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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
DICOM IMAGING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0422026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1350 E. Flamingo Road
Suite 847
Las Vegas, NV 89119
(Address of principal executive offices, including zip code)
(877) 624-6243
(Registrant's Telephone Number, Including Area Code)
(415) 831-2232
(Registrant's Facsimile Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.001
(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
CERTAIN FORWARD-LOOKING INFORMATION
The information contained in this Registration Statement includes
forward-looking statements. Since this information is based on current
expectations which involve risks and uncertainties, actual results could differ
materially from those expressed in the forward-looking statements. Various
important factors known to Dicom Imaging Systems, Inc. that could cause such
material differences are identified in the section entitled Plan of Operation
contained in Part I, Item 2 of this Registration Statement.
PART I .
Item 1. Description of Business
BUSINESS DEVELOPMENT
Dicom Imaging Systems, Inc., a Nevada Corporation ("Dicom" or "DIS" or
the "Company") is a development stage software provider to the dental industry
and associated groups. It is the plan of Dicom to capture market share of
imaging software in dentistry by producing and distributing, free of charge, an
imaging software application known as IMAGE EXPLORER AND IMAGE EDITOR ("Image
Explorer") to dentists, dental specialists, dental laboratories, dental
insurance companies, and educational facilities throughout North America. Dicom
requires registration of its Image Explorer product by its customers through a
telephone registration system. At the point of registration of IMAGE EXPLORER,
it is anticipated that Dicom representatives will market a series of value added
software modules, support services and select imaging hardware devices to its
software registrants.
The core Image Explorer product functions primarily as a means for
dental professionals to categorize, manage and manipulate patient images by
means of a visual interface. The value added software modules each provide
products to assist dental professionals with a specific area of image management
and manipulation, such as cosmetic whitening procedures on teeth. The value
added software modules can be added and integrated as dental professionals
become more familiar with the Dicom's Image Explorer technology.
By providing dental care providers with a DICOM (Digital Image
Communications in Medicine) compliant standard image database application,
management believes that DIS could provide an industry wide standard for dealing
with dental images across the profession. It is anticipated that substantially
all of Dicom's revenues will be derived from sales of value added software
modules, support services and select imaging hardware devices to its software
registrants. Presently, no significant sales of value added software modules,
support services and select imaging hardware devices have yet taken place, nor
has Dicom registered or distributed any significant number of copies of IMAGE
EXPLORER.
BANKRUPTCY OR RECEIVERSHIP
Dicom has never initiated or been the subject of any action under the
United States Bankruptcy Code or any receivership or any similar proceeding.
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COMPANY HISTORY; FORM AND YEAR OF ORGANIZATION; PURCHASE OF SIGNIFICANT
ASSETS
Dicom was incorporated as a Nevada Corporation on March 17, 1999.
Although certain officers of Dicom had been developing and structuring the
software license and other contractual relationships for Dicom prior to
incorporation, Dicom has been active in pursuing its customers and distributing
its products only since April 2, 1999. Dicom intends to handle its customer
service, order fulfillment and sales functions directly in its Las Vegas
offices. Certain technical support and customer service functions, but no sales
functions, are handled by Dicom's wholly owned subsidiary, 527403 British
Columbia Limited, a Canadian corporation incorporated under the laws of British
Columbia, Canada ("BC Ltd.").
Dicom did not develop the Image Explorer or value added module
software, but licensed the same from Torchmark Holdings, Ltd., a Turks and
Caicos Islands B.W.I. corporation ("Torchmark") under a License Agreement dated
March 17, 1999 by and between Torchmark and Dicom and a Capital Contribution
Agreement dated March 17, 1999 by and between Torchmark and Dicom. Torchmark
acquired the license for the Image Explorer and value added module software (the
"Software") from Image F/X Software Solutions, Inc., a Canadian Corporation
("Image"). Directors Wayne Rees, Todd Rees and David Gane are the sole
shareholders of Image. Directors Todd Rees and David Gane are officers of Image.
To date, Dicom has lent $44,000 to Image under a promissory note, at 6%
interest, payable by May 15, 2000.
Dicom has no operating history prior to March 17, 1999. Dicom has had
no significant revenues to date and has funded its activities through the sale
of its common stock and through loans by shareholders. Dicom's corporate
headquarters are located in Las Vegas, Nevada. Dicom is presently negotiating
the lease on its Las Vegas administrative and sales headquarters in Las Vegas.
Certain of the officers and other employees of Dicom presently conduct the
certain aspects of the corporation's business at the physical location of BC
Ltd. Outside Corporate Counsel to Dicom maintains most of Dicom's administrative
and financial records at the offices of Corporate Counsel until a final lease is
negotiated on Dicom's Las Vegas headquarters.
BUSINESS OF DICOM
PRINCIPAL PRODUCTS AND SERVICES OF DICOM AND THEIR MARKETS
The core product, (Image Explorer) is a DICOM compliant Windows based
32 bit dental image archiving software. [according to the industry
standardization protocol, supplement 32, part 10] Image Explorer captures images
from a variety of sources such as digital cameras, intra oral cameras, digital
x-ray, e-mail, internet transfers, operating microscopes or any twain compliant
device, and then stores them in an "electronic file cabinet" visual interface.
After storage, the images can be accessed in the patient file for review,
comparison, printing, and communication. There are other modules or plug-ins
designed to enhance the ability of the Image Explorer(TM) software program. The
core product and the modules are as follows:
Image Editor(TM): Allows the user to enhance the captured images without
substantially altering the image from its original state. This may include such
actions as color enhancement, sharpen, soften, cropping, rotating and flipping.
LabRX(TM): A lab module that facilitates communication between the dentist
and the laboratory technician especially with respect to esthetic restorations,
visually prescribing porcelain procedures to be performed by the lab. It
provides the lab technician certain information which can assist in the
preparation of accurate and cost-effective lab products. LabRX generates an
enhanced electronic prescription as either a print report or an electronic file.
X-Ray(TM): An x-ray module that allows the dentist to acquire x-ray images of
the patient into Image Explorer via direct acquisition or by film scanning
devices. The radiographic imaging tools allows the dentist to enhance the
radiograph for improved diagnosis, measure areas of the radiograph, attach
diagnosis notes, and communicate with colleagues via print or modem. If the
dentist already has a digital x-ray system, Image Explorer will allow the user
to view, enhance, print and communicate those existing images using the
dentistry wide standard interface.
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Whitener(TM): Whitener is an additional add-on module to Image Explorer.
Whitener is a module which identifies the teeth in an image and lightens them to
simulate a bleaching procedure. This module allows the patient to see what a
tooth whitening procedure would look like when completed.
Simulator(TM): Simulator's image manipulation tools show the patient what he or
she could look like with an alteration to their smile before committing to the
actual dentistry. The dentist can then send the patient's image to the
laboratory along with the prescription so the technicians making the restoration
will be able to view the proposed changes. With Simulator, the dentist can
simulate a range of dental procedures, including bleaching, bonding, veneers,
implants, amalgam replacement and orthodontics.
The above products are all intended to be sold to Dentists,
Orthodontists, Oral Surgeons and other dental professionals for use in their
practice with patients.
Distribution Method of Products and Services
Dicom distributes the core Image Explorer software free of charge
directly to dental professionals through direct mail, certain dental product
dealers and through partnering arrangements still in negotiation with other
manufacturers of dental products. Dental professionals who wish to use these
free products must call a toll free number to register the product. At the time
of the call, representatives of Dicom offer the customers the opportunity to
purchase the value added software modules and well as technical support and
upgrade packages. Sales of the value added software modules, such as LabRX,
Whitener, Simulator and X-Ray are conducted primarily through this telephone
"upselling."
Status of Publicly Announced Products or Services
Image Explorer, Image Editor and Whitener are all available for
distribution and are being distributed presently by Dicom. LabRX, X-Ray and
Simulator are still in development and do not yet have an anticipated completion
date.
Competitive Business Conditions, Competitive Position and Methods of
Competition
Competition in the dental products and services industry is intense.
There are many established companies who offer products that compete indirectly
with Dicom. Although growth in the dental industry in general and sales of
dental products and supplies in particular is expected to grow and expand as
cosmetic and elective dental procedures become more widely accepted, the number
of competitors in the marketplace makes competitive pressures severe. There are
competitors to Dicom with significantly greater financial, technical, marketing,
distribution and human resources. There is no guarantee Dicom will be able to
meet or survive these significant competitive challenges. The dental software
industry in particular, because of the potentially high profit margins compared
with other manufactured dental products, has attracted large and sophisticated
competitors with established brand names who have already successfully developed
and marketed products.
In spite of the competitive challenges in the industry, Dicom's
competitive position is somewhat unique. Currently there are no companies that
compete directly with Dicom in offering a free core product similar to Image
Explorer. Each competitor uses a different data base structure, file format and
interface design making it difficult for the dentist to come up with a
comprehensive solution by purchasing modules from different manufacturers. IMAGE
EXPLORER is presently the only image storage and retrieval system which is a 32
bit, Dicom compliant dental imaging product.
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Dicom's main competitors are SciCan (which markets products Image FX
and CosmetiX), Dentsply/New Image Industries (which markets Capture It Plus) and
Dynamic Dental Systems (which markets VIPERSOFT). All of these competitors
charge at least $2000 for their core imaging product, which is competitive with
Image Explorer. If any of these more established competitors were to also
give-away or substantially discount their products, such a move might have a
material, adverse effect on Dicom's ability to compete in the dental imaging
software market.
Sources of Raw Materials and the Names of Principal Suppliers
As Dicom produces and sells a software product, there are a limited
number of raw materials necessary for the conduct of its business. Blank compact
disks, mastered compact disks, printed software mailers and manuals and
marketing brochures are the main materials that go into the Dicom product.
Standard business papers, blank and mastered compact disks and printed software
mailers are available from a wide variety of suppliers. Dicom presently relies
on Peripherals of British Columbia to manufacture its compact discs containing
its software. There are more than 100 other suppliers available for this
function as well as Dicom's other raw material needs. Most of these suppliers
offer substantially identical prices. A sharp rise in these prices, however, by
Peripherals or a large number of other suppliers would have a material, adverse
effect on Dicom's ability to compete and achieve profitability.
Dependence on one of a few major customers
Dicom markets to over 20,000 dentists and dental professionals and is
not dependent on any particular customer. Although historical information is not
yet available due to Dicom's short operating history, it is anticipated that no
one customer will account for more than 1% of Dicom's yearly sales volume.
Patents, trademarks, licenses, royalty agreements or labor contracts
Dicom does not have any patents. Dicom protects its software via
copyright, trademark and by guarding the source code as a trade secret. Though
Dicom requires its programmers to sign industry standard agreements to protect
its trade secrets, there can be no assurance that these agreements will be
honored or that the remedies available in the event of breach of these
agreements would be adequate. A compromise of Dicom's source code, for any
reason, would have a severe negative impact on Dicom's ability to compete
effectively. Dicom is in the process of seeking trademark protection on Image
Explorer, Dicom Imaging Systems, LabRX, X-Ray, Whitener, Simulate and Image
Editor. There is no assurance that such trademarks will actually be applied for
or approved. If such trademarks were not to be secured, there could be a
material adverse effect on Dicom's competitive position and ability to
distinguish and differentiate its products.
Dicom has a thirty year license from Torchmark for the Software. A
breach of the terms of this license by Torchmark or the cancellation of the
license for any other reason would almost certainly have a severe materially
adverse effect on Dicom's ability to sell its products and on its financial
condition. Dicom is in the process of negotiating employment agreements with
certain key personnel and new hirees.
Need for Governmental Approval
Dicom's products are regulated by Federal, State, Provincial and Local
regulations. It is possible that the products require approval of the United
States Food and Drug Administration ("FDA"). Dicom is in the process of applying
for FDA approval of certain products, as described below. There is no assurance
that such applications will be completed, submitted or approved. If the required
applications were not to be completed, submitted and approved, Dicom may not be
able to successfully market or sell these products, which would have a
materially adverse effect on Dicom's revenues and profits.
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Image Explorer and LabRX are likely to be regulated by the FDA as
Class I devices, exempt from premarket notification procedures. Notwithstanding
this exemption, Dicom will be required to satisfy all other requirements for
medical device manufacturers, including complying with Quality System
regulations for the manufacture and distribution of software, registering as a
medical device manufacturer, listing the products with the FDA as medical
devices and timely reporting of adverse events.
Simulator, Whitener and X-Ray are likely to be regulated by the FDA as
Class II medical devices, requiring a 510(k) premarket notification for these
modules, according to the FDA guidelines and recommendations, as articulated by
the FDA Center for Devices and Radiological Health in its Draft Guidance
Statements, including the Draft "General Principals of Software Validation,
Version 1.1" released on June 9, 1997. These products are likely regulated as
PACS (picture archiving and communications systems) and therefore must be DICOM
and Joint Photographic Experts Group (JPEG) compliant. While FDA guidance
documents are not legally binding, Dicom is in the process of making such an
application to comply with the guidance documents. Dicom could encounter
regulatory difficulties which could have a material effect on its financial
condition, as there is no assurance that regulatory approvals will be granted or
that Dicom will complete the regulatory process in a timely manner.
Though Dicom has made an effort to comply with applicable regulations,
it is possible that Dicom is not in compliance with current FDA regulations, as
interpreted by the FDA staff, in its present distribution of products. Such
non-compliance could have a material adverse effect on Dicom's financial
condition, sales and profits.
Effect of Existing or Probable Governmental Regulation
Although it is not certain, it appears that Dicom's products, after
necessary applications have been made and approved, will still be subject to
governmental regulation that could have a material, adverse effect on the
ability of Dicom to market and sell the Software. The dental imaging field is
relatively new and it is quite possible that new regulations could be proposed
and adopted which could severely restrict products similar to the Software.
Although management is not presently aware of any such pending or proposed
regulations, there is no assurance that they will not be imposed. The dental
industry is a heavily regulated field, operating under a wide range of local,
state, federal and provincial regulations. It is possible that additional
regulations could be adopted or current enforcement practices changed in a way
that makes it more difficult or impossible to market or sell the Software. In
addition, because dental science is constantly evolving, new regulatory regimes
and processes could be adopted at any time and could have a material, adverse
effect on Dicom's ability to conduct it's business.
Estimate of the amount spent on Research and Development
As little historical data is available, such data does not necessarily
provide a representative sample of what research and development expenses Dicom
will incur in the future. To date, Dicom estimates that it has spent
approximately $150,000 on research and development expenses and that these costs
will be borne only indirectly by customers, through the cost of Dicom products.
To date, no customer has borne any direct research and development expense.
Costs and effects of environmental compliance
Dicom has no significant costs associated with environmental
compliance.
Number of total employees and number of full time employees.
Dicom has seven total employees and seven full time employees.
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Item 2. Plan of Operation
Plan of Operation Over the Next Twelve Months
Dicom's plan of operation over the next twelve months is to continue to
develop and improve the Software throughout the year. It is the plan of Dicom to
capture market share of imaging software in Dentistry by producing and
distributing, free of charge, an imaging software application known as IMAGE
EXPLORER AND IMAGE EDITOR ("Image Explorer") to dentists, dental specialists,
dental laboratories, dental insurance companies, and educational facilities
throughout North America. Dicom intends to require registration of its Image
Explorer product by its customers through a telephone registration system. At
the point of registration of IMAGE EXPLORER, it is anticipated that DIS
representatives will market a series of value added software modules, support
services and select imaging hardware devices to its software registrants.
The core Image Explorer product functions primarily as a means for
dental professionals to categorize, manage and manipulate patient images by
means of a user-friendly, visual interface. The value added software modules
each provide products to assist dental professionals with a specific area of
image management and manipulation, such as cosmetic whitening procedures on
teeth. The value added software modules can be added and integrated as dental
professionals become more familiar with the Dicom's Image Explorer technology.
By providing dental care providers with a DICOM (Digital Image
Communications in Medicine) compliant standard image database application,
management believes that DIS could provide an industry wide standard for dealing
with dental images across the profession. It is anticipated that substantially
all of Dicom's revenues will be derived from sales of value added software
modules, support services and select imaging hardware devices to its software
registrants.
It is anticipated that IMAGE EXPLORER will be given away free of charge
to all dental care providers so they may all have a standard method which is
DICOM compliant to store, view, print, and communicate images, thus increasing
the standard of care to patients. The Software will come on a CD, which will
install the IMAGE EXPLORER image database system. On the main menu bar of the
IMAGE EXPLORER program the tabs for all of the additional optional modules will
reside. When they are pressed a description of the module and instructions on
how to order will appear. Also on the CD will be a short training video on how
to use IMAGE EXPLORER and an introduction to the benefits of the other available
modules. In the package will be instructions on how to load the software, the
benefits of the software, and how to purchase the additional modules and the
service/support agreement. In order to activate the software the user must first
load the software onto their computer, then when they go to run the software
they will be requested to call our 1-877-62-IMAGE number for the activation
code. At that time the Dicom Imaging Systems (DIS) support representative will
take the users key information for our database and market the additional
modules. The support representative will also market the service/support
contract. If the end user would like to purchase additional hardware such as
cameras, capture boards, and scanners DIS can either provide them or assist the
user in finding the best source. The IMAGE EXPLORER product that is provided at
no charge will assist the user with their standard day to day handling of
images.
Risk Factors
WE HAVE A LIMITED OPERATING HISTORY UPON WHICH TO EVALUATE OUR LIKELIHOOD OF
SUCCESS.
We have only manufactured and distributed our software and manufactured and
distributed our Image Explorer product since April, 1999. Therefore, we have a
limited relevant operating history upon which to evaluate the likelihood of our
success. Factors such as the risks, expenses and difficulties frequently
encountered in the operation and expansion of a relatively new business and the
development and marketing of new products must be considered in evaluating the
likelihood of success of our company.
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WE HAVE A HISTORY OF LOSSES AND ACCUMULATED DEFICIT AND THIS TREND OF LOSSES MAY
CONTINUE IN THE FUTURE.
At March 31, 1999, our accumulated deficit was $102,934. Our ability to obtain
and sustain profitability will depend, in part, upon the successful marketing of
our existing products and the successful and timely introduction of new
products. There can be no assurance that we will ever be profitable.
FLUCTUATION IN QUARTERLY RESULTS MAY RESULT IN DECLINES IN OUR STOCK PRICE.
Certain quarterly influences may affect our business. Sales are generally
higher in the fourth quarter due to the purchasing patterns of dentists in the
United States and are generally lower in the first quarter due primarily to the
effect upon demand of increased purchases in the prior quarter. We also expect
to experience lower sales in the summer months as a consequence of holiday
vacations and a lesser number of trade shows. These fluctuations could result in
significant fluctuations, including significant declines in our stock price when
Dicom's stock begins to trade on the public markets.
OUR FUTURE DEPENDS ON OUR ABILITY TO INCREASE DEMAND FOR OUR IMAGE EXPLORER
PRODUCT AS WELL AS OUR ABILITY TO DEVELOP AND INTRODUCE NEW PRODUCTS.
Our future depends upon our ability to increase demand for our Image Explorer
and related products and our ability to develop and successfully introduce new
products. Development of new product lines is risk intensive and often requires:
- long-term forecasting of market trends;
- the development and implementation of new designs;
- compliance with extensive governmental regulatory requirements; and
- a substantial capital commitment.
Also, the medical and dental device industry is characterized by rapid
technological change. As technological changes occur in the marketplace, we may
have to modify our products in order to become or remain competitive or ensure
that our products do not become obsolete. If we fail to anticipate or respond in
a cost-effective and timely manner to government requirements, market trends or
customer requirements, or if there are any significant delays in product
development or introduction, this could have a material adverse effect on our
business.
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THE GOVERNMENT EXTENSIVELY REGULATES OUR PRODUCTS AND FAILURE TO COMPLY WITH
APPLICABLE REGULATIONS COULD RESULT IN FINES, SUSPENSIONS, SEIZURE ACTIONS,
PRODUCT RECALLS, INJUNCTIONS AND CRIMINAL PROSECUTIONS.
The United States Food and Drug Administration, as well as state and foreign
agencies, regulate almost all aspects of our medical devices including:
- entry into the marketplace;
- design;
- testing;
- - manufacturing procedures;
- reporting of complaints;
- labeling; and
- promotional activities.
Under the Federal Food, Drug, and Cosmetic Act, the FDA has the authority to
control the introduction of new products into the United States marketplace.
Unless specifically exempted by the agency, medical devices enter the
marketplace through either FDA clearance of a premarket approval application or
FDA approval of an application for 510(k) clearance. The FDA conducts periodic
inspections to assure compliance with that agency's regulations.
Unless specifically exempted by FDA's regulations, we will need to file a
510(k) submission or pre-market approval application for any new products
developed in the future. The process of obtaining a clearance or approval can be
time-consuming and expensive. Compliance with the FDA's regulatory requirements
can be burdensome. We do not guarantee that the required regulatory approvals or
clearances will be obtained. Any approval or clearance obtained from the FDA may
include significant limitations on the use of the medical device which is the
subject of the approval or clearance. In addition, in order to sell our products
internationally we need to obtain the appropriate approvals of foreign
regulators, none of which can be guaranteed to be received. The international
regulatory review process varies from country to country. For example in Europe,
the regulations of the European Union require that a device have a CE mark
before it can be sold in that market. We cannot market a medical device in any
particular market if the required approval or clearance is not granted.
