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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q-SB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2000
Securities and Exchange Commission File Number
000-26369
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)
Suite 432, 114 West Magnolia Street
Bellingham, WA
98225
(Address of principal executive offices, including zip code)
(877) 624-6243
(Registrant's Telephone Number, Including Area Code)
(877) 284-7590
(Registrant's Facsimile Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
requirements for the past 90 days. YES X NO
The number of issued and outstanding shares of the Registrants Common
Stock, $0.001 par value, as of September 30, 2000, was 21,600,000.
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DICOM IMAGING SYSTEMS, INC.
PART I-FINANCIAL INFORMATION
Page
Item 1. Financial Statements:
Consolidated Balance Sheet at September 30, 2000 and December 31, 1999...4
Consolidated Statements of Operations for the three and nine months
ended September 30, 2000 and September 30, 1999..........................6
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and September 30, 1999..........................7
Consolidated Statements of Stockholders' Equity for the nine months
ended September 30, 2000.................................................8
Notes to Unaudited Consolidated Financial Statements...................9-10
Item 2. Management's Discussion and Analysis or Plan of Operation....11-14
PART II-OTHER INFORMATION
Item 1. Legal Proceedings ..............................................15
Item 2. Changes in Securities...........................................15
Item 3. Defaults Upon Senior Securities.................................15
Item 4. Submission of Matters to a Vote of Security Holders.............15
Item 5. Other Information ..............................................15
Item 6. Exhibits and Reports on Form 8-K................................15
Signatures..............................................................16
Exhibits................................................................17
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Special Note Regarding Forward-Looking Statements
Certain statements in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.Words such as "expects","anticipates", "intends", "plans", "believes",
"seeks", "estimates", and "should" and variations of these words and similar
expressions, are intended to identify these forward-looking statements. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. Information contained in this
quarterly report is qualified in its entirety by reference to Dicom's filing
with the Securities and Exchange Commission on Form 10-KSB for the fiscal year
ended December 31, 1999. Particular attention should be given to the risk
factors contained therein.
Part I . Financial Information
Item 1. Financial Statements
Additional information relevant to the following interim unaudited financial
information is included herein by reference to Dicom's audited financial
statements and notes contained in its filing with the Securities and Exchange
Commission on Form 10-KSB for the fiscal year ended December 31, 1999.
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CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
As At September 30, 2000
September 30, 2000 December 31, 1999
(Unaudited) (Audited)
Assets
Current Assets:
Cash and cash equivalents $ 127,669 $ 18,263
Accounts receivable 184,876 48,215
Inventory 98,102 -
Prepaid expenses 36,703 30,468
-----------------------------------
447,350 96,946
Intangible assets 279,092 15,237
Equipment 121,860 46,639
-----------------------------------
$ 848,302 $ 158,822
===================================
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 245,081 $ 56,431
Accrued liabilities 140,138 89,673
Due to shareholder (note 4) 235,700 -
-----------------------------------
620,919 146,104
-----------------------------------
Deferred revenue 186,382 248,699
-----------------------------------
Stockholders' equity (deficit):
Authorized: 10,000,000 preferred stock,
$.001 par value
50,000,000 common stock,
$.001 par value
Issued:
21,600,000 common stock
(December 31, 1999 - 21,600,000) 21,600 21,600
Additional paid in capital 1,149,841 898,415
Deficit (1,130,440) (1,155,996)
----------------------------------------
41,001 (235,981)
$ 848,302 $ 158,822
========================================
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CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(Unaudited)
Three months ended Three months ended Nine months ended Nine months ended
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------------------------------------------------------------------
Sales
$ 348,944 $ 98,777 $ 1,544,602 $ 98,777
Cost
of
sales
236,700 31,592 601,573 31,592
------------------------------------------------------------------
Gross
profit 112,244 67,185 943,029 67,185
------------------------------------------------------------------
Other
income
(note
5) 677,083 - 677,083 -
Operating
expenses:
Depreciation
26,522 9,452 68,205 9,452
General
and
administrative
292,303 281,802 661,815 929,354
Research
and
development
188,272 27,903 398,844 38,672
Selling
and
marketing
182,514 - 465,692 -
-----------------------------------------------------------------
689,611 319,157 1,594,556 977,478
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Continues CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(Unaudited)
Three months ended Three months ended Nine months ended Nine months ended
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------------------------------------------------------------------
Net
income
(loss) $ 99,716 $ (251,972) $ 25,556 $(910,293)
===================================================================
Net
income
(loss) per
share,
basic
and
diluted $ 0.00 $ (0.01) $ 0.00 $ (0.04)
-----------------------------------------------------------------
Weighted
average
common shares
outstanding,
basic
21,600,000 21,600,000 21,600,000 21,600,000
-----------------------------------------------------------------
Weighted average
common shares
outstanding,
diluted
33,181,808 21,600,000 33,181,808 21,600,000
-----------------------------------------------------------------
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CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. dollars)
(Unaudited)
Nine months ended Nine months ended
September 30, 2000 September 30, 1999
-------------------------------------------------
Cash flows from
operating activities:
Net income (loss) 25,556 (910,293)
Items not involving cash:
Stock based compensation 231,926 -
Depreciation and amortization 68,205 9,452
Loss on disposal of equipment 2,754 -
Interest expense related to
warrants on debt 5,200 -
Changes in operating
assets and liabilities:
Accounts receivable (136,661) (68,762)
Inventory (98,102) -
Prepaid expenses (6,235) (21,947)
Accounts payable 188,650 85,909
Accrued liabilities 50,465 -
Deferred revenue (62,317) 100,000
--------------------------------------
Net cash provided by (used in)
operating activities 269,441 (805,641)
Cash flows from
financing activities:
Issue of common shares - 1,000,000
Share issue costs - (50,000)
Short-term loan 250,000 -
--------------------------------------
Net cash provided by
financing activities 250,000 950,000
Cash flows from
investing activities:
Purchase of equipment (103,164) (63,148)
Purchase of trademarks (306,871) -
--------------------------------------
Net cash used in
investing activities (410,035) (63,148)
--------------------------------------
Net increase in cash
and cash equivalents 109,406 81,211
Cash and cash equivalents, 18,263 -
beginning of period
--------------------------------------
Cash and cash equivalents, $ 127,669 $ 81,211
end of period --------------------------------------
Supplementary information:
Interest paid $ 13,372 $ -
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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Expressed in U.S. dollars)
Nine months ended September 30, 2000
(Unaudited)
Total
Common stock Additional Income stockholders'
Shares Amount paid-in capital (Deficit) equity
Balance,
12-31-99
(note 7) 21,600,000 $ 21,600 $ 898,415 $(1,155,996) $ (235,981)
Issuance
of stock
options
(note 6) - - 150,293 - 150,293
Deferred
compensation
of stock
options
(note 6) - - 81,633 - 81,633
Warrants issued
on debt
financing
(note 4) - - 19,500 - 19,500
Net income - - - 25,556 25,556
------------------------------------------------------------------
Balance,
9-30-00 21,600,000 $ 21,600 $ 1,149,841 $(1,130,440) $ 41,001
------------------------------------------------------------------
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Dicom Imaging Systems, Inc.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
Nine months ended September 30, 2000
1. Nature of business:
Dicom Imaging Systems, Inc. (the "Company") was incorporated in 1999 under
the Nevada Corporation Code and is in the business of developing and
selling dental imaging software and support contracts, as well as selling
related imaging hardware. These consolidated financial statements have been
prepared on a going concern basis in accordance with United States
generally accepted accounting principles. The going concern basis of
presentation assumes the Company will continue in operation for the
foreseeable future and will be able to realize its assets and discharge its
liabilities and commitments in the normal course of business. Certain
conditions, discussed below, currently exist which raise substantial doubt
upon the validity of this assumption. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
The Company's future operations are dependant upon the market's acceptance
of its products and the Company's ability to license its products around
the world. There can be no assurance that the Company's products will be
able to secure market acceptance or that it will be able to license its
products. The Company does not have sufficient working capital to sustain
operations until the end of the year ended December 31, 2000. Additional
debt or equity financing will be required and may not be available or may
not be available on reasonable terms.
2. Significant accounting policies:
(a) Basis of presentation:
These unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in
the United States and the rules and regulations of the Securities and
Exchange Commission. The unaudited interim financial statements include
all adjustments, consisting solely of normal recurring adjustments,
which in management's opinion are necessary for a fair presentation of
the financial results for the interim periods. The financial statements
include the accounts of the Company's wholly owned subsidiary, 527403
B.C. Limited. All significant intercompany balances and transactions
have been eliminated in the unaudited consolidated financial
statements. The interim financial statements have been prepared on a
basis consistent with the annual financial statements of the Company
and should be read in conjunction therewith. The Company's results of
operations for any interim period are not necessarily indicative of the
results of operations for any other interim period or for a full fiscal
year.
