SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
13-3152648
(I.R.S. Employer Identification No.)
200 North Westlake Boulevard, Suite 202, Westlake Village, California 91362
(Address of Principal Executive Offices) (Zip Code)
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC. 1997 STOCK INCENTIVE PLAN
(Full Title of the Plan)
Steven Ross, Chief Financial Officer
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
200 North Westlake Boulevard, Suite 202, Westlake Village, California 91362
(Name and Address of Agent for Service)
(805) 381-2700
(Telephone Number, Including Area Code, of Agent for Service)
Copies to:
Murray Markiles, Esq.
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067
(310) 728-3000
CALCULATION OF REGISTRATION FEE
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<TABLE>
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum
Title of Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered Registered Share(1) Price(1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock 350,000 Shares(2) $5.78 $2,023,000 $597
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c). On October 23, 1998, the average of the bid and ask
price of the Registrant's Common Stock on the NASDAQ SmallCap Market was $5.78
per share.
(2) 350,000 Shares of Common Stock under the same plan were previously
registered on a Form S-8, file number 333-42867, for which the appropriate fee
was paid.
This Registration Statement on Form S-8 is for the registration of an
additional 350,000 shares of Common Stock for which the Form S-8 registration
statement, file number 333-42867 , was filed on December 16, 1997 relating to
the Dental/Medical Diagnostic Systems, Inc. 1997 Stock Incentive Plan. The Form
S-8, file number 333-42867, is hereby incorporated by reference.
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PART I
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Information.*
* Information required by Part I to be contained in the Section
10(a) prospectus is omitted from the Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as
amended, and the Note to Part I of Form S-8.
PART II
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated herein by reference:
(a) Registrant's Report on Form 10-KSB for the fiscal year ended
December 31, 1997;
(b) Registrant's Report on Form 10-QSB for the quarter ended June 30,
1998;
(c) Registrant's Report on Form 10-QSB for the quarter ended March 31,
1998; and
(d) The information under the caption "DESCRIPTION OF SECURITIES" on
Pages 43 through 46 of Registrant's Registration Statement on
Form SB-2 (Registration No. 333-22507).
(e) Registrant's Registration Statement on Form S-8, file number
333-42867.
All documents and reports filed by the Registrant with the Securities and
Exchange Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the
respective dates of filing of such documents or reports. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
Item 4. Description of Securities.
The securities to be offered are registered under Section 12 of the Exchange
Act of 1934.
Item 5. Interests of Named Experts and Counsel.
None.
Item 6. Indemnification of Directors and Officers.
See Registrant's Registration Statement on Form S-8, file number 333-42867.
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Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Dental/Medical Diagnostic Systems, Inc. 1997 Stock Incentive Plan.
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP regarding validity
of securities.
23.1 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in
Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included as part of the Signature page of this
Registration Statement).
Item 9. Undertakings.
See Registrant's Registration Statement on Form S-8, file number
333-42867
.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 20th day of
October, 1998.
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
(Registrant)
By: /s/ Robert H. Gurevitch
--------------------------------------------
Robert H. Gurevitch, Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Robert H. Gurevitch and Steven Ross, and each of them, as his or her true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert H. Gurevitch
- -------------------------- Chairman of the Board, Chief October 20, 1998
Robert H. Gurevitch Executive Officer,
President and Secretary
/s/ Jack D. Preston
- -------------------------- Director October 20, 1998
Jack D. Preston
/s/ Marvin H. Kleinberg
- -------------------------- Director October 20, 1998
Marvin H. Kleinberg
/s/ Steven Ross
- -------------------------- Chief Financial Officer October 20, 1998
Steven Ross
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EXHIBIT INDEX
Exhibit No. Exhibit Description Sequentially
- ----------- ------------------- Numbered Page
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4.1 Dental/Medical Diagnostic Systems, Inc. 1997 Stock Incentive Plan.
5.1 Opinion of Troop Steuber Pasich Reddick & Tobey, LLP regarding
validity of securities.