Inability to obtain such approval or clearance could result in a delay or
suspension of the manufacture and sale of affected medical devices in that
market. Any such delay or suspension would have a material adverse effect on our
business. Also changes in existing regulations or the adoption of new
regulations could make regulatory compliance by us more difficult in the future.
The failure to obtain the required regulatory clearances or to comply with
applicable regulations could result in one or more of the following:
- fines;
- delays or suspensions of device clearances;
- seizure actions;
- mandatory recalls;
- injunction action; and
- criminal prosecution.
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THE LOSS OF OUR CHIEF EXECUTIVE OFFICER COULD LEAD TO THE LOSS OF A SIGNIFICANT
PORTION OF OUR BUSINESS BECAUSE OF HIS PERSONAL CONTACTS IN OUR INDUSTRY.
Our success is highly dependent upon our President and Chief Executive
Officer, Dr. David Gane. Unlike larger companies, we rely heavily on a small
number of officers to conduct a large portion of our business. The loss of
service of Dr. Gane along with the loss of his numerous contacts and
relationships in the industry would have a material adverse effect on our
business. We have not entered into an employment agreement with Dr. Gane. We do
not have key person life insurance on Dr. Gane.
OUR PRODUCTS HAVE NO PATENT PROTECTION, AND THEREFORE, THEY MAY NOT BE
ADEQUATELY PROTECTED FROM COPYING BY COMPETITORS.
Our future success and ability to compete is dependent in part upon our
proprietary technology. We have been advised by counsel that our software cannot
easily be protected by patent. Consequently, we rely primarily on trademark,
trade secret and copyright laws to protect our technology. However, there can be
no assurance that third parties will not try to copy our products. In addition,
many foreign countries' laws may not protect us from improper use of our
proprietary technology overseas. We may not have adequate remedies if our
proprietary rights are breached and therefore a breach of our proprietary rights
could have a material adverse effect on our financial condition.
SHAREHOLDER VOTING AGREEMENT.
Because the Shareholder Voting Agreement, attached hereto as exhibit 10.5
determines and fixes the composition of the board of directors until the
shareholders that are a party to it have sold their shares, no change of control
may be possible for a significant period of time, even if such a change of
control may be in the best interests of the corporation.
WE ARE SUSCEPTIBLE TO PRODUCT LIABILITY SUITS AND IF A LAWSUIT IS BROUGHT
AGAINST US IT COULD RESULT IN US HAVING TO PAY LARGE LEGAL EXPENSES AND/OR
JUDGMENTS.
Although we have not yet had any product liability claims, because of
the nature of the medical/ dental device industry, there can be no assurance
that we will not be subject to such claims in the future. Our products relate to
procedures which involve vulnerable areas of the human body, such as the mouth,
tongue, teeth and gums, and, therefore, the sale and support of dental products
makes us susceptible to the risk of such claims. A successful product liability
claim or claim arising as a result of use of our products brought against us, or
the negative publicity brought up by such claim, could have a material adverse
effect upon our business. We are in the process of obtaining product liability
insurance, but do not yet have such insurance secured. While we intend to
maintain adequate insurance coverage, we do not guarantee that the amount of
insurance will be adequate to satisfy claims made against us in the future, or
that we will be able to obtain insurance in the future at satisfactory rates or
in adequate amounts.
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THE YEAR 2000 ISSUE COULD HAVE AN IMPACT ON OUR INFORMATION TECHNOLOGY AND
NON-INFORMATION TECHNOLOGY SYSTEMS AS WELL AS THOSE OF OUR SUPPLIERS AND/OR
CUSTOMERS, ANY OF WHICH COULD NEGATIVELY AFFECT SALES OF OUR PRODUCTS.
The Year 2000 readiness issue, which is common to most businesses, arises
from the inability of information systems, and other time and date sensitive
products and systems, to properly recognize and process date-sensitive
information or system failures. Estimates of the potential cost and effects of
Year 2000 issues vary significantly among businesses, and it is extremely
difficult to predict the actual impact. Recognizing this uncertainty, our
management is continuing to actively analyze, assess and plan for various Year
2000 issues across our businesses.
The Year 2000 issue has an impact on both information technology systems and
non-information technology systems, such as manufacturing systems and physical
facilities including, but not limited to, security systems and utilities. We
intend to test all of our information technology systems and non-information
technology systems for Year 2000 readiness. Management believes that all systems
are Year 2000 compliant.
The Year 2000 readiness of our customers varies. We are not investigating
whether or not our customers are evaluating and/or preparing their own systems
to be Year 2000 compliant. These efforts by customers to address Year 2000
issues may affect the demand for certain products and services; however, the
impact on our revenue is highly uncertain.
We have not investigated the Year 2000 readiness of our key suppliers,
however, management believes that the large number of available suppliers makes
it unlikely that we will experience disruptions due to a non compliant supplier,
although a widespread supplier shortage due to non-compliance would have a
material adverse impact on our business.
The Year 2000 issue presents a number of other risks and uncertainties that
could impact us, such as public utilities failures, potential claims against us
for damages arising from products and services that are not Year 2000 compliant,
and the response ability of certain government commissions of the various
geographic areas where Dental/Medical conducts business. While we continue to
believe the Year 2000 issues described above will not materially affect our
financial position, it remains uncertain as to what extent, if any, we may be
impacted.
If we, our customers or suppliers are unable to resolve any Year 2000
compliance problems in a timely manner, we could face business interruptions or
a shutdown, financial loss, regulatory actions, reputational harm and/or legal
liability. However, because it is unlikely that our business will be disrupted
unless compliance problems are serious and widespread throughout the industry,
we have concluded that our business remains adequately prepared for the Year
2000. As a result, we have determined that we will not be developing any
contingency plans that address a reasonably likely worst case scenario.
THE NASDAQ OTC BULLETIN BOARD MARKET HAS A LIMITED OPERATING HISTORY
CHARACTERIZED BY HIGH VOLATILITY WHICH MAY NEGATIVELY AFFECT OUR STOCK PRICE.
We intend to apply for admission to trading of our shares on the Nasdaq OTC
bulletin board ("Bulletin Board"). The Bulletin Board has a limited operating
history and is characterized by high volatility. We cannot guarantee any market
for out shares. We cannot guarantee that any market for our shares will develop
or be sustained. We cannot predict the effect, if any, that future sales of our
shares, or the availability of our shares for future sale, will have on the
market price of our shares.
11
<PAGE> 12
Cash Requirements
Management believes that Dicom can satisfy its cash needs out of
available cash and operating income and will not have to engage in any sale of
Dicom's securities during the next twelve months. Dicom believes that it can
satisfy its cash requirements for the foreseeable future out of a combination of
cash now available from the previous sale of shares of common stock in Dicom and
operating revenues. In addition, Dicom is prohibited from the issuance of
additional shares and the undertaking of material debt without the consent of
its shareholders. There can be no assurance that, in the event Dicom had a need
for additional capital, that such consent will be forthcoming.
Product Development and Research Plan for the Next Twelve Months
It is anticipated that Dicom will spend $12,000 per month over the next
twelve months to improve and develop the Image Explorer Software and modules.
These improvements might include customer requested enhancement as well as the
amelioration of any technical problems that become manifested with the Image
Explorer Software and modules
Expected Purchase or Sale of Plant and Significant Equipment
None.
Expected Significant changes in number of employees.
None.
Description of Property
Dicom is currently in negotiation for office space in Las Vegas.
Dicom's administrative functions are largely carried out by use of space at the
offices of corporate counsel, which it receives without cost. In addition, Dicom
uses the offices of BC Ltd. for some customer service functions without cost
while permanent leased office space in Las Vegas is being negotiated.
Investment Policies.
Dicom owns no real estate, makes no real estate investments of any kind
or character and management has no intention of doing so during the next twelve
months.
12
<PAGE> 13
Security Ownership of Certain Beneficial Owners and Management
Beneficial Owners of More than Five Percent.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of Percent of Class
Title of Class Beneficial Owner Beneficial Owner
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Dr. David Gane 333,433 President, CEO and 8.9%
1081 Kent Street Director(1)
White Rock, BC
Canada V4B4T2
- --------------------------------------------------------------------------------------------------------------------
Common Wayne Rees 333,433 Vice President and 8.9%
13670 Malabar St. Director(1)
White Rock, BC
Canada V4B2X9
- --------------------------------------------------------------------------------------------------------------------
Common Todd Rees 333,433 Vice President and 8.9%
112-15282 19th Avenue Director(1)
Surrey, BC
Canada v4B1X6
- --------------------------------------------------------------------------------------------------------------------
Common Stephen Winter 250,000 Vice President, 6.7%
4610 Boulderwood Drive Director, Secretary,
Victoria, BC Treasurer (2)
Canada
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes rights to acquire 333,333 shares of common stock
(2) Includes rights to acquire 250,000 shares of common stock
Security Ownership of Management
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of Percent of Class
Title of Class Beneficial Owner Beneficial Owner
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Dr. David Gane 333,433 President, CEO and 8.9%
1081 Kent Street Director(1)
White Rock, BC
Canada V4B4T2
- --------------------------------------------------------------------------------------------------------------------
Common Wayne Rees 333,433 Vice President and 8.9%
13670 Malabar St. Director(1)
White Rock, BC
Canada V4B2X9
- --------------------------------------------------------------------------------------------------------------------
Common Todd Rees 333,433 Vice President and 8.9%
112-15282 19th Avenue Director(1)
Surrey, BC
Canada v4B1X6
- --------------------------------------------------------------------------------------------------------------------
Common Stephen Winter 250,000 Vice President, 6.7%
4610 Boulderwood Drive Director, Secretary,
Victoria, BC Treasurer (2)
Canada
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes rights to acquire 333,333 shares of common stock
(2) Includes rights to acquire 250,000 shares of common stock
13
<PAGE> 14
Directors, Executive Officers, Promoters and Control Persons
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of Percent of Class
Title of Class Beneficial Owner Beneficial Owner
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Dr. David Gane 333,433 President, CEO and 8.9%
1081 Kent Street Director(1)
White Rock, BC
Canada V4B4T2
- --------------------------------------------------------------------------------------------------------------------
Common Wayne Rees 333,433 Vice President and 8.9%
13670 Malabar St. Director(1)
White Rock, BC
Canada V4B2X9
- --------------------------------------------------------------------------------------------------------------------
Common Todd Rees 333,433 Vice President and 8.9%
112-15282 19th Avenue Director(1)
Surrey, BC
Canada v4B1X6
- --------------------------------------------------------------------------------------------------------------------
Common Stephen Winter 250,000 Vice President, 6.7%
4610 Boulderwood Drive Director, Secretary,
Victoria, BC Treasurer (2)
Canada
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes rights to acquire 333,333 shares of common stock
(2) Includes rights to acquire 250,000 shares of common stock
DR. DAVID GANE PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
PERSONAL: BIRTH DATE: APRIL 17 1954
Dr. Gane graduated from the University of Western Ontario in 1977, (B.Sc.
Honors) and in 1981 with his Doctorate in Dental Surgery (D.D.S.)
CORPORATE:
Dr. Gane is the President and Co-Founder of Source Dental Image Inc. (1988) a
company specializing in the development and sales of Dental Imaging Software,
President and Co-Founder of Image FX Software Solutions Inc. (1995) a company
specializing in the development and sales of Imaging Solutions to Dentists and
Physicians and is currently Program Director, Imaging Technologies for Experdent
Centers of Dental Excellence. Dr. Gane is recognized as an expert in dental
imaging and in this capacity has consulted for a number of Corporations and
Universities on this topic. He has also lectured worldwide and published on the
topic of dental imaging and cosmetic dentistry. Dr. Gane has practiced dentistry
for 20 years and maintains an exclusive part time dental practice limited to
advanced restorative dentistry.
WAYNE REES, VICE-PRESIDENT, DIRECTOR
CORPORATE:
Wayne Rees
Wayne's background in sales began with his commerce and business
administration training at Malaspina College where he majored in marketing.
Wayne's front line experience has encompassed computer hardware, software,
service, and dental peripheral products. Wayne co-founded Intadata Management, a
national computer support company with eleven branch offices throughout Canada.
His responsibilities included negotiating supplier agreements, establishing
technical training programs for colleges and government, and establishing an in
house leasing division, in addition to managing all marketing activities. Wayne
co-developed "CHOICES" the initial hair salon imaging system back in 1987. He
co-founded Source 1 Dental Imaging, the developers of the "Picture Perfect
Imaging System" in DOS which was marketed exclusively by Dentsply International
and the "InfoSource / Picture Perfect" system for MS Windows. Wayne co-founded
and was Vice President of ProDentec Canada where he was responsible for
international marketing of computer and imaging related products. Wayne set up
dealer marketing programs, established and trained large international dental
distributors on the imaging products, attended and presented at most of the
major dental trade shows over the past six years, and assisted lecturers in
presentations throughout the US and Canada. Wayne consulted and assisted in
writing the dental textbook by Goldstein, Goldstein, and Garber, called "Imaging
in Esthetic Dentistry". He was also on the American Dental Association Standards
Committee. Wayne co-founded Image FX Software Solutions and co-designed the
Image FX / CosmetiX imaging systems for dentistry, and the MedX / Simulate
System for Medical use. Sales training courses provided by suppliers such as
Micom, Xerox, AES, MAI, IBM, DEC and Honeywell round out Wayne's experience in
technical sales, and support services.
14
<PAGE> 15
TODD REES VICE-PRESIDENT AND DIRECTOR
PERSONAL: Birthdate April 1 1959
CORPORATE:
Todd Rees
Todd has an extensive background in electronics' design and software
development. He graduated from Camosun College with a certificate in
electronics. From there he co-founded a national computer support company with
11 branch offices throughout Canada. This company was then sold to Datatech
Systems Inc. There he headed up the support division for Western Canada with a
directive of decreasing the budget of $8.5 million CDN, this was accomplished by
a decrease in overhead of approx. 28% within a 6-month period. His skills
include teaching electronics' program at Camosun College and co-authoring a
technical program at Malispina College which are both still active today. Todd
was President and co-founder of ImageFX Software Solutions where he co-managed
an International software development company with products in the Medical and
Dental fields.
STEPHEN WINTER VICE-PRESIDENT, TREASURER, SECRETARY AND DIRECTOR
PERSONAL: Birthdate February 11, 1961
Stephen Winter is presently the Vice President of Photo Type Composing
Ltd. located in Victoria, BC Canada. He is responsible for the design,
development, and promotion of seven publications specializing in Recreational
Atlases. Stephen has obtained a degree in Cartography and has fifteen years
experience in graphic design, computer programming, printing, and marketing new
products. Stephen has been a director of an oil and gas company for two years.
Other areas of experience include surveying and photogrammetry, certified
welder, and dental lab technician.
Family Relationships
Vice President and Director Todd Rees and Vice President and Director
Wayne Rees are brothers.
Involvement in Legal Proceedings.
None.
15
<PAGE> 16
Item 6. Executive Compensation
Dr. David Gane, President, CEO and Director, receives payments of $6000
per month in salary and options to purchase 333,433 shares of common stock in
Dicom as compensation. As of March 31, 1999, Dr. Gane had received $9000 in
compensation from Dicom.
Item 7. Certain Relationships and Related Transactions
Directors David Gane, Wayne Rees and Todd Rees together control Image
as identified earlier in this registration statement. Image sold the license to
the Software to Torchmark for $150,000 CDN. Torchmark entered into the License
Agreement and the Capital Contribution Agreement with Dicom attached as exhibits
10.2 and 10.3 hereto.
From inception to present, Dicom has loaned $44,000 to Image, payable
at 6% interest on or before May 15, 2000. Certain shareholders of Dicom have
entered into a lock-up agreement amongst themselves whereby they each
voluntarily agree to hold ninety percent of their shares for a period of one
hundred and eighty days from the date Dicom commences trading on the Nasdaq OTC
bulletin board. Although Dicom is not a party to this lock-up agreement, the
lock up agreement could have a severely restrictive impact on the public trading
float of Dicom's stock and could limit the ability of Dicom shares to be sold
into the public markets.
16
<PAGE> 17
Item 8. Description of Securities
The following summary of certain provisions of the Common Stock does not purport
to be complete and is subject to, and qualified in its entirety by, the
provisions of applicable law and the provisions of the Company's Articles of
Incorporation, which are included as an exhibit to this Registration Statement.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding shares of Preferred Stock,
the holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
for the payment of dividends. Holders of Common Stock have no preemptive rights
or rights to convert their Common Stock into any other securities. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and non-assessable.
There are no other material rights of common stockholders as a class.
However, under the terms of the Stock Purchase Agreement executed by and between
certain holders of Dicom common stock and Dicom, a representative of the holders
must consent to the undertaking of any material indebtedness outside the
ordinary course of business and any issuance of additional equity in Dicom. In
addition, Dicom has the obligation to repurchase certain shares of common stock
upon demand of the holders thereof, pursuant to the conditions of the Stock
Purchase Agreement attached hereto as exhibit 10.1.
Part II.
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters
There is no public trading market in the registrant's stock. There are
approximately 30 holders of the registrant's common stock. There have been no
dividends declared to date. There are no restrictions on the ability to declare
dividends in the future. No shares of the Company's common stock have previously
been registered with the Securities and Exchange Commission (the "Commission")
or any state securities agency or authority. The Company intends to make an
application to the NASD for the Company's shares to be quoted on the OTC
Bulletin Board. The Company's application to the NASD will consist of current
corporate information, financial statements and other documents as required by
Rule 15c2-11 of the Securities Exchange Act of 1934, as amended. Inclusion on
the OTC Bulletin Board permits price quotations for the Company's shares to be
published by such service. The Company is not aware of any established trading
market for its common stock. Although the Company intends to submit its
application to the OTC Bulletin Board contemporaneously with the filing of this
registration statement, there is no assurance that such an application will be
granted. Except for the application to the OTC Bulletin Board, there are no
plans, proposals, arrangements or understandings with any person concerning the
development of a trading market in any of the Company's securities. The
Company's common stock has not traded in a public market.
As of April 30, 1999 there were 30 holders of record of the Company's
common stock, which figure does not take into account those shareholders whose
certificates are held in the name of broker-dealers or other nominees. Because
there has been no established public trading market for the Company's
securities, no trading history is presented herein.
17
<PAGE> 18
As of the date hereof, the Company has issued and outstanding 2,400,000
shares of common stock. In March, 1997, the Company issued 1,400,000 shares of
common stock to various purchasers for the purchase price between $0.001 and
$1.00 per share for a total sale price of $1,000,000 and an average per share
price of $0.71. The funds were used to pay various payables including payments
to certain persons for prior services rendered to the Company.
Of the Company's total outstanding shares, 1,400,000 may be sold,
transferred or otherwise traded in the public market without restriction, unless
held by an affiliate or controlling shareholder of the Company or otherwise
restricted by agreements between individual stockholders. Of these 1,400,000
shares, the Company has identified 400 shares as being held by affiliates of the
Company.
A total of 1,000,400 shares are considered restricted securities and
are presently held by affiliates and/or principal shareholders of the Company.
None of the 1,000,400 restricted shares are presently eligible for sale pursuant
to Rule 144, subject to the volume and other limitations set forth under Rule
144. In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of the
Company for at least one year, including any person who may be deemed to be an
"affiliate" of the Company (as the term "affiliate" is defined under the Act),
is entitled to sell, within any three-month period, an amount of shares that
does not exceed the greater of (i) the average weekly trading volume in the
Company's common stock, as reported through the automated quotation system of a
registered securities association, during the four calendar weeks preceding such
sale or (ii) 1% of the shares then outstanding. A person who is not deemed to be
an "affiliate" of the Company and has not been an affiliate for the most recent
three months, and who has held restricted shares for at least two years would be
entitled to sell such shares without regard to the resale limitations of Rule
144.
The Company has not previously filed a registration statement with the
Commission. No private placement memorandum was used in relation to the issuance
of shares.
Dividend Policy
Dicom has not declared any dividends in the past and there is no
intention to declare dividends in the future.
Item 2. Legal Proceedings
There are presently no material pending legal proceedings to which the
Company or any of its subsidiaries is a party or to which any of its property is
subject and, to the best of its knowledge, no such actions against the Company
are contemplated or threatened.
Item 3. Changes in and Disagreements with Accountants.
None.
Item 4. Recent Sales of Unregistered Securities
Between March 17, 1999 and April 6, 1999, the registrant sold 2,400,000
shares of common stock. There was no public offering of the shares. The shares
were offered to acquaintances of the officers and directors and issued in
connection with the licensing of the Company's software.
