VITALCOM INC, S-8, 1996-05-14

VITALCOM INC
S-8, 1996-05-14
FACILITIES SUPPORT MANAGEMENT SERVICES

Previous: SOUTH SEAS PROPERTIES CO LTD PARTNERSHIP, 10-Q, 1996-05-14

Next: BACOU USA INC, 10-Q, 1996-05-14

<PAGE> 1

As filed with the Securities and Exchange Commission on May 14, 1996
Registration No. 333-
================================================================================
================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8/S-3
REGISTRATION STATEMENT
(Including registration of shares for resale by means of a Form S-3 Prospectus)
Under
THE SECURITIES ACT OF 1933
------------
VITALCOM INC.
(Exact name of registrant as specified in charter)
------------
Delaware 33-0538926
(State of incorporation) (I.R.S. Employer Identification No.)
15222 Del Amo Avenue
Tustin, California 92680
(Address of principal executive offices)
------------
1993 STOCK OPTION PLAN
1996 DIRECTOR OPTION PLAN
1996 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
------------
Shelley B. Thunen
Chief Financial Officer
VitalCom Inc.
15222 Del Amo Avenue
Tustin, California 92680
(714) 546-0147
(Name, address, and telephone number, including area code, of agent for service)
------------
Copy to:
BARRY E. TAYLOR, ESQ.
MARK E. BONHAM, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(415) 493-9300
==============================================================================
CALCULATION OF REGISTRATION FEE
==============================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered(1) Share Price Fee
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.0001 par value
To be issued under 1993 Stock Option Plan . . . . 809,885 shares $ 7.60(2) $ 6,155,126 $ 2,123
Issued under 1993 Stock Option Plan . . . . . . . 30,000 shares $ 0.94 (3) $ 28,200 $ 10
To be issued under 1996 Employee Stock Purchase
Plan . . . . . . . . . . . . . . . . . . . . . . 150,000 shares $ 11.69 (4) $ 1,753,500 $ 605
To be issued under 1996 Director Option Plan . . 60, 000 shares $ 17.88 (5) $ 1,072,800 $ 370
TOTAL 1,049,885 shares $ 9,009,626 $ 3,108
========================================================================================================================
</TABLE>
(1) For the sole purpose of calculating the registration fee, the number of
shares to be registered under this Registration Statement has been broken
down into four subtotals.
(2) Computed in accordance with Rule 457(h) and 457(c) under the Securities
Act of 1933. Such computation is based on the weighted average exercise
price of $5.63 per share covering 679,509 outstanding options and the
estimated exercise price of $17.88 per share covering 130,376 authorized
but unissued shares. The estimated exercise price of $17.88 per share was
computed in accordance with Rule 457 by averaging the high and low prices
of a share of VitalCom Inc. Common Stock as reported in the Nasdaq
National Market on May 8, 1996.
(3) Computed in accordance with Rule 457(h) under the Securities Act of 1933.
Such computation is based on the weighted average exercise price of $0.94
per share covering 30,000 shares issued under the 1993 Stock Option Plan.
(4) The exercise price of $11.69 per share, computed in accordance with Rule
457(c) under the Securities Act of 1933, is 85% of the average of the high
and low prices of a share of VitalCom Inc. Common Stock as reported in the
Nasdaq National Market on February 14, 1996, the initial Enrollment Date.
Pursuant to Section 2(m) of the 1996 Employee Stock Purchase Plan (Exhibit
4.3), shares are sold at 85% of the lesser of the fair market value of
such shares on the Enrollment Date or on the Exercise Date.
(5) Computed in accordance with Rule 457(h) and 457(c) under the Securities
Act of 1933. Such computation is based on the estimated exercise price of
$17.88 per share covering 60,000 authorized but unissued shares. The
estimated exercise price of $17.88 per share was computed in accordance
with Rule 457 by averaging the high and low prices of a share of VitalCom
Inc. Common Stock as reported in the Nasdaq National Market on May 8,
1996.
THIS DOCUMENT CONSISTS OF ___ PAGES.
THE INDEX TO EXHIBITS IS ON PAGE ___.

<PAGE> 2

PROSPECTUS

VITALCOM INC.

30,000 SHARES

COMMON STOCK

______________________________________

This Prospectus relates to 30,000 shares of the Common Stock (the
"Common Stock") of VitalCom Inc. (the "Company"), which may be offered from
time to time by Selling Stockholders (the "Selling Stockholders") for their own
accounts. It is anticipated that the Selling Stockholders will offer shares
for sale at prevailing prices on the Nasdaq National Market on the date of
sale. The Company will receive no part of the proceeds from sales made
hereunder. The Selling Stockholders will bear all sales commissions and
similar expenses. Any other expenses incurred by the Company in connection
with the registration and offering and not borne by the Selling Stockholders
will be borne by the Company. None of the shares offered pursuant to this
Prospectus have been registered prior to the filing of the Registration
Statement of which this Prospectus is a part.

______________________________________

Each Selling Stockholder and any broker executing selling orders on
behalf of a Selling Stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933, in which event commissions received by
such broker may be deemed to be underwriting commissions under the Securities
Act.

The Common Stock is traded on the Nasdaq National Market (Nasdaq
Symbol: VCOM). On May 8, 1996, the last reported sale price of the Common
Stock was $18.50 per share.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

______________________________________

The date of this Prospectus is May 14, 1996

<PAGE> 3

No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or any Selling Stockholder. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, nor shall there be any
sale of these securities by any person in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or sale. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that the information contained herein is
correct as of any time subsequent to the date hereof.

The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus is delivered, upon written or oral request of
any such person, a copy of any and all of the information that has been or may
be incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to Shelley B. Thunen,
Chief Financial Officer, 15222 Del Amo Avenue, Tustin, California 92680. The
Company's telephone number at that location is (714) 546-0147.

The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended, and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the Public Reference Room of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
IL 60661 and Seven World Trade Center, 13th Floor, New York, NY 10048; and
copies of such material can be obtained from the Public Reference Section of
the Commission, Washington, D.C. 20549, at prescribed rates. The Company's
Common Stock is traded on the Nasdaq National Market. The foregoing materials
are also available for inspection at the National Association of Securities
Dealers, Inc., 1735 K. Street N.W., Washington, D.C. 20006.