23.1 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in
Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included as part of the Signature Page of this
Registration Statement.)
5
EXHIBIT 4.1
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
1997 STOCK INCENTIVE PLAN
1. PURPOSES.
(a) The purpose of the 1997 Stock Incentive Plan (the "Plan") is to
provide a means by which Employees or Directors of or Consultants to
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC. (the "Company"), and its Affiliates, may
be given an opportunity to benefit from increases in value of the Common Stock
of the Company through the granting of Stock Awards.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company, to
secure and retain the services of new Employees, Directors and Consultants, and
to provide incentives for such persons to exert maximum efforts for the success
of the Company.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to Section 3(c), be
either (1) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, (2) Stock Bonuses or Rights to
Purchase Restricted Stock granted pursuant to Section 7 hereof, or (3) Stock
Appreciation Rights granted pursuant to Section 8 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant and a separate certificate or certificates will be issued for
shares purchased upon exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "CCSL" means the California Corporate Securities Law of 1968, as
amended.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in accordance
with Section 3(c) of the Plan.
(f) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(g) "Company" means DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC., a Delaware
corporation.
(h) "Concurrent Stock Appreciation Right" or "Concurrent Right" means a
right granted pursuant to subsection 8(b)(ii) of the Plan.
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(i) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render bona fide consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(j) "Continuous Status as an Employee, Director or Consultant" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated by the Company or any Affiliate. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (1) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave; provided, however, that for purposes of Incentive Stock Options
and Stock Appreciation Rights appurtenant thereto, any such leave may not exceed
ninety days, unless reemployment upon the expiration of such leave is guaranteed
by contract (including certain Company policies) or statute; (2) transfers
between locations of the Company or between the Company, Affiliates or its
successor; or (3) a change in the status of the relationship from Employee to
Director or Consultant, from Director to Employee or Consultant, or from
Consultant to Employee or Director.
(k) "Director" means a member of the Board.
(l) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(m) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Fair Market Value" means, as of any date, the value of the 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 National Market, the Fair Market Value of a share of Common
Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq System (but not
on the Nasdaq National Market) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a share of Common Stock shall be the mean between the bid and
asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or
such other source as the Board deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Board.
(p) "Incentive Stock Option" means an Option intended by the Board at
the time of grant to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.
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(q) "Independent Stock Appreciation Right" or "Independent Right" means
a right granted under subsection 8(b)(iii) of the Plan.
(r) "Non-Employee Director" means a director (1) who is not currently
an officer of the Company or any of its Affiliates or otherwise currently
employed by the Company or any of its Affiliates; (2) does not receive
compensation, either directly or indirectly from the Company or any of its
Affiliates for services rendered as a consultant or in any capacity other than
as a director, except for an amount that does not exceed the dollar amount for
which disclosure would be required pursuant to Item 404(a) of Regulation S-K;
(3) does not possess an interest in any other transaction for which disclosure
would be required pursuant to Item 404(a) of Regulation S-K; or (4) is not
engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
(s) "Nonstatutory Stock Option" means an Option not intended by the
Board at the time of grant to qualify as an Incentive Stock Option.
(t) "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.
(u) "Option" means a stock option granted pursuant to the Plan.
(v) "Optionee" means an Employee, Director or Consultant who holds an
outstanding Option.
(w) "Plan" means this 1997 Stock Incentive Plan.
(x) "Rule 16b-3" means Rule 16b-3 under the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(y) "Regulation S-K" means Regulation S-K of the Securities and
Exchange Commission.
(z) "Right to Purchase Restricted Stock" means an award of an
entitlement to purchase shares of Common Stock under the Plan which are subject
to certain voting limitations and restrictions at a price which is lower than
the fair market value of the Common Stock on the date of grant.
(aa) "Securities Act" means the Securities Act of 1933.
(bb) "Stock Appreciation Right" means any of the various types of
rights which may be granted under Section 8 of the Plan.
(cc) "Stock Award" means any right granted under the Plan, including
any Option, any Stock Bonus, any Right to Purchase Restricted Stock and any
Stock Appreciation Right.