18
<PAGE> 19
The total offering price for the common stock sold for cash was
$1,000,000. Dicom paid a consulting fee to Landmark Consulting and Developing
Ltd., an International Business Corporation, of $100,000 and an expense
allowance of $35,000 as consulting fees in connection with the sale of shares of
Dicom's common stock.
Dicom issued 950,000 shares of common stock to Torchmark under the
Capital Contribution Agreement and the License Agreement attached hereto as
exhibits 10.2 and 10.3 respectively and 25,000 shares to VCBM Ltd. and 25,000
shares to James Ullock under the same agreements. Dicom received a 30 year
license for the Software as consideration for the issuance.
Dicom issued 1,400,000 in an offering which raised $1,000,000 for the
shares pursuant to the exemption contained in Regulation D, Rule 504 of the
Securities Act of 1933, as amended. The shares were sold and payment received
therefrom on or before April 6, 1999. The offering was for no more than
$1,000,000. No general solicitation was made. There were no more than 8
unaccredited investors in the offering.
The shares issued to Torchmark, James Ullock and VCBM Ltd. were issued
and sold pursuant to Rule 505 of Regulation D of the Securities Act of 1933.
The issuance of the securities described above were deemed to be exempt
from registration under the Securities Act in reliance on Section 4(2), Rule 701
promulgated thereunder, Section 3(a)(9) among other exemptions. The recipients
of securities in each such transaction represented their intentions to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the share certificates issued in such transactions. All recipients had access,
through their relationships with the Registrant, to information about the
Registrant.
Item 5. Indemnification of Officers and Directors
The Company's Articles of Incorporation provide for indemnification to
the full extent permitted by Nevada law of all persons it has the power to
indemnify under Nevada law. In addition, Article VII of the Company's By Laws
provide for indemnification to the full extent permitted by Nevada law of all
persons it has the power to indemnify under Nevada law. Such indemnification is
not deemed to be exclusive of any other rights to which those indemnified may be
entitled, under any bylaw, agreement, vote of stockholders or otherwise. The
provisions of the Company's Articles of Incorporation and By Laws which provide
indemnification may reduce the likelihood of derivative litigation against the
Company's directors and officers for breach of their fiduciary duties, even
though such action, if successful, might otherwise benefit the Company and its
stockholders.
Part F/S
(a) (1) See Audited Financial Statements and supplementary data index which
appears on page F-1 herein.
(2) Schedules have been omitted because they are either not applicable
or the required information is shown in the financial statements or
notes thereto.
(3) Exhibits
19
<PAGE> 20
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
3.1 Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant
10.1 Form of Stock Purchase Agreement between the Registrant and
purchasers of shares of common stock in the Registrant.
10.2 License Agreement between Torchmark Holdings, Ltd. and
Registrant dated March 17, 1999.
10.3 Capital Contribution Agreement between Torchmark Holdings,
Ltd. and Registrant dated March 17, 1999.
10.4 Order Fulfillment Agreement between 527403 British Columbia
Limited and Registrant dated May 14, 1999.
10.5 Voting Agreement between certain holders of common stock in
the Registrant and the Registrant, dated March 17, 1999.
20
<PAGE> 21
DICOM IMAGING SYSTEMS, INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
Page
----
Report of Kurt Saliger, CPA, Independent Auditor ............... F-2
Consolidated Balance Sheets .................................... F-3
Consolidated Statements of Operations .......................... F-4
Consolidated Statements of Stockholders' Equity ................ F-5
Consolidated Statements of Cash Flows .......................... F-6
Notes to Consolidated Financial Statements ..................... F-7
21
<PAGE> 22
Kurt D. Saliger, CPA
5000 W. Oakey, Suite A-4
Las Vegas, NV 89146
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Dicom Imaging Systems,
Inc. (a development stage Company), as of March 31, 1999; and the related
statements of operations, stockholders' equity and cash flows for the period
from March 17, 1999 (date of inception) to March 31, 1999. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I concluded my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Dicom Imaging
Systems, Inc. (a development stage company) at March 31, 1999 in conformity with
generally accepted accounting principles.
/s/ Kurt D. Saliger C.P.A.
Kurt D. Saliger C.P.A.
April 27, 1999
22
<PAGE> 23
DICOM IMAGING SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEET
March 31, 1999
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
CURRENT ASSETS
- --------------------------------------------------------------------------------
Cash $ 222,902
- --------------------------------------------------------------------------------
Stock Subscription Receivable $ 443,950
- --------------------------------------------------------------------------------
Total Current Assets $ 666,852
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET $ 34,914
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 701,766
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------------------
CURRENT LIABILITIES
- --------------------------------------------------------------------------------
Accounts Payable $ 0
- --------------------------------------------------------------------------------
Total Current Liabilities $ 0
- --------------------------------------------------------------------------------
LONG TERM DEBT $ 0
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Common Stock, $0.001 par value authorized
50,000,000 shares issued and outstanding at March 31, 1999
1,400,000 shares $ 1,400
- --------------------------------------------------------------------------------
Additional Paid In Capital $ 803,000
- --------------------------------------------------------------------------------
Deficit Accumulated During Development Stage $(102,934)
- --------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 701,766
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 701,766
- --------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 24
DICOM IMAGING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
March 17, 1999 (Inception) to March 31, 1999
- --------------------------------------------------------------------------------
INCOME
- --------------------------------------------------------------------------------
Revenue $ 0
- --------------------------------------------------------------------------------
TOTAL INCOME $ 0
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
General and Administrative $ 103,223
- --------------------------------------------------------------------------------
TOTAL EXPENSES $ 103,223
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS $ (103,223)
- --------------------------------------------------------------------------------
Provision for income taxes $ 0
- --------------------------------------------------------------------------------
Interest Income $ 289
- --------------------------------------------------------------------------------
NET INCOME (LOSS) $ (102,934)
- --------------------------------------------------------------------------------
NET INCOME (LOSS)
PER SHARE - BASIC AND DILUTED $ (0.0735)
- --------------------------------------------------------------------------------
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 1,400,000
- --------------------------------------------------------------------------------
24
<PAGE> 25
DICOM IMAGING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
March 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
(Deficit)
Additional Accumulated During
Common stock Number of Shares Amount Paid in Capital Development Stage
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Issued for cash
March 17, 1999 1,400,000 $ 1,400 $ 803,300
- --------------------------------------------------------------------------------------------------------------
(Net Loss) March 17, 1999 $(102,934)
(Inception) to March 31, 1999
- --------------------------------------------------------------------------------------------------------------
Balance March 31, 1999 1,400,000 $ 1,400 $ 803,300 $(102,934)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 26
DICOM IMAGING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
March 17, 1999 (Inception) to March 31, 1999
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
- --------------------------------------------------------------------------------
(Net loss) $(102,934)
- --------------------------------------------------------------------------------
(Increase) in accounts receivable $(443,950)
- --------------------------------------------------------------------------------
Net Cash (Used) In Operating Activities $(546,884)
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
- --------------------------------------------------------------------------------
Purchases of property and equipment $ 34,884
- --------------------------------------------------------------------------------
$(581,798)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
- --------------------------------------------------------------------------------
Issuance of common stock for cash $ 804,700
- --------------------------------------------------------------------------------
Net increase in cash $ 222,902
- --------------------------------------------------------------------------------
Cash, March 17, 1999 $ 0
- --------------------------------------------------------------------------------
Cash, March 31, 1999 $ 222,902
- --------------------------------------------------------------------------------
26
<PAGE> 27
DICOM IMAGING SYSTEMS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 17, 1999 (inception) to March 31, 1999
Note 1- HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated March 17, 1999 under the laws of the State
of Nevada. The Company was organized to engage in any lawful activity. The
Company currently has no operations and, in accordance with SFAS #7, is
considered a development stage company.
In March of 1999 the Company entered into a license and distribution
agreement with Torchmark Holdings to secure rights to image archiving and
retrieval software for use in dental diagnostic procedures and for other
applications.
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Property and equipment
Property and equipment is stated at cost. Depreciation is recorded
using the straight-line method over the estimated useful life of computer
hardware equipment over a period of three years.
Income Taxes
Income Taxes are provided for using the liability method of accounting
in accordance with Statement of Financial Accounting Standards No. 109 (SFAS
#109) "Accounting for Income Taxes." A deferred tax asset or liability is
recorded for all temporary differences between financial and tax reporting.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Research and Development
Research and development costs are expensed as incurred.
27
<PAGE> 28
Loss per share
Net loss per share is provided in accordance with Statement of
Financial accounting Standards No. 128 9SFAS #128) "Earnings Per Share." Basic
loss per share is computed by dividing losses available to common stockholders
by the weighted average number of common shares outstanding during the period.
Diluted loss per share reflects per share amounts that would have resulted if
dilutive common stock equivalents had been converted to common stock. As of
March 31, 1999, the Company had no dilutive stock equivalents such as stock
options.
NOTE 3- INCOME TAXES
There is no provision for income taxes for the period from March 17,
1999 (inception) to March 31, 999 due to the net loss and no Nevada state income
tax in the state of the Company's domicile.
NOTE 4- STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the Company consists of 50,000,000
shares with a par value of $0.001 per share.
Preferred Stock
The authorized preferred stock of the Company consists of 10,000,000
shares with a par value of $0.001 per share.
28
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
DICOM IMAGING SYSTEMS, INC.
(Registrant)
Date: JUNE 11, 1999
By: /s/ David Gane
-------------------------------------
David Gane
President and Chief Executive Officer
29
<PAGE> 1
Exhibit 3.1
Exhibit 3.1 Articles of Incorporation
Articles of Incorporation of Dicom Imaging Systems, Inc.
Know all men by these presents that the undersigned have this day voluntarily
associated ourselves together for the purpose of forming a corporation under and
pursuant to the provisions of Nevada Revised Statutes 78.010 to Nevada Revised
Statutes 78.090 inclusive as amended and state and certify that the articles of
incorporation are as follows.
First: Name
The name of the corporation is Dicom Imaging Systems, Inc. (The
"Corporation").
Second: Registered Office and Agent
The address of the registered office of the corporation in the State of
Nevada is 3360 W. Sahara Ave., Suite 200, Las Vegas, County of Clark 89102. The
name and address of the corporation's registered agent in the State of Nevada is
Shawn F. Hackman, Esq., 3360 W. Sahara Ave,. Suite 200, Las Vegas, NV 89102, at
said address, until such time as another agent is duly authorized and appointed
by the corporation.
Third: Purpose and Business
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
Nevada Revised Statutes of the State of Nevada, including, but not limited to,
the following:
(a) The corporation may at any time exercise such rights, privileges,
and powers when not inconsistent with the purposes and object for
which this corporation is organized;
(b) The corporation shall have the power to have succession by its
corporate name in perpetuity, or until dissolved and its affairs
wound up according to law;
(c) The corporation shall have power to sue and be sued in any court
of law or equity;
(d) The corporation shall have power to make contracts;
(e) The corporation shall have power to hold, purchase and convey
real and personal estate and to mortgage or lease any such real
and personal estate with its franchises. The power to hold real
and personal estate shall include the power to take the same by
devise or bequest in the State of Nevada, or in any other state,
territory or country.
(f) The corporation shall have power to appoint such officers and
agents as the affairs of the Corporation shall requite and allow
them suitable compensation;
(g) The Corporation shall have power to make bylaws not inconsistent
with the constitution or laws of the United States or the State
of Nevada, for the management, regulation, and government of its
affairs and property, the transfer of its stock, the transaction
of its business and the calling and holding of meetings of
stockholders;
(h) The Corporation shall have the power to wind up and dissolve
itself, or be wound up or dissolved;
(i) The Corporation shall have the power to adopt and use a common
seal or stamp, or not to use such seal or stamp and if one is
used, to alter the same. The use of a seal or stamp by the
corporation on any corporate documents is not necessary. The
Corporation may use a seal or stamp, if it desires, but such use
or non-use shall not in any way affect the legality of the
document;
(j) The Corporation Shall have the power to borrow money and contract
debts when necessary for the transaction of its business, or for
the exercise of its corporate rights, privileges or franchises,
or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures, and other
obligations and evidence of indebtedness, payable at a specified
time or times, or payable upon the happening of a specified event
or events, whether secured by mortgage, pledge or otherwise, or
unsecured, for money borrowed or in payment for property
purchased, or acquired, or for another lawful object;
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(k) The Corporation shall have the power to guarantee, purchase,
hold, sell, assign, transfer mortgage, pledge or otherwise
dispose of the shares of the capital stock of, or any bonds,
securities or evidence in indebtedness created by any other
corporations in the State of Nevada, or any other state or
government and, while the owner of such stock, bonds, securities
or evidence of indebtedness, to exercise all the rights, powers
and privileges of ownership, including the right to vote, if any;
(l) The Corporation shall have the power to purchase, hold, sell and
transfer shares of its own capital stock and use therefor its
capital, capital surplus, surplus or other property or fund;
(m) The Corporation shall have to conduct business, have one or more
offices and hold, purchase, mortgage and convey real and personal
property in the State of Nevada and in any of the several states
and territories, possessions and dependencies of the United
States, the District of Columbia and in any foreign country;
(n) The Corporation shall have the power to do all and everything
necessary and proper for the accomplishment of the objects
enumerated in its articles of incorporation, or any amendments
thereof, or necessary or incidental to the protection and benefit
of the Corporation and, in general, to carry on any lawful
business necessary or incidental to the attainment of the
purposes of the Corporation, whether or not such business is
similar in nature to the purposes set forth in the articles of
incorporation of the Corporation, or any amendment thereof;
(o) The Corporation shall have the power to make donations for the
public welfare or for charitable, scientific or educational
purposes;
(p) The Corporation shall have the power to enter into partnerships,
general or limited, or joint ventures, in connection with any
lawful activities.
Forth: Capital Stock
1. Classes and Number of Shares. The total number of shares of all
classes of stock, which the corporation shall have authority to issue
is Sixty Million (60,000,000), consisting of Fifty Million
(50,000,000) shares of Common Stock, par value of $0.001 per share
(the "Common Stock") and Ten Million (10,000,000) shares of Preferred
Stock, which have a par value of $0.001 per share (the "Preferred
Stock").
2. Powers and Rights of Common Stock
(a) Preemptive Right. No shareholders of the Corporation holding
common stock shall have any preemptive or other right to
subscribe for any additional un-issued or treasury shares of
stock or for other securities of any class, or for rights,
warrants or options to purchase stock, or for scrip, or for
securities of any kind convertible into stock or carrying stock
purchase warrants or privileges unless so authorized by the
Corporation;
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(b) Voting Rights and Powers. With respect to all matters upon which
stockholders are entitled to vote or to which stockholders are
entitled to give consent, the holders of the outstanding shares
of the Common Stock shall be entitled to cast thereon one (1)
vote in person or by proxy for each share of the Common Stock
standing in his/her name;
(c) Dividends and Distributions
(i) Cash Dividends. Subject to the rights of holders of
Preferred Stock, holders of Common Stock shall be entitled
to receive such cash dividends as may be declared thereon by
the Board of Directors from time to time out of the assets
and funds of the Corporation legally available therefor;
(ii) Other Dividends and Distributions. The Board of Directors
may issue shares of the Common Stock in the form of a
distribution or distributions pursuant to a stock dividend
or split up of the shares of Common Stock;
(iii) Other Rights. Except as otherwise required by the Nevada
Revised Statutes and as may otherwise be provided in these
Articles of Incorporation, each share of the Common Stock
shall have identical powers, preferences and rights,
including rights in liquidation.
3. Preferred Stock. The powers, preferences, rights, qualifications,
limitations and restrictions pertaining to the Preferred Stock, or any
series thereof, shall be as may be fixed, from time to time, by the
Board of Directors in its sole discretion authority to do so being
expressly vested in such board.
4. Issuance of the Common Stock and the Preferred Stock. The Board of
Directors of the Corporation may from time to time authorize by
resolution the issuance of any or all shares of the Common Stock and
the Preferred Stock herein authorized in accordance with the terms and
conditions set forth in these Articles of Incorporation for such
purposes, in such amounts, to such persons, corporations, or entities
for such consideration and in the case of the Preferred Stock, in one
or more series, all as the Board of Directors in its discretion, may
determine and without any vote or other action by the stockholders,
except as otherwise required by law. The Board of Directors, from time
to time, also may authorize, by resolution, options, warrants and
other rights convertible into Common or Preferred Stock (collectively,
"securities"). The securities must be issued for such consideration,
including cash, property, or services, as the Board or Directors may
deem appropriate, subject to the requirement that the value for such
consideration be no less than the par value if the shares issued. Any
shares issued for which the consideration so fixed as been paid or
delivered shall be fully paid stock and the holder of such shares
shall not be liable for any further call or assessment or any other
payment thereon, provided that the actual value of such consideration
is not less that the par value of the shares so issued. The Board of
Directors may issue shares of the Common Stock in the form of a
distribution or distributions pursuant to a stock divided or split-up
of the shares of the Common Stock only to the then holders of the
outstanding shares of the Common Stock.
5. Cumulative Voting. Except as otherwise required by applicable law,
there shall be no cumulative voting on any matter brought to a vote of
stockholders of the Corporation.
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Fifth: Adoption of Bylaws
In furtherance and not in limitation of the powers conferred by statute
and subject to Article Sixth hereof, the Board of Directors is expressly
authorized to adopt, repeal, rescind, alter or amend in any respect the Bylaws
of the Corporation (the "Bylaws").
Sixth: SHAREHOLDER AMENDMENT OF BYLAWS.
NOTWITHSTANDING ARTICLE FIFTH HEREOF, THE BYLAWS MAY ALSO BE ADOPTED,
REPEALED, RESCINDED, ALTERED, OR AMENDED IN ANY RESPECT BY THE STOCKHOLDERS OF
THE CORPORATION, BUT ONLY BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF NOT LESS
THAN FIFTY-ONE (51%) OF THE VOTING POWER OF ALL OUTSTANDING SHARES OF VOTING
STOCK, REGARDLESS OF CLASS AND VOTING TOGETHER AS A SINGLE VOTING CLASS.
Seventh: BOARD OF DIRECTORS
THE BUSINESS AND AFFAIRS OF THE CORPORATION SHALL BE MANAGED BY AND
UNDER THE DIRECTION OF THE BOARD OF DIRECTORS. EXCEPT AS MAY OTHERWISE BE
PROVIDED PURSUANT TO SECTION 4 OR ARTICLE FORTH HEREOF IN CONNECTION WITH RIGHTS
TO ELECT ADDITIONAL DIRECTORS UNDER SPECIFIED CIRCUMSTANCES, WHICH MAY BE
GRANTED TO THE HOLDERS OF ANY CLASS OR SERIES OF PREFERRED STOCK, THE EXACT
NUMBER OF DIRECTORS OF THE CORPORATION SHALL BE DETERMINED FROM TIME TO TIME BY
A BYLAW OR AMENDMENT THERETO, PROVIDING THAT THE NUMBER OF DIRECTORS SHALL NOT
BE REDUCED TO LESS THAN TWO (2). THE DIRECTORS HOLDING OFFICE AT THE TIME OF THE
FILING OF THESE ARTICLES OF INCORPORATION SHALL CONTINUE AS DIRECTORS UNTIL THE
NEXT ANNUAL MEETING AND/OR UNTIL THEIR SUCCESSORS ARE DULY CHOSEN.
Eighth: TERM OF BOARD OF DIRECTORS.
EXCEPT AS OTHERWISE REQUIRED BY APPLICABLE LAW, EACH DIRECTOR SHALL
SERVE FOR A TERM ENDING ON THE THIRD ANNUAL MEETING OF STOCKHOLDERS OF THE
CORPORATION (THE "ANNUAL MEETING") FOLLOWING THE ANNUAL MEETING AT WHICH SUCH
DIRECTOR WAS ELECTED. ALL DIRECTORS, SHALL HAVE EQUAL STANDING.
