or
4.1(b), as applicable and subject to Section 4.2(c), will be adjusted to account
for the deviation. For example, if the actual revenue from the contracts is
$223,225 (i.e., a deviation of $22,275), the purchase price will be decreased
$10,000 ($22,275 minus $12,275), and each of the remaining installment payments
will be reduced to account for the $10,000 reduction. If for purposes of this
example, four installment payments were remaining, each payment would be reduced
by $2,500.
6. Collection of Accounts Receivable. Exhibit 6.1 sets forth certain
information about Seller's existing accounts receivable from sales or support
payments with respect to ClinicManager. Buyer agrees to use its best efforts to
collect Seller's accounts receivable existing at the Closing Date during the
120-day period following the Closing and to forward to Seller weekly all amounts
collected during such 120-day period. For contract (as outlined in Sections 1.6,
1.7 and 1.8) accounts receivable, if during the 120-day period Buyer makes a
collection from a customer listed on Exhibit 6.1 who also owes money to Buyer
pursuant to a new contract account receivable, Buyer shall first apply the
amount collected to payment of Seller's account receivable and thereafter apply
any remaining amount to the payment of Buyer's account receivable. For other
accounts receivable Buyer will collect and forward payments to Seller on an
invoice or "open item" basis. Following such 120-day period, Buyer shall have no
further obligation or authority to collect Seller's accounts receivable, and
Seller may initiate appropriate collection activity as it deems appropriate.
<PAGE>
10. Buyer's Covenants. Seller agrees that, except as Seller may otherwise
consent in writing, during the period between the execution of this Agreement
and Closing, Buyer will make written employment offers to not less than ten of
Seller's employees for positions specified on Exhibit 3.1; the terms of such
written offers of employment shall be in compliance with the requirements of
Section 3.
18. Monthly Reports and audit Rights. Buyer shall keep accurate records of
all activity with respect to revenue from (a) contracts described in Sections
1.6, 1.7 and 1.8 (the "Revenue"), and (b) collection of Seller's accounts
receivable as provided in Section 6 ("Collections"). Buyer shall provide Seller
with monthly summaries of the Revenue and Collections, including customer names,
amounts of Revenues and Collections, and transaction dates. At any time during
the 18-month period following the Closing, Seller shall have the right to audit
the books and records of Buyer, not to exceed two such audits during said
18-month period, in order to verify that Buyer has performed its obligations in
accordance with Sections 4.2 and 6. If any audit reveals that Buyer has (a) not
accurately recorded the Revenue in an amount that would require an adjustment in
the purchase price in favor of Seller as provided in Section 4, or (b) underpaid
Seller with respect to Collections, Buyer shall pay Seller the underpayment
amount within three days of notification of such underpayment. If any audit
reveals that Buyer has underpaid Seller by an amount equal to or greater than
five percent of any amount owed with respect to the Revenue or Collections
during any one-month period, Buyer shall also reimburse Seller for the costs
associated with the audit.
Addition:
In Section 19.5 Notices. Under "If to Buyer", "With a copy to:"
McGavick Graves, P.S.
P.O. Box 1317
Tacoma, WA 98401-1317
Attention: Elizabeth Pauli
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement effective as of the date first written above.
"Seller" INFORMEDICS, INC.
By: /s/ Gerald P. Kelly
-------------------------------
Gerald P. Kelly
President and Chief Operating Officer
"Buyer" ADAPTIVE HEALTH SYSTEMS
OF WASHINGTON, INC.
By: /s/ Randall H. Rogers
-------------------------------------
Randall H. Rogers
President