(b) Use of estimates:
The preparation of the unaudited consolidated financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and
recognized revenues and expenses for the reporting periods. In these
unaudited consolidated financial statements, the significant areas
requiring the use of estimates include the valuation of long-lived
assets, including intangible assets, the fair value of stock options
and the recognition of revenue. Actual results may significantly differ
from these estimates.
(c) Revenue recognition:
The Company generates revenues through three sources: hardware,
software licenses and services. Hardware revenues are recognized when
goods are shipped and title passes. Software license revenues are
normally generated from licensing the perpetual right to use the
Company's products directly to end-users and indirectly through
resellers. The Company recognizes as revenue only the fee payable from
the reseller, net of any discount. Service revenues are generated from
telephone support services.
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Revenues from software license agreements are recognized upon delivery
of software if persuasive evidence of an arrangement exists, collection
is probable, the fee is fixed or determinable, and vendor-specific
objective evidence exists to allocate the total fee to elements of the
arrangement. Vendor-specific objective evidence is typically based on
the price charged when an element is sold separately, or, in the case
of an element not yet sold separately, the price established by
authorized management, if it is probable that the price, once
established, will not change before market introduction. Elements
included in multiple element arrangements could consist of software
products, upgrades, enhancements or customer support services. The
Company's agreements with its customers and resellers do not contain
product return rights.
Service revenues are recognized ratably over the term of the contract,
typically one year. If a transaction includes both license and service
elements, license fee revenues are recognized on shipment of the
software, provided services do not include significant customization or
modification of the base product, and the payment terms for licenses
are not subject to acceptance criteria. Revenues that have been prepaid
or invoiced but do not yet qualify for recognition under that Company's
policies are reflected as deferred revenues.
(d) Inventories
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, and net realizable value.
(e) Intangible assets:
Intangible assets are stated at cost and are amortized using the
straight-line method over their estimated useful lives of five years.
(f) Research and development and advertising:
Research and development and advertising costs are expensed as
incurred.
3. Net income (loss) per share:
The basic and diluted weighted average number of common shares
outstanding gives effect on a retroactive basis to the 3 for 1 stock split which
occurred on April 5, 2000 for all shareholders as of record on March 31, 2000
and reflects the issued and outstanding shares as of September 30, 2000.
4. Due to shareholder:
On August 16, 2000, the company entered into a short-term loan
agreement that consisted of an unsecured promissory note for $250,000. The note
bears interest at a rate of 10% per annum. The note is repayable in 180 days
from the date of issuance of the note, or when the Company receives debt or
equity financing equal to or greater than $500,000, if this event occurs before
180 days from the date of issuance of the note. As consideration for the
execution of the note, the Company has also granted 31,620 warrants to the
noteholder to purchase common stock of the company at $2.37 per share. The
Company has recorded the $250,000 received as a shareholder loan and equity due
to the warrants that were issued. The loan and equity components have been
determined to be $230,500 and $19,500 respectively based on relative fair
values. The loan components is being accreted over the term of the promissory
note to the face value of $250,000.
5. Other income:
On September 26th, 2000, the license agreement with CLG, also known as
the "Spanish deal", was terminated. This resulted in the recognition of $677,083
of revenue which has been recorded as other income. Deferred revenue has been
accordingly reduced by $677,083. The company and the licensee have signed a
settlement agreement, releasing each other from any further obligations under
the license agreement.
6. Stock-Based Compensation:
On August 1, 2000, a consultant of the Company changed his status to an
employee. This required a recalculation of their stock-based award under the
intrinsic value method whereas it was previously calculated under the provisions
of Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation". This resulted in a decrease of the fair value of
options issued in the period from January 1, 2000 to September 30, 2000 by
$1,278,068. Deferred compensation of stock options was decreased respectively by
the unamortized portion of the deferred compensation costs of $1,259,172.
In addition, on September 19, 2000, a previously granted option was repriced.
This resulted in an increase of the fair value of options issued in the period
from January 1, 2000 to September 30, 2000 by $3,427. The related deferred
compensation costs of $29,616 was also added to deferred compensation of stock
options.
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7. Common stock:
The number of common shares outstanding gives effect on a retroactive basis to
the 3 for 1 stock split which occurred on April 5, 2000 for all shareholders as
of record on March 31, 2000 and reflects the issued and outstanding shares as of
September 30, 2000. 8. Comparative Figures:
Certain comparative figures have been restated to conform to the presentation
adopted in the current period.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
consolidated financial statements for the three month periods ended September
30, 2000 and 1999 and the Form 10 KSB for the fiscal year ended December 31,
1999.
REVENUES
Total revenues for the three months ended September 30, 2000 were $1,026,027.
This amount includes $677,083 of revenue recognized due to the termination of
the license agreement with CLG, also known as the "Spanish deal". The remaining
$348,944 of revenue includes $10,624 of revenue recognized from previously
deferred long-term license agreements and support contracts. The remaining
$338,320 was derived primarily from the sale of hardware and software licenses
directly to dentists and dealers in the United States, as compared to $98,777
for the quarter ended September 30, 1999. Revenues for the nine months ended
September 30, 2000, including the $677,083 of other income, total $2,221,685.
$500,000 of this revenue was recorded as deferred revenue at December 31, 1999
and was derived from the termination of the agreement with Mr. Doug Campbell
that resulted in a settlement, whereby the Company fulfilled all of its
obligations by delivering to him 650 copies of the software license. Of the
total sales amount, $184,876 remains in accounts receivable; the remainder was
received in cash. All of our revenues were paid in US currency.
The company has recorded deferred revenue as at September 30, 2000 in the amount
of $186,382. This consists primarily of monies received in exchange for issuing
exclusive three and four-year contracts to distributors in the United Kingdom
and Australia. This deferred revenue will be recognized ratably over the term of
the contracts (3 to 4 years). These contracts also provide the company with a
royalty based on sales by these distributors. The royalties are receivable
starting in the second year of these contracts. The deferred revenue as at
September 30, 1999 was $100,000 and related to the agreement with Mr. Doug
Campbell, which was terminated in the first quarter of 2000.
GROSS MARGIN
Cost of sales for the three months ended September 30, 2000 were $236,700,
leaving a Gross Margin of $112,244, which equates to 32% of sales. 30% of this
gross margin relates to the sales of hardware and software licenses directly to
dentists. The total cost of sales for the nine months ended September 30, 2000
was $601,573, leaving a Gross Margin of $943,029. 36% of this gross margin
relates to the sales of hardware and software licenses directly to dentists. The
reason for the fluctuation in gross margin relates to the proportion of hardware
sales versus software sales. In the third quarter of 2000, 65% of sales to
dentists were derived from hardware sales, compared to 56% in the second quarter
and 44% in the first quarter. Hardware sales have a higher associated cost of
sales than software sales. Cost of sales included software burning and hardware
costs, freight costs and credit card transaction charges, as well as support
related salaries and telephone charges. Cost of sales for the quarter ending
September 30, 1999 were $31,592, leaving a gross margin of $67,185, which
equates to 68% of sales.
OPERATING EXPENSES
Operating expenses for the three months ended September 30, 2000 include:
- Depreciation and amortization in the amount of $26,522 primarily on
internally used computer hardware, as well as camera equipment used for
demonstration purposes at tradeshows. Depreciation and amortization was
$68,205 for the nine months ended September 30, 2000. The increase in the
third quarter of 2000 is made up of increased amortization due to the
acquisition of the medical license, increased depreciation due to the
purchase of computer hardware and furniture related to personnel increases
and increased depreciation due to the purchase of new demonstration
equipment. The total cost of new computer hardware and furniture purchased
in the third quarter of 2000 is $19,518. The total cost of new
demonstration equipment purchased in the third quarter of 2000 is $7,592.
Depreciation in the 3 months ending September 30, 1999 was $9,452. Fixed
assets at September 30, 1999 consisted of internally used computer
hardware as well as some camera equipment used for demonstration purposes
at tradeshows.
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- General and administrative costs in the amount of $292,303,
compared to $281,802 for the three months ended September 30, 1999.
General and administrative costs in 2000 include administrative
salaries, audit and legal charges, investor relations' charges, rent,
insurance costs and office expenses. The general and administrative
costs in 1999 were made up primarily of start-up expenses. The total
general and administrative expenses for the nine months ended
September 30, 2000 are $661,815. The increase in the third quarter of
2000 was due to increased personnel and hiring costs relating to new
personnel, as well as increased legal fees. The employment agreements
for the new executive personnel have been attached as Exhibit 10.1,
10.2 and 10.3.
- Research and development costs in the amount of $188,272 for software
development, compared to $27,903 for the three months ended September 30,
1999. The increase is due to the hiring of a new IT officer and new staff
members as well as increased charges from outside developers. We expect
our research and development costs to increase in the next months as we
complete the development of the Xray and LabRX modules, as well as the
medical version of the software. The total research and development costs
for the nine months ended September 30, 2000 are $398,844.
- Selling and marketing costs of $182,514. The total selling and marketing
costs for the nine months ended September 30 are $465,692. Selling and
marketing costs include selling and marketing personnel salaries, trade
show costs, advertising, mailings, and web site maintenance. These costs
have increased in order to effect higher sales volumes. There were no
selling and marketing costs in 1999 as the company was still in a start-up
position.