NOT WITHSTANDING THE FOREGOING PROVISIONS OF THIS ARTICLE EIGHTH EACH
DIRECTOR SHALL SERVE UNTIL HIS SUCCESSOR IS ELECTED AND QUALIFIED OR UNTIL HIS
DEATH, RESIGNATION OR REMOVAL; NO DECREASE IN THE AUTHORIZED NUMBER OF DIRECTORS
SHALL SHORTEN THE TERM OF ANY INCUMBENT DIRECTOR; AND ADDITIONAL DIRECTORS,
ELECTED PURSUANT TO SECTION 4 OR ARTICLE FORTH HEREOF IN CONNECTION WITH RIGHTS
TO ELECT SUCH ADDITIONAL DIRECTORS UNDER SPECIFIED CIRCUMSTANCES, WHICH MAY BE
GRANTED TO THE HOLDERS OF ANY CLASS OR SERIES OF PREFERRED STOCK, SHALL NOT BE
INCLUDED IN ANY CLASS, BUT SHALL SERVE FOR SUCH TERM OR TERMS AND PURSUANT TO
SUCH OTHER PROVISIONS AS ARE SPECIFIED IN THE RESOLUTION OF THE BOARD OF
DIRECTORS ESTABLISHING SUCH CLASS OR SERIES
Ninth: VACANCIES ON BOARD OF DIRECTORS
EXCEPT AS MAY OTHERWISE BE PROVIDED PURSUANT TO SECTION 4 OF ARTICLE
FORTH HEREOF IN CONNECTION WITH RIGHTS TO ELECT ADDITIONAL DIRECTORS UNDER
SPECIFIED CIRCUMSTANCES, WHICH MAY BE GRANTED TO THE HOLDERS OF ANY CLASS OR
SERIES OF PREFERRED STOCK, NEWLY CREATED DIRECTORSHIPS RESULTING FROM ANY
INCREASE IN THE NUMBER OF DIRECTORS, OR ANY VACANCIES ON THE BOARD OF DIRECTORS
RESULTING FROM DEATH, RESIGNATION, REMOVAL, OR OTHER CAUSES, SHALL BE FILLED
SOLELY BY THE QUORUM OF THE BOARD OF DIRECTORS. ANY DIRECTOR ELECTED IN
ACCORDANCE WITH THE PRECEDING SENTENCE SHALL HOLD OFFICE FOR THE REMAINDER OF
THE FULL TERM OF DIRECTORS IN WHICH THE NEW DIRECTORSHIP WAS CREATED OR THE
VACANCY OCCURRED AND UNTIL SUCH DIRECTOR'S SUCCESSOR SHALL HAVE BEEN ELECTED AND
QUALIFIED OR UNTIL SUCH DIRECTOR'S DEATH RESIGNATION OR REMOVAL, WHICHEVER FIRST
OCCURS.
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Tenth: REMOVAL OF DIRECTORS
EXCEPT AS MAY OTHERWISE BE PROVIDED PURSUANT TO SECTION 4 OR ARTICLE
FOURTH HEREOF IN CONNECTION WITH RIGHTS TO ELECT ADDITIONAL DIRECTORS UNDER
SPECIFIED CIRCUMSTANCES, WHICH MAY BE GRANTED TO THE HOLDERS OF ANY CLASS OR
SERIES OF PREFERRED STOCK, ANY DIRECTOR MAY BE REMOVED FROM OFFICE ONLY FOR
CAUSE AND ONLY BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF NOT LESS THAN FIFTY ON
PERCENT (51%) OF THE VOTING POWER OF ALL OUTSTANDING SHARES OF VOTING STOCK
ENTITLED TO VOTE IN CONNECTION WITH THE ELECTION OF SUCH DIRECTOR SHALL BE
REQUIRED FOR APPROVAL OF SUCH REMOVAL. FAILURE OF AN INCUMBENT DIRECTOR TO BE
NOMINATED TO SERVE AN ADDITIONAL TERM OF OFFICE SHALL NOT BE DEEMED A REMOVAL
FROM OFFICE REQUIRING ANY STOCKHOLDER VOTE.
Eleventh: STOCKHOLDER ACTION
ANY ACTION REQUIRED OR PERMITTED TO BE TAKEN BY THE STOCKHOLDERS OF THE
CORPORATION MUST BE EFFECTIVE AT A DULY CALLED ANNUAL MEETING OR AT A SPECIAL
MEETING OF STOCKHOLDER OF THE CORPORATION, UNLESS SUCH ACTION REQUIRING OR
PERMITTING STOCKHOLDER APPROVAL IS APPROVED BY A MAJORITY OF THE DIRECTORS, IN
WHICH CASE SUCH ACTION MAY BE AUTHORIZED OR TAKEN BY THE WRITTEN CONSENT OF THE
HOLDERS OF OUTSTANDING SHARES OF VOTING STOCK HAVING NOT LESS THAN THE MINIMUM
VOTING POWER THAT WOULD BE NECESSARY TO AUTHORIZE OR TAKE SUCH ACTION AT A
MEETING OF STOCKHOLDERS AT WHICH ALL SHARES ENTITLED TO VOTE THEREON WERE
PRESENT AND VOTED, PROVIDED ALL OTHER REQUIREMENTS OF APPLICABLE LAW THESES
ARTICLES HAVE BEEN SATISFIED.
Twelfth: SPECIAL STOCKHOLDER MEETING
SPECIAL MEETINGS OF THE STOCKHOLDERS OF THE CORPORATION FOR ANY PURPOSE
OR PURPOSES MAY BE CALLED AT ANY TIME BY A MAJORITY OF THE BOARD OF DIRECTORS OR
BY THE CHAIRMAN OF THE BOARD OR THE PRESIDENT. SPECIAL MEETING MAY NOT BE CALLED
BY ANY OTHER PERSON OR PERSONS. EACH SPECIAL MEETING SHALL BE HELD AT SUCH DATE
AND TIME AS IS REQUESTED BY THE PERSON OR PERSONS CALLING THE MEETING, WITHIN
THE LIMITS FIXED BY LAW.
Thirteenth: LOCATION OF STOCKHOLDER MEETINGS.
MEETINGS OF STOCKHOLDERS OF THE CORPORATION MAY BE HELD WITHIN OR
WITHOUT THE STATE OF NEVADA, AS THE BYLAWS MAY PROVIDE. THE BOOKS OF THE
CORPORATION MAY BE KEPT (SUBJECT TO ANY PROVISION OF THE NEVADA REVISED
STATUTES) OUTSIDE THE STATE OF NEVADA AT SUCH PLACE OR PLACES AS MAY BE
DESIGNATED FROM TIME TO TIME BY THE BOARD OF DIRECTORS OR IN THE BYLAWS.
Fourteenth: PRIVATE PROPERTY OF STOCKHOLDERS.
THE PRIVATE PROPERTY OF THE STOCKHOLDERS SHALL NOT BE SUBJECT TO THE
PAYMENT OF CORPORATE DEBTS TO ANY EXTENT WHATEVER AND THE STOCKHOLDERS SHALL NOT
BE PERSONALLY LIABLE FOR THE PAYMENT OF THE CORPORATION'S DEBTS.
Fifteenth: STOCKHOLDER APPRAISAL RIGHTS IN BUSINESS COMBINATIONS.
TO THE MAXIMUM EXTENT PERMISSIBLE UNDER THE NEVADA REVISED STATUTES OF
THE STATE OF NEVADA, THE STOCKHOLDERS OF THE CORPORATION SHALL BE ENTITLED TO
THE STATUTORY APPRAISAL RIGHTS THEREIN, WITH RESPECT TO ANY BUSINESS COMBINATION
INVOLVING THE CORPORATION AND ANY STOCKHOLDER (OR ANY AFFILIATE OR ASSOCIATE OF
ANY STOCKHOLDER), WHICH REQUIRED THE AFFIRMATIVE VOTE OF THE CORPORATION'S
STOCKHOLDERS.
Sixteenth: OTHER AMENDMENTS
THE CORPORATION RESERVES THE RIGHT TO ADOPT, REPEAL, RESCIND, ALTER, OR
AMEND IN ANY RESPECT ANY PROVISION CONTAINED IN THESE ARTICLES OF INCORPORATION
IN THE MANNER NOW OR HEREAFTER PRESCRIBED BY APPLICABLE LAW AND ALL RIGHTS
CONFERRED ON STOCKHOLDERS HEREIN GRANTED SUBJECT TO THIS RESERVATION.
Seventeenth: TERM OF EXISTENCE
THE CORPORATION IS TO HAVE PERPETUAL EXISTENCE.
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Eighteenth: LIABILITY OF DIRECTORS
NO DIRECTOR OF THIS CORPORATION SHALL HAVE PERSONAL LIABILITY TO THE
CORPORATION OR ANY OF ITS STOCKHOLDERS FOR MONETARY DAMAGES FOR BREACH OF
FIDUCIARY DUTY AS A DIRECTOR OR OFFICERS INVOLVING ANY ACT OR OMISSION OF ANY
SUCH DIRECTOR OR OFFICER. THE FOREGOING PROVISION SHALL NOT ELIMINATE OR LIMIT
THE LIABILITY OF A DIRECTOR (I) FOR ANY BREACH OF THE DIRECTOR'S DUTY OF LOYALTY
TO THE CORPORATION OR ITS STOCKHOLDERS, (II) FOR ACTS OR OMISSIONS NOT IN GOOD
FAITH OR, WHICH INVOLVE INTENTIONAL MISCONDUCT OR A KNOWING VIOLATION OF LAW,
(III) UNDER APPLICABLE SECTIONS OF THE NEVADA REVISED STATUTES, (IV) THE PAYMENT
OF DIVIDENDS IN VIOLATION OF SECTION 78.300 OF THE NEVADA REVISED STATUTES OR,
(V) FOR ANY TRANSACTION FROM WHICH THE DIRECTOR DERIVED AN IMPROPER PERSONAL
BENEFIT. ANY REPEAL OR MODIFICATION OF THIS ARTICLE BY THE STOCKHOLDERS OF THE
CORPORATION SHALL BE PROSPECTIVE ONLY AND SHALL NOT ADVERSELY AFFECT ANY
LIMITATION ON THE PERSONAL LIABILITY OF A DIRECTOR OR OFFICER OF THE CORPORATION
FOR ACTS OR OMISSIONS PRIOR TO SUCH REPEAL OR MODIFICATION.
Nineteenth: NAME AND ADDRESS OF FIRST DIRECTORS AND INCORPORATORS.
THE NAME AND ADDRESS OF THE INCORPORATORS OF THE CORPORATION AND THE
FIRST DIRECTORS OF THE BOARD OF DIRECTORS OF THE CORPORATION WHICH SHALL BE ONE
(1) IN NUMBER IS AS FOLLOWS:
DIRECTOR #1
-----------
SHAWN F. HACKMAN, ESQ.
3360 W. SAHARA AVE., SUITE 200
LAS VEGAS, NV 89102
I, Shawn F. Hackman, Esq. being the first director and Incorporate herein before
named, for the purpose of forming a corporation pursuant to the Nevada Revised
Statutes, of the State of Nevada, do make these Articles, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true and
accordingly have hereunto set my hand this 16th day of March 1999.
/s/ Shawn F. Hackman
Shawn F. Hackman, Esq.
Verification
State of Nevada SS
County of Clark
On this 16th day of March 1999, before me, the undersigned, a Notary
Public in and for said State, personally appeared Shawn F. Hackman, Esq.
personally know to me (or proved to me on the basis of satisfactory evidence) to
be the person who subscribed his name to the Articles of Incorporation and
acknowledged to me that he executed the same freely and voluntarily and for the
use and purposes therein mentioned.
/s/ Loree Richards
Loree Richards
Notary Public in and for said County and State
SEAL
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Exhibit 3.2
Bylaws of the Registrant
<PAGE> 2
BYLAWS
OF
DICOM IMAGING SYSTEMS, INC.
ARTICLE I: OFFICES
The principal office of the Corporation in the State of Nevada shall be
located in Las Vegas, County of Clark, the Corporation may have such other
offices, either within or without the State of Nevada, as the Board of Directors
my designate or as the business of the Corporation my require from time to time.
ARTICLE II: SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the 15th day in the month of September in each year, beginning with
the transaction of such other business as my come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the State of Nevada,
such meeting shall be held on the next succeeding business day. If the election
of Directors shall be held on the day designated herein for any annual meeting
of the shareholders or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as conveniently may be.
SECTION 2. Special Meetings. Special meeting of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than ten percent (10%) of
all the outstanding shares of the Corporation entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors my designate any
place, either within our without the State of Nevada, unless otherwise
prescribed by statute, as the place of meeting for any annual meeting or for any
special meeting. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within our without the State of
Nevada, unless otherwise prescribed by statute, as the place for the holding of
such meeting. If no designation is made, the place of meeting shall be the
principal office of the Corporation.
SECTION 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall unless otherwise prescribed by statute,
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States Mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, with postage thereon
prepaid.
SECTION 5. Closing of Transfer Books or Fixing of Record. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed in any case fifty (50) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least fifteen (15) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than thirty (30) days and, in case of a
meeting of shareholders, not less than ten (10) days, prior to the date on which
the particular action requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
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SECTION 6. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. Such lists shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his or
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the Corporation before or at the time of the meeting. A meeting of the Board
of Directors my be had by means of telephone conference or similar
communications equipment by which all persons participating in the meeting can
hear each other, and participation in a meeting under such circumstances shall
constitute presence at the meeting.
SECTION 10. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator my
be voted by him either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name, if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation shall not be voted
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time.
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SECTION 11. Informal Action by Shareholders. Unless otherwise provided
by law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
ARTICLE III: BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of directors
of the Corporation shall be fixed by the Board of Directors, but in no event
shall be less than two ( 2 ). Each Director shall hold office until the next
annual meeting of shareholder and until his successor shall have been elected
and qualified.
SECTION 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without notice other than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or any two directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix the place for holding any special meeting of the Board of Directors
called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
least one (1) day previous thereto by written notice delivered personally or
mailed to each director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United Sates mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any directors may waive notice of any meeting. The attendance
of a director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 6. Quorum. A majority of the number of directors fixed by
Section 2 of the Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. Action Without a Meeting. Any action that may be taken by
the Board of Directors at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, shall be signed before such
action by all of the directors.
SECTION 9. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election by the Board of
Directors for a term of office continuing only until the next election of
directors by the shareholders.
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SECTION 10. Compensation. By resolution of the Board of Directors, each
director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as a director or a fixed sum
for attendance at each meeting of the Board of Directors or both. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation thereof.
SECTION 11. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof, or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
ARTICLES IV: OFFICERS
SECTION 1. Number. The officers of the corporation shall be a
President, one or more vice Presidents, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by the
Board of Directors, including a Chairman of the Board. In its discretion, the
Board of Directors may leave unfilled for any such period as it may determine
any office except those of President and Secretary. Any two or more offices may
be held by the same person. Officers may be directors or shareholders of the
Corporation.
SECTION 2. Election and Term of Office. The officers of the Corporation
to be elected by the board of Directors shall be elected annually by the board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have qualified, or until his death, or until he
shall resign or shall have been removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever, in its judgement, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights, and such appointment shall
be terminable at will.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the un-expired portion of the term.
SECTION 5. President. The president shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors, unless there is a Chairman of
the Board, in which case the Chairman shall preside. He may sign, with the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, certificates for shares of the Corporation, any deed,
mortgages, bonds, contract, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by there
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. Vice President. In the absence of the president or in the
event of his death, inability or refusal to act, the Vice President shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
President shall perform such other duties as from time to time may be assigned
to him by the President or by the Board of Directors, If there is more than one
Vice President, each Vice President shall succeed to the duties of the President
in order of rank as determined by the Board of Directors. If no such rank has
been determined, then each Vice President shall succeed to the duties of the
President in order of date of election, the earliest date having the first rank.
5
<PAGE> 6
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
Board of Directors in one or more minute books provided for the purpose; (b) see
that all notices are duly given in accordance with the provisions of the Bylaws
or as required by law; (c) be custodian of the corporate records and of the seal
of the Corporation and see that the seal of the Corporation is affixed to all
documents, the execution of which on behalf of the Corporation under its seal is
duly authorized; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President certificates for share of the Corporation, the issuance
of which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the Corporation, and (g) in
general perform all duties incident to the office of the Secretary and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; (b)
receive and give receipts for moneys due and payable to the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaw; and (c) in general perform all
of the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such sureties
as the Board of Directors shall determine.
SECTION 9. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE V: INDEMNITY
The Corporation shall indemnify its directors, officers and employees
as follows:
(a) Every director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities, including
counsel fees, reasonable incurred by or imposed upon him in connection with any
proceeding to which he may become involved, by reason of his being or having
been a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of the corporation, partnership, joint venture, trust or enterprise, or
any settlement thereof, whether or not he is a director, officer, employee or
agent at the time such expenses are incurred, except in such cases wherein the
director, officer, or employee is adjudged guilty of willful misfeasance or
malfeasance in the performance of his duties; provided that in the event of a
settlement the indemnification herein shall apply only when the Board of
Directors approves such settlement and reimbursement as being for the best
interests of the Corporation.
(b) The Corporation shall provide to any person who is or was a
director, officer, employee, or agent of the Corporation or is or was serving at
the request of the Corporation as director, officer, employee or agent of the
corporation, partnership, joint venture, trust or enterprise, the indemnity
against expenses of suit, litigation or other proceedings which is specifically
permissible under applicable law.
(c) The Board of Directors may, in its discretion, direct the purchase
of liability insurance by way of implementing the provisions of the Article V.
ARTICLE VI: CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any office
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
6
<PAGE> 7
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII: CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the Board of
Directors so to do, and sealed with the corporate seal. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, expect that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefore upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes, Provided, however,
that upon any action undertaken by the shareholder to elect S Corporation status
pursuant to Section 1362 of the Internal Revenue Code and upon any shareholders
agreement thereto restricting the transfer of said shares so as to disqualify
said S Corporation status, said restriction on transfer shall be made a part of
the Bylaws so long as said agreements is in force and effect.
ARTICLE VIII: FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of
January and end on the 31st day of December of each year.
ARTICLE IX: DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and condition provided by law and its Articles of Incorporation.
7
<PAGE> 8
ARTICLE X: CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words, Corporate Seal.
ARTICLE XI: WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provision of
the Articles of Incorporation or under the provisions of the applicable Business
Corporation Act, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XII: AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the Board
of Directors.
The above Bylaws are certified to have been adopted by the Board of
Directors of the Corporation on the 29th day of March, 1999.
--------------------------------------
Stephen Winter,
Secretary, Vice-President and Director
8
<PAGE> 1
Exhibit 10.1
Form of Stock Purchase Agreement between the Registrant and
purchasers of shares of common stock in the Registrant.
<PAGE> 2
DICOM IMAGING SYSTEMS, INC.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of March ___,
1999, by and between Dicom Imaging Systems, Inc. , a Nevada Corporation (the
"Company"), and ____________________________________, ("Purchaser").
In consideration of the mutual covenants and representations herein set
forth, the Company and the Purchaser agree as follows:
1. SALE OF STOCK. The Company hereby agrees to sell to Purchaser and
Purchaser hereby agrees to purchase an aggregate of __________shares of the
Company's Common Stock (the "Shares"), at a purchase price of $1.00 per share
(the "Purchase Price"), or an Aggregate Purchase Price of $____________.
2. PAYMENT OF PURCHASE PRICE. The Purchase Price for the Shares shall
be paid to the Company by any combination of the following: (i) in immediately
available funds upon the execution of this Agreement or (ii) the cancellation of
indebtedness owed by the Company to the Purchaser, such cancellation being
hereby acknowledged by receipt of the Shares and as identified in Exhibit A
hereto.
3. DEFINITIONS.
(a) "SHARES" refers to the purchased Shares and all shares
received in respect thereof as a consequence of stock dividends, stock splits,
reverse stock splits, recapitalizations, mergers, reorganizations or the like,
and all new, substituted or additional securities or other properties to which
Purchaser is or may be entitled by reason of Purchaser's ownership of the
Shares.
4. LEGENDS. The share certificate evidencing the Shares issued
hereunder shall be endorsed with the following restrictive legends (in addition
to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT SAYING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT.
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS UPON
TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN
THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS AVAILABLE UPON THE
REQUEST OF THE REGISTERED HOLDER HEREOF TO THE SECRETARY OF THE
COMPANY.
5. ADJUSTMENTS FOR STOCK SPLITS, ETC. All references to the number of
Shares and the purchase price of the Shares in this Agreement shall be
appropriately adjusted to reflect any stock dividend, stock split,
recapitalization, merger, reorganization or other change in the Shares which may
be made by the Company after the date of this Agreement.
6. CO-SALE AGREEMENT. Purchaser and each transferee of the Shares
issued hereunder agrees by acceptance hereof or thereof not to sell, make a
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by Purchaser except in
accordance with that certain Co-Sale Agreement of even date hereof and attached
as Exhibit B to this Agreement. Purchaser further agrees to execute any
agreement reflecting the above provision as may be requested by the Company.
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<PAGE> 3
7. PURCHASER'S REPRESENTATIONS. In connection with the Purchaser's
purchase of the Shares, the Purchaser hereby represents and warrants to the
Company as follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. The
Purchaser is purchasing the Shares solely for his own account for investment and
not with a view to or for sale in connection with any distribution of the Shares
or any portion thereof and not with any present intention of selling, offering
to sell or otherwise disposing of or distributing the Shares or any portion
thereof in any transaction other than a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Act"). The Purchaser also
represents that the entire legal and beneficial interest of the Shares is being
purchased, and will be held, for the Purchaser's account only, and neither in
whole or in part for any other person. Purchaser has a pre-existing business
relationship with the Company and has the capacity to evaluate the merits and
risks of an investment in the Company and to protect Purchaser's own interests
in connection with this transaction.
(b) ECONOMIC RISK. The Purchaser realizes that the purchase of
the Shares will be a highly speculative investment and involves a high degree of
risk, and the Purchaser is able, without impairing financial condition, to hold
the Shares for an indefinite period of time and to suffer a complete loss on the
Purchaser's investment.
