INSIGHT HEALTH SERVICES CORP, 424B3, 1996-05-13

INSIGHT HEALTH SERVICES CORP
424B3, 1996-05-13
MEDICAL LABORATORIES

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<PAGE>

Filed pursuant to Rule 424(b)(3)
SEC File No. 333-02935

May 9, 1996

Dear Stockholder:

You are cordially invited to attend the special meeting (the "Special
Meeting") of stockholders of Maxum Health Corp. ("Maxum") to be held on
Tuesday, June 25, 1996, at Dallas Medallion, 4099 Valley View Lane
(LBJ Freeway and Midway Road), Dallas, Texas 75244, commencing at 10:00 a.m.,
Central Daylight Time.

At the Special Meeting, stockholders will be asked to consider and vote upon
three proposals. The first proposal seeks approval of (i) the Agreement and
Plan of Merger, dated as of February 26, 1996 (the "Merger Agreement"), among
Maxum, American Health Services Corp., a Delaware corporation ("AHS"), InSight
Health Services Corp., a newly formed Delaware corporation ("InSight"), and
two wholly-owned subsidiaries of InSight--AHSC Acquisition Company, a Delaware
corporation ("AHSC Acquisition"), and MXHC Acquisition Company, a Delaware
corporation ("MXHC Acquisition")--and (ii) the transactions contemplated by
the Merger Agreement (the "Merger Proposal").

Pursuant to the Merger Agreement:

. MXHC Acquisition will merge with and into Maxum and AHSC Acquisition
will merge with and into AHS (collectively, the "Merger");

. each outstanding share of common stock, par value $.01 per share, of
Maxum ("Maxum Common Stock") will be converted into the right to receive
.598 of a share of common stock, par value $.001 per share, of InSight
("InSight Common Stock");

. each outstanding share of Series B Preferred Stock, par value $.01 per
share, of Maxum (the "Maxum Series B Preferred Stock"), which is
contemplated to be issued immediately prior to the consummation of the
Merger, will be converted into the right to receive 83.392 shares of
Series A Preferred Stock, par value $.001 per share, of InSight (the
"InSight Series A Preferred Stock");

. each outstanding share of common stock, par value $.03 per share, of AHS
("AHS Common Stock") will be converted into the right to receive one-
tenth of a share of InSight Common Stock;

. each outstanding share of Series B Senior Convertible Preferred Stock,
par value $.03 per share, of AHS ("AHS Series B Preferred Stock"), which
is currently convertible into 100 shares of AHS Common Stock, will be
converted into the right to receive 10 shares of InSight Common Stock;

. each outstanding share of Series C Preferred Stock, par value $.03 per
share, of AHS (the "AHS Series C Preferred Stock"), which is
contemplated to be issued immediately prior to the consummation of the
Merger, will be converted into the right to receive 1.25088 shares of
InSight Series A Preferred Stock; and

. each outstanding option, warrant or other right to purchase Maxum Common
Stock and AHS Common Stock will be converted into the right to acquire,
on the same terms and conditions, shares of InSight Common Stock, with
the number of shares and exercise price applicable to such option,
warrant or other right adjusted based on the applicable exchange ratio
for the underlying Maxum Common Stock or AHS Common Stock.

It is a condition to the consummation of the Merger that the holders of a
majority of the outstanding shares of Maxum Common Stock vote in person or by
proxy at the Special Meeting to approve the Merger Proposal.
<PAGE>

A prerequisite to the consummation of the Merger is the granting of certain
financial accommodations contemplated to be provided by General Electric
Company, acting through GE Medical Systems ("GE Medical"), the primary
creditor of each of Maxum and AHS, and its affiliate General Electric Capital
Corporation, which would result in the reduction in certain debt and operating
lease obligations of Maxum and AHS in exchange for, among other things, the
issuance to GE Medical immediately prior to the consummation of the Merger of
Maxum Series B Preferred Stock and AHS Series C Preferred Stock. At the
effective time of the Merger, such preferred stock contemplated to be issued
to GE Medical will be converted into the right to receive such number of
shares of InSight Series A Preferred Stock as will be convertible into InSight
Common Stock representing approximately 48% of InSight Common Stock
outstanding at the effective time of the Merger (after giving effect to such
conversion).