This prospectus contains information concerning the Company and the
sale of its Common Stock by the Selling Stockholders, but does not contain all
the information set forth in the Registration Statement which the Company has
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"). The Registration Statement, including
various exhibits, may be inspected at the Commission's office in Washington,
D.C.

<PAGE> 4
THE COMPANY

From its inception in 1971 to December 1992, the Company conducted its
business as a California corporation. In December 1992, the Company was
incorporated in the State of Delaware. The executive offices of the Company
are located at 15222 Del Amo Avenue, Tustin, California 92680, and its
telephone number is (714) 546-0147.

SELLING STOCKHOLDERS

Except as otherwise set forth below, none of the Selling Stockholders
is an executive officer or director of the Company and none of the Selling
Stockholders beneficially own, individually or in the aggregate, more than 1%
of the outstanding Common Stock of the Company prior to this offering. All of
the shares of Common Stock beneficially owned by the Selling Stockholders were
issued upon exercise of stock options granted under the Company's 1993 Stock
Option Plan. The following table shows the names of the Selling Stockholders
and the number of shares of Common Stock to be sold by them pursuant to this
Prospectus.

<TABLE>
<CAPTION>
Number of Shares
Name Being Offered
---- ----------------
<S> <C>
Kirk Barrus . . . . . . . . . . . . . . . . 500
Kathleen E. Berg . . . . . . . . . . . . . 1,250
Pat Bradley . . . . . . . . . . . . . . . . 2,500
Sam Brewer . . . . . . . . . . . . . . . . 500
Niki Butler . . . . . . . . . . . . . . . . 2,500
Warren J. Cawley (1) . . . . . . . . . . . 1,500
David R. Clark . . . . . . . . . . . . . . 1,000
Samuel Cortes . . . . . . . . . . . . . . . 2,500
Julie D'Addieco . . . . . . . . . . . . . . 500
Terry Flach . . . . . . . . . . . . . . . . 1,000
Alan Golombek . . . . . . . . . . . . . . . 500
John R. Graham (2) . . . . . . . . . . . . 1,500
James Griffen . . . . . . . . . . . . . . . 500
Donald W. Judson (3) . . . . . . . . . . . 1,500
Scott LaBounty . . . . . . . . . . . . . . 500
William C. McBride (4) . . . . . . . . . . 1,500
Olas Nichols III . . . . . . . . . . . . . 500
David Pettijohn . . . . . . . . . . . . . . 2,500
Bruce Pitt . . . . . . . . . . . . . . . . 500
Christine Psaros . . . . . . . . . . . . . 500
Michael D. Stoop (5) . . . . . . . . . . . 1,000
Shelley B. Thunen (6) . . . . . . . . . . . 2,750
Glenn Tormey . . . . . . . . . . . . . . . 1,000
Kenneth Witcher . . . . . . . . . . . . . . 1,000
Jenny Yin . . . . . . . . . . . . . . . . . 500
---------------
TOTAL 30,000
</TABLE>
(1) Mr. Cawley has served as Vice President, Direct Sales of the Company since
1989. As of the date of this Prospectus, Mr. Cawley owns 87,799 (1.1%) of
the outstanding shares of the Company's Common Stock, including 5,654
shares issuable upon exercise of stock options exercisable within 60 days
of this filing.

<PAGE> 5

(2) Mr. Graham has served as Vice President, OEM Sales of the Company since
1989. As of the date of this Prospectus, Mr. Graham owns 151,578 (1.9%)
of the outstanding shares of the Company's Common Stock, including 5,654
shares issuable upon exercise of stock options exercisable within 60 days
of this filing.

(3) Mr. Judson has served as the Company's Chairman of the Board since 1992.
As of the date of this Prospectus, includes 299,746 shares held of record
by the Donald and Margaret Judson Family Trust and 8,424 shares issuable
upon exercise of stock options exercisable within 60 days of this filing.

(4) Mr. McBride served as a director and executive officer of the Company
until April 1996.

(5) Mr. Stoop has served as Vice President, Research & Development of the
Company since April 1996. As of the date of this Prospectus, Mr. Stoop
owns 29,005 of the outstanding shares of the Company's Common Stock,
including 3,316 shares issuable upon exercise of stock options exercisable
within 60 days of this filing.

(6) Ms. Thunen has served as the Company's Chief Financial Officer since
December 1992. As of the date of this Prospectus, Ms. Thunen owns 11,283
of the outstanding shares of the Company's Common Stock, including 8,039
shares issuable upon exercise of stock options exercisable within 60 days
of this filing.

<PAGE> 6
PLAN OF DISTRIBUTION

The Company has been advised by the Selling Stockholders that they intend
to sell all or a portion of the shares offered hereby from time to time in the
Nasdaq National Market and that sales will be made at prices prevailing in the
Nasdaq National Market at the times of such sales. The Selling Stockholders
may also make private sales directly or through a broker or brokers, who may
act as agent or as principal. Further, the Selling Stockholders may choose to
dispose of the shares offered hereby by gift to a third party or as a donation
to a charitable or other non-profit entity. In connection with any sales, the
Selling Stockholders and any brokers participating in such sales may be deemed
to be underwriters within the meaning of the Securities Act.

Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if such broker acts as agent
for the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Stockholders. Broker-dealers may
agree with the Selling Stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable
to do so acting as agent for the Selling Stockholders, to purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to the Selling Stockholders. Broker-dealers who acquire shares as principal
may thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.

The Company has advised the Selling Stockholders that the
anti-manipulative Rules 10b-6 and 10b-7 under the Securities Exchange Act of
1934, as amended, may apply to sales in the market and has informed them of the
possible need for delivery of copies of this Prospectus. The Selling
Stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act. Any commissions paid or any
discounts or concessions allowed to any such broker-dealers, and, if any such
broker-dealers purchase shares as principal, any profits received on the resale
of such shares, may be deemed to be underwriting discounts and commissions
under the Securities Act.