(c) RESTRICTED SECURITIES. The Purchaser understands and
acknowledges that:
(i) the sale of the Shares has not been registered
under the Act, and the Shares must be held indefinitely unless subsequently
registered under the Act or an exemption from such registration is available;
(ii) the share certificate representing the Shares
will be stamped with the legend specified in Section 4 hereof; and
(iii) the Company will make a notation in its records
of the aforementioned restrictions on transfer and legend.
8. FORCED REPURCHASE. The Company hereby covenants to repurchase the
Shares from Purchaser under the terms and conditions of this Section 8 as
follows:
(a) NOTIFICATION OF REPURCHASE. Purchaser may tender to the
Company a written notice of exercise ("Repurchase Notice") that the Company is
obligated to repurchase the Shares pursuant to this Section 8 at any time after
120 days from the date of this Agreement. Upon receipt of the Repurchase Notice,
the Company agrees to immediately issue a Secured Promissory Note, in the form
attached hereto as Exhibit C to Purchaser for the Repurchase Amount, as defined
below. Upon the full payment of the sums due under Secured Promissory Note,
Purchaser shall tender the Shares to the Company or its assignee. The Repurchase
Amount shall be equal to the Aggregate Purchase Price of the Shares plus
interest at 10% per annum, from the date of this Agreement.
(b) RIGHT OF PURCHASER. The Purchaser has the right, but not
the obligation, to tender the Repurchase Notice. In the event that the Purchaser
tenders one or more Repurchase Notices for less than the full number of the
Shares, the Repurchase Amount thereunder shall be adjusted on a pro-rata basis.
The right to issue a Repurchase Notice pursuant to this Section 8 shall expire
upon the earlier of the Purchaser's sale of all of the Shares or three years
from the date hereof.
9. PROHIBITIONS ON ADDITIONAL EQUITY OR DEBT ISSUANCES. Except in
accordance with this Section 9, the Company covenants not to issue additional
shares of capital stock or undertake any indebtedness other than in the ordinary
course of business and in an aggregate total of no more than $50,000 (the
"Prohibition"). The Prohibition shall continue as long as Purchaser holds any of
the Shares or until Purchaser waives the Prohibition in writing.
(a) PROCEDURE FOR ISSUING ADDITIONAL EQUITY OR DEBT. The
Company may issue additional equity or undertake indebtedness if and only if it
has obtained the written consent of the Purchaser or his designee ("Authorized
Designee") for each and every issuance of additional equity and each and every
undertaking of indebtedness. The Purchaser hereby appoints Stephen Winter as his
Authorized Designee. The Purchaser may not change the identity of his Authorized
Designee except with the consent of the majority of holders of the Company's
Common Stock.
(b) VIOLATIONS OF THE PROHIBITION. In the event that the
Company should violate the Prohibition at any time while Purchaser still holds
any of the Shares, the Purchaser shall be entitled to exercise the following
remedy without notice or demand and in addition to any other remedies provided
to the purchaser in law or equity: (i) Purchaser shall have the right to
immediately exercise its right to tender a Repurchase Notice to the Company
pursuant to Section 8 above, irrespective of whether 120 days has passed as
required in Section 8.
3
<PAGE> 4
(c) BEST EFFORTS. The Company covenants and warrants to make
its best efforts to insure that the Prohibition is not violated, including the
adoption of corporate signature protocols, changes to its by-laws or other
charter documents, and disclosure of this Section 9 to all potential equity
investors or credit grantors and any other written instrument or act reasonably
requested by Purchaser in furtherance of this Section 9.
10. REGISTRATION RIGHTS. The Company covenants and warrants to make its
best efforts to cause the Shares to be registered under the Securities Act of
1933, as amended ("Securities Act") or to obtain an opinion of counsel to the
Company that the Shares are exempt from the requirements for registration under
the Securities Act. In the event that Company does not register the Shares under
the Securities Act in reliance on an exemption therefrom, the Company covenants
and warrants to make its best efforts to file a registration statement under the
Securities Exchange Act of 1934, as amended ("Exchange Act") on Form 10 or Form
10-SB. The Company covenants and warrants that it will cause to be filed a
registration statement under the Securities Act or the Exchange Act, pursuant to
this Section 10, within 90 days of the date hereof. The rights granted to
Purchaser under this Section 10 are in addition to any other contractual rights
Purchaser may have to cause the Shares to be registered.
11. GENERAL PROVISIONS.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada as they apply to
contracts entered into and wholly to be performed within such state.
(b) This Agreement represents the entire agreement between the
parties with respect to the purchase of the Shares by the Purchaser.
(c) Any notice, demand or request required or permitted to be
given by either the Company or Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered, if delivered
personally; three business days after the business day of deposit in the U.S.
mail, by registered or certified mail with postage prepaid; one business day
after the business day of facsimile transmission, if a confirmation copy is sent
by first class mail with postage prepaid; or, one business day after the
business day of deposit with Federal Express or similar overnight carrier,
freight prepaid; in any such case addressed to any party at such party's address
as set forth at the end of this Agreement or such other address as the party may
designate by notifying the other in writing.
(d) The rights and benefits of the Company under this
Agreement shall be transferable to any one or more persons or entities, and all
covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company's successors and assigns. The rights and obligations
of Purchaser under this Agreement may only be assigned with the prior written
consent of the Company, which shall not be unreasonably withheld.
4
<PAGE> 5
(e) Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party from thereafter
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
(f) Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
[remainder of page intentionally blank]
5
<PAGE> 6
By Purchaser's signature below, Purchaser represents that Purchaser
hereby accepts this Stock Purchase Agreement subject to all of the terms and
provisions thereof. Purchaser has reviewed this Stock Purchase Agreement in its
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Stock Purchase Agreement and fully understands all provisions of
this Stock Purchase Agreement.
COMPANY:
DICOM IMAGING SYSTEMS, INC.
By:
------------------------------------
Title:
--------------------------------
PURCHASER:
By:
------------------------------------
Title:
--------------------------------
6
<PAGE> 1
Exhibit 10.2
License Agreement between Torchmark Holdings, Ltd.
and Registrant dated ____, 1999
<PAGE> 2
LICENSE & DISTRIBUTION AGREEMENT
This License & Distribution Agreement (the "Agreement") is entered into and
effective as of March 17, 1999 (the "Effective Date") by and between TORCHMARK
HOLDINGS, a Turks and Caicos B.W.I. corporation with its principal place of
business at Box 303, 164 Richmond Hills, Providenciales, Turks and Caicos
Islands B. W. I. ("Torchmark"), and DICOM IMAGING SYSTEMS, INC., a Nevada
corporation ("Dicom").
WHEREAS Torchmark has secured rights to image archiving and retrieval software
for use in dental diagnostic procedures and for other applications;
WHEREAS Dicom desires to secure from Torchmark, and Torchmark desires that Dicom
have, the right to use and distribute certain Torchmark technologies pursuant to
the terms and conditions of this Agreement; and
WHEREAS, Torchmark and Dicom have executed that certain Capital Contribution
Agreement dated the date hereof (the "Contribution Agreement") which is
conditioned on the execution and delivery of the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "Software" means Torchmark's imaging archiving and retrieval
software program as described in EXHIBIT A, and any updates, modules or plug-ins
developed by Torchmark for the software and provided by Torchmark throughout the
term of this Agreement.
1.2 "Field of Dentistry" means the general practice of dentistry and
related subspecialties, including endodontics, periodontics, dental implant
procedures, oral surgery, oral medicine, orthodontics, pediatric dentistry, and
prosthodontics by dental professionals.
1.3 "Field of Medicine" means the general practice of medicine and
related specialties and subspecialties, including but not limited to surgery,
internal medicine, family practice, emergency medicine, obstetrics and
gynecology, orthopedics, oncology, psychiatry, podiatry, pharmacology, pharmacy
and pediatrics by health care professionals outside of the Field of Dentistry.
2
<PAGE> 3
2. CONDITIONS
The obligations of each party under this Agreement are dependent upon and
contingent to the fulfillment of the following condition:
2.1 EQUITY. The grant of the License is conditioned on, and subject to,
Dicom raising a minimum of $1,000,000 in equity through the sale of common stock
on or prior to June 1, 1999 (the "Private Placement"). If the Private Placement
has not been consummated by this date, then, at Torchmark's sole option,
Torchmark may terminate this Agreement.
2.2 ESCROW INSTRUCTIONS. Reference is made to that certain Letter
Agreement of Escrow of even date herewith and attached as hereto as Exhibit C,
which requires disbursement of the equity proceeds referred to in Section 2.1 of
this Agreement in accordance with the budget contained in the Confidential
Business Plan as identified in the Letter Agreement of Escrow. In the event that
there is a material breach of Section 2 or 3 of the Letter Agreement of Escrow,
Torchmark may terminate this Agreement at Torchmark's sole option.
3. RIGHTS
3.1 EXCLUSIVE DISTRIBUTION LICENSE. Subject to the restrictions in this
Section 3 and solely for the purpose of distributing the Software to end users
in the Field of Dentistry, Torchmark hereby grants to Dicom an exclusive,
transferable, limited, royalty-free, fully paid up, worldwide right and license
to: reproduce, publish, license, transmit or otherwise distribute to third
parties, object code versions of the Software, on any storage medium.
3.2 END USER LICENSE AGREEMENTS. Torchmark will provide the Software to
Dicom with Torchmark's form of end user license agreement ("EULA") for the
Software and Dicom agrees that it will not modify or remove the EULA. Dicom will
distribute the EULA with every copy of the Software in a manner in which the end
user is aware of the EULA and agrees to its terms.
3.3 PROPRIETARY NOTICES. Dicom will not alter or remove any copyright
or trademark notices contained in the Software.
3.4 OWNERSHIP. Torchmark reserves and retains all right, title and
interest in Torchmark Confidential Information and to the Software, and any
related patents, copyrights, and trademarks not expressly covered by this
Agreement. Dicom retains all right, title and interest in Dicom Confidential
Information.
3.5 RIGHT TO SUE FOR INFRINGEMENT. Torchmark reserves the right, at its
sole discretion, to sue third parties for infringing the copyright or any other
intellectual property rights in the Software.
3
<PAGE> 4
4. SUPPORT
4.1 DELIVERY OF UPDATES. Torchmark will provide to Dicom any updates,
modules or plug-ins that Torchmark or its agents may develop during the term of
this Agreement, that are designed to enhance the functionality of the Software
licensed under Section 2.1. Any such updates, modules or plug-ins shall be
delivered within fifteen (15) days of their completion by Torchmark and shall be
subject to the terms and conditions of this Agreement in the same manner as was
the original Software.
4.2 NO ADDITIONAL SUPPORT. Except for the updates provided to Dicom
pursuant to Section 4.1, Torchmark is not responsible for providing product or
technical support for the Software to end users or to Dicom.
5. RIGHT OF FIRST REFUSAL
5.1 Dicom acknowledges that its rights under this Agreement extend only
to marketing and distributing the Software in the Field of Dentistry, and do not
extend to other existing or potential fields, industries, or other applications
of the Software.
5.2 MEDICAL LICENSE OPTION. If, at any time during the term of this
Agreement, Torchmark desires to license a non-dental version of the Software for
the Field of Medicine, then Torchmark must offer to Dicom a license for that
field under terms consistent with this Section 5. Torchmark may not tender a
Medical License Offer to Dicom until a period of 90 days has elapsed from the
date of this Agreement. In such a case, Torchmark will give a written notice
(the "Torchmark Medical Notice") to Dicom advising them that Torchmark is
willing and able to grant such license (the "Medical License Offer"). Dicom has
a non-assignable, exclusive option to accept the Medical License Offer for
payment of $250,000.
5.3 FAILURE TO EXERCISE MEDICAL LICENSE OPTION. Dicom must give notice
to Torchmark of Dicom's desire to pursue the Medical License Offer within 30
days after Dicom's receipt of the Torchmark Medical Notice. A license agreement
between Dicom and Torchmark under this option must be executed no later than 75
days after Dicom's receipt of the Torchmark Medical Notice, unless this 75 day
deadline is otherwise extended by the mutual agreement of the parties. Dicom
must notify Torchmark within 30 days of Dicom's receipt of the Medical License
Offer.
5.4 NON-MEDICAL OPTION. If, at any time during the term of this
Agreement, Torchmark desires to license a non-dental version of the Software to
a third party for fields other than the Field of Dentistry or the Field of
Medicine, then Torchmark must first offer to Dicom a license for that field
under terms consistent with this Section 5. Torchmark may not tender a License
Offer to Dicom until a period of 90 days has elapsed from the date of this
Agreement. In such a case, Torchmark will give a written notice (the "Torchmark
Notice") to Dicom advising them of the price and terms on which Torchmark is
willing to grant such license (the "License Offer"). Dicom has a non-assignable
first option to accept the License Offer. The purchase price of such license
shall be negotiated between the parties.
5.5 EXERCISE OF OPTION. Dicom must give notice to Torchmark of Dicom's
desire to pursue the License Offer within 30 days after Dicom's receipt of the
Torchmark Notice. A license agreement between Dicom and Torchmark under this
option must be executed no later than 75 days after Dicom's receipt of the
Torchmark Notice, unless this 75 day deadline is otherwise extended by the
mutual agreement of the parties.
5.6 FAILURE TO EXERCISE OPTION. If Dicom does not notify Torchmark in
accordance with Section 5.4, or if a license agreement between the parties is
not executed within the time limit provided for in Section 5.5, then Torchmark
is free to enter into a license with any other party upon the fulfillment of
both of the following conditions (i) the price and terms are no more favorable
to the licensee than those contained in the License Offer, and (ii) such license
is executed within 180 days (or longer, but only so long as required for
regulatory review or approval of the transaction) after Dicom's receipt of the
Torchmark Notice.
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<PAGE> 5
6. CONFIDENTIALITY
6.1 Each party expressly undertakes to retain in confidence and to
require its distributors, resellers and all other contractors to retain in
confidence all information and know-how transmitted to such party that the
disclosing party has identified as being proprietary and/or confidential or
which, by the nature of the circumstances surrounding the disclosure, ought in
good faith to be treated as proprietary and/or confidential. Without limiting
the foregoing, all terms and conditions of this Agreement shall be considered
confidential and shall not be disclosed (except to either party's attorneys and
accountants on a need-to-know-basis) without prior written consent of the other
party. The receiving party's obligation hereunder shall extend for five (5)
years following the disclosure of the Confidential Information.
6.2 EXCLUSIONS. Confidential information shall not include any
information that: (i) is at the time of disclosure or subsequently becomes
available without the receiving party's breach of any obligations owed the
disclosing party; (ii) became known to the receiving party prior to the
disclosing party's disclosure of such information to the receiving party; (iii)
became known to the receiving party from a source other than the disclosing
party other than by the breach of an obligation of confidentiality owed to the
disclosing party; or (iv) is independently developed by the receiving party.
7. WARRANTIES
7.1 Torchmark warrants and represents that:
7.1.1 It has the full power to enter into this Agreement and
make the assignments and license rights set forth herein;
7.1.2 It has not previously and will not grant any rights in
the Software to any third party that are inconsistent with the rights
granted to Dicom herein;
7.1.3 The Software does not infringe any copyright, trade
secret, or other proprietary right held by any third party;
7.1.4 The Software does not knowingly infringe any patent held
by any third party;
7.1.5 Torchmark will use best efforts to ensure that the
Software contains no software viruses;
7.1.6 Torchmark has obtained Consultant Non-Disclosure and
Confidentiality Agreements from all consultants, employees, programmers
and all others who were involved in the development of the Software,
true and complete copies of which are attached hereto as Exhibit B; and
7.1.7 EXCEPT FOR THOSE WARRANTIES PROVIDED IN THIS SECTION
7.1, TORCHMARK MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, REGARDING
THE SOFTWARE. TORCHMARK EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.2 Dicom warrants and represents that:
7.2.1 It has the full power to enter into this Agreement and
make the assignments and license rights set forth herein; and
7.2.2 It will not use, display, perform, reproduce, publish,
license, transmit or otherwise distribute the Software in a field other
than the Field of Dentistry unless authorized in writing by Torchmark
to do so.
7.2.3 It, nor any of its employees or agents, will make any
warranties or promises regarding the use of the Software other than
those contained in the EULA. Any warranty offered by Dicom to an end
customer must expressly state that Dicom is the party offering the
warranty.
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8. INDEMNITY
8.1 Torchmark agrees to indemnify, defend, and hold Dicom and its
successors, officers, directors and employees harmless from any and all actions,
causes of action, claims, demands, costs, liabilities, expenses and damages,
including attorneys' fees, (not including internal employee's wages) arising out
of, or in connection with any claim arising out of Torchmark's breach of any
representation, warranty or covenant contained in this Agreement or any claim
arising out of any distribution of the Software.
8.2 Dicom agrees to indemnify, defend, and hold Torchmark and its
successors, officers, directors and employees harmless from any and all actions,
causes of action, claims, demands, costs, liabilities, expenses and damages,
including attorneys' fees, (not including internal employee's wages) arising out
of, or in connection with any claim arising out of Dicom's breach of any
representation, warranty or covenant contained in this Agreement.
9. TERM AND TERMINATION
9.1 TERMINATION. Except as otherwise provided in this Section 9.1, this
Agreement shall continue in effect until thirty years from the date of this
Agreement. Upon expiration or termination of the Agreement, this License shall
be null and void and all rights hereunder shall cease, except as otherwise
provided in section 9.2.
9.2 EFFECT OF TERMINATION.
9.2.1 In the event of expiration or termination of this
Agreement for any reason, Sections 3.5, 6, 8, 9, 10 and 11 will
survive.
9.2.2 Upon termination of this Agreement, Torchmark shall have
no further obligations to deliver additional Software to Dicom and
Dicom's license to use the Software previously delivered by Torchmark
shall cease immediately. Licenses granted to end users by Dicom will
survive termination of this Agreement.
9.2.3 Upon termination of this Agreement, each party shall
promptly return to the other party (or destroy upon receipt of such
party's written instruction) all copies of any confidential information
of the other party then in its possession, custody or control,
regardless of medium.
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10. LIMITATION OF LIABILITIES
EXCEPT FOR BREACHES OF SECTIONS 6 AND 8, NEITHER PARTY IS LIABLE FOR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
11. GENERAL
11.1 NOTICES. All notices and requests in connection with this
Agreement are to be deemed given as of the day they are received either by
messenger, delivery service, or in the United States of America mails, postage
prepaid, certified or registered, return receipt requested, and addressed as
follows:
To Torchmark: To Dicom:
Torchmark Holdings Dicom, Inc.
Attention: Attention: President
Torchmark Holdings Limited 1350 E. Flamingo Road
Box 303 Suite 847
164 Richmond Hills Las Vegas, NV 89119
Providenciales
Turks and Caicos Islands B.W.I.
With a copy to: With a copy to:
Gary J. Kocher, Esq. Jonathan Dariyanani
Preston Gates & Ellis LLP 3100 Fulton St., Suite 4
701 Fifth Avenue, Suite 5000 San Francisco, California 94118
Seattle, Washington 98104 Tel: (415) 668-0371
Tel: (206) 623-7580 Fax: (415) 831-2232
Fax: (206) 623-7022
or to such other address as a party may designate pursuant to this notice
provision.
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11.2 INDEPENDENT CONTRACTORS. Torchmark and Dicom are independent
contractors of each other, and nothing in this Agreement shall be construed as
creating an employer-employee relationship, a partnership, or a joint venture
between the parties.
11.3 GOVERNING LAW. This Agreement is to be governed by the laws of the
State of Nevada as though entered into between Nevada residents and to be
performed entirely within the State of Nevada, and each party consents to
jurisdiction and venue in the state and federal courts sitting in the State of
Nevada. In any action or suit to enforce any right or remedy under this
Agreement or to interpret any provision of this Agreement, the prevailing party
shall be entitled to recover its costs, including reasonable attorneys' fees.
11.4 NO ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of each party's respective successors and lawful assigns.
11.5 MODIFICATIONS AND WAIVERS. No purported amendment, modification or
waiver of any provision of this Agreement is binding unless set forth in a
written document signed by all parties (in the case of amendments and
modifications) or by the party to be charged (in the case of waivers). Any
waiver is limited to the circumstance or event specifically referenced in the
written waiver document and is not to be deemed a waiver of any other term or
provision of this Agreement or of the same circumstance or event upon any
recurrence of the waived activity.
11.6 CONSTRUCTION. If for any reason a court of competent jurisdiction
finds any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder of this
Agreement will continue in full force and effect. Failure by either party to
enforce any provision of this Agreement will not be deemed a waiver of future
enforcement of that or any other provision. This Agreement has been negotiated
by the parties and their respective counsel and will be interpreted fairly in
accordance with its terms and without any strict construction in favor of or
against either party.
11.7 ENTIRE AGREEMENT. This Agreement does not constitute an offer by
Dicom and it is not effective until signed by both parties. This Agreement
constitutes the entire agreement between the parties with respect to the
Software and all other subject matter hereof and merges all prior and
contemporaneous communications.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.