The resulting net income for the three months ended September 30, 2000 was
$99,716, which equates to a fully diluted income per share, after accounting for
the April 5, 2000 stock split, of $.003 per share, decreasing the accumulated
deficit to $1,130,440. The net loss for the three months ended September 30,
1999 was $251,972, which equated to a fully diluted loss per share of $.01 per
share. The amount of weighted average common shares outstanding for the period
ended September 30, 1999 did not include any options, as these options did not
have a dilutive effect at the time.
We have implemented a stock option plan. The plan is an essential tool to
attract and retain the qualified personnel needed to implement our business
strategy. At September 30, 2000, we have granted 13,773,000 options (after
accounting for the April 5, 2000 stock split). While no options have been
exercised as yet, we recorded a non-cash charge to the income statement for the
three months ended September 30, 2000 of $102,842. The stock option plan is
attached as Exhibit 10.4.
The operations for the three months ended September 30, 2000 were funded
primarily from the cash generated from operating activities, as well as a
short-term loan in the amount of $250,000 from a shareholder, Torchmark Holdings
Ltd. A copy of the promissory note payable to Torchmark Holdings has been
attached as Exhibit 10.6.
PLAN OF OPERATIONS FOR THE TWELVE MONTH PERIOD ENDING SEPTEMBER 30, 2001
Dicom's vision is to become a dynamic player in selected fields of dental and
medical imaging and related technologies within the global e-health care market.
It is the Company's current strategy to offer comprehensive imaging and image
management software, hardware, Internet and support solutions to the health
professions. The Company's software products utilize the Microsoft Windows
family of operating systems on the desktop and over the Internet. In the next 12
months of operations, the Company's general business approach is to capture
market share of imaging software in dentistry by producing and distributing,
free of charge, a quality imaging software application known as ImagExplorer(TM)
to each and every dentist, dental specialist, dental laboratory, dental
insurance company, and educational facility throughout North America.
Presently, Dicom Imaging Systems Inc. (DIS) derives income primarily from direct
and indirect sales of software modules and associated hardware via a dealer
network, and international distribution licenses. Dicom, however, plans to
introduce new software products over the next 12 months, as part of a general
end-to-end solution strategy within an imaging e-health care portal and to form
appropriate strategic alliances with significant players.
DIS currently provides DICOM compliant software and related technology to
capture, manipulate, analyze and store digital dental images. DICOM represents
the emerging technical standard for the exchange of images in dentistry and
medicine.
DIS's core competencies relate to the creation of industry-leading dental
imaging software, and the marketing of this software in conjunction with related
technologies such as camera hardware and associated software.
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Currently, the software is distributed on CD or downloaded from the Web for
individual PC or Local Area Network client/server installation. It is the
Company's intention to develop the provision of its software within an
integrated end-to-end service environment, which incorporates hardware
technology, practice management software, electronic claims processing and
software support. Alongside the traditional software distribution model, we
envision this service also being available over the Internet, which will bring
an advantage to the user in the area of the elimination of hardware and
computing skill requirements from the practice, as these will be handled
remotely by the service provider.
Product Development
Management believes that the formation of relevant strategic alliances with
significant players offers the fastest and most cost-effective manner to become
major player in a dynamically changing market. Our recent strategic alliance
with Eastman Kodak demonstrates the advantages of this. Our view is this is a
preferred development route because it is faster and requires substantially less
investment than developing our acquiring our own alternative.
In addition to developing our existing and new software modules, we seek to
extend our offer to provide a world-class end-to-end solution for dentists,
encompassing all related technologies. This means adding practice management and
electronic insurance claim strategic relationships, and the requisite software
integration, together with a full portfolio of high performance yet
cost-efficient imaging hardware. This solution will be made available both on an
installed client/server basis, as appropriate, and for delivery over the
Internet in an Application Service Provider mode.
Dicom has revised its product development and release schedules in order to meet
the evolving demands of a dynamic marketplace. The result is that the release of
some new modules is being delayed to accommodate the requirement for additional
new modules. The expected outcome of the revised product development schedule is
a greater number of new products which better meet the overall needs of the
market.
There is a strong belief among the major players in the computing industry that
software provision will swiftly migrate to a rental model delivered over the
Internet, as this provides a number of advantages to the user such as: o Access
to the latest technology at a reduced entry price (renting vs. buying) o
Immediate availability of upgrades with no requirement for installation,
minimizing of IT and networking headaches, as well
as maintenance requirements
o Reduction of the cost of required hardware (a simple browser with
Internet access will replace high powered computer processing
requirements)
Ultimately, as dental businesses realize and start to leverage the commercial
advantages the Internet provides, management intends for the Company's web
presence to evolve into active partnerships with major Internet dentistry
portals, linking together all the elements of the supply chain in an industry
trading hub - dentists, insurers, pharmacies, wholesalers and supply product
manufacturers. Each will be able to interact with all the other components in
the supply chain in a more efficient manner with all the speed, flexibility and
superior economics that an e-commerce business model provides. DIS anticipates
participating in the trading hub dynamic on a transaction based revenue model.
International Distribution
In addition to the above, Dicom anticipates formalizing distribution of its
products in Japan and China, as well as elsewhere in Asia, within the next nine
months. Dicom also plans to have formalized distribution agreements in Europe
and Latin America over the next nine months.
The computing industry has started to change its approach to software
distribution and ownership. Businesses today are increasingly shifting their
focus towards their core competency rather than the implementation and
maintenance of information technology. Networks play an increasingly important
role in our day-to-day lives and the Internet, the largest network of all, is
having the greatest impact in the business market today and will continue to do
so in the future. The Internet is acting as the main enabler, allowing
organizations to focus on their core business, outsourcing their overhead and
technology, and switching to an Internet-centric, hosted computing model.
To compete and thrive, it is imperative for any software manufacturer to
recognize this reality and to leverage the power of the Internet to its benefit
by modifying its product offering to enable new centrally hosted versions. In
this context, Dicom is no exception. In order to be increasingly successful, the
Company will start diverting resources in 2001 towards the re-engineering and
adaptation of its product line to a hosted model in the context of an
appropriate strategic relationship.
Presently, Dicom has operations in White Rock, British Columbia and Bellingham,
Washington. The White Rock office contains all of the corporate functions and
operations with the exception of some related marketing activities, which take
place in Bellingham, Washington.
The Company's intent is to move the majority of its operations to the United
States before the end of the current calendar year. These operations include
finance, research and development, testing and quality assurance, technical
operations, Internet production facilities, and marketing and sales. Some
important corporate functions and operations such as the chief executive office,
investor relations, business development and product development are to remain
in Canada.
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Purchases of Plant and Equipment
Dicom anticipates purchasing between $250,000 and $500,000 in computer equipment
and related hardware in the next 12 months. In addition, the Company may need to
expand its currently available office space to accommodate increased growth.
Additional space is available to expand the Company's existing facilities in
White Rock, British Columbia and Bellingham, Washington, though such space may
not be sufficient to accommodate Dicom's need for expansion.
Increases in the Number of Employees
Dicom anticipates hiring up to an additional 15 employees over the next 12
months in the fields of software and web development, sales, marketing, business
development and administration.
Financing Requirements for the Next 12 Months
Dicom will need to complete one or more financings involving sale of its equity
or debt instruments during the next twelve months in order to sustain present
operations and to provide for future growth. The Company contemplates raising
between $4,000,000 and $10,000,000 from financings over the next twelve months.
Management of the Company has not determined the terms and conditions of such a
financing or whether such a financing would be for equity or debt or some
combination thereof. There can be no assurance that such financing would be
available under terms acceptable to the Company. Failure to secure such
financing would have a material adverse impact on the Company's ability to
conduct its business as presently operated or to develop any expansion plans.
Page 14
<PAGE>
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not involved in any material legal proceedings or litigation, and
the officers and directors are aware of no other pending litigation which would
have a material, adverse effect on the Company.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
In March of 2000, Dicom had entered into a Software Agreement with CLG
Investments Limited
("Software Agreement") whereby CLG would pay a License Fee of $2,250,000 for a
license to certain Dicom software. CLG is granted the exclusive right to
distribute copies of Dicom's as ImagExplorer(TM), ImagEditor (TM), Whitener and
Simulator ("Licensed Products") dental imaging software ("License") within the
territories of Mexico, Brazil, Spain and Portugal ("Territory"). $750,000 USD of
the License Fee was paid by CLG upon the signing of the software Agreement. The
remaining $1,500,000 USD of the License Fee was due in two equal installments
due by August 1, 2000 and December 20, 2000 respectively. This agreement was
terminated on September 26, 2000, resulting in the recognition of $677,083 of
revenue. The software agreement did not provide for a right to refund. Dicom
agreed to CLG's request to discontinue its obligations under the license
agreement due to the fact that the $750,000 payment which had been made to Dicom
was non-refundable and other distribution opportunities are present. The revenue
has been recorded as other income in the consolidated statement of operations
for the 3 months ended September 30, 2000. The parties' settlement agreement has
been attached as exhibit 10.5
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 10.1 Executive Compensation Agreement - Don Williams
Exhibit 10.2 Executive Compensation Agreement - Richard Bergin
Exhibit 10.3 Executive Compensation Agreement - Reza Bazargan
Exhibit 10.4 Stock Option Agreement
Exhibit 10.5 Settlement Agreement - CLG
Exhibit 10.6 Promissory Note - Torchmark Holdings Ltd.