Upon the Company's being notified by the Selling Stockholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholders, the commissions paid
or discounts or concessions allowed by the Selling Stockholders to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.

As of the date of this Prospectus, the following Selling Stockholders are
subject to lock-up agreements pursuant to which they may not sell, transfer or
otherwise dispose of any shares of, or securities convertible into or
exchangeable for, the Company's Common Stock for a period of 180 days from
February 14, 1996, the date of the Company's initial public offering, without
the prior written consent of Wessels, OF Arnold & Henderson, one of the
managing underwriters of the initial public offering: Warren J. Cawley; John
R. Graham; Donald W. Judson; William C. McBride and Shelley B. Thunen.

Any securities covered by this Prospectus which qualify for sale pursuant
to Rules 144 and 701 under the Securities Act may be sold under that Rule
rather than pursuant to this Prospectus. In general, under Rule 144 as
currently in effect, a person (or persons whose shares are aggregated),
including any person who may be deemed to be an "affiliate" of the Company, is
entitled to sell within any three month period "restricted shares" beneficially
owned by him or her in an amount that does not exceed the greater of (i) 1% of
the then outstanding shares of

<PAGE> 7

Common Stock or (ii) the average weekly trading volume in shares of Common
Stock during the four calendar weeks preceding such sale, provided that at
least two years have elapsed since such shares were acquired from the Company
or an affiliate of the Company. Sales are also subject to certain requirements
as to the manner of sale, notice and availability of current public information
regarding the Company. However, a person who has not been an "affiliate" of
the Company at any time within three months prior to the sale is entitled to
sell his or her shares without regard to the volume limitations or other
requirements of Rule 144, provided that at least three years have elapsed since
such shares were acquired from the Company or an affiliate of the Company. In
general, under Rule 701 as currently in effect, any employee, consultant or
advisor of the Company who purchases shares from the Company in connection with
a compensatory stock or option plan or other written agreement related to
compensation is eligible to resell such shares 90 days after the date of the
Company's initial public offering on February 14, 1996 in reliance on Rule 144,
but without compliance with certain restrictions contained in Rule 144.

There can be no assurance that the Selling Stockholders will sell any or
all of the shares of Common Stock offered hereunder.

SECURITIES TO BE OFFERED

The Shares offered hereby are shares of Common Stock, $.0001 par value, of
the Company. Each share of such Common Stock entitles the holder to one vote
on matters submitted to a vote of the stockholders, a pro rata share of such
dividends as may be declared on the Common Stock and a pro rata share of assets
remaining available for distribution to stockholders upon a liquidation of the
Company. Such Common Stock is not convertible and has no preemptive rights.
While the Board of Directors has authority, within certain limitations, to
issue shares of Preferred Stock which would have one or more preferences over
the Common Stock, no Preferred Stock is currently outstanding and the Company
has no present plans to issue any Preferred Stock.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation limits the monetary liability
of its directors to the Company or its stockholders for breach of such
director's fiduciary duty to the fullest extent permitted by the Delaware
General Corporation Law (the "DGCL") or, if the DGCL is not applicable, to the
fullest extent permissible under applicable law. In addition, the Company's
charter authorizes the Company by bylaw, agreement or otherwise to indemnify
directors, officers, employees and agents in excess of the indemnification
permitted by applicable law.

Under the Company's by-laws, each person who was or is a party or is
threatened to be made a party to, or is involved in, any proceeding by reason
of the fact that he or she is or was a director or officer of the Company, or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation or other enterprise, shall be
indemnified and held harmless by the Company to the fullest extent permitted by
the DGCL against all costs, charges, expenses, liabilities and losses
(including attorney's fees) reasonably incurred or suffered by such person in
connection with such proceeding. Such right to indemnification includes the
right to be paid by the Company the expenses incurred in defending any such
proceeding in advance of its final disposition. The Board of Directors has
discretion to provide indemnification to employees and agents of the Company
with the same scope and effect as the foregoing indemnification of directors
and officers. The foregoing right to indemnification and advancement of
expenses under the Company's by-laws is not exclusive of any other right which
any person may have or acquire under the Company's charter, any statute,
agreement or otherwise.

7
<PAGE> 8

In addition, the Company has entered into indemnification agreements with
each of its directors and executive officers and has obtained a directors' and
officers' liability insurance policy that insures such persons against the cost
of defense, settlement or payment of judgments under certain circumstances.

Pursuant to that certain Underwriting Agreement among the Company and the
underwriters of the Company's initial public offering dated February 13, 1996,
the Company's officers and directors and other persons who control the Company
are indemnified against any and all losses, claims, damages or liabilities to
which such persons may become subject under the Securities Act, Exchange Act,
and common law which arise out of any untrue statement regarding or omission of
a material fact contained in the registration statement for such initial public
offering if such statement or omission was made in reliance upon and in
conformity with information provided to the Company in writing by any
underwriter of the Company's initial public offering.

INFORMATION INCORPORATED BY REFERENCE

There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Securities and
Exchange Commission (the "Commission"):

(1) The Company's Registration Statement on Form SB-2 (File no.
333-268-LA) under the Securities Act, in the form declared effective on
February 13, 1996, including the Prospectus dated February 14, 1996, as filed
with the Commission pursuant to Rule 424(b) on February 17, 1996.

(2) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A/A filed January 16, 1996 pursuant
to Section 12(g) of the Exchange Act and as amended on February 13, 1996.

(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, as filed with the Commission on May 10, 1996.

All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities registered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing of such documents.

<PAGE> 9
VITALCOM INC.
REGISTRATION STATEMENT ON FORM S-8

PART II

INFORMATION REQUIRED IN REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Securities and
Exchange Commission (the "Commission"):

(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, as filed with the Commission on May 10, 1996.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

<PAGE> 10

Company the expenses incurred in defending any such proceeding in advance of
its final disposition. The Board of Directors has discretion to provide
indemnification to employees and agents of the Company with the same scope and
effect as the foregoing indemnification of directors and officers. The
foregoing right to indemnification and advancement of expenses under the
Company's by-laws is not exclusive of any other right which any person may have
or acquire under the Company's charter, any statute, agreement or otherwise.