In addition, as part of the granting of certain financial accommodations
contemplated to be provided by GE Medical, at the effective time of the
Merger, warrants previously issued to GE Medical by Maxum to acquire 700,000
shares of Maxum Common Stock, and warrants previously issued to GE Medical by
AHS to acquire 1,589,072 shares of AHS Common Stock, will be canceled.
Furthermore, upon consummation of the Merger, GE Medical will have the right
to receive for ten years annual payments (the "Supplemental Service Fee")
under its maintenance agreements with InSight, Maxum and AHS equal to 14% of
pre-tax income, subject to certain adjustments, of InSight, and further
subject to proportional reductions for certain post-Merger acquisitions.
InSight may terminate the Supplemental Service Fee at any time during such
ten-year period by making a payment to GE Medical equal to $8 million less the
discounted value of the aggregate amount of such Supplemental Service Fee
(calculated at a discount rate of 15% per annum) paid through the date of such
termination payment.

The terms and conditions of the Merger Agreement are described in the
accompanying Joint Proxy Statement/Prospectus. The complete text of the Merger
Agreement is attached as Appendix A to the accompanying Joint Proxy
Statement/Prospectus.

The second proposal seeks approval of the InSight Health Services Corp. 1996
Employee Stock Option Plan and the InSight Health Services Corp. 1996
Directors' Stock Option Plan (collectively, the "InSight Option Plans"), under
which a total of up to 882,443 shares of InSight Common Stock will be
available for issuance to officers and employees of, and consultants to,
InSight or any of its operating subsidiaries (including Maxum and AHS after
the Merger), and to the non-employee members of the InSight Board of Directors
(the "InSight Option Plans Proposal"). Copies of the InSight Option Plans are
attached as Appendices E and F to the accompanying Joint Proxy
Statement/Prospectus.

The third proposal seeks ratification of the grant of certain nonqualified
stock options to purchase Maxum Common Stock previously authorized by the
Maxum Board of Directors to each of the directors of Maxum, none of whom are
employees of Maxum (the "Maxum Option Ratification Proposal").

After careful consideration, your Board of Directors believes that the
Merger Proposal, the InSight Option Plans Proposal and the Maxum Option
Ratification Proposal are fair to, and in the best interests of, Maxum and its
stockholders. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
PROPOSAL, THE INSIGHT OPTION PLANS PROPOSAL AND THE MAXUM OPTION RATIFICATION
PROPOSAL AND RECOMMENDS THAT YOU VOTE IN FAVOR THEREOF AT THE SPECIAL MEETING.
Each of the directors and executive officers of Maxum have indicated that they
will vote all of the shares held by them FOR approval of the Merger Proposal,
the InSight Option Plans Proposal and the Maxum Option Ratification Proposal.

2
<PAGE>

It is important that your shares be voted at the Special Meeting, regardless
of the number of shares you hold. THEREFORE, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING. This will not prevent you from voting your shares
in person if you do attend.

We look forward to seeing you on Tuesday, June 25, 1996.

Sincerely,

Gaines W. Hammond, Jr., M.D.,
Chairman of the Board

3
<PAGE>

MAXUM HEALTH CORP.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996

To the Stockholders of Maxum Health Corp.:

Notice is Hereby Given that a special meeting (the "Special Meeting") of the
stockholders of Maxum Health Corp., a Delaware corporation ("Maxum"), will be
held on Tuesday, June 25, 1996, at Dallas Medallion, 4099 Valley View Lane
(LBJ Freeway and Midway Road), Dallas, Texas 75244, commencing at 10:00 a.m.,
Central Daylight Time, for the following purposes:

1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of February 26, 1996 (the "Merger Agreement"), among
Maxum, American Health Services Corp., a Delaware corporation ("AHS"),
InSight Health Services Corp., a newly formed Delaware corporation
("InSight"), and two wholly-owned subsidiaries of InSight--AHSC Acquisition
Company, a Delaware corporation ("AHSC Acquisition"), and MXHC Acquisition
Company, a Delaware corporation ("MXHC Acquisition")--and the transactions
contemplated by the Merger Agreement (the "Merger Proposal"). Pursuant to
the terms of the Merger Agreement, (i) MXHC Acquisition will merge with and
into Maxum and AHSC Acquisition will merge with and into AHS (collectively,
the "Merger"), (ii) each outstanding share of common stock, par value $.01
per share, of Maxum (the "Maxum Common Stock") will be converted into the
right to receive .598 of a share of common stock, par value $.001 per
share, of InSight (the "InSight Common Stock"), (iii) each outstanding
share of Series B Preferred Stock, par value $.01 per share, of Maxum (the
"Maxum Series B Preferred Stock"), which is contemplated to be issued
immediately prior to the consummation of the Merger, will be converted into
the right to receive 83.392 shares of Series A Preferred Stock, par value
$.001 per share, of InSight (the "InSight Series A Preferred Stock"), (iv)
each outstanding share of common stock, par value $.03 per share, of AHS
(the "AHS Common Stock") will be converted into the right to receive one-
tenth of a share of InSight Common Stock, (v) each outstanding share of
Series B Senior Convertible Preferred Stock, par value $.03 per share, of
AHS (the "AHS Series B Preferred Stock"), which is currently convertible
into 100 shares of AHS Common Stock, will be converted into the right to
receive 10 shares of InSight Common Stock, (vi) each outstanding share of
Series C Preferred Stock, par value $.03 per share, of AHS (the "AHS Series
C Preferred Stock"), which is contemplated to be issued immediately prior
to the consummation of the Merger, will be converted into the right to
receive 1.25088 shares of InSight Series A Preferred Stock, and (vii) each
outstanding option, warrant or other right to purchase Maxum Common Stock
and AHS Common Stock will be converted into the right to acquire, on the
same terms and conditions, shares of InSight Common Stock, with the number
of shares and exercise price applicable to such option, warrant or other
right adjusted based on the applicable exchange ratio for the underlying
Maxum Common Stock or AHS Common Stock. Accordingly, a vote in favor of the
Merger Proposal will also be a vote in favor of InSight's assumption of the
various stock option plans under which the options to acquire AHS Common
Stock and Maxum Common Stock are currently outstanding. A copy of the
Merger Agreement is attached as Appendix A to the accompanying Joint Proxy
Statement/Prospectus.

2. To consider and vote upon a proposal to approve the InSight Health
Services Corp. 1996 Employee Stock Option Plan and the InSight Health
Services Corp. 1996 Directors' Stock Option Plan (collectively, the
"InSight Option Plans"), under which a total of up to 882,433 shares of
InSight Common Stock will be available for issuance to officers and
employees of, and consultants to, InSight or any of its operating
subsidiaries (including AHS and Maxum after the Merger), and to the non-
employee members of the InSight Board of Directors. Copies of the InSight
Option Plans are attached as Appendices E and F to the accompanying Joint
Proxy Statement/Prospectus.

3. To consider and vote to ratify the grant to each of the directors of
Maxum (none of whom are employees of Maxum) on August 15, 1994, of a ten-
year nonqualified option to purchase 15,000 shares of Maxum Common Stock at
an exercise price of $0.0625 per share.
<PAGE>

4. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.

Only stockholders of record at the close of business on May 7, 1996, will be
entitled to notice of and to vote at the Special Meeting or any adjournment
thereof.

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE
SPECIAL MEETING. A return envelope is enclosed for your convenience and
requires no postage for mailing in the United States. Proxies are revocable at
any time prior to the time they are voted, and stockholders who are present at
the meeting may withdraw their proxies and vote in person if they so desire.