(dd) "Stock Award Agreement" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(ee) "Stock Bonus" means a grant of Common Stock under the Plan which
does not involve the payment of a purchase price to the Company by the recipient
thereof.
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(ff) "Tandem Stock Appreciation Right" or "Tandem Right" means a right
granted under subsection 8(b)(i) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in Section 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how Stock Awards
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a Stock Bonus, a Right to Purchase Restricted Stock,
a Stock Appreciation Right, or a combination of the foregoing; the provisions of
each Stock Award granted (which need not be identical), including, without
limitation, the time or times when a person shall be permitted to receive stock
pursuant to a Stock Award; whether a person shall be permitted to receive stock
upon exercise of an Independent Stock Appreciation Right; and the number of
shares with respect to which Stock Awards shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement
and, subject to Section 14 hereof, otherwise amend the Plan in a manner and to
the extent it shall deem necessary.
(iii) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company and which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two members (the "Committee"), and at least two of
the members of the Committee shall be Non-Employee Directors. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments
upon changes in the Common Stock, the number of shares of Common Stock that may
be issued pursuant to Stock Awards
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under the Plan shall not exceed in the aggregate 700,000 shares. If any Stock
Award or option granted under the terms of the Plan shall for any reason expire
or otherwise terminate without having been exercised in full, the Common Stock
not purchased shall again become available for issuance under the Plan. Shares
subject to Stock Appreciation Rights exercised in accordance with Section 8 of
the Plan and Shares withheld by the Company to satisfy a federal, state and/or
local tax withholding obligation of a participant relating to the exercise of a
Stock Award shall not be available for subsequent issuance under the Plan.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be granted
only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and such Incentive Stock Option is not exercisable
after the expiration of five years from the date of its grant.
6. OPTION PROVISIONS.
Each Option shall be approved by the Board and be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The
provisions of separate options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option
or otherwise) the substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten
years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock option shall be
not less than one hundred percent (100%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, the
exercise price of an Option for which an exemption from the qualification
requirements of the CCSL is unavailable, and which is granted to a person who
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any of its Affiliates, shall
be at least one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the date of grant.
(c) Consideration. The exercise price of Common Stock acquired pursuant
to the exercise of an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (1) in cash at the time the Option
is exercised, or (2) at the discretion of the Board, either at the time of the
grant or exercise of the Option, (A) by delivery to the Company of other shares
of Common Stock, the value of which shall be the Fair Market Value of such
Common Stock, as defined by this Agreement, (B) according to a deferred payment
or other arrangement (which may include, without limiting the generality of the
foregoing, the use of other shares of Common Stock) with the person to whom the
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Option is granted or to whom the Option is transferred pursuant to Section 6(d),
or (C) in any other form of legal consideration that may be acceptable to the
Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be payable at the minimum rate of interest
necessary to avoid the imputation of interest, under the applicable provisions
of the Code and Treasury Regulations.
(d) Transferability. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person, or in the case of such person's
disability by such person's legal representative or guardian. A Nonstatutory
Stock Option shall not be transferable except by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order satisfying
the requirements of Rule 16b-3 and any administrative interpretations or
pronouncements thereunder (a "QDRO"), and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person or any
transferee pursuant to a QDRO.
(e) Vesting. The total number of shares of Common Stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option may provide that from time to time during each
of such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary; however, in the case of an Option for which an
exemption from the qualification requirements of the CCSL is unavailable, the
vesting provisions must provide for vesting of at least twenty percent (20%) per
year of the total number of shares subject to the Option from the date the
Option was granted. During the remainder of the term of the Option (if its term
extends beyond the end of the installment periods), the option may be exercised
from time to time with respect to any shares then remaining subject to the
Option. The provisions of this Section 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(f) Securities Law Compliance. The Company may require any Optionee, or
any person to whom an Option is transferred pursuant to Section 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the Common Stock subject to the
Option for such person's own account and not with any present intention of
selling or otherwise distributing the Common Stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (x) the
issuance of the shares upon the exercise of the Option has been registered under
a then currently effective registration statement under the Securities Act, or
(y) as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.