See also the undertakings set out in the response to Item 9 herein.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

The issuance of the shares being offered by the Form S-3 resale prospectus
were deemed exempt from registration under the Securities Act in reliance upon
Rule 701 promulgated under the Securities Act.

ITEM 8. EXHIBITS.

Exhibit
Number Description
-------- ------------

<S> <C>
4.1 1993 Stock Option Plan, as amended and forms of agreement
thereunder.
4.2* 1996 Director Option Plan.
4.3* 1996 Employee Stock Purchase Plan.
5.1 Opinion of counsel as to legality of securities being registered.
24.1 Consent of counsel (contained in Exhibit 5.1).
24.2 Independent Auditors' Consent (see page II-6).
25.1 Power of Attorney (see page II-4).
</TABLE>

- -------------------
* Incorporated by reference to the Company's Registration Statement on
Form SB-2, as amended (No. 333-268-LA), which was declared effective
on February 13, 1996.

ITEM 9. UNDERTAKINGS.

A. The Company hereby undertakes:

(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of distribution

II-2
<PAGE> 11

not previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.

(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

B. The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to law, the Company's Certificate of Incorporation,
Bylaws or indemnification agreements, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in a successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered hereunder, the Company will, unless in the opinion of its counsel
the matter has already been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

II-3
<PAGE> 12

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8/S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Tustin, State of California, on this 13 day of
May, 1996.

VITALCOM INC.

By:/S/ SHELLEY B. THUNEN
-----------------------
Shelley B. Thunen,
Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David L. Schlotterbeck and Shelley B.
Thunen, and each of them, as his or her attorney-in-fact, with full power of
substitution in each, for him or her in any and all capacities to sign any
amendments to this Registration Statement on Form S-8/S-3, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact, or his substitutes, may do or cause to be done by
virtue hereof.

II-4
<PAGE> 13
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
<S> <C> <C>

/S/ DONALD W. JUDSON Chairman of the Board May 13, 1996
________________________________________
Donald W. Judson

/S/ DAVID L. SCHLOTTERBECK President, Chief Executive Officer and May 13, 1996
________________________________________ Director (Principal Executive Officer)
David L. Schlotterbeck

/S/ SHELLY B. THUNEN Chief Financial Officer (Principal Financial May 13, 1996
________________________________________ and Accounting Officer)
Shelley B. Thunen

Director
________________________________________
Jack W. Lasersohn

/S/ ELIZABETH H. WEATHERMAN Director May 13, 1996
________________________________________
Elizabeth H. Weatherman

/S/ TIMOTHY T. WEGLICKI Director May 13, 1996
________________________________________
Timothy T. Weglicki

</TABLE>

II-5
<PAGE> 14

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
4.1 1993 Stock Option Plan, as amended, and forms of agreement
thereunder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.2* 1996 Director Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3* 1996 Employee Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . .
5.1 Opinion of counsel as to legality of securities being registered . . . . . . .

24.1 Consent of counsel (contained in Exhibit 5.1) . . . . . . . . . . . . . . . .
24.2 Independent Auditors' Consent . . . . . . . . . . . . . . . . . . . . . . . .
25.1 Power of Attorney (INCLUDED ON P. II-4) . . . . . . . . . . . . . . . . . . . .
</TABLE>
- -----------------
* Incorporated by reference to the Company's Registration Statement on Form
SB-2, as amended (No. 333-268-LA), which was declared effective on February
13, 1996.

<PAGE> 1
EXHIBIT 4.1

VITALCOM INC.

1993 STOCK OPTION PLAN
(AMENDED AND RESTATED JANUARY 1996)

1. Purposes of the Plan.

The purposes of this 1993 Stock Option Plan (the "Plan") of
VITALCOM INC., a Delaware corporation (the "Company"), are (a) to insure the
retention of the services of existing executive personnel, key employees and
directors of the Company and its subsidiaries or its affiliates; (b) to attract
and retain competent new executive personnel and key employees; and (c) to
provide incentive to all such personnel and employees to devote their utmost
effort and skill to the advancement and betterment of the Company, by permitting
them to participate in the ownership of the Company and thereby in the success
and increased value of the Company.

2. Shares Subject to the Plan.

The shares of stock subject to the incentive options having the
terms and conditions set forth in Section 6 below (hereinafter "incentive
options") and/or nonqualified options having the terms and conditions set forth
in Section 7 below (hereinafter "nonqualified options") and other provisions of
the Plan shall be shares of the Company's authorized but unissued or reacquired
Common Stock (herein sometimes referred to as the "Common Stock"). The total
number of shares of the Common Stock of the Company which may be issued under
the Plan shall not exceed, in the aggregate, 839,885 shares. The limitations
established by the preceding sentence shall be subject to adjustment as provided
in Section 8 below. In the event that any outstanding incentive option or
nonqualified option granted under the Plan can no longer under any circumstances
be exercised, for any reason, the shares of Common Stock allocable to the
unexercised portion of such incentive option or nonqualified option may again be
subject to grant or issuance under the Plan.

3. Eligibility.

a. Incentive Options. Officers and other key employees of the
Company or of any subsidiary corporation (including directors if they are also
employees of the Company or a subsidiary), as may be determined by the Board or
the Committee, who qualify for incentive stock options under the applicable
provisions of the Internal Revenue Code, will be eligible for selection to
receive incentive options under the Plan. An employee who has been granted an
incentive option may, if otherwise eligible, be granted a nonqualified option or
options or an additional incentive option or options if the Board or Committee
shall so determine.

b. Nonqualified Options. Officers, other key employees of the
Company or of any subsidiary corporation, and consultants to the Company or any
subsidiary corporation will be eligible to receive nonqualified options under
the Plan. An individual who has been granted a nonqualified option may, if
otherwise eligible, be granted an incentive option or options or an additional
nonqualified option or options if the Board or Committee shall so determine.