By Order of the Board of Directors

Gaines W. Hammond, Jr., M.D.,
Chairman of the Board

May 9, 1996
<PAGE>

May 9, 1996

Dear Stockholder:

You are cordially invited to attend the special meeting (the "Special
Meeting") of stockholders of American Health Services Corp., a Delaware
corporation ("AHS"), to be held on Tuesday, June 25, 1996, at The Sutton Place
Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660, commencing
at 10:00 a.m., Pacific Daylight Time.

At the Special Meeting, you will be asked to consider and vote upon three
proposals. The first proposal seeks approval of (i) the Agreement and Plan of
Merger, dated as of February 26, 1996 (the "Merger Agreement"), among AHS,
Maxum Health Corp., a Delaware corporation ("Maxum"), InSight Health Services
Corp., a newly formed Delaware corporation ("InSight"), and two wholly-owned
subsidiaries of InSight--AHSC Acquisition Company, a Delaware corporation
("AHSC Acquisition"), and MXHC Acquisition Company, a Delaware corporation
("MXHC Acquisition")--and (ii) the transactions contemplated by the Merger
Agreement (the "Merger Proposal").

Pursuant to the Merger Agreement:

. AHSC Acquisition will merge with and into AHS and MXHC Acquisition will
merge with and into Maxum (collectively, the "Merger");

. each outstanding share of common stock, par value $.03 per share, of AHS
("AHS Common Stock") will be converted into the right to receive one-
tenth of a share of common stock, par value $.001 per share, of InSight
("InSight Common Stock");

. each outstanding share of common stock, par value $.01 per share, of
Maxum ("Maxum Common Stock") will be converted into the right to receive
.598 of a share of InSight Common Stock;

. each outstanding option, warrant or other right to purchase AHS Common
Stock and Maxum Common Stock will be converted into the right to
acquire, on the same terms and conditions, shares of InSight Common
Stock, with the number of shares and exercise price applicable to such
option, warrant or other right adjusted based on the applicable exchange
ratio for the underlying AHS Common Stock or Maxum Common Stock.

It is a condition to consummation of the Merger that the holders of a
majority of the outstanding shares of each of AHS Common Stock and AHS Series
B Preferred Stock, each voting as a separate class, vote in person
<PAGE>

or by proxy at the Special Meeting to approve the Merger Proposal. The holders
of AHS Series B Preferred Stock have agreed to vote in favor of the Merger
Proposal.

A prerequisite to the consummation of the Merger is the granting of certain
financial accommodations contemplated to be provided by General Electric
Company, acting through GE Medical Systems ("GE Medical"), the primary
creditor of each of AHS and Maxum, and its affiliate General Electric Capital
Corporation, which would result in the reduction in certain debt and operating
lease obligations of AHS and Maxum in exchange for, among other things, the
issuance to GE Medical immediately prior to the consummation of the Merger of
AHS Series C Preferred Stock and Maxum Series B Preferred Stock. At the
effective time of the Merger, such preferred stock contemplated to be issued
to GE Medical will be converted into the right to receive such number of
shares of InSight Series A Preferred Stock as will be convertible into InSight
Common Stock representing approximately 48% of InSight Common Stock
outstanding at the effective time of the Merger (after giving effect to such
conversion).

In addition, as part of the granting of certain financial accommodations
contemplated to be provided by GE Medical, at the effective time of the
Merger, warrants previously issued to GE Medical by AHS to acquire 1,589,072
shares of AHS Common Stock, and warrants previously issued to GE Medical by
Maxum to acquire 700,000 shares of Maxum Common Stock, will be canceled.
Furthermore, upon consummation of the Merger, GE Medical will have the right
to receive for ten years annual payments (the "Supplemental Service Fee")
under its maintenance agreements with InSight, AHS and Maxum equal to 14% of
pre-tax income, subject to certain adjustments of InSight, and further subject
to proportional reductions for certain post-Merger acquisitions. InSight may
terminate the Supplemental Service Fee at any time during such ten-year period
by making a payment to GE Medical equal to $8 million less the discounted
value of the aggregate amount of such Supplemental Service Fee (calculated at
a discount rate of 15% per annum) paid through the date of such termination
payment.