Exhibit 27.1 Financial Data Schedule
(b) Reports on 8-K
None.
Page 15
<PAGE>
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: November 14, 2000
By: /s/ David Gane
David Gane
President and Chief Executive Officer
Page 16
<PAGE>
Exhibit 10.1 - Executive Employment Agreement - Don Williams
Introduction
This Executive Employment Agreement ("Agreement") is made and effective this
June 20, 2000 by and between Dicom Imaging Systems, Inc. ("Company") and Don
Williams ("Executive"). Now, therefore, the parties hereto agree as follows:
Employment.
Company hereby agrees to employ Executive as its Chief Operating Officer and
Executive hereby accepts such employment in accordance with the terms of this
Agreement. The Executive will devote his best efforts, skills, judgment and
abilities to the performance of his employment duties and responsibilities and
will work on a full time basis for the Company. Nothing within this agreement is
to be interpreted to create or imply any obligation of the Company to continue
to employ the Executive for any period of time or to create or grant any rights
to Executive not specifically denominated in this Agreement. The Executive may
be terminated at will by the Company, at any time and for any reason, subject
only to the compensation specified for such a termination specifically in this
Agreement.
Election or appointment of Executive to another office or position, if such
office or position is substantially inferior to Executive's initial office or
position as deemed customary by the industry in the field of employment, shall
be considered a breach of this agreement.
The Company undertakes to provide all necessary support in a timely manner to
facilitate the ability of the Executive to work as necessary in the United
States, including the Executive's acquisition of U.S. permanent residency
status. However, if the Company, despite its best efforts is unable to
facilitate such residency and work permit status for the Executive in the United
States, the Company may elect to revoke this clause of the agreement.
Duties of the Executive
The duties of the Chief Operating Officer (COO) include assisting the CEO in
directing the overall operation of the business in accordance with the policies
and objectives established by the Board and CEO. The COO assists the CEO in
establishing the long-range objectives, plans, and policies for the Company. The
COO also coordinates the efforts of different departments consistent with
Company priorities, directs essential Company priorities that demand immediate
remedies, and provides an operational perspective to executives in other areas
of the Company. Executive shall perform all duties in a professional, ethical
and businesslike manner.
The Executive shall be required to participate in any Executive Management
Committee of the Company and be given the required authority to perform
Executive's duties with regard to implementation of the corporate business plan.
Compensation Executive will be paid compensation during this Agreement as
follows:
>> A base salary of USD $10,500 per month in the first year, payable in
installments according to the Company's regular payroll schedule.
>> A base salary of USD $13,500 per month in the second and third years,
payable in installments according to the Company's regular payroll schedule.
>> A signing bonus of USD $5,000 payable upon signing of the employment
contract.
>> A performance bonus of USD $20,000 following the successful completion
of a 90 day probation period within which the preparation of a revised
corporate business plan will be finalized. Given the successful
completion of the probationary period and revised corporate business
plan, the Executive's position title will be changed to President and
Chief Operating Officer.
>> A performance bonus equal to 15% of the Executive's total salary
remuneration if company's revenue should exceed the targeted
performance (as specified in the most current business plan) by 25% -
49%, payable within 30 days of the anniversary of Executive's
employment.
>> A performance bonus equal to 25% of the Executive's total salary
remuneration if company's revenue should exceed the targeted
performance (as specified in the most current business plan) by 50% or
more, payable within 30 days of the anniversary of Executive's
employment.
>> An initial base option plan granting 450,000 options to purchase the
Company's stock at the low bid price on the date of the signing of this
agreement, vested according to the following schedule:
After 8 months of employment 25% of the total
After 12 months of employment 50% of the total
After 18 months of employment 75% of the total
After 24 months of employment 100% of the total
Page 17
<PAGE>
>> An additional base option plan at the beginning of the second year of
employment granting 150,000 options to purchase the Company's stock at
the low bid price on the date of the signing of this agreement, vested
according to the schedule above in the ensuing 24 month period (i.e.,
in the second and third year of employment).
>> An incentive option plan granting additional options according to the
following schedule:
Either stock price increases to $7.50 or Base option plan increased by
25% Company's revenue exceeds target by 75% to 99%.
Either stock price increases to $10.00 or Base option plan increased by
50% Company's revenue exceeds target by 100% to 124%.
Either stock price increases to $15.00 or Base option plan increased by
100% Company's revenue exceeds target by 125% to 174%.
Either stock price increases to $20.00 or Base option plan increased by
200% Company's revenue exceeds target by 175% or more.
>> For the purposes of determination of the Company's stock price with
respect to the incentive option plan, this shall be regarded as the
average of the best 10 days' closing price in any one calendar month
period. The Company's revenue performance shall be measured against the
forecast performance in the revised business plan, which is to be
prepared during the 90-day employment probation period.
>> In the event of an acquisition of the Company or a merger or a change
in the control of the Company or if the Company disposes of all its
assets, all share option plans outlined above shall be moved forward
six calendar months for vesting purposes.
>> In the event of the death of the Executive while this agreement is in
force, all current stock options shall be prorated from the date of
this agreement, and shall pass to the estate of the Executive.
>> The Executive shall be entitled to trade any amount or all vested shares
without restraint.
Benefits
Vacations & Holidays
Executive will be entitled to four weeks paid holidays each calendar year,
without any qualifying period, and all statutory public holidays. Company will
notify Executive on or about the beginning of each calendar year with respect to
the public holiday schedule for the coming year. Personal holidays, if any, will
be scheduled in advance subject to the requirements of Company.
Medical and Group Life Insurance
Company agrees to include Executive in a group medical and hospital plan of the
Company and provide group life insurance for Executive at no charge to Executive
in an amount equal to twice the Executive's total annual base salary, without
limit, during this Agreement. The company shall also provide short-term and
long-term disability insurance as appropriate to the Executive's position.
Executive shall be responsible for payment of any federal or provincial income
tax imposed upon these benefits.
Expense Reimbursement
Executive shall be entitled to reimbursement for all reasonable expenses,
including mileage in own car, travel and entertainment, incurred by Executive in
the performance of Executive's duties and pursuant to the travel policy in
effect and at that time. Executive will maintain records and written receipts as
required by the Company policy and as reasonably requested by the Board of
Directors to substantiate such expenses. All expenses are to be reimbursed
within fifteen business days of submission.
Training
The Executive shall be entitled to a minimum of 40 hours training per year, at a
location appropriate to the training in question.
Term and Termination
The Agreement shall commence on June 20, 2000 and it shall continue in
effect for a period of one year. Thereafter, the Agreement shall be renewed upon
the mutual written agreement of Company and Executive and the terms of this
Agreement shall remain in force, unless mutually agreed otherwise in writing.
This Agreement and Executive's employment may be terminated at Company's
discretion, provided that Company shall pay to Executive an amount equal to
payment at Executive's base salary rate for a period of six months or the
remainder of the 1st employment year, whichever is smaller. After the 1st
Employment year, Executive shall be entitled to three months of payments at the
Executive's base salary rate. In the event of any such non-renewal or
termination pursuant to this section, Executive shall be entitled a minimum of
three month's salary paid in full in advance.
Executive may terminate this Agreement, at Executive's discretion by
providing at least fourteen (14) days prior written notice to Company.
In the event of termination by Executive, Company may immediately
relieve Executive of all duties and immediately terminate this
Agreement.
Page 18
<PAGE>
>> In the event that Executive is in breach of any material obligation
owed to the Company in this Agreement, habitually or grossly neglects
the duties to be performed under this Agreement, engages in any conduct
which is dishonest, damages the reputation or standing of the Company,
or is convicted of any criminal act or engages in any act of moral
turpitude, then Company may terminate this Agreement immediately. In
event of termination of the agreement pursuant to this section,
Executive shall be paid only at the then applicable total salary rate
up to and including the date of termination. Executive shall be paid
any incentive salary payments or other compensation, which are due at
the time of termination and which have been fully earned as of that
date. In the case of a termination for cause, as defined above,
Executive shall not receive any pro rata amounts of bonus or incentive
compensation not already fully earned.
Notices
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery service.
If to Company:
Dicom Imaging Systems, Inc.
Suite 201-15047 Marine Drive
White Rock, B.C. V4B 1C5
If to Executive:
Don Williams
3057 McBride Avenue
Surrey, B.C. V4A 3G9
Confidentiality Covenant
For the purposes of this Agreement, "Confidential Information" means all
information, data, trade secrets, technology, knowledge and know how, in
whatever form and however communicated, relating directly or indirectly to the
Company and its affiliates, that is delivered or disclosed by the Company to the
Executive or which the Executive learns or obtains through his employment by the
Company.