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(g) Termination of Employment or Relationship as a Director or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
Disability) (a "Termination"), the Optionee may exercise his or her Option (to
the extent that the Optionee is entitled to exercise it at the date of
Termination), but only within such period of time as is determined by the Board,
which period shall not be longer than ninety days from the date of Termination
for an Incentive Stock Option nor less than thirty days from the date of
Termination for an Option for which an exemption from the qualification
requirements of the CCSL is unavailable; provided, however, that if an Optionee
is terminated for cause, as defined by the Board, the Option may provide for an
exercise period shorter than thirty days, or may provide for expiration
concurrent with such Termination. In no event shall an Option be exercised later
than the expiration of the term of such Option as set forth in the Option. If,
at the date of Termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable 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 in the Option, the Option shall
terminate, and the shares covered by such Option, to the extent unexercised,
shall revert to the Plan.
(h) Disability of Optionee. If an Optionee's Continuous Status as an
Employee, Director or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within six
months from the date of such Termination (or such longer period, not exceeding
twelve months for Incentive Stock Options, as specified in the Option), and only
to the extent that the Optionee was entitled to exercise the Option at the date
of such Termination (but in no event later than the expiration of the term of
such Option as set forth in the Option). If, at the date of Termination, the
Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable 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 therein, the Option shall terminate, and the shares covered by
such Option, to the extent unexercised, shall revert to the Plan.
(i) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised at any time within six months following the date of
death (or such longer period not exceeding twelve months, for Incentive Stock
Options, as specified in the Option), but in no event later than the expiration
of the term of such Option as set forth in the Option, by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the date of death. If, at the time of death, the Optionee was not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option, to
the extent unexercised, shall revert to the Plan.
(j) Early Exercise. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a right to repurchase in favor of the Company upon
Termination of the Optionee, at a repurchase price equal to the exercise price
of the Option, payable in cash or cancellation of purchase money indebtedness
for the shares; provided, however, that for any Option for which an exemption
from the qualification requirements of the CCSL is unavailable, the Company's
right to repurchase at the exercise price of the Option shall lapse at a minimum
rate of twenty percent (20%) per
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year over five years from the date the Option was granted and such right shall
terminate to the extent not exercised within ninety days following Termination
of the Optionee.
(k) Withholding. To the extent provided by the terms of an Option, the
Optionee may satisfy any federal, state or local tax withholding obligation
relating to the exercise of such Option by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the Common Stock otherwise
issuable to the Optionee as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of Common Stock.
(l) Re-Load Options. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option a
provision entitling the Optionee to a further Option (a "Re-Load Option") in the
event the Optionee exercises the Option, in whole or in part, by surrendering
other shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option. Any such Re-Load Option (1) shall be for a number of
shares equal to the number of shares surrendered as part or all of the exercise
price of such Option; (2) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; (3) shall have an exercise price of not less than 100% of the Fair
Market Value of the Common Stock on the date of the grant of such Re-Load
Option; and (4) in the case of a Re-Load Option which is an Incentive Stock
Option or an Option for which an exemption from the qualification requirements
of the CCSL is unavailable, and which is granted to a 10% shareholder (as
described in Section 5(b)), shall have an exercise price which is equal to one
hundred ten percent (110%) of the Fair Market Value of the Common Stock subject
to the Re-Load Option on the date of exercise of the original Option and, with
respect to Incentive Stock Options, shall have a term which is no longer than
five years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on exercisability of Incentive Stock Options
described in Section 12(d) of the Plan and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares under Section 4(a) and shall
be subject to such other terms and conditions as the Board may determine which
are not inconsistent with the express provisions of the Plan regarding the terms
of the Options.