The second proposal seeks approval of the InSight Health Services Corp. 1996
Employee Stock Option Plan and the InSight Health Services Corp. 1996
Directors' Stock Option Plan (collectively, the "InSight Option Plans"), under
which a total of up to 882,433 shares of InSight Common Stock will be
available for issuance to officers and employees of, and consultants to,
InSight or any of its operating subsidiaries (including AHS and Maxum after
the Merger), and to the non-employee members of the InSight Board of Directors
(the "InSight Option Plans Proposal"). Copies of the InSight Option Plans are
attached as Appendices E and F to the accompanying Joint Proxy
Statement/Prospectus.

The third proposal seeks approval of certain amendments to the existing AHS
stock option and incentive plans which would ensure that the options held by
three AHS executive officers and one AHS director who will serve InSight in
similar capacities, and options held by the four AHS non-employee directors
who will resign from the AHS Board of Directors as a condition to and upon
consummation of the Merger, will not terminate as a result of any deemed or
actual termination of employment or service in connection with the Merger (the
"AHS Plan Amendment Proposal"). Copies of the proposed amendments to the AHS
stock option and incentive plans are attached as Appendix G to the
accompanying Joint Proxy Statement/Prospectus.

After careful consideration, your Board of Directors believes that the
Merger Proposal, the InSight Option Plans Proposal and the AHS Plan Amendment
Proposal are fair to, and in the best interests of, AHS and its stockholders.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER PROPOSAL, THE
INSIGHT OPTION PLANS PROPOSAL AND THE AHS PLAN AMENDMENT PROPOSAL AND
RECOMMENDS THAT YOU VOTE IN FAVOR THEREOF AT THE SPECIAL MEETING. Each of the
directors and executive officers of AHS has indicated that he will vote all of
the shares held therein FOR approval of the Merger Proposal, the InSight
Option Plans Proposal and the AHS Plan Amendment Proposal.

2
<PAGE>

We look forward to seeing you on Tuesday, June 25, 1996.

Sincerely,

E. Larry Atkins,
President and Chief Executive
Officer

3
<PAGE>

AMERICAN HEALTH SERVICES CORP.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996

To the Stockholders of American Health Services Corp.:

NOTICE IS HEREBY GIVEN that a special meeting (the "Special Meeting") of the
stockholders of American Health Services Corp., a Delaware corporation
("AHS"), will be held on Tuesday, June 25, 1996, at The Sutton Place Hotel,
4500 MacArthur Boulevard, Newport Beach, California 92660, commencing at 10:00
a.m., Pacific Daylight Time, for the following purposes:

1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of February 26, 1996 (the "Merger Agreement"), among
AHS and Maxum Health Corp., a Delaware corporation ("Maxum"), InSight
Health Services Corp., a newly formed Delaware corporation ("InSight"), and
two wholly-owned subsidiaries of InSight--AHSC Acquisition Company, a
Delaware corporation ("AHSC Acquisition"), and MXHC Acquisition Company, a
Delaware corporation ("MXHC Acquisition")--and the transactions
contemplated by the Merger Agreement (the "Merger Proposal"). Pursuant to
the terms of the Merger Agreement, (i) AHSC Acquisition will merge with and
into AHS and MXHC Acquisition will merge with and into Maxum (collectively,
the "Merger"), (ii) each outstanding share of common stock, par value $.03
per share, of AHS ("AHS Common Stock") will be converted into the right to
receive one-tenth of a share of common stock, par value $.001 per share, of
InSight ("InSight Common Stock"), (iii) each outstanding share of Series B
Senior Convertible Preferred Stock, par value $.03 per share, of AHS ("AHS
Series B Preferred Stock"), which is currently convertible into 100 shares
of AHS Common Stock, will be converted into the right to receive 10 shares
of InSight Common Stock, (iv) each outstanding share of Series C Preferred
Stock, par value $.03 per share, of AHS (the "AHS Series C Preferred
Stock"), which is contemplated to be issued immediately prior to the
consummation of the Merger, will be converted into the right to receive
1.25088 shares of Series A Preferred Stock, par value $.001 per share, of
InSight (the "InSight Series A Preferred Stock"), (v) each outstanding
share of common stock, par value $.01 per share, of Maxum ("Maxum Common
Stock") will be converted into the right to receive .598 of a share of
InSight Common Stock, (vi) each outstanding share of Series B Preferred
Stock, par value $.01 per share, of Maxum (the "Maxum Series B Preferred
Stock"), which is contemplated to be issued immediately prior to the
consummation of the Merger, will be converted into the right to receive
83.392 shares of InSight Series A Preferred Stock, and (vii) each
outstanding option, warrant or other right to purchase AHS Common Stock and
Maxum Common Stock will be converted into the right to acquire, on the same
terms and conditions, shares of InSight Common Stock, with the number of
shares and exercise price applicable to such option, warrant or other right
adjusted based on the applicable exchange ratio for the underlying AHS
Common Stock or Maxum Common Stock. Accordingly, a vote in favor of the
Merger Proposal will also be a vote in favor of InSight's assumption of the
various stock option plans under which the options to acquire Maxum Common
Stock and AHS Common Stock are currently outstanding. A copy of the Merger
Agreement is attached as Appendix A to the accompanying Joint Proxy
Statement/Prospectus.