All Confidential Information shall be treated as secret and confidential by the
Executive and shall not be disclosed by the Executive to any person without the
consent of the Company except to the extent that the Executive is required by
court to disclose the Confidential Information.
The Executive acknowledges and agrees that as a result of the sensitive nature
of the Confidential Information, the Executive holds the same in trust for the
Company and the Executive stands in a fiduciary relationship with the company.
In addition, Executive acknowledges that any work product, information,
invention, improvement, innovation or any other intellectual property developed
during the term of this Agreement by the Executive in the field in which the
Company competes or may compete, as defined in the prevailing business plan,
shall be the sole and exclusive property of the Company and Executive hereby
acknowledges and conveys any interest in the same. Should the Executive conceive
of an innovation during the term of this agreement which is not in the field in
which the Company competes, the Company shall have the right of first refusal on
any such new innovation for a period of 45 calendar days during which it must
outline in writing to the Executive its intent, if any, with respect to the
innovation. Any disputes related to this section of the Agreement shall be dealt
with in accordance with the Arbitration section of this Agreement.
In addition, Executive agrees to sign and abide by the Company's standard
non-compete, work-for-hire and non-disclosure agreements and agrees that any
breach of these covenants constitutes grounds for a termination by cause.
Final Agreement
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only in writing
that is duly executed by both parties.
Governing Law
This Agreement shall be construed and enforced in accordance with the laws of
the State of Nevada.
Headings
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
Severability
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
Arbitration
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be
entered in any court having jurisdiction thereof. Any such arbitration shall be
conducted in the State of Washington, or such other place as may be mutually
agreed upon by the parties. Within fifteen (15) days after the commencement of
the arbitration, each party shall select one person to act as arbitrator, and
the two arbitrators so selected shall select a third arbitrator within ten (10)
days of their appointment.
Page 19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
DICOM Imaging Systems Inc. Employee
Per:
------------------------- ----------------------------
Authorized Signatory Don Williams
Page 20
<PAGE>
Exhibit 10.2 - Executive Employment Agreement - Richard Bergin
Introduction
This Executive Employment Agreement ("Agreement") is made and effective this
June 20, 2000 by and between Dicom Imaging Systems, Inc.("Company") and
Richard Bergin ("Executive"). Now, therefore, the parties hereto agree
as follows:
Employment.
Company hereby agrees to employ Executive as its Vice President of Marketing and
Sales and Executive hereby accepts such employment in accordance with the terms
of this Agreement. The Executive will devote his best efforts, skills, judgment
and abilities to the performance of his employment duties and responsibilities
and will work on a full time basis for the Company. Nothing within this
agreement is to be interpreted to create or imply any obligation of the Company
to continue to employ the Executive for any period of time or to create or grant
any rights to Executive not specifically denominated in this Agreement. The
Executive may be terminated at will by the Company, at any time and for any
reason, subject only to the compensation specified for such a termination
specifically in this Agreement.
Election or appointment of Executive to another office or position, if such
office or position is substantially inferior to Executive's initial office or
position as deemed customary by the industry in the field of employment, shall
be considered a breach of this agreement.
The Company undertakes to provide all necessary support in a timely manner to
facilitate the ability of the Executive to work as necessary in the United
States, including the Executive's acquisition of U.S. permanent residency
status. However, if the Company, despite its best efforts is unable to
facilitate such residency and work permit status for the Executive in the United
States, the Company may elect to revoke this clause of the agreement.
Duties of the Executive
The duties of the Vice President of Marketing and Sales include overseeing the
marketing and sales functions of the Company. Reporting to the COO, the
Executive shall determine target sales volume and develop budgets, marketing
programs, and sales strategies. The VP of Marketing and Sales directs the
activities of the marketing department. The Executive shall perform all duties
in a professional, ethical and businesslike manner.
The Executive shall be required to participate in any Executive Management
Committee of the Company and be given the required authority to perform
Executive's duties with regard to implementation of the corporate business plan.
Compensation
Executive will be paid compensation during this Agreement as follows:
>> A base salary of USD $8,800 per month in the first year, payable in
installments according to the Company's regular payroll schedule.
>> A base salary of USD $10,800 per month in the second and third years,
payable in installments according to the Company's regular payroll schedule.
>> A signing bonus of USD $5,000 payable upon signing of the employment
contract.
>> A performance bonus of USD $20,000 following the successful completion of a
90 day probation period within which the preparation of a revised corporate
business plan will be finalized.
>> A performance bonus equal to 15% of the Executive's total salary
remuneration if company's revenue should exceed the targeted
performance (as specified in the most current business plan) by 25% -
49%, payable within 30 days of the anniversary of Executive's
employment.
>> A performance bonus equal to 25% of the Executive's total salary
remuneration if company's revenue should exceed the targeted
performance (as specified in the most current business plan) by 50% or
more, payable within 30 days of the anniversary of Executive's
employment.
>> An initial base option plan granting 350,000 options to purchase the
Company's stock at the low bid price on the date of the signing of this
agreement, vested according to the following schedule:
After 8 months of employment 25% of the total
After 12 months of employment 50% of the total
After 18 months of employment 75% of the total
After 24 months of employment 100% of the total
Page 21
<PAGE>
>> An additional base option plan at the beginning of the second year of
employment granting 125,000 options to purchase the Company's stock at
the low bid price on the date of the signing of this agreement, vested
according to the schedule above in the ensuing 24 month period (i.e.,
in the second and third year of employment).
>> An incentive option plan granting additional options according to the
following schedule:
Either stock price increases to $7.50 or Base option plan increased by
25% Company's revenue exceeds target by 75% to 99%.
Either stock price increases to $10.00 or Base option plan increased by
50% Company's revenue exceeds target by 100% to 124%.
Either stock price increases to $15.00 or Base option plan increased by
100% Company's revenue exceeds target by 125% to 174%.
Either stock price increases to $20.00 or Base option plan increased by
200% Company's revenue exceeds target by 175% or more.
>> For the purposes of determination of the Company's stock price with
respect to the incentive option plan, this shall be regarded as the
average of the best 10 days' closing price in any one calendar month
period. The Company's revenue performance shall be measured against the
forecast performance in the revised business plan, which is to be
prepared during the 90-day employment probation period.
>> In the event of an acquisition of the Company or a merger or a change
in the control of the Company or if the Company disposes of all its
assets, all share option plans outlined above shall be moved forward
six calendar months for vesting purposes.
>> In the event of the death of the Executive while this agreement is in
force, all current stock options shall be prorated from the date of
this agreement, and shall pass to the estate of the Executive.
>> The Executive shall be entitled to trade any amount or all vested shares
without restraint.
Benefits
Vacations & Holidays
Executive will be entitled to four weeks paid holidays each calendar year,
without any qualifying period, and all statutory public holidays. Company will
notify Executive on or about the beginning of each calendar year with respect to
the public holiday schedule for the coming year. Personal holidays, if any, will
be scheduled in advance subject to the requirements of Company.
Medical and Group Life Insurance
Company agrees to include Executive in a group medical and hospital plan of the
Company and provide group life insurance for Executive at no charge to Executive
in an amount equal to twice the Executive's total annual base salary, without
limit, during this Agreement. The company shall also provide short-term and
long-term disability insurance as appropriate to the Executive's position.
Executive shall be responsible for payment of any federal or provincial income
tax imposed upon these benefits.
Expense Reimbursement
Executive shall be entitled to reimbursement for all reasonable expenses,
including mileage in own car, travel and entertainment, incurred by Executive in
the performance of Executive's duties and pursuant to the travel policy in
effect and at that time. Executive will maintain records and written receipts as
required by the Company policy and as reasonably requested by the Board of
Directors to substantiate such expenses. All expenses are to be reimbursed
within fifteen business days of submission.
Training
The Executive shall be entitled to a minimum of 40 hours training per year, at a
location appropriate to the training in question.
Term and Termination
>> The Agreement shall commence on June 20, 2000 and it shall continue in
effect for a period of one year. Thereafter, the Agreement shall be
renewed upon the mutual written agreement of Company and Executive and
the terms of this Agreement shall remain in force, unless mutually
agreed otherwise in writing. This Agreement and Executive's employment
may be terminated at Company's discretion, provided that Company shall
pay to Executive an amount equal to payment at Executive's base salary
rate for a period of six months or the remainder of the 1st employment
year, whichever is smaller. After the 1st Employment year, Executive
shall be entitled to three months of payments at the Executive's base
salary rate. In the event of any such non-renewal or termination
pursuant to this section, Executive shall be entitled a minimum of
three month's salary paid in full in advance.
Page 22
<PAGE>
>> Executive may terminate this Agreement, at Executive's discretion by
providing at least fourteen (14) days prior written notice to Company.