<PAGE> 2
c. Limitations. The following limitations shall apply to grants
of options to employees of the Company:

i. No employee of the Company shall be granted, in any
fiscal year of the Company, options to purchase more than 400,000 shares of
Common Stock of the Company.

ii. In connection with his or her initial employment, an
employee of the Company may be granted options to purchase up to an additional
400,000 shares of Common Stock of the Company which shall not count against
the limit set forth in subsection i. above.

iii. The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 8.

iv. If an option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 8), the cancelled option will be counted against the limits
set forth in subsections i. and ii. above. For this purpose, if the exercise
price of an option is reduced, the transaction will be treated as a cancellation
of the option and the grant of a new option.

4. Administration of the Plan.

a. This Plan shall be administered by a committee (the
"Committee"), which Committee shall be constituted to comply with the rules
under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, relating to
the disinterested administration of employee benefit plans under which Section
16(b) exempt discretionary grants and awards of equity securities are to be
made, and which Committee shall be appointed by, and serve at the pleasure of,
the Board of Directors. The Committee may from time to time, in its discretion,
determine which persons shall be granted incentive options or nonqualified
options under the Plan, the terms thereof, and the number of shares for which an
incentive option or options or nonqualified option or options shall be granted.

b. The Committee shall have full and final authority to
determine the persons to whom, and the time or times at which, incentive options
or nonqualified options shall be granted, the number of shares to be represented
by each incentive option and nonqualified option and the consideration to be
received by the Company upon the exercise thereof; to interpret the Plan; to
establish, amend and rescind rules and regulations relating to the Plan; to
determine the form and content of the incentive options or nonqualified options
to be granted under the Plan; to determine the identity or capacity of any
persons who may be entitled to exercise a participant's rights under any
incentive option or nonqualified option under the Plan; to correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
incentive option or nonqualified option in the manner and to the extent the
Board or Committee deems desirable to carry the Plan, incentive option or
nonqualified option into effect; to accelerate the exercise date of any
incentive option or nonqualified option; to provide for an option to the Company
to repurchase any shares issued upon exercise of an option upon termination of
employment; and to make all other determinations

<PAGE> 3
necessary or advisable for the administration of the Plan, but only to the
extent not contrary to the express provisions of the Plan. Any action, decision,
interpretation or determination by the Committee with respect to the application
or administration of the Plan shall be final and binding on all participants and
prospective participants.

5. Option Price of Shares.

a. Incentive Options. The exercise price of the shares of Common
Stock covered by each incentive option granted under the Plan shall not be less
than the fair market value of such shares on the date the incentive option is
granted; provided, however, that the exercise price shall not be less than 110%
of the fair market value if the person to whom such options are granted owns 10%
or more of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation.

b. Nonqualified Options. The exercise price of the shares of
Common Stock covered by each nonqualified option granted under the Plan shall
not be less than the fair market value of such shares on the date the
nonqualified option is granted.

c. Fair Market Value. For purposes of this Section 5, fair
market value shall, if the Common Stock is not listed or admitted to trading on
a stock exchange or the NASDAQ National Market System on the over-the-counter
market, be the average of the closing bid price and asked price of the Common
Stock in the over-the-counter market on the date the incentive option or
nonqualified option is granted or, if the Common Stock is then listed or
admitted to trading on any stock exchange or the NASDAQ National Market System,
the closing sale price on such day on the principal stock exchange on which the
Common Stock is then listed or admitted to trading or the NASDAQ National Market
System, as the case may be. If no closing bid and asked prices are quoted on
such day, or if no sale takes place on such day on such principal exchange or on
the NASDAQ National Market System, then the average of the closing bid and asked
prices on the next preceding day on which such prices were quoted, or closing
sale price of the Common Stock on such principal exchange or the NASDAQ National
Market System on the next preceding day on which a sale occurred, as the case
may be, shall be deemed to be the fair market value of the Common Stock. During
such times as there is not a market price available, the fair market value of
the Company's Common Stock shall be determined by the Committee, which shall
consider, among other facts which it considers to be relevant, the book value of
such stock and the earnings of the Company. The exercise price shall be subject
to adjustment as provided in Section 8 below.

6. Terms and Conditions of Incentive Options.

Each incentive option granted pursuant to this Plan shall be
evidenced by a written Option Agreement which shall specify that the options
subject thereto are incentive options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended. The granting of an incentive option
shall take place at the time of Committee action granting the option. The Option

<PAGE> 4
Agreement shall be in such form as the Committee shall, from time to time,
recommend, but shall comply with and be subject to the following terms and
conditions:

a. Medium and Time of Payment. The exercise price of an
incentive option shall be payable (i) in United States dollars payable in cash,
certified check, or bank draft; (ii) subject to any legal restrictions on the
acquisition or purchase of its shares by the Company, by the delivery of shares
of Common Stock which (x) in the case of shares acquired upon exercise of an
option have been owned by the optionee for more than six (6) months on the date
of surrender and (y) have an aggregate fair market value on the date of
surrender equal to the aggregate exercise price of the shares as to which the
option is being exercised; (iii) in the discretion of the Committee, by the
issuance of a promissory note in a form acceptable to the Committee; (iv)
delivery of a properly executed exercise notice together with such other
documentation as the Committee and broker, if applicable, shall require to
effect an exercise of the option and delivery to the Company of the sale or loan
proceeds required to pay the exercise price; or (v) any combination of (i),
(ii), (iii) or (iv) above.

b. Number of Shares. The incentive option shall state the total
number of shares to which it pertains.

c. Term of Incentive Option. Each incentive option granted under
the Plan shall expire within a period of not more than ten (10) years from the
date the incentive option is granted; provided, however, that the incentive
option shall expire within a period of not more than five (5) years if granted
to a person who owns more than 10% of the combined voting power of all classes
of stock of the Company or of its parent or subsidiary corporation.

d. Date of Exercise. Each incentive stock option granted
pursuant to this Plan shall become exercisable on each successive anniversary of
the grant date of such options in increments of twenty five percent (25%);
provided, however, that in the discretion of the Committee, individual Option
Agreements may contain different exercise schedules.