3. To consider and vote upon a proposal to approve amendments to the four
existing AHS stock option and incentive plans which would ensure that the
stock options held by three AHS executive officers and one AHS director who
will serve InSight in similar capacities, and options held by the four AHS
non-employee directors who will resign from the AHS Board as a condition to
and upon consummation of the Merger, will not terminate as a result of any
deemed or actual termination of employment or service in
<PAGE>

connection with the Merger. Copies of the proposed amendments to the AHS
stock option and incentive plans are attached as Appendix G to the
accompanying Joint Proxy Statement/Prospectus.

4. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.

Only stockholders of record at the close of business on May 7, 1996, will be
entitled to notice of and to vote at the Special Meeting or any adjournment
thereof.

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE
SPECIAL MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE AND
REQUIRES NO POSTAGE FOR MAILING IN THE UNITED STATES. PROXIES ARE REVOCABLE AT
ANY TIME PRIOR TO THE TIME THEY ARE VOTED, AND STOCKHOLDERS WHO ARE PRESENT AT
THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.

By Order of the Board of Directors

Thomas V. Croal, Secretary
May 9, 1996
<PAGE>

MAXUM HEALTH CORP.

AMERICAN HEALTH SERVICES CORP.

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

JOINT PROXY STATEMENT

FOR

SPECIAL MEETINGS OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996

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

INSIGHT HEALTH SERVICES CORP.

PROSPECTUS

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

This Joint Proxy Statement/Prospectus is provided in connection with the
solicitation by (i) the Board of Directors of Maxum Health Corp., a Delaware
corporation ("Maxum"), of proxies from holders of shares of common stock, par
value $.01 per share, of Maxum ("Maxum Common Stock") for use at the special
meeting of Maxum stockholders to be held on Tuesday, June 25, 1996 and at any
adjournment thereof (the "Maxum Special Meeting") and (ii) the Board of
Directors of American Health Services Corp., a Delaware corporation ("AHS"),
of proxies from holders of shares of common stock, par value $.03 per share,
of AHS ("AHS Common Stock") for use at the special meeting of AHS stockholders
to be held on Tuesday, June 25, 1996 and at any adjournment thereof (the "AHS
Special Meeting").

The Joint Proxy Statement/Prospectus relates to the transactions
contemplated by the Agreement and Plan of Merger, dated as of February 26,
1996 (the "Merger Agreement"), by and among InSight Health Services Corp., a
newly formed Delaware corporation ("InSight"), Maxum, AHS and two wholly-owned
subsidiaries of InSight--MXHC Acquisition Company, a Delaware corporation
("MXHC Acquisition"), and AHSC Acquisition Company, a Delaware corporation
("AHSC Acquisition"). The Merger Agreement provides for the mergers
(collectively, the "Merger") of (i) MXHC Acquisition with and into Maxum and
(ii) AHSC Acquisition with and into AHS. The proposal to approve the Merger
Agreement, and the transactions contemplated thereby, is referred to herein as
the "Merger Proposal."