In the event of termination by Executive, Company may immediately
relieve Executive of all duties and immediately terminate this
Agreement.
>> In the event that Executive is in breach of any material obligation
owed to the Company in this Agreement, habitually or grossly neglects
the duties to be performed under this Agreement, engages in any conduct
which is dishonest, damages the reputation or standing of the Company,
or is convicted of any criminal act or engages in any act of moral
turpitude, then Company may terminate this Agreement immediately. In
event of termination of the agreement pursuant to this section,
Executive shall be paid only at the then applicable total salary rate
up to and including the date of termination. Executive shall be paid
any incentive salary payments or other compensation, which are due at
the time of termination and which have been fully earned as of that
date. In the case of a termination for cause, as defined above,
Executive shall not receive any pro rata amounts of bonus or incentive
compensation not already fully earned.
Notices
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery service.
If to Company:
Dicom Imaging Systems, Inc.
Suite 201-15047 Marine Drive
White Rock, B.C. V4B 1C5
If to Executive:
Richard Bergin
7272 Adera Street
Vancouver, B.C. V6P 5C4
Confidentiality Covenant
For the purposes of this Agreement, "Confidential Information" means all
information, data, trade secrets, technology, knowledge and know how, in
whatever form and however communicated, relating directly or indirectly to the
Company and its affiliates, that is delivered or disclosed by the Company to the
Executive or which the Executive learns or obtains through his employment by the
Company.
All Confidential Information shall be treated as secret and confidential by the
Executive and shall not be disclosed by the Executive to any person without the
consent of the Company except to the extent that the Executive is required by
court to disclose the Confidential Information.
The Executive acknowledges and agrees that as a result of the sensitive nature
of the Confidential Information, the Executive holds the same in trust for the
Company and the Executive stands in a fiduciary relationship with the company.
In addition, Executive acknowledges that any work product, information,
invention, improvement, innovation or any other intellectual property developed
during the term of this Agreement by the Executive in the field in which the
Company competes or may compete, as defined in the prevailing business plan,
shall be the sole and exclusive property of the Company and Executive hereby
acknowledges and conveys any interest in the same. Should the Executive conceive
of an innovation during the term of this agreement which is not in the field in
which the Company competes, the Company shall have the right of first refusal on
any such new innovation for a period of 45 calendar days during which it must
outline in writing to the Executive its intent, if any, with respect to the
innovation. Any disputes related to this section of the Agreement shall be dealt
with in accordance with the Arbitration section of this Agreement.
In addition, Executive agrees to sign and abide by the Company's standard
non-compete, work-for-hire and non-disclosure agreements and agrees that any
breach of these covenants constitutes grounds for a termination by cause.
Final Agreement
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only in writing
that is duly executed by both parties.
Governing Law
This Agreement shall be construed and enforced in accordance with the laws of
the State of Nevada.
Headings
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
Severability
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
Arbitration
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be
entered in any court having jurisdiction thereof. Any such arbitration shall be
conducted in the State of Washington, or such other place as may be mutually
agreed upon by the parties. Within fifteen (15) days after the commencement of
the arbitration, each party shall select one person to act as arbitrator, and
the two arbitrators so selected shall select a third arbitrator within ten (10)
days of their appointment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
DICOM Imaging Systems Inc. Employee
Per:
------------------------- ----------------------------
Authorized Signatory Richard Bergin
Page 23
<PAGE>
Exhibit 10.3 - Executive Employment Agreement - Reza Bazargan
Introduction
This Executive Employment Agreement ("Agreement") is made and effective this
June 20, 2000 by and between Dicom Imaging Systems, Inc. ("Company") and Reza
Bazargan ("Executive"). Now, therefore, the parties hereto agree as follows:
Employment.
Company hereby agrees to employ Executive as its Chief Technology Officer and
Executive hereby accepts such employment in accordance with the terms of this
Agreement. The Executive will devote his best efforts, skills, judgment and
abilities to the performance of his employment duties and responsibilities and
will work on a full time basis for the Company. Nothing within this agreement is
to be interpreted to create or imply any obligation of the Company to continue
to employ the Executive for any period of time or to create or grant any rights
to Executive not specifically denominated in this Agreement. The Executive may
be terminated at will by the Company, at any time and for any reason, subject
only to the compensation specified for such a termination specifically in this
Agreement.
Election or appointment of Executive to another office or position, if such
office or position is substantially inferior to Executive's initial office or
position as deemed customary by the industry in the field of employment, shall
be considered a breach of this agreement.
The Company undertakes to provide all necessary support in a timely manner to
facilitate the ability of the Executive to work as necessary in the United
States, including the Executive's acquisition of U.S. permanent residency
status. However, if the Company, despite its best efforts is unable to
facilitate such residency and work permit status for the Executive in the United
States, the Company may elect to revoke this clause of the agreement.
Duties of the Executive
The duties of the Chief Technology Officer (CTO) include overseeing the
long-range research and development as well as technical operations of the
Company. Reporting to the COO, the Executive shall direct the Company's
research, product development, quality assurance and control, purchase of
hardware and software, and technological communication throughout the Company.
The Executive shall perform all duties in a professional, ethical and
businesslike manner.
The Executive shall be required to participate in any Executive Management
Committee of the Company and be given the required authority to perform
Executive's duties with regard to implementation of the corporate business plan.
Compensation
Executive will be paid compensation during this Agreement as follows:
>> A base salary of USD $8,800 per month in the first year, payable in
installments according to the Company's regular payroll schedule.
>> A base salary of USD $10,800 per month in the second and third years,
payable in installments according to the Company's regular payroll schedule.
>> A signing bonus of USD $5,000 payable upon signing of the employment
contract.
>> A performance bonus of USD $20,000 following the successful completion of a
90 day probation period within which the preparation of a revised corporate
business plan will be finalized.
>> A performance bonus equal to 15% of the Executive's total salary
remuneration if company's revenue should exceed the targeted
performance (as specified in the most current business plan) by 25% - 49%,
payable within 30 days of the anniversary of Executive's employment.
>> A performance bonus equal to 25% of the Executive's total salary
remuneration if company's revenue should exceed the targeted
performance (as specified in the most current business plan) by 50% or
more, payable within 30 days of the anniversary of Executive's
employment.
>> An initial base option plan granting 350,000 options to purchase the
Company's stock at the low bid price on the date of the signing of this
agreement, vested according to the following schedule:
After 8 months of employment 25% of the total
After 12 months of employment 50% of the total
After 18 months of employment 75% of the total
After 24 months of employment 100% of the total
>> An additional base option plan at the beginning of the second year of
employment granting 125,000 options to purchase the Company's stock at
the low bid price on the date of the signing of this agreement, vested
according to the schedule above in the ensuing 24 month period (i.e.,
in the third and fourth year of employment).
>> An incentive option plan granting additional options according to the
following schedule:
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Either stock price increases to $7.50 or Base option plan increased by
25% Company's revenue exceeds target by 75% to 99%.
Either stock price increases to $10.00 or Base option plan increased by
50% Company's revenue exceeds target by 100% to 124%.
Either stock price increases to $15.00 or Base option plan increased by
100% Company's revenue exceeds target by 125% to 174%.
Either stock price increases to $20.00 or Base option plan increased by
200% Company's revenue exceeds target by 175% or more.
>> For the purposes of determination of the Company's stock price with
respect to the incentive option plan, this shall be regarded as the
average of the best 10 days' closing price in any one calendar month
period. The Company's revenue performance shall be measured against the
forecast performance in the revised business plan, which is to be
prepared during the 90-day employment probation period.
>> In the event of an acquisition of the Company or a merger or a change
in the control of the Company or if the Company disposes of all its
assets, all share option plans outlined above shall be moved forward
six calendar months for vesting purposes.
>> In the event of the death of the Executive while this agreement is in
force, all current stock options shall be prorated from the date of
this agreement, and shall pass to the estate of the Executive.
>> The Executive shall be entitled to trade any amount or all vested shares
without restraint.
Benefits
Vacations & Holidays
Executive will be entitled to four weeks paid holidays each calendar year,
without any qualifying period, and all statutory public holidays. Company will
notify Executive on or about the beginning of each calendar year with respect to
the public holiday schedule for the coming year. Personal holidays, if any, will
be scheduled in advance subject to the requirements of Company.
Medical and Group Life Insurance
Company agrees to include Executive in a group medical and hospital plan of the
Company and provide group life insurance for Executive at no charge to Executive
in an amount equal to twice the Executive's total annual base salary, without
limit, during this Agreement. The company shall also provide short-term and
long-term disability insurance as appropriate to the Executive's position.
Executive shall be responsible for payment of any federal or provincial income
tax imposed upon these benefits.
Expense Reimbursement
Executive shall be entitled to reimbursement for all reasonable expenses,
including mileage in own car, travel and entertainment, incurred by Executive in
the performance of Executive's duties and pursuant to the travel policy in
effect and at that time. Executive will maintain records and written receipts as
required by the Company policy and as reasonably requested by the Board of
Directors to substantiate such expenses. All expenses are to be reimbursed
within fifteen business days of submission.