(m) Market Standoff. In connection with any underwritten public
offering by the Company, prior to the sale or transfer of any Optionee's shares,
such Optionee may be required to obtain prior written consent of the Company or
its underwriters for a stated period of time following the effective date of the
offering.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be
approved by the Board and be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of
stock bonus or restricted stock purchase agreements may change from time to
time, and the terms and conditions of separate agreements need not be identical,
but each stock bonus or restricted stock purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions, as appropriate:
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(a) Purchase Price. The purchase price under each stock purchase
agreement shall be such amount as the Board shall determine and designate in
such agreement. Additionally, the Board may determine that eligible participants
in the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit. Notwithstanding the foregoing, the purchase price of shares of Common
Stock for which an exemption from the qualification requirements of the CCSL is
unavailable shall be not less than one-hundred percent (100%) of the Fair Market
Value of the Common Stock at the date of the grant or the sale; provided, if
such shares of Common Stock are granted or sold to a person who owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any of its Affiliates, the purchase price
shall be at least one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the date of grant or sale.
(b) Transferability. No rights under a stock bonus or restricted stock
purchase agreement shall be assignable by any participant under the Plan, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the person to whom
the rights are granted only by such person. The person to whom such rights are
granted may, be delivering written notice to the Company, in a form satisfactory
to the Company, designate a third party who, in the event of the death of such
person, shall thereafter be entitled to exercise the rights held by such person
under the stock bonus or restricted stock purchase agreement.
(c) Consideration. The purchase price of Common Stock acquired pursuant
to a stock purchase agreement shall be paid either: (1) in cash at the time of
purchase; (2) at the discretion of the Board, according to a deferred payment or
other arrangement with the person to whom the Common Stock is sold; or (3) in
any other form of legal consideration that may be acceptable to the Board in its
discretion. Notwithstanding the foregoing, the Board may award stock pursuant to
a stock bonus agreement in consideration for past services actually rendered to
the Company or for its benefit. Any non-cash consideration applied towards the
purchase price shall be given a value as determined in good faith by the Board
to be its fair market value at the time of such purchase.
(d) Vesting. Shares of Common Stock sold or awarded under the Plan may,
but need not, be subject a right to repurchase in favor of the Company upon
Termination of the person to whom such shares have been sold or awarded at a
repurchase price equal to the original purchase price (or such higher price as
the Board may determine to be appropriate) payable in cash or cancellation of
purchase money indebtedness. The Board shall provided that such rights to
repurchase lapse with respect to such purchased shares (or that such purchased
shares vest) pursuant to a schedule determined by the Board; provided, however,
that for any stock bonus or restricted stock purchase right for which an
exemption from the qualification requirements of the CCSL is unavailable, the
Company's right to repurchase at the original purchase price shall lapse (or the
purchased shares shall vest) at a minimum rate of twenty percent (20%) per year
over five years from the date the stock bonus or restricted stock purchase right
was granted and such right shall terminate to the extent not exercised within
ninety days following Termination of the purchaser.
8. STOCK APPRECIATION RIGHTS.
(a) The Board shall have full power and authority, exercisable in its
sole discretion, to grant Stock Appreciation Rights to Employees or Directors
of, or Consultants to, the Company or its Affiliates under the Plan. Each such
right shall entitle the holder to a distribution based on the appreciation in
the Fair Market Value per share of a designated amount of Common Stock.
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(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan, Tandem Rights, Concurrent Rights and Independent
Rights, and the terms and conditions applicable to each shall be as follows:
(i) Tandem Stock Appreciation Rights. Tandem Rights will be
granted appurtenant to an Option and will require the holder to elect between
the exercise of such Option for shares of Common Stock and the surrender, in
whole or in part, of such Option for an appreciation distribution payable in
cash in an amount equal to (A) the aggregate Fair Market Value (on the date of
Option surrender) of the number of vested shares of Common Stock under the
Option (or portion thereof) being surrendered on such date, less (B) the
aggregate exercise price of such vested shares of Common Stock. Tandem Rights
may be tied to either Incentive Stock Options or Nonstatutory Stock Options.