e. Termination of Association Except Upon Death or Disability.
In the event of an optionee's termination of association with the Company (as
hereinafter defined) for any reason other than his death or disability, (i) all
incentive options granted to any such optionee pursuant to this Plan which are
not exercisable at the date of such termination of association shall terminate
immediately and become void and of no effect, and (ii) all incentive options
granted to any such optionee pursuant to this Plan which are exercisable at the
date of such termination of association may be exercised (but only to the extent
such options were exercisable as of the date of such termination of association)
at any time within three (3) months of the date of such termination of
association, but in any event no later than the date of expiration of the
incentive option period, and if not so exercised within such time shall become
void and of no effect at the end of such time. For purposes of this Plan, the
term "termination of association" with the Company shall mean (i) for any person
who is an employee of the Company or a subsidiary of the Company but not also a
director of the Company, the cessation of such person's employment with the
Company or a subsidiary of the

<PAGE> 5
Company, or any corporation or a parent or subsidiary of a corporation issuing
and assuming an option in a transaction to which Section 424(a) of the Internal
Revenue Code applies (collectively, an "Affiliate"), (ii) for any person who is
both a director of the Company and an employee of the Company or a subsidiary or
Affiliate of the Company, the cessation of both the employment and status as a
director of such person, and (iii) for any person who is a director of the
Company but not also an employee of the Company or a subsidiary of the Company,
the cessation of such person's status as a director of the Company.

f. Death or Disability of Optionee. In the event of an
optionee's termination of association with the Company by reason of his or her
death or disability, (i) all incentive options granted to such person pursuant
to this Plan which are not exercisable at the date of such termination of
association shall terminate immediately and become void and of no effect, and
(ii) all incentive options granted to such person pursuant to this Plan which
are exercisable at the date of such termination of association may be exercised
(but only to the extent they were exercisable as of the date of such termination
of association) at any time within one (1) year after the optionee's termination
of association as a result of such death or disability, but in any event no
later than the date of expiration of the incentive option period, by such
optionee, or in the event of death, by the executors or administrators of the
optionee's estate or by any person or persons who shall have acquired the
incentive option directly from the optionee by bequest or inheritance. At the
end of such one (1) year period, all incentive options held by such optionee, to
the extent they remain unexercised, shall terminate and become void and of no
effect.

g. Rights as a Stockholder. An optionee or a transferee of an
incentive option shall have no rights as a stockholder with respect to any
shares of Common Stock covered by his or her incentive option until the date of
the issuance of a share certificate to him or her for such shares. No adjustment
shall be made for dividends or distributions or other rights for which the
record date is prior to the date such share certificate is issued.

h. Nonassignability of Rights. No incentive option shall be
assignable or transferable by the person receiving same except by will or the
laws of descent and distribution. During the life of such person, the incentive
option shall be exercisable only by him or her.

i. Limitation. Notwithstanding any other provisions of the Plan,
to the extent the aggregate fair market value (determined in accordance with the
provisions of Section 5 above as of the time the incentive option is granted) of
the shares of Common Stock with respect to which incentive stock options are
exercisable for the first time by the optionee during any calendar year (under
all such plans of the Company and any parent and subsidiary corporations)
exceeds $100,000, such excess shall be treated as nonqualified options.

j. Notice of Disposition. Each Option Agreement which relates to
the grant of an incentive stock option shall provide that the optionee shall
give prompt written notice to the

<PAGE> 6
Company in the event the optionee sells or otherwise disposes of any shares of
Common Stock issued upon the exercise of such incentive stock options.

k. Other Provisions. Any Option Agreement may contain such other
terms, provisions and conditions as may be determined by the Committee, which
are not inconsistent with the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended, including the option of the Company to repurchase any
shares issued upon the exercise of an option upon termination of employment.
Incentive options granted to different persons, or to the same person at
different times, may be subject to terms, conditions and restrictions which
differ from each other.

7. Terms and Conditions of Nonqualified Options.

Each nonqualified option granted pursuant to this Plan shall be
evidenced by a written Option Agreement which shall specify that the options
subject thereto are nonqualified options. The granting of a nonqualified option
shall take place at the time of Committee action granting such option. The
Option Agreement shall be in such form as the Committee shall, from time to
time, recommend, but shall comply with and be subject to the following terms and
conditions:

a. Medium and Time of Payment. The nonqualified option price
shall be payable (i) in United States dollars payable in cash, certified check,
or bank draft; (ii) subject to any legal restrictions on the acquisition or
purchase of its shares by the Company, by the delivery of shares of Common Stock
which (x) in the case of shares acquired upon exercise of an option have been
owned by the optionee for more than six (6) months on the date of surrender and
(y) have an aggregate fair market value on the date of surrender equal to the
aggregate exercise price of the shares as to which the option is being
exercised; (iii) in the discretion of the Committee, by the issuance of
promissory note in a form acceptable to the Committee; (iv) delivery of a
properly executed exercise notice together with such other documentation as the
Committee and broker, if applicable, shall require to effect an exercise of the
option and delivery to the Company of the sale or loan proceeds required to pay
the exercise price; or (v) any combination of (i), (ii), (iii) or (iv) above.

b. Number of Shares. The nonqualified option shall state the
total number of shares to which it pertains.

c. Term of Nonqualified Option. Each nonqualified option granted
under the Plan shall expire within a period of not more than ten (10) years from
the date the nonqualified option is granted.

d. Date of Exercise. Each nonqualified option granted pursuant
to this Plan shall become exercisable on each successive anniversary of the
grant date of such options in increments of twenty five percent (25%); provided,
however, that in the Committee's absolute discretion, individual Option
Agreements may contain different exercise schedules.
<PAGE> 7
e. Termination of Association Except Upon Death or Disability.
In the event of an optionee's termination of association with the Company or any
subsidiary or Affiliate of the Company, for any reason other than his or her
death or disability, (i) all nonqualified options granted to any such optionee
pursuant to this Plan which are not exercisable at the date of such termination
of association shall terminate immediately and become void and of no effect, and
(ii) all nonqualified options granted to any such optionee pursuant to this Plan
which are exercisable at the date of such termination of association may be
exercised (but only to the extent they were exercisable as of the date of the
termination of association) at any time within three (3) months of the date of
such termination of association, but in any event no later than the date of
expiration of the nonqualified option period, and if not so exercised within
such time shall become void and of no effect at the end of such time.