This Joint Proxy Statement/Prospectus is a prospectus under the Securities
Act of 1933, as amended (the "Securities Act"), for the issuance of the shares
of common stock, par value $.001 per share, of InSight ("InSight Common
Stock") into which shares of Maxum Common Stock, AHS Common Stock and AHS
Series B Preferred Stock will be converted upon consummation of the Merger.
Application has been made to list InSight Common Stock on the Nasdaq SmallCap
Market. There can be no assurance, however, that InSight Common Stock will be
accepted for listing on the Nasdaq SmallCap Market. If not, it is anticipated
after consummation of the Merger that InSight Common Stock will be quoted on
the OTC Bulletin Board.

If the Merger Proposal is approved by the stockholders of Maxum at the Maxum
Special Meeting and by the stockholders of AHS at the AHS Special Meeting, and
if the other conditions specified in the Merger Agreement are satisfied or
waived, each of Maxum and AHS (individually, a "Company" and together, the
"Companies") will become a wholly-owned subsidiary of InSight, each
outstanding share of Maxum Common Stock will be converted into the right to
receive .598 of a share of InSight Common Stock, each outstanding share of AHS
Common Stock will be converted into the right to receive one-tenth of a share
of InSight Common Stock and each outstanding share of Series B Senior
Convertible Preferred Stock, par value $.03 per share, of AHS ("AHS Series B
Preferred Stock") will be converted into the right to receive 10 shares of
InSight Common Stock. Cash, without interest, will be paid in lieu of the
issuance of fractional shares of InSight Common Stock, rounded to the nearest
cent, equal to the product of such fraction multiplied by the value of a share
of InSight Common Stock as determined by the InSight Board of Directors (the
"InSight Board"). For this

1
<PAGE>

purpose, the InSight Board will value each share of InSight Common Stock by
using the quotient of (i) the sum of (a) the number of shares of Maxum Common
Stock outstanding immediately prior to the Merger multiplied by the average
closing bid quotation on the OTC Bulletin Board for Maxum Common Stock for the
last ten trading days immediately preceding the Merger, plus (b) the number of
shares of AHS Common Stock outstanding immediately prior to the Merger
multiplied by the average closing bid quotation on the OTC Bulletin Board for
AHS Common Stock for the last ten trading days immediately preceding the
Merger, divided by (ii) the number of shares of InSight Common Stock issued in
respect of shares of Maxum Common Stock and AHS Common Stock. Moreover, each
outstanding option, warrant or other right to purchase Maxum Common Stock or
AHS Common Stock will be converted into the right to acquire, on the same
terms and conditions, shares of InSight Common Stock, with the number of
shares and exercise price applicable to such option, warrant or other right
adjusted based on the applicable exchange ratio for the underlying Maxum
Common Stock or AHS Common Stock. In connection with such adjustments, InSight
will also assume the outstanding obligations of Maxum and AHS under the
various plans or agreements under which those options, warrants or other
rights are currently outstanding.