Training
The Executive shall be entitled to a minimum of 40 hours training per year, at a
location appropriate to the training in question.
Term and Termination
The Agreement shall commence on June 20, 2000 and it shall continue in
effect for a period of one year. Thereafter, the Agreement shall be
renewed upon the mutual written agreement of Company and Executive and
the terms of this Agreement shall remain in force, unless mutually
agreed otherwise in writing. This Agreement and Executive's employment
may be terminated at Company's discretion, provided that Company shall
pay to Executive an amount equal to payment at Executive's base salary
rate for a period of six months or the remainder of the 1st employment
year, whichever is smaller. After the 1st Employment year, Executive
shall be entitled to three months of payments at the Executive's base
salary rate. In the event of any such non-renewal or termination
pursuant to this section, Executive shall be entitled a minimum of
three month's salary paid in full in advance.
Executive may terminate this Agreement, at Executive's discretion by
providing at least fourteen (14) days prior written notice to Company.
In the event of termination by Executive, Company may immediately
relieve Executive of all duties and immediately terminate this
Agreement.
In the event that Executive is in breach of any material obligation
owed to the Company in this Agreement, habitually or grossly neglects
the duties to be performed under this Agreement, engages in any conduct
which is dishonest, damages the reputation or standing of the Company,
or is convicted of any criminal act or engages in any act of moral
turpitude, then Company may terminate this Agreement immediately. In
event of termination of the agreement pursuant to this section,
Executive shall be paid only at the then applicable total salary rate
up to and including the date of termination. Executive shall be paid
any incentive salary payments or other compensation, which are due at
the time of termination and which have been fully earned as of that
date. In the case of a termination for cause, as defined above,
Executive shall not receive any pro rata amounts of bonus or incentive
compensation not already fully earned.
Notices
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery service.
If to Company:
Dicom Imaging Systems, Inc.
Suite 201-15047 Marine Drive
White Rock, B.C. V4B 1C5
If to Executive:
Reza Bazargan
15510 Oxenham Avenue
White Rock, B.C. V4B 2J3
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Confidentiality Covenant
For the purposes of this Agreement, "Confidential Information" means all
information, data, trade secrets, technology, knowledge and know how, in
whatever form and however communicated, relating directly or indirectly to the
Company and its affiliates, that is delivered or disclosed by the Company to the
Executive or which the Executive learns or obtains through his employment by the
Company.
All Confidential Information shall be treated as secret and confidential by the
Executive and shall not be disclosed by the Executive to any person without the
consent of the Company except to the extent that the Executive is required by
court to disclose the Confidential Information.
The Executive acknowledges and agrees that as a result of the sensitive nature
of the Confidential Information, the Executive holds the same in trust for the
Company and the Executive stands in a fiduciary relationship with the company.
In addition, Executive acknowledges that any work product, information,
invention, improvement, innovation or any other intellectual property developed
during the term of this Agreement by the Executive in the field in which the
Company competes or may compete, as defined in the prevailing business plan,
shall be the sole and exclusive property of the Company and Executive hereby
acknowledges and conveys any interest in the same. Should the Executive conceive
of an innovation during the term of this agreement which is not in the field in
which the Company competes, the Company shall have the right of first refusal on
any such new innovation for a period of 45 calendar days during which it must
outline in writing to the Executive its intent, if any, with respect to the
innovation. Any disputes related to this section of the Agreement shall be dealt
with in accordance with the Arbitration section of this Agreement.
In addition, Executive agrees to sign and abide by the Company's standard
non-compete, work-for-hire and non-disclosure agreements and agrees that any
breach of these covenants constitutes grounds for a termination by cause.
Final Agreement
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only in writing
that is duly executed by both parties.
Governing Law
This Agreement shall be construed and enforced in accordance with the laws of
the State of Nevada.
Headings
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
Severability
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
Arbitration
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be
entered in any court having jurisdiction thereof. Any such arbitration shall be
conducted in the State of Washington, or such other place as may be mutually
agreed upon by the parties. Within fifteen (15) days after the commencement of
the arbitration, each party shall select one person to act as arbitrator, and
the two arbitrators so selected shall select a third arbitrator within ten (10)
days of their appointment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
DICOM Imaging Systems Inc. Employee
Per:
------------------------- ----------------------------
Authorized Signatory Reza Bazargan
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Exhibit 10.4 Stock Option Agreement
DICOM IMAGING SYSTEMS, INC.
1999 INCENTIVE STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 hereof.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Dicom Imaging Systems, Inc., a Nevada corporation.
(h) "Consultant" means any person who is engaged by the Company
or any Parent or Subsidiary to render consulting or advisory services to such
entity.
(i) "Director" means a member of the Board of Directors of the Company.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, on the 181st day of such leave any Incentive
Stock Option held by the Optionee shall cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option. Neither service as a Director nor payment of a director's fee by the
Company shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation, The Nasdaq OTC Bulletin
Board, The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq
Stock Market, its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system for the last market trading day prior to the time of determination,
as reported in The Wall Street Journal or such other source as the
Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
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(o) "Nonstatutory Stock Option" means an Option not intended to qualify as an
Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written or electronic agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(s) "Option Exchange Program" means a program whereby
outstanding Options are exchanged for Options with a lower exercise price.
(t) "Optioned Stock" means the Common Stock subject to an Option or a Stock
Purchase Right.
(u) "Optionee" means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter existing,
as defined in Section 424(e) of the Code.
(w) "Plan" means this 1998 Incentive Stock Plan.
(x) "Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of a Stock Purchase Right under Section 11 below.
(y) "Section 16(b)" means Section 16(b) of the Securities Exchange Act of 1934,
as amended.
(z) "Service Provider" means an Employee, Director or Consultant.
(aa) "Share" means a share of the Common Stock, as adjusted in accordance with
Section 12 below.
(bb) "Stock Purchase Right" means a right to purchase Common
Stock pursuant to Section 11 below.
(cc) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 200,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, such Shares shall become available for future
grant under the Plan.
4. Administration of the Plan.
(a) Administrator. The Plan shall be administered by the Board
or a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock Purchase Rights
may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each such award
granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, of any Option or Stock Purchase Right
granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the Common Stock relating thereto, based in each case
on such factors as the Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances an Option may be settled
in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then current Fair Market
Value if the Fair Market
Value of the Common Stock covered by such Option has declined since the date the
Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws;
(x) to allow Optionees to satisfy withholding tax obligations by electing to
have the Company withhold from the Shares to be issued upon exercise of an
Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards granted pursuant
to the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Optionees.
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5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees.
(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon any Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
such relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon its adoption by the Board.
It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.
7. Term of Option. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any other Employee, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at the time of grant of such Option,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per Share on the
date of grant.
(B) granted to any other Service Provider, the per Share exercise price shall be
no less than 85% of the Fair Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a per Share
exercise price other than as required above pursuant to a merger or other
corporate transaction or an agreement to forgive sums owed to a service
provider.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
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9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be tolled during any unpaid leave of absence. An Option may not
be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of
any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise
of an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Shares, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of
Shares thereafter available,both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (of at least six (6) months) to the extent that the
Option is vested on the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement) by the
Optionee's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, at the time of death, the Optionee is not vested
as to the entire Option, the Shares covered by the unvested portion of the
Option shall immediately revert to the Plan. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options and Stock Purchase Rights. The
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid, and the time within
which such person must accept such offer. The terms of the offer shall comply in
all respects with Applicable Law. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers, Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 20% per year over five (5) years from the date of
purchase.
(c) Other Provisions. The Restricted Stock purchase agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
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12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Service Provider to whom an Option
or Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend
or terminate the Plan.
(b) Shareholder Approval. The Board shall obtain shareholder approval of any
Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise
of an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
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<PAGE>
16. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the degree
and manner required under Applicable Laws.
19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
Exhibit 10.5 Settlement Agreement - CLG
September 26, 2000
Re: Settlement Agreement between Dicom Imaging Systems, Inc. and
CLG Investments Ltd.
To Whom It May Concern::
This letter is a Settlement Letter Agreement ("Letter Agreement" or
"Agreement") between Dicom Imaging Systems, Inc., a Nevada corporation ("Dicom")
and CLG Investments Ltd. ("CLG"), together the Parties, concerning the License
Agreement between the Parties dated March 17, 2000 (the "License"). In
consideration of the mutual covenants contained herein as consideration the
sufficiency of which is hereby acknowledged, the Parties hereby agree that the
terms of this Letter Agreement are as follows:
1. Resolution of Mutual Affairs. Pursuant to the License Agreement,
each Party has obligations and rights described therein. It is the
desire of the Parties that the obligations of the License Agreement
and any other obligations between them be settled and extinguished
now and forever by means of their mutual release as expressed in
Section 2 hereof.