Each such right shall, except as specifically set forth below, be subject to the
same terms and conditions applicable to the particular Option to which it
pertains.
(ii) Concurrent Stock Appreciation Rights. Concurrent Rights
will be granted appurtenant to an Option and may apply to all or any portion of
the shares of Common Stock subject to such Option and will be automatically
exercised at the same time such Option is exercised with respect to the
particular shares of Common Stock to which the Concurrent Right pertains. The
appreciation distribution, payable in cash, to which the holder of such
Concurrent Rights shall be entitled upon exercise of the related Option shall be
an amount equal to (A) the aggregate Fair Market Value (on the date of Option
exercise) of the number of vested shares of Common Stock under the Option (or
portion thereof) being exercised on such date and with respect to which such
Concurrent Rights apply, less (B) the aggregate exercise price paid for such
vested shares of Common Stock. Concurrent Rights may be tied to any or all of
the shares of Common Stock under any Incentive Stock Option or Nonstatutory
Stock Option. A Concurrent Right shall, except as specifically set forth below,
be subject to the same terms and conditions applicable to the particular Option
grant to which it pertains.
(iii) Independent Stock Appreciation Rights. Independent
Rights shall be granted independently of any Option and will entitle the holder
upon exercise thereof to an appreciation distribution payable in cash in an
amount equal to (A) the aggregate Fair Market Value (on the date of the exercise
of the Independent Right) of a number of shares of Common Stock equal to the
number of vested share equivalents with respect to which the holder is
exercising the Independent Right on such date, less (B) the aggregate Fair
Market Value (on the date of the grant of the Independent Right) of such number
of shares of Common Stock. Independent Rights shall, except as specifically set
forth below, be subject to the same terms and conditions applicable to
Nonstatutory Stock Options as set forth in Section 6. They shall be denominated
in share equivalents.
(iv) Terms Applicable to Stock Appreciation Rights Generally.
(A) To exercise any outstanding Stock Appreciation Right,
the holder must provide written notice of exercise to the Company in compliance
with the provisions of the instrument evidencing such right.
(B) If a Stock Appreciation Right is granted to an
individual who is at the time subject to Section 16(b) of the Exchange Act, the
instrument of grant shall incorporate all the terms and conditions at the time
necessary to assure that the subsequent exercise of such right shall qualify for
the safe-harbor exemption from short-swing profit liability provided by Rule
16b-3 promulgated under the Exchange Act (or any successor role or regulation).
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(C) No limitation shall exist on the aggregate amount
of cash payments the Company may make under the Plan in connection with the
exercise of Stock Appreciation Rights.
9. CANCELLATION AND REGRANT OF OPTIONS.
The Board shall have the authority to effect, at any time and from time
to time, with the consent of the affected holders of Options and/or Stock
Appreciation Rights, (a) the repricing of any outstanding Options and/or any
Stock Appreciation Rights under the Plan and/or (b) the cancellation of any
outstanding Options and/or any Stock Appreciation Rights under the Plan and the
grant in substitution therefor of new Options and/or Stock Appreciation Rights
under the Plan covering the same or different numbers of shares of Common Stock,
but having an exercise price per share not less than one-hundred percent (100%)
of the Fair Market Value (one hundred percent (100%) of the Fair Market Value in
the case of an Incentive Stock Option or, in the case of an Incentive Stock
Option granted to a 10% shareholder as described in Section 5(c), not less than
one hundred ten percent (110%) of the Fair Market Value) per share of Common
Stock on the new grant date. Notwithstanding the forgoing, the Board may grant
an Option and/or Stock Appreciation Right with an exercise price lower than that
set forth above if such Option and/or Stock Appreciation Right is granted as
part of a transaction to which Section 424(a) of the Code applies.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy
such Stock Awards up to the number of shares of Common Stock authorized under
the Plan.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
effect any Stock Award, and to issue and sell shares of Common Stock under the
Stock Awards; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any Stock Award or
any stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell stock under
such Stock Awards unless and until such authority is obtained.