DICOM TORCHMARK
Dicom Imaging Systems, Inc. Torchmark Holdings
- --------------------------- ---------------------------
By (Sign) By (Sign)
- --------------------------- ---------------------------
Name (Print) Name (Print)
- --------------------------- ---------------------------
Title Title
- --------------------------- ---------------------------
Date Date
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<PAGE> 10
EXHIBIT A
DESCRIPTION OF SOFTWARE
Product Descriptions
The core product, (Image Explorer) is a Windows based 32bit Dental Image
archiving software that reads and writes Dicom images, as well as captures
images from a variety of sources including but not limited to digital cameras,
intra oral cameras, digital x-ray, e-mail, internet transfers, operating
microscopes or any twain compliant device, and then stores them in a logical,
easy to use electronic file cabinet. you can then access the images in the
patient file for review, comparison, printing, and communication.. There are
other modules that we have designed to enhance the ability of the Image Explorer
software program. they are as follows:
IMAGE EDITOR: Allows the user to enhance the captured images without altering
the image from its original state. This may include such actions as color
enhancement, sharpen, soften, cropping, rotating and flipping to name a few.
LAB R/X: A lab module that optimizes communication between the dentist and the
laboratory technician especially with respect to esthetic restorations, visually
prescribing porcelain procedures to be performed by the lab. It provides the lab
technician all the information necessary to create a quality product for the
dentist and patient in an accurate and concise manner. Lab R/X generates an
enhanced electronic prescription as either a print report or an electronic file.
Lab R/X also provides the interface for the new "Dental Color Analyzer". This
unit enables the dentist and lab to accurately color map teeth to the current
shade guides. Lab R/X also gives the dentist the ability to color map the teeth
manually through the use of a drop - down table that harbors the current tables
of the shade guides.
DIGITAL X-RAY: An X-Ray module that allows the dentist to acquire x-ray images
of the patient into Image Explorer via direct acquisition or by film scanning
devices. The radiographic imaging tools allows the dentist to enhance the
radiograph for improved diagnosis, measure areas of the radiograph, attach
diagnostic notes, and communicate with colleagues via print or modem. If the
dentist already has a digital X-Ray system, Image Explorer will allow the user
to view, enhance, print, and communicate those existing images using the
dentistry wide standard interface.
WHITENER: Whitener is an additional add on module to image explorer. Whitener is
a VERY EASY TO USE module which quickly identifies the teeth in an image and
lightens them to simulate a bleaching simulation. Tooth whitening or bleaching
is one of the fastest growing procedures in dentistry and this module allows the
patient to see what they can look like before committing to the procedure.
IMAGE ENHANCER: Image Enhancer's image manipulation tools show the patient what
he or she could look like with an alteration to their smile before committing to
the actual dentistry. The dentist can then send the patient's image to the
laboratory along with the prescription so the technicians making the restoration
will be able to view the proposed changes. This reduces remakes and provides a
complete communication link between the patient, dentist and laboratory. With
Image Enhancer the dentist can simulate a complete range of dental procedures
including bleaching, bonding, veneers, implants, amalgam replacement and
orthodontics.
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Exhibit 10.3
Capital Contribution Agreement between Torchmark Holdings, Ltd.
and Registrant dated March 17, 1999.
<PAGE> 2
CAPITAL CONTRIBUTION AGREEMENT
THIS CAPITAL CONTRIBUTION AGREEMENT (the "Agreement") is entered into
to be effective as of March 17, 1999 by and between Torchmark Holdings Limited
("Torchmark"), a Turks and Caicos Islands B.W.I. corporation, and Dicom Imaging
Systems, Inc., a Nevada Corporation ("Dicom").
WITNESSETH :
WHEREAS, Torchmark has rights to certain archiving and search software
(the "Software") suitable for use in dental diagnostic procedures and for other
applications; and
WHEREAS, certain of the shareholders of Dicom and Torchmark wish to
enter into a shareholder voting agreement concurrently and as a condition to the
execution of this Agreement; and
WHEREAS, Torchmark and Dicom desire to enter into certain arrangements
regarding the grant of a license to use the Software in the field of dental
imagery to Dicom in exchange for a controlling equity interest in Dicom.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. LICENSE AGREEMENT AND STOCK ISSUANCE
Simultaneously with the execution of this Agreement, Torchmark is
granting to Dicom an exclusive, worldwide, fully paid license to Dicom of its
rights to market Image Explorer (the "Product") solely in the field of
dentistry, and also any software modules, plug-ins, modifications, or updates
developed by Torchmark designed to enhance the functionality of the Product,
which license is set forth in the License Agreement (the "License") attached
hereto as Annex A. As consideration for the License, Dicom is issuing to
Torchmark 950,000 fully-paid and nonassessable shares of Dicom Common Stock, par
value $0.001 per share (the "Torchmark Shares"). The Torchmark Shares have not
been and will not be registered under the United States Securities Act of 1933,
as amended (the "U.S. Securities Act"), and accordingly may not be offered or
sold within the United States except in certain transactions exempt from the
registration requirements of the U.S. Securities Act.
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<PAGE> 3
2. CLOSING; EFFECTIVE DATE
2.1 CLOSING. The execution of the License and issuance of the Dicom
shares to Torchmark required under this Agreement shall be deemed to occur
simultaneously with the execution of this Agreement at 9:00 am at the offices of
Jonathan Dariyanani, Esq. The term "CLOSING" shall mean the completion of the
execution of the License and transfer of the Dicom shares to Torchmark on the
terms described in this Agreement, and the term "CLOSING DATE" shall mean the
date of this Agreement.
2.2 EFFECTIVE DATE. The execution of the License and issuance of the
Dicom shares to Torchmark shall be deemed effective as of the commencement of
business on the Closing Date (the "EFFECTIVE DATE").
3. REPRESENTATIONS AND WARRANTIES OF DICOM
Dicom represents and warrants to and agrees with Torchmark as follows:
3.1 CAPITALIZATION. The authorized capital stock of Dicom consists of
50,000,000 shares of Dicom Common Stock, of which 1,350,000 shares are issued
and outstanding as of the Closing Date and 10,000,000 shares of Dicom Preferred
Stock, none of which are issued and outstanding as of the Closing Date. Schedule
3(a) correctly sets forth the identity of the Dicom shareholders and the amount
of stock owned by each. All of the issued and outstanding shares of Dicom Common
Stock (including the Torchmark Shares) have been duly authorized, validly
issued, and are fully paid and non-assessable, with no personal liability
attaching to the ownership thereof, free from all pre-emptive or other rights to
acquire such shares. Dicom is not bound by any outstanding subscriptions,
options, warrants, calls, commitments, or agreements of any character calling
for the transfer, purchase, or issuance of any shares of its capital stock or
any securities representing the right to purchase or otherwise receive any
shares of its capital stock or any securities convertible into or representing
the right to purchase or subscribe for any such shares, and there are no
agreements or undertakings to which Dicom is a party with respect to voting any
such shares other than this Agreement, the Co-Sale Agreement and the Shareholder
Voting Agreement executed in connection with this Agreement.
3.2 ORGANIZATION, POWER, GOOD STANDING, ETC.; AFFILIATES AND
SUBSIDIARIES. Dicom is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. Dicom has all the requisite
corporate power and authority to own, lease and operate all of its properties
and assets and to carry on the business contemplated by this Agreement. Dicom is
or is capable of being duly licensed or qualified to do business and is or may
be in good standing in each jurisdiction in which the nature of the business to
be conducted by it makes such licensing or qualification necessary and where the
failure to be so qualified would, individually or in the aggregate, have a
materially adverse effect on Dicom. Dicom has previously delivered or made
available to Torchmark true and correct copies, including all amendments
thereto, of its Articles of Incorporation and its bylaws (the "Dicom Charter
Documents") as in effect on the date hereof. There is no firm, corporation,
partnership, joint venture or similar organization in which Dicom has a direct
or indirect equity interest.
3.3 ACCURATE RECORDS. The minute books of Dicom contain materially
complete and accurate records of all meetings held and other corporate action
taken since its date of organization, by its shareholders and Board of
Directors.
3.4 DISCLOSURE OF AGREEMENTS. Dicom has previously delivered to
Torchmark true and complete copies of all agreements to which it is a party or
by which its assets may be bound (i) which relate to any ownership interest by
Dicom of an equity interest in any partnership, joint venture, or similar
enterprise or (ii) pursuant to which Dicom may be required to transfer funds in
respect of an equity interest to, make and investment in, or guarantee or assume
any debt, dividend or other obligation of, any person or entity, partnership,
joint venture or similar enterprise. Schedule 3(e) correctly sets forth a list
of all such agreements.
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<PAGE> 4
3.5 REPORTS. Dicom has previously delivered or made available to
Torchmark an accurate and complete copy of all reports or other material
communications delivered by Dicom to its stockholders since its inception and no
such report or communication, as of its date, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.6 LITIGATION. As of the Closing Date, there were no actions, suits,
claims, inquiries, proceedings or investigations before any court, commission,
bureau, regulatory, administrative or governmental agency, arbitrator, body or
authority pending or threatened against Dicom. Dicom is not subject to any
order, judgment or decree.
3.7 VALID AGREEMENTS; RESTRICTIVE DOCUMENTS. All transactions
contemplated by and necessary to this Agreement have been authorized by all
necessary corporate action on the part of Dicom. This Agreement has been duly
executed and delivered on behalf of Dicom and constitutes a valid and binding
obligation, enforceable against Dicom in accordance with its terms, except as
the enforcement thereof may be limited by applicable bankruptcy and other laws
of general application relating to creditors' rights or general principles of
equity. Dicom is not subject to, or a party to, any mortgage, lien, lease,
license, permit, agreement, contract, instrument, law, rule, ordinance,
regulation, order, judgment or decree, or any other restriction of any kind or
character, which would prevent consummation of the transactions contemplated by
this Agreement or compliance by Dicom with the terms, conditions and provisions
of this Agreement or any other agreement entered into by Dicom in connection
with the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (i) violate, conflict with or result in the breach
of any provision of the Dicom Charter Documents, (ii) violate any order,
judgment, award or decree of any court, arbitrator or governmental or regulatory
body against, or binding upon, Dicom; or (iii) violate any statute, law or
regulation of any jurisdiction, which violation could have a material adverse
effect on Dicom.
3.8 LIABILITIES. Dicom does not have any outstanding claims,
liabilities or indebtedness of any nature whatsoever, including without
limitation, claims or liabilities for any federal, state, local or foreign taxes
(collectively, "Liabilities"), whether accrued, absolute or contingent,
determined or undetermined, asserted or unasserted, and whether due or to become
due, other than Liabilities specifically disclosed in Schedule 3(i) hereto.
3.9 CONSENTS AND APPROVALS. No consents or approvals of or filings or
registrations with any third party or public body or authority are necessary in
connection with the execution and delivery by Dicom of this Agreement, the
License, and the other documents executed in connection with this Agreement.
3.10 EMPLOYEES. Except as specifically identified in this Agreement,
Dicom has no employees, consultants, staff or other paid or unpaid agents
whatsoever. Dicom has no outstanding or potential obligations to pay any amount
to any former employee or other agent (including, but not limited to wages,
salaries, vacation pay, pensions, severance pay, any direct or indirect
compensation earned or accrued at the date hereof).
3.11 TAXES AND TAX RETURNS. Dicom has timely and correctly filed all
federal, state, county and local tax and other returns and reports
(collectively, "Returns") required by applicable law to be filed, including,
without limitation, estimated tax returns, income tax returns, excise tax
returns, sales tax returns, use tax returns, property tax returns, franchise tax
returns, information returns and withholding, employment and payroll tax
returns, and has paid all taxes, levies, license and registration fees, charges
or withholdings of any nature whatsoever shown by such Returns to be owed, or
which are otherwise due and payable (hereinafter, "Taxes"). Dicom is not in
default in the payment of any Taxes due or payable or any assessments received
in respect thereof except for Taxes which are being contested in good faith. No
assessments of Taxes against Dicom are proposed, pending or threatened.
3.12 DISCLOSURE. Nothing in this Agreement or any Annex, certificate,
document or statement in writing which has been supplied by or on behalf of
Dicom, in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact, or omits any statement of a material fact
required to be stated or necessary in order to make the statements contained
herein or therein not misleading. There is no fact which materially and
adversely affects Dicom, which has not been set forth in this Agreement or in
the Annexes, certificates, documents or statements in writing furnished in
connection with the transactions contemplated by this Agreement.
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4. REPRESENTATIONS AND WARRANTIES OF TORCHMARK
Torchmark represents and warrants to and agrees with Dicom as follows:
4.1 EXISTENCE AND GOOD STANDING. Torchmark is a corporation duly
organized, validly existing and in good standing under the laws of Turks and
Caicos and has the full corporate power and authority to own and operate its
properties and to carry on its business all as, and in the places where, such
properties are now owned or operated or such business is now being conducted.
Torchmark is qualified to do business as a foreign corporation in each
jurisdiction where such qualification is required, whether by ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a material adverse effect
on Torchmark or its obligations under this Agreement.
4.2 VALID AGREEMENTS; RESTRICTIVE DOCUMENTS. The execution, delivery
and performance of this Agreement, and the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of
Torchmark. This Agreement has been duly executed and delivered on behalf of
Torchmark and constitutes its valid and binding obligation, enforceable against
Torchmark in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy and other laws of general application relating
to creditors' rights or general principles of equity. Torchmark is not subject
to, or a party to, any charter, by-law, mortgage, lien, lease, license, permit,
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which
materially and adversely affects the rights granted under the License, or which
would prevent consummation of the transactions contemplated by this Agreement,
compliance by Torchmark with the terms, conditions and provisions of this
Agreement or any other agreement entered into by Torchmark in connection with
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) violate, conflict with or result in the breach of any provision of the
charter documents of Torchmark, (ii) violate or result in the breach of any of
the terms of, result in a material modification of, or otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract to which Torchmark is
a party; (iii) violate any order, judgment, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, the
Product; or (iv) violate any statute, law or regulation of any jurisdiction,
which violation could have a material adverse effect on the License.
4.3 REQUIRED APPROVALS, NOTICES AND CONSENTS. No consent or approval
of, other action by, or notice to, any governmental body or agency, domestic or
foreign, or any third party is required in connection with the execution and
delivery by Torchmark of this Agreement or the consummation by Torchmark of the
transactions contemplated hereby, including, without limitation, the grant of
the License.
4.4 LITIGATION. As of the Closing Date, there were no actions, suits,
claims, inquiries, proceedings or investigations before any court, commission,
bureau, regulatory, administrative or governmental agency, arbitrator, body or
authority pending or threatened against Torchmark or any affiliated entity
thereof. Torchmark is not subject to any order, judgment or decree. Reference is
made to the litigation between various parties identified and further described
in Annex C hereto (the "1997 Litigation"). Torchmark represents that the 1997
Litigation has been fully settled and that true copies of the Settlement
Agreement and Mutual Release in Full are attached in Annex C hereto. Torchmark
represents and warrants that no party to the 1997 Litigation has a basis in law
or fact to interfere with the granting of the License to Dicom and the
fulfillment of the terms of this Agreement and the terms of the License.
4.5 DISCLOSURE. Nothing in this Agreement or any Annex, certificate,
document or statement in writing which has been supplied by or on behalf of
Torchmark, in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact, or omits any statement of a material fact
required to be stated or necessary in order to make the statements contained
herein or therein not misleading. There is no fact known to Torchmark that
materially and adversely affects the License which has not been set forth in
this Agreement or in the Annexes, certificates, documents or statements in
writing furnished in connection with the transactions contemplated by this
Agreement.
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5. INDEMNIFICATION
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
right of either party to this Agreement fully to investigate the affairs of the
other party and notwithstanding any knowledge of facts determined or
determinable by either party pursuant to such investigation or right of
investigation, each party has the right to rely fully upon the representations,
warranties, covenants and agreements of the other party contained in this
Agreement and the Annexes or in any document or other papers delivered in
connection with this Agreement. All such representations, warranties, covenants
and agreements shall survive the execution and delivery of this Agreement and
the Closing hereunder.
5.2 OBLIGATION OF TORCHMARK TO INDEMNIFY DICOM. Torchmark agrees to
indemnify and hold harmless Dicom (and its affiliates, agents, representatives,
successors and assigns) from and against any and all losses, liabilities,
damages, deficiencies, demands, claims, actions, judgments or causes of action,
assessments, costs or expenses (including, without limitation, bonds, interest,
penalties and reasonable attorneys' fees and disbursements) ("Losses") based
upon, arising out of or otherwise in respect of any inaccuracy in or any breach
of any representation, warranty, covenant or agreement of Torchmark contained in
this Agreement or any Annex or Schedule hereto, or any other agreement delivered
by Torchmark to Dicom in connection with this Agreement.
5.3 OBLIGATION OF DICOM TO INDEMNIFY TORCHMARK. Dicom agrees to
indemnify and hold harmless Torchmark (and its directors, managers, officers,
employees, affiliates, agents, representatives, successors and assigns) from and
against any and all Losses based upon, arising out of or otherwise in respect of
(i) any inaccuracy in or any breach of any representation, warranty, covenant or
agreement of Dicom contained in this Agreement or any Annex or Schedule hereto,
or in any other agreement delivered by Dicom to Torchmark in connection with
this Agreement, and (ii) any liabilities and obligations of whatever nature
pertaining to Dicom arising before the Effective Date.
5.4 NOTICE AND OPPORTUNITY TO DEFEND.
5.4.1 NOTICE OF ASSERTED LIABILITY. Promptly after receipt by
any party hereto (the "Indemnitee") of notice of any demand, claim or
circumstances which, with the lapse of time, would or might give rise to a claim
or the commencement (or threatened commencement) of any action, proceeding or
investigation (an "ASSERTED LIABILITY") that may result in any Losses to which
such Indemnitee is entitled to indemnification hereunder, the Indemnitee shall
promptly give notice thereof (the "CLAIMS NOTICE") to any other party obligated
to provide indemnification pursuant to Section 5.2 or 5.3 (the "INDEMNIFYING
PARTY"), PROVIDED, HOWEVER, that the failure to promptly notify the Indemnifying
Party shall not relieve him or it, as the case may be, from any liability which
such Indemnifying Party may have to any Indemnitee except to the extent that
such Indemnifying Party is prejudiced thereby. The Claims Notice shall describe
the Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Losses that have
been or may be suffered by the Indemnitee.
6
<PAGE> 7
5.4.2 OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel (such counsel to
be reasonably satisfactory to Indemnitee(s)), any Asserted Liability relating to
a third party claim or action. If the Indemnifying Party elects to compromise or
defend such Asserted Liability, it shall within 20 days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so and confirm in such notice such Indemnifying Party's agreement
to pay the full amount of any Losses to the Indemnitee, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, fails to notify the Indemnitee
of its election as herein provided, fails to aggressively defend the Asserted
Liability or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay, compromise or defend such Asserted Liability at the expense
of the Indemnifying Party. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any claim without
the prior written consent of the other; PROVIDED, HOWEVER, that consent to
settlement or compromise shall not be unreasonably withheld. The Indemnitee
shall have the right to participate in the defense and employ its own counsel in
any case with respect to an Asserted Liability, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee unless (a) the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such action, (b) such
Indemnifying Party shall not have promptly employed counsel as provided above,
reasonably satisfactory to such Indemnitee to take charge of the defense of such
action, or (c) such Indemnitee shall have reasonably concluded that there may be
one or more legal defenses available to it which are different from or
additional to those available to such Indemnifying Party, in any of which events
such reasonable fees and expenses shall be borne by the Indemnifying Party and
the Indemnifying Party shall not have the right to direct the defense of such
action on behalf of the Indemnitee in respect of such different or additional
defenses. If the Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
The parties hereto agree to cooperate fully with one another in the defense,
compromise or settlement of any Asserted Liability.
6. MANAGEMENT AND OPERATION OF THE COMPANY
6.1 BOARD OF DIRECTORS. At the Effective Date, the Board of Directors
of Dicom will consist of five members, Wayne Rees, Todd Rees, David Gane and
Stephen Winter as elaborated in the Shareholder Voting Agreement attached hereto
as Annex A, which requires the parties thereto to elect directors in accordance
with this Agreement.
7
6.2 GRANT OF STOCK OPTIONS. Each director named on the Closing Date
shall receive options to purchase 250,000 shares of common stock at an exercise
price of $1.00 per share to vest upon the bid price of the Common Stock of Dicom
as reported on Nasdaq reaching the following levels: 50,000 shares will vest
when the price reaches $7.50; 50,000 shares when the price reaches $10.00;
50,000 shares when the price reaches $12.50 and 100,000 shares when the price
reaches $15.00.
6.3 CONSULTING AGREEMENTS. Dicom shall retain as consultants the
services of Wayne Rees, Todd Rees, David Gane, and/or such persons as the Board
of Directors of Dicom should deem desirable. Each such consultant shall enter
into consulting agreements in a form to be mutually agreed upon by the parties.