f. Death or Disability of Optionee. In the event of an
optionee's termination of association with the Company by reason of his or her
death or disability, (i) all nonqualified options granted to such optionee
pursuant to this Plan which are not exercisable at the date of such termination
of association shall terminate immediately and become void and of no effect, and
(ii) all nonqualified options granted to such optionee pursuant to this Plan
which are exercisable at the date of such termination of association may be
exercised (but only to the extent they were exercisable as of the date of the
termination of association) at any time within one (1) year after the optionee's
death or disability, but in any event no later than the date of expiration of
the nonqualified option period, by such optionee, or in the event of death, by
the executors or administrators of the optionee's estate or by any person or
persons who shall have acquired the nonqualified option directly from the
optionee by bequest or inheritance. At the end of such one (1) year period, all
nonqualified options held by such optionee, to the extent they remain
unexercised, shall terminate and become void and of no effect.

g. Rights as a Stockholder. An optionee or an offeree or a
transferee of a nonqualified option shall have no rights as a stockholder with
respect to any shares of Common Stock covered by his or her nonqualified option
until the date of the issuance of a share certificate to such optionee for such
shares. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date such share certificate is
issued.

h. Nonassignability of Rights. No nonqualified option shall be
assignable or transferable by the person receiving same except by will or the
laws of descent and distribution. During the life of such person, the
nonqualified option shall be exercisable only by him or her.

i. Other Provisions. Any Option Agreement may contain such other
terms, provisions and conditions as may be determined by the Committee.
Nonqualified options granted to different persons, or to the same person at
different times, may be subject to terms, conditions and restrictions which
differ from each other.

<PAGE> 8
8. Changes in Capital Structure.

In the event that the outstanding shares of Common Stock of the
Company are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation or reorganization in which the Company is the surviving
corporation or of a recapitalization, stock split, combination of shares,
reclassification, reincorporation, stock dividend (in excess of 2%), or other
change in the corporate structure of the Company, appropriate adjustments shall
be made by the Board of Directors in the aggregate number and kind of shares
subject to this Plan, and the number and kind of shares and the price per share
subject to outstanding incentive options and nonqualified options in order to
preserve, but not to increase, the benefits to persons then holding incentive
options and/or nonqualified options.

In the event that the Company at any time proposes to (i) merge
into, consolidate with or to enter into any other reorganization (including the
sale of substantially all of its assets) in which the Company is not the
surviving corporation, or (ii) enter into a merger or other reorganization as a
result of which the outstanding shares of Common Stock of the Company will be
changed into or exchanged for shares of the capital stock or other securities of
another corporation or for cash or property, then the Plan and all unexercised
incentive options and nonqualified options granted hereunder shall terminate,
unless provision is made in writing in connection with such transaction for the
continuance of the Plan and for the assumption of incentive options and
nonqualified options theretofore granted, or the substitution for such incentive
options and nonqualified options of new options covering shares of a successor
corporation, with appropriate adjustments as to number and kind of shares and
prices, in which event the Plan and the incentive options and nonqualified
options theretofore granted, or the new incentive options and nonqualified
options substituted therefor, shall continue in the manner and under the terms
so provided. If such provision is not made in such transaction for the
continuance of the Plan and the assumption of incentive options and nonqualified
options theretofore granted or the substitution for such incentive options and
nonqualified options of new incentive options and nonqualified options covering
the shares of a successor corporation, then the Committee shall cause written
notice of the proposed transaction to be given to the persons holding incentive
options or nonqualified options not less than thirty (30) days prior to the
anticipated effective date of the proposed transaction, and all incentive
options and nonqualified options shall be accelerated and, concurrent with the
effective date of the proposed transaction, such person shall have the right to
exercise incentive options and nonqualified options in respect of any or all
shares then subject thereto.

9. Amendment and Termination of the Plan.

The Board of Directors of the Company may from time to time alter,
amend, suspend or terminate the Plan in such respects as the Board of Directors
may deem advisable; provided, however, that no such alteration, amendment,
suspension or termination shall be made which shall substantially affect or
impair the rights of any person under any incentive option or nonqualified
option theretofore granted to such person without his or her consent; provided
further, however, that

<PAGE> 9
no amendment which would (i) materially increase the benefits accruing to
participants under the Plan, (ii) materially increase the number of securities
which may be issued under the Plan, or (iii) materially modify the requirements
as to eligibility for participation in the Plan, shall be made except with the
approval of the Company's shareholders. Without limiting the generality of the
foregoing, to the extent permitted by applicable law, the Board of Directors of
the Company may alter or amend the Plan to comply with requirements under the
Internal Revenue Code relating to restricted stock options, incentive options,
qualified options or other options which give the optionee more favorable tax
treatment than that applicable to options granted under this Plan as of the date
of its adoption. Upon any such alteration or amendment, to the extent permitted
by applicable law, any outstanding option granted hereunder shall be subject to
the more favorable tax treatment afforded to an optionee pursuant to such terms
and conditions as the Committee may determine.

Unless the Plan shall theretofore have been terminated, the Plan
shall be effective on September 22, 1993, and shall terminate on September 21,
2003.

10. Application of Funds.

The proceeds received by the Company from the sale of Common Stock
pursuant to incentive options and nonqualified options will be used for general
corporate purposes.

11. No Obligation to Exercise Option.

The granting of an incentive option or nonqualified option shall
impose no obligation upon the optionee to exercise such incentive option or
nonqualified option.

12. Continuance of Employment or Status as Director.

The Plan or the granting of any incentive option or nonqualified
option thereunder shall not impose any obligation on the Company or its
shareholders to continue the employment of any optionee who is an employee, or
to retain as a director any optionee who is a director.