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
12. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
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(b) Neither an Optionee nor any person to whom an Option is transferred
under Section 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares of Common Stock subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant,
Optionee, or other holder of Stock Awards any right to continue in the employ of
the Company or any Affiliate (or to continue acting as a Director or Consultant)
or shall affect the right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant of any Employee,
Director, Consultant or Optionee, with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by any Optionee during any calendar year
under all plans of the Company and its affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
(e) The Company shall deliver to the holders of Stock Awards, not later
than one hundred twenty days after the close of each of the Company's fiscal
years, a balance sheet and an income statement. This Section shall not apply
when the issuance of Stock Awards is limited to key employees whose duties in
connection with the Company assure them access to equivalent information.
13. ADJUSTMENTS UPON CHANGES IN THE COMMON STOCK.
(a) Subject to the provisions of Section 13(b), if any change is made
in the Common Stock subject to the Plan, or subject to any Stock Award, without
receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company) the Plan will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan pursuant to Section 4(a) and the maximum number of shares subject to
Options and Stock Appreciation Rights pursuant to Section 5(d), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding Stock
Awards. Such adjustments shall be made by the Board, the determination of which
shall be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction of not
involving the receipt of consideration by the Company".)
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then, at the sole discretion of the Board and to the extent permitted
by applicable law, such Stock Awards shall (i) terminate upon such event and may
be exercised prior thereto to the extent such Stock Awards are then exercisable
or (ii) continue in full force and effect and, if applicable, the surviving
corporation or an Affiliate of such surviving corporation shall assume any Stock
Awards outstanding under the Plan and/or shall substitute similar Stock Awards
for those outstanding under the Plan.
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14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes
in the Common Stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve months before or after the adoption of
the amendment, where the amendment will:
(i) Increase the number of shares of Common Stock reserved
for Stock Awards under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan to the extent such modification requires shareholder
approval in order for the Plan to satisfy the requirements of Section 422 of the
Code; or
(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code or to comply with the requirements of Rule 16b-3.
Rights and obligations under any Stock Award granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan unless (1)
the Company requests the consent of the person to whom the Stock Award was
granted and (2) such person consents thereto in writing.
(b) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (1) the Company requests the consent of the person to whom the Stock
Award was granted and (2) such person consents thereto in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on February 1, 2007. No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the written consent of the person to whom the Stock Award
was granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercisable unless and until the
Plan has been approved by the shareholders of the Company (and such approval by
the shareholders must be obtained within twelve months of the Plan being adopted
by the Board), and, for Stock Awards for which an exemption from the
qualification requirements of the CCSL is unavailable, an appropriate permit has
been issued by the Commissioner of Corporations of the State of California.
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EXHIBIT 5.1
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
LAWYERS
October 28, 1998
DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
200 North Westlake Boulevard, Suite 202
Westlake Village, CA 91362
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to which this letter is attached as Exhibit
5.1 filed by DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC., a Delaware corporation
(the "Company"), in order to register under the Securities Act of 1933, as
amended (the "Act"), 350,000 shares of Common Stock, par value $0.01 per share
(the "Shares"), of the Company issuable pursuant to the Company's 1997 Stock
Incentive Plan (the "Plan").
We are of the opinion that the Shares have been duly authorized and
upon issuance and sale in conformity with and pursuant to the Plan, the Shares
will be validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the use of our name in the Prospectus constituting
a part thereof.
Respectfully submitted,
/s/ TROOP STEUBER PASICH REDDICK & TOBEY, LLP
------------------------------------------------
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Dental/Medical Diagnostic Systems, Inc. on Form S-8 of our report dated February
16, 1998 on our audits of the consolidated financial statements of
Dental/Medical Diagnostic Systems, Inc. as of December 31, 1997 and 1996 and
for the twelve month period ended December 31, 1997, the ten month period ended
December 31, 1996, and for the period from inception (October 23, 1995) to March
2, 1996, which report is included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
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Los Angeles, California
October 30, 1998