Each consultant retained by Dicom under this Agreement shall enter into a
Non-Competition and Non-Solicitation Agreement in substantially the form as that
attached hereto as Annex B.
6.4 AGREEMENT WITH LANDMARK. Dicom shall enter into a consulting
agreement with Landmark Consulting and Developing Ltd. on or before Closing
Date.
7. ADDITIONAL AGREEMENTS
7.1 EQUITY. The grant of the License is conditioned on, and subject to,
Dicom raising a minimum of $1,000,000 in equity through the sale of common stock
on or prior to June 1, 1999 under rule 504 of Regulation D of the Securities Act
of 1933, as amended (the "Private Placement"), including sales of capital shares
of Dicom which have been made prior to the date hereof. If the Private Placement
has not been consummated by this date, the License shall be terminable according
to its terms at the election of Torchmark.
7.2 EXECUTION OF NON-COMPETITION AND NON-SOLICITATION AGREEMENTS. The
obligations of Torchmark under this Agreement shall be subject to the execution
by all consultants retained by Dicom under this Agreement of the form of
Non-Competition and Non-Solicitation Agreement attached hereto as Annex B.
7
<PAGE> 8
8. MISCELLANEOUS
8.1 EXPENSES. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
8.2 CONFIDENTIAL INFORMATION. In the course of a party's preparation
for and performance of this Agreement, it may disclose to the other party
nonpublic proprietary information or trade secrets, including, without
limitation, software programs, designs, specifications, protocols, schedules,
competition analyses, price or cost data, supplier information, customer
information, and the like (collectively, "Confidential Information"). All
information identified as being "confidential" or "trade secret" shall be
presumed to be Confidential Information. The term "Confidential Information" as
used herein shall not include any information which (a) is in the public domain
at the time of disclosure or becomes part of the public domain through no fault
or act of the receiving party; (b) is obtained by the receiving party from a
third party under no duty of nondisclosure; (c) is independently developed or
derived by the receiving party prior to its disclosure by the disclosing party,
as shown by the receiving party's books and records; or (d) is required to be
disclosed pursuant to law, regulation or court order. A party required by law,
regulation or court order to disclose the other party's Confidential Information
shall use its best efforts to afford the other party a reasonable opportunity to
challenge such requirement and/or to obtain any protective order as may be
available to limit or control the disclosure.
8.3 NONUSE AND NONDISCLOSURE. Each party agrees to use the Confidential
Information of the other party only to perform its obligations under the terms
of this Agreement and for no other purpose. The receiving party agrees to treat
as confidential all Confidential Information of the disclosing party made
available to receiving party or to any employee, agent or representative of
receiving party. The receiving party agrees to use commercially reasonable
efforts to protect the Confidential Information of the disclosing party from any
unauthorized use of disclosure by it or its employees, agents or representatives
and shall at least use the same degree of care to protect the Confidential
Information of the disclosing party as the receiving party uses to protect its
own confidential information. The receiving party agrees not to, or allow its
employees and agents to, copy, disclose to unauthorized parties or use any
Confidential Information of the disclosing party for any purpose other than the
purposes set forth in this Agreement. The receiving party shall be liable to the
disclosing party for any breach of the terms of this Section 8.3 by any of its
employees, agents or representatives.
8.4 NO BROKERS. Except as provided in the next sentence, each of the
parties represents and warrants to the other that no broker, finder or agent has
acted on its or his behalf in connection with this Agreement or the transactions
contemplated thereby. The parties acknowledge that Torchmark has entered into an
agreement with James Ullock and VCBM Ltd. pursuant to which Torchmark is
obligated to pay to each of Ullock and VCBM Ltd. a fee consisting of 25,000
shares of Dicom Common Stock in connection with the transactions contemplated
hereby. Dicom will pay such a fee in restricted shares of Dicom Common Stock
directly to James Ullock and VCBM Ltd. upon the Closing Date.
8.5 FURTHER ASSURANCES AND COOPERATION. Each of the parties agrees
that, after the Closing Date, they will execute and deliver such further
documents and instruments and take such further action as may be reasonably
necessary or proper to fully effectuate this Agreement and the intent hereof.
8.6 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Nevada, without application of its conflict of
laws provisions. The parties hereby irrevocably and unconditionally submit in
any legal action or proceeding relating to this Agreement to the non-exclusive
general jurisdiction of the courts of the State of Nevada and of the United
States located in Clark County, Nevada and, in any such action or proceeding,
consent to jurisdiction in such courts and waive any objection to the venue in
any such court.
8.7 CAPTIONS. The captions or headings used herein are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.
8.8 PUBLICITY. None of the parties hereto shall issue any press release
or make any other public statement, in each case relating to or connected with
or arising out of this Agreement or the matters contained herein, without
obtaining the prior written consent of the other party, which consent shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing, either of
the parties may at any time make announcements that are required by applicable
law, regulatory bodies, or stock exchange or stock association rules, so long as
the party so required to make the announcement, promptly upon learning of such
requirement, notifies the other party of such requirement and discusses with the
other party in good faith the exact wording of any such announcement.
8
<PAGE> 9
8.9 NOTICES. Any notice or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by
registered or certified mail, postage prepaid, addressed as follows:
If to Torchmark, to: Torchmark Holdings Limited
Box 303
164 Richmond Hills
Providenciales
Turks and Caicos Islands B.W.I.
With a copy to: Gary J. Kocher, Esq.
Preston Gates & Ellis LLP
Suite 5000
701 Fifth Avenue
Seattle, Washington 98104
Telephone: (206) 623-7580
Fax: (206) 623-7022
If to Dicom: Dicom Imaging Systems, Inc.
1350 E. Flamingo Road
Suite 847
Las Vegas, NV 89119
With a copy to: Jonathan Dariyanani, Esq.
3100 Fulton St., Suite 4
San Francisco, California 94118
Telephone: (415) 668-0371
Fax: (415) 831-2232
, or such other address as shall be furnished in writing by
any such party, and such notice or communication shall be deemed to have been
given as of the date so delivered, sent by telex or mailed.
8.10 PARTIES IN INTEREST. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and personal representatives; provided, that, this
Agreement may not be transferred, assigned, pledged or hypothecated by either
party without the prior written consent of the other party.
8.11 SEVERABILITY. In the event any provision of this
Agreement is found to be void and unenforceable by a court of competent
jurisdiction or arbitration panel, the remaining provisions of this Agreement
shall nevertheless be binding upon the parties with the same effect as though
the void or unenforceable part had been severed and deleted.
8.12 COUNTERPARTS. This Agreement may be executed in more than
one counterpart, all of which taken together shall constitute one instrument.
8.13 ENTIRE AGREEMENT. This Agreement, including the other
documents referred to herein which form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
9
<PAGE> 10
8.14 MODIFICATIONS AND WAIVERS. No purported amendment,
modification or waiver of any provision of this Agreement shall be binding
unless set forth in a written document signed by all parties (in the case of
amendments and modifications) or by the party to be charged thereby (in the case
of waivers). Any waiver shall be limited to the circumstance or event
specifically referenced in the written waiver document and shall not be deemed a
waiver of any other term or provision of this Agreement or of the same
circumstance or event upon any recurrence thereof.
9. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Section 9. Additional terms may be defined elsewhere
in this Agreement.
9.1 "PERSON" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or other department or agency thereof.
9.2 "KNOWLEDGE" Defined. Where any representation and warranty
contained in this Agreement is expressly qualified by reference to knowledge,
information and belief of the parties hereto, the parties confirm that they have
made such due and diligent inquiry as to the matters that are the subject of
such representations and warranties that shall be reasonable under the
circumstances.
9.3 An "AFFILIATE" of any Person shall mean any Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with such Person.
9.4 "CONTROL" shall mean, among other things, the power to exercise a
controlling influence over the management or policies of a Person, by such means
as the ownership of the voting securities of such Person.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
DICOM IMAGING SYSTEMS, INC. TORCHMARK HOLDINGS LIMITED
- ---------------------------------- ----------------------------------
By (Sign) By (Sign)
- ---------------------------------- ----------------------------------
Name (Print) Name (Print)
- ---------------------------------- ----------------------------------
Title Title
- ---------------------------------- ----------------------------------
Date Date
11
<PAGE> 1
Exhibit 10.4
Order Fulfillment Agreement between 527403 British Columbia Limited
and Registrant dated May 14, 1999.
<PAGE> 2
ORDER FULFILLMENT AND CUSTOMER SUPPORT AGREEMENT
This Order Fulfillment and Customer Support Agreement (the "Agreement") is
entered into and effective as of May 14, 1999 (the "Effective Date") by and
between 527403 BRITISH COLUMBIA LIMITED., a Canadian corporation ("BC Ltd."),
and DICOM IMAGING SYSTEMS, INC., a Nevada corporation ("Dicom").
WHEREAS Dicom has secured rights to image archiving and retrieval software for
use in dental diagnostic procedures and for other applications;
WHEREAS BC Ltd. is a wholly owned subsidiary of Dicom;
WHEREAS BC Ltd. desires to act and Dicom desires that BC Ltd. act as its
Technical Support Provider for the software;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "Software" means Dicom's imaging archiving and retrieval software
program as described in EXHIBIT A, and any updates, modules or plug-ins
developed by Dicom for the software and provided by Dicom throughout the term of
this Agreement.
1.2 "Field of Dentistry" means the general practice of dentistry and
related subspecialties, including endodontics, periodontics, dental implant
procedures, oral surgery, oral medicine, orthodontics, pediatric dentistry, and
prosthodontics by dental professionals.
2. RIGHTS
This Agreement is solely for the purpose of BC Ltd. fulfilling
customer orders as directed by Dicom and providing customer support as directed
by Dicom ("Customer Service"). BC Ltd. shall have no rights in the Software and
no license in the software. The sole right and obligation that BC Ltd. shall
have shall be to provide the Customer Service. BC Ltd. shall not have the right
to manufacture and make copies of the Software, unless specifically so
authorized by Dicom in writing. BC Ltd. shall have no authority to modify the
packaging of the Software and related EULA, as defined below, for distribution,
but may make modifications to the Help routines, Set Up and Installation
routines and Splash Screens as required. Except as contained in this Section 3,
no right is granted to BC Ltd. to modify the Software.
2.1 SALES PROHIBITED. While BC Ltd. may engage in marketing and
customer service for Dicom, it is prohibited from selling any Dicom product to
any end user, other than the Customer Support Contracts. All other sales must be
referred to Dicom for processing and completion.
2
<PAGE> 3
2.2 END USER LICENSE AGREEMENTS. Dicom will provide the Software to BC
Ltd. with Dicom's form of end user license agreement ("EULA") for the Software
and BC Ltd. agrees that it will not modify or remove the EULA. BC Ltd. will
distribute the EULA with every copy of the Software in a manner in which the end
user is aware of the EULA and agrees to its terms.
2.3 PROPRIETARY NOTICES. BC Ltd. will not alter or remove any copyright
or trademark notices contained in the Software.
2.4 OWNERSHIP. Dicom reserves and retains all right, title and interest
in Dicom Confidential Information and to the Software, and any related patents,
copyrights, and trademarks and BC Ltd. specifically disclaims ownership thereof.
2.5 RIGHT TO SUE FOR INFRINGEMENT. Dicom reserves the sole right, at
its sole discretion, to sue third parties for infringing the copyright or any
other intellectual property rights in the Software.
2.6 REVERSE ENGINEERING. BC Ltd. covenants not to decompile, reverse
engineer or otherwise attempt to make derivative software based on the Software
nor to assist any third party to do so.
3. PAYMENTS
3.1 PAYMENTS TO BC LTD. BC Ltd. shall invoice Dicom on a monthly basis
for the Customer Support provided under this Agreement (the "BC Ltd. Fee").
Dicom agrees to pay the BC Ltd. Fee promptly upon receipt, subject to
verification. The BC Ltd. Fee shall be equal to $399 per Customer Service
Contract sold and administered through BC Ltd. BC Ltd. shall bear its own
expenses, though Dicom may advance such expenses as a credit against future BC
Ltd. Fees.
3.2 ACCOUNTING AND INSPECTION. Dicom is hereby granted the right to
make an inspection of all accounts, books, invoices and records of BC Ltd. to
determine if payments are properly due under Section 4.1 hereof and to verify
any BC Ltd. Fee.
4. CONFIDENTIALITY
4.1 Each party expressly undertakes to retain in confidence and to
require all contractors to retain in confidence all information and know-how
transmitted to such party that the disclosing party has identified as being
proprietary and/or confidential or which, by the nature of the circumstances
surrounding the disclosure, ought in good faith to be treated as proprietary
and/or confidential. Without limiting the foregoing, all terms and conditions of
this Agreement shall be considered confidential and shall not be disclosed
(except to either party's attorneys and accountants on a need-to-know-basis)
without prior written consent of the other party. The receiving party's
obligation hereunder shall extend for five (5) years following the disclosure of
the Confidential Information.
4.2 EXCLUSIONS. Confidential information shall not include any
information that: (i) is at the time of disclosure or subsequently becomes
available without the receiving party's breach of any obligations owed the
disclosing party; (ii) became known to the receiving party prior to the
disclosing party's disclosure of such information to the receiving party; (iii)
became known to the receiving party from a source other than the disclosing
party other than by the breach of an obligation of confidentiality owed to the
disclosing party; or (iv) is independently developed by the receiving party.
3
<PAGE> 4
5. WARRANTIES
5.1 Dicom warrants and represents that:
5.1.1 It has the full power to enter into this Agreement and
make the assignments and license rights set forth herein;
5.1.2 The Software does not knowingly infringe any patent held
by any third party;
5.1.3 EXCEPT FOR THOSE WARRANTIES PROVIDED IN THIS SECTION
6.1, DICOM MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
SOFTWARE. BC LTD. EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
5.2 BC Ltd. warrants and represents that:
5.2.1 It has the full power to enter into this Agreement; and
5.2.2 It will not use, display, perform, reproduce, publish,
license, transmit or otherwise distribute the Software in a field other
than in accordance with this Agreement
5.2.3 It, nor any of its employees or agents, will make any
warranties or promises regarding the use of the Software other than
those contained in the EULA.
6. INDEMNITY
6.1 Dicom agrees to indemnify, defend, and hold BC Ltd. and its
successors, officers, directors and employees harmless from any and all actions,
causes of action, claims, demands, costs, liabilities, expenses and damages,
including attorneys' fees, (not including internal employee's wages) arising out
of, or in connection with any claim arising out of Dicom's breach of any
representation, warranty or covenant contained in this Agreement or any claim
arising out of any distribution of the Software.
6.2 BC Ltd. agrees to indemnify, defend, and hold Dicom and its
successors, officers, directors and employees harmless from any and all actions,
causes of action, claims, demands, costs, liabilities, expenses and damages,
including attorneys' fees, (not including internal employee's wages) arising out
of, or in connection with any claim arising out of Image Solution's breach of
any representation, warranty or covenant contained in this Agreement.
4
<PAGE> 5
7. TERM AND TERMINATION
7.1 TERMINATION. Except as otherwise provided in this Section 8.1, this
Agreement shall continue in effect until Dicom tenders written notice to BC Ltd.
of its desire to cancel this Agreement ("Termination Notice") which notice shall
be immediately effective upon receipt. BC Ltd. has no right to terminate this
Agreement. In the event of a Termination Notice, BC Ltd. agrees to immediately
return any property of Dicom, including all copies of the Software and materials
related thereto. BC Ltd. shall immediately cease and desist from all Customer
Support upon receipt of a Termination Notice, or continue only for such period
as provided in the Termination Notice.
7.2 EFFECT OF TERMINATION.
7.2.1 In the event of termination of this Agreement for any
reason, Dicom shall pay to BC Ltd. any unpaid or unbilled BC Ltd. Fees
incurred through the term of this Agreement. Sections 5, 6, 7, 8, 9 and
10 will survive the termination of this Agreement.
7.2.2 Upon termination of this Agreement, each party shall
promptly return to the other party (or destroy upon receipt of such
party's written instruction) all copies of any confidential information
of the other party then in its possession, custody or control,
regardless of medium, pursuant to Section 8.1 above.
8. LIMITATION OF LIABILITIES
EXCEPT FOR BREACHES OF SECTIONS 5 AND 7, NEITHER PARTY IS LIABLE FOR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9. GENERAL
9.1 NOTICES. All notices and requests in connection with this Agreement
are to be deemed given as of the day they are received either by messenger,
delivery service, or in the United States of America mails, postage prepaid,
certified or registered, return receipt requested, and addressed as follows:
To BC Ltd.: To Dicom:
527403 BC Ltd. Dicom Imaging Systems, Inc.
Attention: General Manager Attention: Dr. David Gane
15047 Marine Dr., Suite 201 1350 E. Flamingo Road, Suite 847
Whiterock, BC Canada V4B1C5 Las Vegas, NV 89119
With a copy to: With a copy to:
Gary J. Kocher, Esq. Jonathan Dariyanani
Preston Gates & Ellis LLP 3100 Fulton St., Suite 4
701 Fifth Avenue, Suite 5000 San Francisco, California 94118
Seattle, Washington 98104 Tel: (415) 668-0371
Tel: (206) 623-7580 Fax: (415) 831-2232
Fax: (206) 623-7022
or to such other address as a party may designate pursuant to this notice
provision.
5
<PAGE> 6
9.2 INDEPENDENT CONTRACTORS. BC Ltd. and Dicom are independent
contractors of each other, and nothing in this Agreement shall be construed as
creating an employer-employee relationship, a partnership, or a joint venture
between the parties.
9.3 GOVERNING LAW. This Agreement is to be governed by the laws of the
State of Nevada as though entered into between Nevada residents and to be
performed entirely within the State of Nevada, and each party consents to
jurisdiction and venue in the state and federal courts sitting in the State of
Nevada. In any action or suit to enforce any right or remedy under this
Agreement or to interpret any provision of this Agreement, the prevailing party
shall be entitled to recover its costs, including reasonable attorneys' fees.
9.4 NO ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of each party's respective successors and lawful assigns; provided,
however, that that this Agreement may not be assigned, in whole or in part,
without the prior written approval of both parties.
9.5 MODIFICATIONS AND WAIVERS. No purported amendment, modification or
waiver of any provision of this Agreement is binding unless set forth in a
written document signed by all parties (in the case of amendments and
modifications) or by the party to be charged (in the case of waivers). Any
waiver is limited to the circumstance or event specifically referenced in the
written waiver document and is not to be deemed a waiver of any other term or
provision of this Agreement or of the same circumstance or event upon any
recurrence of the waived activity.
9.6 CONSTRUCTION. If for any reason a court of competent jurisdiction
finds any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder of this
Agreement will continue in full force and effect. Failure by either party to
enforce any provision of this Agreement will not be deemed a waiver of future
enforcement of that or any other provision. This Agreement has been negotiated
by the parties and their respective counsel and will be interpreted fairly in
accordance with its terms and without any strict construction in favor of or
against either party.
9.7 ENTIRE AGREEMENT. This Agreement does not constitute an offer by
Dicom and it is not effective until signed by both parties. This Agreement
constitutes the entire agreement between the parties with respect to the
Software and all other subject matter hereof and merges all prior and
contemporaneous communications.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.
DICOM BC LTD.
- ---------------------------------- ----------------------------------
Dicom Imaging Systems, Inc. 527403 British Columbia Limited
- ---------------------------------- ----------------------------------
By (Sign) By (Sign)
- ---------------------------------- ----------------------------------
Name (Print) Name (Print)
- ---------------------------------- ----------------------------------
Title Title
- ---------------------------------- ----------------------------------
Date Date
7
<PAGE> 8
EXHIBIT A
DESCRIPTION OF SOFTWARE
THE CORE PRODUCT, (IMAGE EXPLORER) IS A DICOM COMPLIANT WINDOWS BASED 32 BIT
DENTAL IMAGE ARCHIVING SOFTWARE THAT CAPTURES IMAGES FROM A VARIETY OF SOURCES
SUCH AS DIGITAL CAMERAS, INTRA ORAL CAMERAS, DIGITAL X-RAY, E-MAIL, INTERNET
TRANSFERS, OPERATING MICROSCOPES OR ANY TWAIN COMPLIANT DEVICE, AND THEN STORES
THEM IN A LOGICAL, EASY TO USE ELECTRONIC FILE CABINET SUCH THAT THE IMAGES CAN
BE ACCESSED IN THE PATIENT FILE FOR REVIEW, COMPARISON, PRINTING, AND
COMMUNICATION. THERE ARE OTHER MODULES OR PLUG-INS THAT WE HAVE DESIGNED TO
ENHANCE THE ABILITY OF THE IMAGE EXPLORER SOFTWARE PROGRAM. THEY ARE AS FOLLOWS:
IMAGE EDITOR: ALLOWS THE USER TO ENHANCE THE CAPTURED IMAGES WITHOUT ALTERING
THE IMAGE FROM ITS ORIGINAL STATE. THIS MAY INCLUDE SUCH ACTIONS AS COLOR
ENHANCEMENT, SHARPEN, SOFTEN, CROPPING, ROTATING AND FLIPPING TO NAME A FEW.