13. Tax Withholding.

Whenever shares are to be issued under the Plan, the Company or
any subsidiary of the Company employing the recipient shall have the right to
deduct from the recipient's compensation or require the recipient to remit to
the employer corporation, prior to the issuance of the shares, an amount
sufficient to satisfy federal, state and local withholding tax requirements.

14. Stockholder Approval.

This Plan must be approved by the Company's shareholders within
twelve (12) months following its approval by the Board of Directors of the
Company. Any stock option exercised before
<PAGE> 10
stockholder approval is obtained must be rescinded if stockholder approval is
not obtained within twelve (12) months following approval of the Plan by the
Board of Directors.

15. General Provisions.

Notwithstanding any other provision of this Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of stock upon the exercise of options
granted under this Plan prior to fulfillment of all of the following conditions:

(a) Any registration or other qualification of such shares under
any state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute
discretion, deem necessary or advisable;

(b) The obtaining of any other consent, approval or permit from
any state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and

(c) The execution and delivery to the Company by the recipient
of an investment representation letter containing such assurances and/or
representations as the Committee shall, in its absolute discretion, determine to
be necessary or advisable to satisfy the requirements for exemptions from
registration and qualification under applicable state and federal securities
laws.
<PAGE> 11
1993 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Grant Number _________________________

Date of Grant _________________________

Vesting Commencement Date _________________________

Exercise Price per Share $________________________

Total Number of Shares Granted _________________________

Total Exercise Price $_________________________

Type of Option: ___ Incentive Stock Option

___ Nonstatutory Stock Option

Term/Expiration Date: _________________________

Vesting Schedule:

This Option may be exercised, in whole or in part, in accordance with the
following schedule:

25% of the Shares subject to the Option shall vest each year on the
anniversary of the date of grant.
<PAGE> 12
Termination Period:

This Option may be exercised for three (3) months after termination of
the Optionee's employment or consulting relationship with the Company. Upon the
death or disability of the Optionee, this Option may be exercised for one (1)
year after termination of Optionee's employment or consulting relationship with
the Company. In the event of the Optionee's change in status from Employee to
Consultant or Consultant to Employee, this Option Agreement shall remain in
effect. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.

II. AGREEMENT

1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 9 of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

2. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

-2-
<PAGE> 13
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.

3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

(a) cash; or

(b) check; or

(c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or

(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or

4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

5. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

6. Tax Consequences. Some of the federal and state tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercising the Option.

(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax and state income tax liability upon exercise of a NSO. The
Optionee will be treated as having

-3-
<PAGE> 14
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Exercised Shares on the date of
exercise over their aggregate Exercise Price. If the Optionee is an Employee or
a former Employee, the Company will be required to withhold from his or her
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.

(ii) Incentive Stock Option. If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax or state income tax
liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee undergoes a
change of status from Employee to Consultant, any Incentive Stock Option of the
Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on
the ninety-first (91st) day following such change of status.

(b) Disposition of Shares.

(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.

(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the

-4-
<PAGE> 15
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by California law
except for that body of law pertaining to conflict of laws.

8. NO GUARANTEE OF EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT
CAUSE.

By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

-5-
<PAGE> 16
OPTIONEE: VITALCOM INC.

By:
- ----------------------------- --------------------------------
Signature

Title:
- ----------------------------- -----------------------------
Print Name

- -----------------------------
Residence Address

- -----------------------------
<PAGE> 17
CONSENT OF SPOUSE

The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.

---------------------------------------
Spouse of Optionee
<PAGE> 18
EXHIBIT A

1993 STOCK OPTION PLAN

EXERCISE NOTICE

VitalCom Inc.
15222 Del Amo Avenue
Tustin, CA 92680

Attention: Secretary

1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of VitalCom Inc. (the "Company") under and
pursuant to the 1993 Stock Option Plan (the "Plan") and the Stock Option
Agreement dated , 19___ (the "Option Agreement"). The purchase price for the
Shares shall be $ , as required by the Option Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company
the full purchase price for the Shares.

3. Representations of Purchaser. Purchaser acknowledges that
Purchaser has received, read and understood the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 8 of the
Plan.

5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing
<PAGE> 19
signed by the Company and Purchaser. This agreement is governed by California
law except for that body of law pertaining to conflict of laws.

Submitted by: Accepted by:

PURCHASER: VITALCOM INC.

By:
- ----------------------------- --------------------------
Signature

Its:
- ----------------------------- --------------------------
Print Name

Address:

- ------------------------

<PAGE> 1
EXHIBIT 5.1

May 13, 1996

VitalCom Inc.
15222 Del Amo Avenue
Tustin, California 92680

Re: REGISTRATION STATEMENT ON FORM S-8/S-3

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8/S-3 to be filed by
you with the Securities and Exchange Commission on May 14, 1996 (as such may
thereafter be amended or supplemented, the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 1,049,885 shares of your Common Stock, $.0001 par value (the "Shares"), of
which 150,000 are to be issued pursuant to the 1996 Employee Stock Purchase
Plan, 60,000 are to be issued pursuant to the 1996 Director Option Plan,
809,885 are to be issued and 30,000 have been issued pursuant to the 1993 Stock
Option Plan. As your legal counsel, we have examined the proceedings taken,
and are familiar with the proceedings proposed to be taken, by you in
connection with the sale and issuance of the Shares.

It is our opinion that, upon completion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, the Shares, when issued and sold in the manner described in the
Registration Statement and in accordance with the resolutions adopted by the
Board of Directors of the Company, will be legally and validly issued, fully
paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.

Very truly yours,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

/s/ WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

<PAGE> 1

EXHIBIT 24.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement
on Form S-8/S-3 of VitalCom Inc. of our report dated January 8, 1996 appearing
in the Registration Statement of VitalCom, Inc. on Form SB-2 declared
effective on February 13, 1996.

Costa Mesa, California
May 13, 1996

Deloitte & Touche LLP

/s/ DELOITTE & TOUCHE LLP