September 28, 2001
VIA FACSIMILE(604) 535-7320
Dicom Imaging Systems, Inc.
15047 Marine Drive
White Rock, B.C.
Canada V4B 1C5
Re: Letter of Intent
Reality Networks, Inc. a Delaware corporation ("Seller"), is pleased to present this Letter of Intent pursuant to which Seller will execute a share-for-share exchange agreement with Dicom Imaging Systems, Inc., a Nevada corporation ("Buyer"; the "Transaction") whereby, among other things, all of Seller's capital stock and other securities convertible or otherwise exchangeable into Seller's capital stock will be exchanged for certain shares of Buyer's common stock. Seller and Buyer may be referred to herein individually as the "Company," and collectively as the "Companies."
This letter reflects in general our current understanding and of course, except as expressly set forth herein, is not intended to be a binding agreement between us. There shall be no obligations whatsoever based on such things as parol evidence, extended negotiations, "handshakes," oral understandings, or courses of conduct (including reliance and changes of position). The purpose of this letter is to set forth those points upon which we have agreed in principle and to confirm our joint intentions with respect to the Transaction.
In connection with the consummation of the Transaction contemplated by this Letter of Intent, Buyer and Seller shall perform a share-for-share exchange, principally described as follows:
shareholders, agents, or any other party associated with the preparation, negotiation and contemplated closing of the Transaction.
Buyer and Seller understand and agree that consummation of the above-described Transaction is subject to the following:
If the Definitive Agreements have not been executed and delivered by 5:00 p.m. Pacific Standard time on October 10, 2001, despite the parties good faith negotiation towards that end ("Drop Dead Negotiation Date"), then the obligation of the parties to go forward with negotiations shall terminate unless extended in writing by mutual agreement. In addition, the Definitive Agreements will provide that, unless extended in writing by mutual agreement, they shall terminate and be of no further force or effect if the Transaction is not consummated by 5:00 p.m. Pacific Standard time on October 10, 2001 ("Drop Dead Consummation Date").
Seller agrees, for a period ending with the Drop Dead Negotiation Date (or if Definitive Agreements are executed, ending with the Drop Dead Consummation Date) that, unless otherwise consented to in writing by Buyer, it shall:
Seller agrees, for a period ending with the Drop Dead Negotiation Date (or if Definitive Agreements are executed ending with the Drop Dead Consummation Date) that, unless required under the Definitive Agreements or otherwise consented to in writing by Buyer, it shall not:
Buyer and Seller will hold and cause its respective employees, agents and advisors to hold in confidence all documents and information concerning the other company, as the case may be, which have been or will be furnished in connection with the Transaction contemplated hereby. Whether or not the Transaction is consummated, such confidential treatment will be maintained for a period of not less than three (3) years from the Effective Date, except to the extent such information (a) was
previously known to the receiving party prior to disclosure by the disclosing party, (b) is in the public domain through no fault of the receiving party, (c) is lawfully acquired by the receiving party from a third party under no obligation of confidence to the disclosing party, or (d) is required by law to be disclosed. Such documents and information will not be used for either the benefit of the receiving party or the detriment of the disclosing party otherwise in any manner, and all documents, materials and other written information provided by the disclosing party to the receiving party, including all copies and extracts thereof, will be returned to the disclosing party promptly upon written request.
All regulatory reports, permit applications and filings, and all press releases, announcements or other publicity pertaining the Transaction will be in mutually agreeable form, subject to any applicable regulatory requirements.
This Letter of Intent shall be governed by and construed in accordance with the laws of the State of Washington, without giving effect to any requirements thereof which might otherwise cause the application of the law of another jurisdiction.
Except as otherwise provided herein, this Letter of Intent is intended to serve only as a mutual expression of the intentions of the parties, and the parties shall not be legally obligated with respect to the contemplated Transaction unless and until formal Definitive Agreements in mutually satisfactory form are agreed upon, approved by the respective Board of Directors (and, if necessary, shareholders) of the Companies, and executed and delivered by the Companies, whereupon the provisions of the Definitive Agreements will supercede this Letter of Intent.
This Letter of Intent may be signed in two or more counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement.
This letter constitutes an expression of our understandings relating to the Transaction and does not contain all matters upon which agreement must be reached. A Transaction will result only from the execution of definitive agreements, subject to the terms and conditions expressed therein. This letter is not intended to be legally binding upon the parties hereto except to the extent of the provisions of paragraph 6 hereof is meant to be a binding obligation.
Please indicate your acceptance of this Letter of Intent by signing the signature page of this letter and returning it to us at our office by hand, courier service or facsimile prior to 5:00 p.m. Pacific Standard time on October 5, 2001. This offer will expire if not accepted by you before then. If you accept this offer, we will distribute fully executed original counterparts of this letter to each accepting party.
REALITY NETWORKS, INC.
|/s/ BRENT HAINES
Name: Brent Haines
Title: Chief Executive Officer
Accepted and agreed this 2nd day of October, 2001.
|DICOM IMAGING SYSTEMS, INC|
|/s/ DR. DAVID GANE
Dr. David Gane, President and CEO