LAB R/X: A LAB MODULE THAT OPTIMIZES COMMUNICATION BETWEEN THE DENTIST AND THE
LABORATORY TECHNICIAN ESPECIALLY WITH RESPECT TO ESTHETIC RESTORATIONS, VISUALLY
PRESCRIBING PORCELAIN PROCEDURES TO BE PERFORMED BY THE LAB. IT PROVIDES THE LAB
TECHNICIAN ALL THE INFORMATION NECESSARY TO CREATE A QUALITY PRODUCT FOR THE
DENTIST AND PATIENT IN AN ACCURATE AND CONCISE MANNER. LAB R/X GENERATES AN
ENHANCED ELECTRONIC PRESCRIPTION AS EITHER A PRINT REPORT OR AN ELECTRONIC FILE.
LAB R/X ALSO PROVIDES THE INTERFACE FOR THE NEW "DENTAL COLOR ANALYZER." THIS
UNIT ENABLES THE DENTIST AND HE LAB TO ACCURATELY COLOR MAP TEETH TO THE CURRENT
SHADE GUIDES. LAB R/X ALSO GIVES THE DENTIST THE ABILITY TO COLOR MAP THE TEETH
MANUALLY THROUGH THE USE OF A DROP DOWN TABLE THAT HARBORS THE CURRENT TABLES OF
THE SHADE GUIDES.
DIGITAL X-RAY: AN X-RAY MODULE THAT ALLOWS THE DENTIST TO ACQUIRE X-RAY IMAGES
OF THE PATIENT INTO IMAGE EXPLORER VIA DIRECT ACQUISITION OR BY FILM SCANNING
DEVICES. THE RADIOGRAPHIC IMAGING TOOLS ALLOWS THE DENTIST TO ENHANCE THE
RADIOGRAPH FOR IMPROVED DIAGNOSIS, MEASURE AREAS OF HE RADIOGRAPH, ATTACH
DIAGNOSIS NOTES, AND COMMUNICATE WITH COLLEAGUES VIA PRINT OR MODEM. IF THE
DENTIST ALREADY HAS A DIGITAL X-RAY SYSTEM, IMAGE EXPLORER WILL ALLOW THE USER
TO VIEW, ENHANCE, PRINT AND COMMUNICATE THOSE EXISTING IMAGES USING THE
DENTISTRY WIDE STANDARD INTERFACE.
WHITENER: WHITENER IS AN ADDITIONAL ADD-ON MODULE TO IMAGE EXPLORER. WHITENER IS
A VERY EASY TO USE MODULE WHICH QUICKLY IDENTIFIES THE TEETH IN AN IMAGE AND
LIGHTENS THEM TO SIMULATE A BLEACHING SIMULATION. TOOTH WHITENING OR BLEACHING
IS ONE OF THE FASTEST GROWING PROCEDURES IN DENTISTRY AND THIS MODULE ALLOWS THE
PATIENT TO SEE WHAT THEY CAN LOOK LIKE BEFORE COMMITTING TO THE PROCEDURE.
IMAGE ENHANCER: IMAGE ENHANCER'S IMAGE MANIPULATION TOOLS SHOW THE PATIENT WHAT
HE OR SHE COULD LOOK LIKE WITH AN ALTERATION TO THEIR SMILE BEFORE COMMITTING TO
THE ACTUAL DENTISTRY. THE DENTIST CAN THEN SEND THE PATIENT'S IMAGE TO THE
LABORATORY ALONG WITH THE PRESCRIPTION SO THE TECHNICIANS MAKING THE RESTORATION
WILL BE ABLE TO VIEW THE PROPOSED CHANGES. THIS REDUCES REMAKES AND PROVIDES A
COMPLETE COMMUNICATION LINK BETWEEN THE PATIENT, DENTIST AND LABORATORY. WITH
IMAGE ENHANCER, THE DENTIST CAN SIMULATE A COMPLETE RANGE OF DENTAL PROCEDURES,
INCLUDING BLEACHING, BONDING, VENEERS, IMPLANTS, AMALGAM REPLACEMENT AND
ORTHODONTICS.
8
<PAGE> 1
Exhibit 10.5
Voting Agreement between certain holders of common stock in the Registrant
and the Registrant, dated March 17, 1999.
<PAGE> 2
DICOM IMAGING SYSTEMS, INC.
SHAREHOLDER VOTING AGREEMENT
THIS SHAREHOLDER VOTING AGREEMENT (THE "AGREEMENT") IS MADE AND ENTERED
INTO THIS 17 DAY OF MARCH, 1999, BY AND AMONG DICOM IMAGING SYSTEMS, INC., A
NEVADA CORPORATION (THE "COMPANY" OR "DICOM"), AND THOSE CERTAIN HOLDERS OF THE
COMPANY'S COMMON STOCK AND/OR OPTIONS TO PURCHASE COMMON STOCK WHO HAVE EXECUTED
A COUNTERPART SIGNATURE PAGE HERETO (THE "KEY SHAREHOLDERS").
WITNESSETH:
WHEREAS, THE KEY SHAREHOLDERS ARE THE BENEFICIAL OWNERS OF AN AGGREGATE
OF 2,400,000 SHARES OF THE COMMON STOCK OF THE COMPANY; AND
WHEREAS, IN CONNECTION WITH THE CONSUMMATION OF THE CAPITAL
CONTRIBUTION AGREEMENT DATED MARCH 17, 1999 (THE "CONTRIBUTION AGREEMENT"), THE
COMPANY AND THE KEY SHAREHOLDERS HAVE AGREED TO PROVIDE FOR THE FUTURE VOTING OF
THEIR SHARES OF THE COMPANY'S CAPITAL STOCK AS SET FORTH BELOW;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED
HEREIN AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS
FOLLOWS:
1. VOTING
1.1 SHARES. The Key Shareholders each agree to vote all shares of
voting capital stock of the Company registered in their respective
names or beneficially owned by them as of the date hereof (and any
and all other securities of the Company legally or beneficially
acquired by each of the Key Shareholders after the date hereof,
including stock received upon exercise of options now held or
hereafter received) (hereinafter collectively referred to as the
"Common Shares") in accordance with the provisions of this
Agreement.
1.2 ELECTION OF DIRECTORS. The Key Shareholders each agree that until
such time as this Agreement is terminated, the Company's Board of
Directors (the "Board") shall consist of five (5) members, each of
whom shall be elected by the Key Shareholders in the manner
described in this Section 1.2. The Key Shareholders agree to vote
all Common Shares held by them (or the holders thereof shall
consent pursuant to an action by written consent of the
shareholders) so as to nominate and elect members of the Company's
Board of Directors as follows:
1.2.1 Four (4) nominees shall be selected by the holders of
those shares of Dicom Common Stock issued to Torchmark pursuant to the
Contribution Agreement (the "Torchmark Shares").
2
<PAGE> 3
1.2.2 One (1) nominee shall be selected by Stephen Winter or a
designee thereof.
1.2.3 Any vote taken to remove any director elected pursuant
to this Section 1.2, or to fill any vacancy created by the resignation
of a director elected pursuant to this Section 1.2, shall also be
subject to the provisions of this Section 1.2.
1.3 The Key Shareholders each agree that until such time as this
Agreement is terminated, they will vote all Common Shares held by
them (or the holders thereof shall consent pursuant to an action by
written consent of the shareholders) against an amendment to the
Company's Articles of Incorporation to increase the number of
authorized shares of the Company.
1.4 LEGEND.
1.4.1 Concurrently with the execution of this Agreement, there
shall be imprinted or otherwise placed, on certificates representing
the Common Shares the following restrictive legend (the "Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A SHAREHOLDERS AGREEMENT DATED
___________, 1999 WHICH PLACES CERTAIN RESTRICTIONS ON THE
VOTING OF THE SHARES REPRESENTED HEREBY. ANY PERSON ACCEPTING
ANY INTEREST IN SUCH SHARES SHALL BE DEEMED TO AGREE TO AND
SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A
COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS."
1.4.2 The Company agrees that, during the term of this
Agreement, it will not remove, and will not permit to be removed (upon
registration of transfer, reissuance or otherwise), the Legend from any
such certificate and will place or cause to be placed the Legend on any
new certificate issued to represent Common Shares.
1.5 SUCCESSORS. The provisions of this Agreement shall be binding upon
the successors in interest to any of the Common Shares. The Company
shall not permit the transfer of any of the Common Shares on its
books or issue a new certificate representing any of the Common
Shares unless and until the person to whom such security is to be
transferred shall have executed a written agreement, substantially
in the form of this Agreement, pursuant to which such person
becomes a party to this Agreement and agrees to be bound by all the
provisions hereof as if such person were a Key Shareholder.
1.6 OTHER RIGHTS. Except as provided by this Agreement, each Key
Shareholder shall exercise the full rights of a shareholder with
respect to the Common Shares.
3
<PAGE> 4
2. REGISTRATION RIGHTS
2.1 REGISTRATION AND QUALIFICATION.
2.1.1 PIGGYBACK REGISTRATION. If the Company proposes to
register any equity security (as defined in Section 3(a)(11) of the Securities
Exchange Act of 1934, as amended) under the Securities Act of 1933, as amended
(the "Securities Act"), on any registration form prescribed by the Securities
and Exchange Commission (the "Commission") permitting a secondary offering or
distribution other than Form S-4 or S-8 (and other than a registration filed in
connection with an exchange offering or an offering of securities solely to
existing holders of the Company's securities), not less than 30 days prior to
each such registration, the Company shall give to the Key Shareholders written
notice of such proposal which shall describe in detail the proposed registration
and distribution (including those jurisdictions where registration or
qualification under the securities or blue sky laws is intended) and, upon the
written request of any Key Shareholder given within 15 days after the date of
any such notice, proceed to include in such registration such Common Shares as
have been requested by any such Key Shareholders to be included in such
registration. The Company will in each instance use its commercially reasonable
best efforts to cause any Common Shares (but not for when-issued trading), the
Key Shareholders of which shall have so requested registration thereof, to be
registered under the Securities Act and qualified under the securities or blue
sky laws of any jurisdiction requested by a prospective seller; provided, that
in the event such registration is an underwritten primary offering on behalf of
the Company and the managing underwriters advise the Company in writing that, in
their opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the Company
will include in such registration, in descending order of priority, (i) first,
the aggregate number of securities to be issued by the Company, (ii) second, the
Common Shares requested by the Key Shareholders to be included in such
registration, and (iii) third, other securities requested to be included in such
registration; and provided further, that to the extent such priority violates
any agreement of the Company with respect to registration of its equity
securities, the shares covered in any such agreement shall be treated on a pro
rata basis with the Common Shares requested by the Key Shareholders to be
included in such registration. The Company will select the managing underwriters
for any offering made pursuant to this Section 2.1.1.
2.1.2 DEMAND REGISTRATION. The holders may: (i) on two (2)
occasions require the Company to effect the registration of Common Shares on
Form S-3 (or any successor form thereto, a "Short Form Registration); and (ii)
in the event a Short Form Registration is unavailable at the time of such
request on one (1) occasion, require the Company to effect the registration (but
not for when-issued trading) of Common Shares on Form S-1 (or any successor form
thereto, a "Long Form Registration"), in each case pursuant to the provisions of
this Section 2.1.2. If one or more Key Shareholders holding at least a majority
in interest of the Common Shares held by all Key Shareholders shall give notice
to the Company to the effect that such Key Shareholders desire to transfer
Common Shares pursuant to a public distribution (within the meaning of the
Securities Act), then the Company shall, as promptly as practicable after
receipt of such notice (but in any event within 90 days after receipt of such
notice), file a registration statement on the appropriate form pursuant to the
Securities Act and cause Common Shares to be registered under the Securities Act
and qualified under the securities or blue sky laws of any jurisdiction
requested by a prospective seller, to the end that such Common Shares may be
sold by the holders thereof under the Securities Act and pursuant to the
securities or blue sky laws of the jurisdictions requested, as promptly as is
practicable thereafter and the Company will use its best efforts to cause any
such registration to become effective and to keep the prospectus included
therein current until the distribution shall have been completed; provided that
such holders shall furnish the Company with such appropriate information in
connection therewith as the Company may reasonably request in writing.
Notwithstanding the foregoing, the Company shall not be required to effect any
registration hereunder for less than 100,000 Common Shares (subject to
appropriate adjustment in the case of stock dividends, stock splits,
recapitalizations and the like). The managing underwriters, if any, for any
offering made pursuant to this Section 2.1.2 shall be selected by the Company,
subject to the consent of the Key Shareholders participating in such offering,
which consent shall not be unreasonably withheld.
4
<PAGE> 5
2.1.3 TERMINATION OF REGISTRATION RIGHTS. The registration
rights contained in this Section 2 terminate at such time as all of the Common
Shares held by the Key Shareholders are either sold pursuant to an effective
registration statement under the Securities Act or are eligible for sale in any
period of three consecutive months pursuant to Rule 144 under the Securities
Act.
2.2 REGISTRATION AND QUALIFICATION PROCEDURES. Whenever the Company is
required by the provisions of Section 2.1 to use its commercially reasonable
best efforts to effect the registration of any of its securities under the
Securities Act, the Company will, as expeditiously as is practicable:
2.2.1 prepare and file with the Commission a registration
statement with respect to such securities;
2.2.2 prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
the prospectus current and to comply with the provisions of the Securities Act
with respect to the sale of all securities covered by such registration
statement whenever the seller of such securities shall desire to sell the same;
2.2.3 furnish to each seller such number of copies of the
registration statement, preliminary prospectuses and prospectuses and each
supplement or amendment thereto and such other documents as each seller may
reasonably request in order to facilitate the sale or other disposition of the
securities owned by such seller in conformity with (i) the requirements of the
Securities Act and (ii) the seller's proposed method of distribution;
2.2.4 register or qualify, or utilize an exemption from
registration or qualification with respect to, the securities covered by such
registration statement under the securities or blue sky laws of such
jurisdictions within the United States as each seller shall reasonably request,
to the extent possible, and do such other reasonable acts and things as may be
required of it to enable each seller to consummate the sale or other
disposition, in such jurisdictions, of the securities owned by such seller;
2.2.5 provide and cause to be maintained a transfer agent and
registrar for securities covered by such registration statement from and after a
date not later than the effective date of such registration statement;
2.2.6 if requested by the underwriters for any underwritten
offering of securities pursuant to a registration requested under Section 2.1,
the Company will enter into an underwriting agreement with such underwriters for
such offering, such agreement to contain such representations and warranties by
the Company and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, provisions with respect to indemnities and contribution as
are reasonably satisfactory to such underwriters and the sellers; and the
sellers on whose behalf securities are to be distributed by such underwriters
will be parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, will also be made to and for the benefit of
such sellers;
2.2.7 furnish, at the request of any seller, on the date such
securities are delivered to the underwriters for sale pursuant to such
registration or, if such securities are not being sold through underwriters, on
the date the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, addressed to the underwriters, if
any, covering such legal matters with respect to the registration in respect of
which such opinion is being given as are customarily included in such opinion
and (ii) letters, dated, respectively, (1) the effective date of the
registration statement and (2) the date such securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, covering such financial,
statistical and accounting matters with respect to the registration in respect
of which such letters are being given as are customarily included in such
letters;
5
<PAGE> 6
2.2.8 otherwise use its commercially reasonable best efforts
to comply with all applicable rules and regulations of the Commission, and make
available to its security holders as soon as reasonably practicable, but not
later than 16 months after the effective date of the registration statement, an
earnings statement covering a period of at least 12 months beginning after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 10(a) of the Securities Act;
2.2.9 make available for inspection by the sellers, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by the sellers
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by the sellers, underwriter, attorney, accountant or agent in
connection with such registration statement;
2.2.10 keep each seller advised in writing as to the
initiation and progress of any registration under Section 2.1, as the case may
be; and
2.2.11 during the period when the registration statement is
required to be effective, notify each seller of the happening of any event as a
result of which the prospectus included in the registration statement contains
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
2.2.12 Holder covenants and agrees that it will provide
customary representations and warranties and opinion of counsel, if requested by
the underwriters, if any, in any registered offering effected pursuant to
Section 2.1.
2.3 ALLOCATION OF EXPENSES. If the Company is required by the provision
of Section 2.1 to use its commercially reasonable best efforts to effect the
registration or qualification under the Securities Act or any state securities
or blue sky laws of any Common Shares, the Company will pay all expenses (other
than underwriters' discounts and commissions with respect to such shares and
legal fees and expenses of the Holders) in connection therewith, including,
without limitation, (a) all expenses incident to filing with the National
Association of Securities Dealers, Inc., (b) registration fees, (c) printing
expenses, (d) accounting and legal fees and expenses, (e) expenses of any
special audits incident to or required by any such registration or qualification
of the Company, (f) expenses of complying with the securities or blue sky laws
of any jurisdictions in connection with such registration or qualification and
(g) all listing and other stock exchange or Nasdaq fees.
6
<PAGE> 7
3. TERMINATION
3.1 This Agreement will continue in full force and effect from the date
hereof through the earliest of the following dates, on which it shall terminate
in its entirety (with the exception of the provisions of Section 2, which shall
survive any such termination until the period specified in Section 2.1.3):
3.1.1 the date on which the Company's Common Stock is first
listed on either (i) the Nasdaq National Market, or (ii) the New York
Stock Exchange; or
3.1.2 ten (10) years from the date of this Agreement;
4. MISCELLANEOUS
4.1 OWNERSHIP. Each Key Shareholder represents and warrants that (a)
she/he now owns the Common Shares, free and clear of liens or encumbrances, and
has not, prior to or on the date of this Agreement, executed or delivered any
proxy or entered into any other voting agreement or similar arrangement other
than one which has expired or terminated prior to the date hereof, and (b) such
Key Shareholder has full power and capacity to execute, deliver and perform this
Agreement, which has been duly executed and delivered by, and evidences the
valid and binding obligation of, such Key Shareholder enforceable in accordance
with its terms.
4.2 FURTHER ACTION. If and whenever the Common Shares are sold, the Key
Shareholders or the personal representative of the Key Shareholders shall do all
things and execute and deliver all documents and make all transfers, and cause
any transferee of the Common Shares to do all things and execute and deliver all
documents, as may be necessary to consummate such sale consistent with this
Agreement.
4.3 SPECIFIC PERFORMANCE. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
or to their heirs, personal representatives, or assigns by reason of a failure
to perform any of the obligations under this Agreement and agree that the terms
of this Agreement shall be specifically enforceable. If any party hereto or his
heirs, personal representatives, or assigns institutes any action or proceeding
to specifically enforce the provisions hereof, any person against whom such
action or proceeding is brought hereby waives the claim or defense therein that
such party or such personal representative has an adequate remedy at law, and
such person shall not offer in any such action or proceeding the claim or
defense that such remedy at law exists.
4.4 AMENDMENT OR WAIVER. This Agreement may be amended (or provisions
of this Agreement waived) only by an instrument in writing signed by (i) the
Company, and (ii) all of the Key Shareholders. Any amendment or waiver so
effected shall be binding upon the Company, each of the parties hereto and any
assignee of any such party.
4.5 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable, the validity and enforceability of the remaining
provisions of this Agreement shall not be affected thereby unless such
construction would clearly be contrary to the intention of the parties or would
result in an unconscionable injustice.
4.6 SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors, assigns,
administrators, executors and other legal representatives.
4.7 ADDITIONAL SHARES. In the event that subsequent to the date of this
Agreement any shares or other securities (other than any shares or securities of
another corporation issued to the Company's shareholders pursuant to a plan of
merger) are issued on, or in exchange for, any of the Common Shares by reason of
any stock dividend, stock split, consolidation of shares, reclassification or
consolidation involving the Company, such shares or securities shall be deemed
to be Common Shares for purposes of this Agreement.
7
<PAGE> 8
4.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.
4.9 WAIVER. No waivers of any breach of this Agreement extended by any
party hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
4.10 ATTORNEY'S FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the most prevailing party in such
dispute shall be entitled to recover from the other party all fees, costs and
expenses reasonably incurred to enforce any right of such prevailing party under
or with respect to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys, which shall include, without limitation,
reasonable fees, costs and expenses of appeals.
4.11 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, along
with the Capital Contribution Agreement and each of the associated agreements,
Annexes, and schedules thereto, constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
4.12 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Nevada, without application of its conflict of
laws provisions. The parties hereby irrevocably and unconditionally submit in
any legal action or proceeding relating to this Agreement to the non-exclusive
general jurisdiction of the courts of the State of Nevada and of the United
States located in Clark County, Nevada and, in any such action or proceeding,
consent to jurisdiction in such courts and waive any objection to the venue in
any such court.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement as of the date first above written.
COMPANY:
DICOM IMAGING SYSTEMS, INC.
By:
----------------------------------
Title:
-------------------------------
KEY SHAREHOLDERS:
- -------------------------------------
Torchmark Holdings
- -------------------------------------
- -------------------------------------
James Ullock
- -------------------------------------
Sheryl Gagne
9