2. Settlement. Each party hereto does hereby, for themselves, their
attorneys, agents, officers, directors, employees, successors,
servants, subsidiaries, heirs and assigns, and all other persons,
firms, corporations, divisions, associations and/or partnerships,
associated therewith or related thereto, unequivocally and without
reservation, release all other parties from any and to all claims,
actions, causes of action, rights, damages, costs, loss of
services, expenses, compensation, subsequent damage and any other
thing whatsoever which they now have or which may hereafter arise,
whether known or unknown, arising from or incident to the facts and
transactions surrounding the License Agreement or any other aspect
of their business relationship.
3. Damages. It is expressly herein agreed that Dicom may retain the $750,000
previously paid to it by CLG under the License may be retained by Dicom as
damages and consideration for the release granted hereunder.
4. Miscellaneous. This Agreement shall bind and inure to the benefit
of the parties hereto and their successors and assigns. This
Agreement shall be governed by the laws of the State of Nevada,
without reference to conflict of laws principles. This document and
the License contain the entire agreement between the parties with
respect to the subject matter hereof. This Agreement may not be
amended, nor any obligation waived, except by a writing signed by
both parties hereto.
5. Counterparts. This Letter Agreement may be signed in counterparts, each of
which shall be deemed an original and all of which shall constitute one
instrument.
IN WITNESS WHEREOF, the Parties have executed this Letter
Agreement on the day and date set forth above.
On behalf of CLG Investments Ltd.
CLG Investments Ltd.
By:_______________________
On behalf of Dicom Imaging Systems, Inc.
Dicom Imaging Systems, Inc.
a Nevada corporation
By:_______________________
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<PAGE>
Exhibit 10.6 Promissory Note - Torchmark Holdings Ltd.
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY, IF ANY, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
USD250,000.00 16 August, 2000
Bellingham, WA
FOR VALUE RECEIVED, Dicom Imaging Systems, Inc., a Nevada corporation (the
"Company") having its principal offices at 1350 E. Flamingo Road, Suite 847,
Las Vegas, NV 89119 promises to pay to Torchmark Holdings Ltd. (the "Holder")
or his registered assigns, the principal sum of USD250,000.00 (two hundred
fifty thousand United States Dollars) or such lesser amount as shall then
equal the
outstanding principal amount hereof, together with interest from the date of
this Note on the unpaid principal balance at a rate per annum equal to TEN
percent (10%) computed on the basis of the actual number of days elapsed and a
year of 365 days or 366 days, as
the case may be.
The following is a statement of the rights of Holder and the conditions to which
this Note is subject, and to which the Holder hereof, by the acceptance of this
Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have the
following meanings:
(a) "Holder" shall mean the person specified in the introductory paragraph
together with its permitted successors and assignees.
(b) "Note" shall mean this Promissory Note.
2. Status of Obligations; Payment Schedule; Warrant Coverage
(a) Prepayment. This Note may be prepaid, in whole or in part from
time to time with the Holder's prior written consent.
Prepayments in part shall be applied first to outstanding
interest and second to principal.
(b) Status of Obligations. The obligations of Company under this Note are
unsecured.
(c) Payment Schedule: Company agrees repay the Note in full, together with
accrued and unpaid interest due thereupon, upon the first of the following two
events:
(i) The Company receives aggregate net proceeds from the
sale of its securities or from a debt financing of
any kind or character equal to or greater than
USD500,000.
(ii) 180 days from the date of this Note.
(d) Warrant Issuance. As consideration for the execution of this
Note, the Company agrees to grant to the Holder the right to
purchase that number of shares of the Company's common stock
equal to thirty percent of the original principal amount due
under this note divided by the 10 day trailing average stock
price of the Company's common stock as quoted on the OTC
Bulletin Board or the NASDAQ small cap exchange. Such Warrants
shall be issued by the Company with ten days of the date
hereof and shall be in form reasonably acceptable to Holder.
Such Warrants shall have piggyback registration rights as
further described in the Warrant Agreement.
3. Representations and Warranties and Covenants of Company. Company hereby
represents and warrants to Holder that:
(a) Due Incorporation, Qualification, etc. The Company
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<PAGE>
(i) is a corporation duly organized, validly existing and in good standing under
the laws of Nevada, (ii) has the power and authority to own, lease, and operate
its properties and carry on its business as now conducted, and (iii) is duly
qualified, licensed to do business and in good standing as a foreign corporation
in each jurisdiction where the failure to be so qualified or licensed could
reasonably be expected to have a material adverse effect on the Company's
business.
(b) Authority. The execution, delivery and performance by Company of the Note
and the performance of its obligations hereunder:
(i) are within the power of Company, and
(ii) have been duly authorized by all necessary actions on the part of Company.
(c) Enforceability. This Note is duly executed and delivered by
Company and constitutes a legal, valid, and binding obligation
of Company, enforceable against Company in accordance with its
terms, except as limited by bankruptcy, insolvency, or other
laws of general application relating to or affecting the
enforcement of creditors' rights generally and general
principles of equity.
(d) Non-Contravention. The execution and delivery by Company of this Note and
the performance of its obligations hereunder will not violate:
(i) the Certificate of Incorporation or Bylaws of the Company or any material
judgment, order, writ, decree, statute, rule or regulation applicable to
Company, or (ii) any provision of, or result in the breach of any instrument
or contract to which it is a party.
(e) Approvals. No consent, approval, order, or authorization of,
or registration, declaration or filing with, any governmental
authority is required in connection with the execution and
delivery of this Note or the performance of its obligations
hereunder.
4. Events of Default. The occurrence of any of the following shall constitute
an "Event of Default" under this Note:
(a) Failure to Pay. Company shall fail to pay any principal or
interest within ten (10) days of such payment becoming due and
owing hereunder and such failure shall continue for a period
of forty-five (45) days after written notice thereof to
Company by Holder, or
(b) Covenant Default. Company shall default in the performance of any of its
material obligations hereunder and such
default shall continue un-remedied for a period of ten (10) days. Holder
shall have no obligation to notify company of any violations of the Company's
covenants.
(c) Representations and Warranties. Any representation, warranty or
certification made herein shall prove to have been false or misleading as of
the time made in a material respect; or
(d) Voluntary Bankruptcy or Insolvency Proceeding. Company shall:
(i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial
part of its property,
(ii) be unable, or admit in writing its inability, to pay its debts generally as
they mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated in full or in part, (v) commence
a voluntary case or other proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or consent to
any such relief or to the appointment of or taking possession of its property
by any official in an involuntary case or other proceeding commenced
against it, or (vi) take any action for the purpose of effecting any of the
foregoing; or
(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator, or
custodian of Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings
seeking liquidation, reorganization, or other relief with
respect to Company or the debts thereof under any bankruptcy,
insolvency, or other similar law now or hereafter in effect
shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within sixty
(60) days of commencement.
5. Rights of Holder upon Default. Upon the occurrence and during the
continuance of any Event of Default under Sections 4(a), (b), or (c)
above, Holder may, by written notice to Company, declare all principal
and accrued and unpaid interest outstanding hereunder to be immediately
due and payable without presentment, demand, protest, or any other
notice of any kind, all of which are hereby expressly waived. Upon the
occurrence and during the continuance of any Event of Default described
in Paragraphs 4(d) or 4(e), immediately and without notice, all
outstanding amounts payable by Company hereunder shall automatically
become immediately due and payable, without presentment, demand,
protest, or any other notice of any kind, all of which are hereby
expressly waived.
6. Successors and Assigns. The rights and obligations of Company and the Holder
of this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
7. Waiver and Amendment. Any provision of this Note may be amended, waived or
modified upon the written consent of Company and the Holder.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or mailed by registered or
certified mail, postage prepaid, or by recognized overnight courier or
personal delivery at the respective addresses of the parties set forth
hereunder. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to
have been given when received.
If to the Holder: Torchmark Holdings Ltd.
PO Box 290, Caribbean Place
Providenciales
Turks & Caicos Islands
If to the Company: Dicom Imaging Systems, Inc.
1350 E. Flamingo Road
Suite 847
Las Vegas, NV 89119
9. Payment. Payment shall be made in lawful tender of the United States either
in immediately available funds or by check.
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<PAGE>
10. Maximum Interest. In the event any interest is paid on this Note which
is deemed to be in excess of the then legal maximum rate, then that
portion of the interest payment representing an amount in excess of the
then legal maximum rate shall be deemed a payment of principal and
applied against the principal of this Note.
11. Governing Law. This Note and all actions arising out of or in connection
with this Note shall be governed by and construed in accordance with the laws of
the State of Nevada, without regard to the conflicts of law provisions of the
State of Nevada or of any other state.
12. Attorney's Fees. The prevailing party in any action under this Note
shall be entitled to collect its reasonable attorney's fees from the
non-prevailing party.
In witness whereof, the Company has caused this Note to be issued as of the date
first written above.
Dicom Imaging Systems, Inc.
VALUE RECEIVED
Signed, sealed and delivered )
in the presence of )
)
)
)
ACKNOWLEDGMENT
The undersigned agrees to the above terms of the Promissory Note
Signed, sealed and delivered )
in the presence of )
)
)
)