As a condition precedent to the Merger and in exchange for the financial
accommodations described below that are contemplated to be provided by General
Electric Company, acting through GE Medical Systems ("GE Medical"), the
primary creditor of each of AHS and Maxum, and its affiliate General Electric
Capital Corporation (referred to herein, together with GE Medical, as the "GE
Parties"), (i) Maxum will issue to GE Medical 15,000 shares of Series B
Preferred Stock, par value $.01 per share, of Maxum (the "Maxum Series B
Preferred Stock") and (ii) AHS will issue to GE Medical 1,000,000 shares of
Series C Preferred Stock, par value $.03 per share, of AHS (the "AHS Series C
Preferred Stock"). Pursuant to the Merger Agreement, at the effective time of
the Merger (the "Effective Time"), (i) the Maxum Series B Preferred Stock will
be converted, at a ratio of 83.392 shares of Series A Preferred Stock, par
value $.001 per share, of InSight (the "InSight Series A Preferred Stock"), to
one share of Maxum Series B Preferred Stock, into the right to receive
1,250,880 shares of InSight Series A Preferred Stock and (ii) the AHS Series C
Preferred Stock will be converted, at a ratio of 1.25088 shares of InSight
Series A Preferred Stock to one share of AHS Series C Preferred Stock, into
the right to receive 1,250,880 shares of InSight Series A Preferred Stock. At
the Effective Time, such InSight Series A Preferred Stock to be received by GE
Medical in the Merger will constitute all of the issued and outstanding shares
of preferred stock of InSight as of such date and will be convertible into
InSight Common Stock representing approximately 48% of InSight Common Stock
outstanding at the Effective Time (after giving effect to such conversion).
The approximate percentage interests of InSight Common Stock to be held by
former Maxum stockholders and former AHS stockholders at the Effective Time,
assuming no conversion by GE Medical of its InSight Series A Preferred Stock
into InSight Common Stock, will be 50.2% and 49.8%, respectively. The
approximate percentage interests of InSight Common Stock to be held by former
Maxum stockholders, former AHS stockholders and GE Medical as of the Effective
Time, assuming the conversion by GE Medical of its InSight Series A Preferred
Stock into InSight Common Stock, will be 26.1%, 25.9% and 48%, respectively.

The financial accommodations contemplated to be provided by the GE Parties
include (a) with respect to AHS, a reduction of the outstanding principal
amount of a term loan by approximately $6.2 million, an aggregate reduction in
required annual lease payments by approximately $814,000 and the release of
certain deferred obligations in the aggregate outstanding principal amount of
approximately $4.5 million, and (b) with respect to Maxum, an aggregate
reduction of the outstanding principal amount of certain indebtedness by
approximately $9.0 million and an aggregate reduction in required lease
payments over the terms of the leases by approximately $1.3 million.

In addition, as part of the granting of the financial accommodations
contemplated to be provided by GE Medical, at the Effective Time, warrants
previously issued to GE Medical by Maxum to acquire 700,000 shares of Maxum
Common Stock, and warrants previously issued to GE Medical by AHS to acquire
1,589,072 shares of AHS Common Stock, will be canceled. Furthermore, GE
Medical will have the right to receive for ten years annual payments (the
"Supplemental Service Fee") under its maintenance agreements with InSight,
Maxum and

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AHS equal to 14% of pre-tax income, subject to certain adjustments, of
InSight, and further subject to proportional reductions for certain post-
Merger acquisitions. InSight may terminate the Supplemental Service Fee at any
time during such ten-year period by making a payment to GE Medical equal to $8
million less the discounted value of the Supplemental Service Fee (calculated
at a discount rate of 15% per annum) paid through the date of such termination
payment. See "Debt Restructuring and Issuance of Preferred Stock to GE
Medical."

This Joint Proxy Statement/Prospectus is being provided in connection with
the solicitation by (i) the Board of Directors of Maxum (the "Maxum Board") of
proxies from holders of the outstanding Maxum Common Stock for use at the
Maxum Special Meeting on proposals to (a) approve the Merger Proposal, (b)
approve the InSight Health Services Corp. 1996 Employee Stock Option Plan and
the InSight Health Services Corp. 1996 Directors' Stock Option Plan (the
"InSight Option Plans Proposal") and (c) ratify the grant to the directors of
Maxum of nonqualified options to purchase Maxum Common Stock (the "Maxum
Option Ratification Proposal"), and (ii) the Board of Directors of AHS (the
"AHS Board") of proxies from the holders of the outstanding AHS Common Stock
to vote at the AHS Special Meeting on proposals to (a) approve the Merger
Proposal, (b) approve the InSight Option Plans Proposal and (c) approve
certain amendments to the four existing AHS stock option and incentive plans
(the "AHS Plan Amendment Proposal").

Maxum Common Stock and AHS Common Stock each trade over the counter on the
OTC Bulletin Board. On February 26, 1996, the last trading day before the
public announcement of the execution and delivery of the Merger Agreement, the
closing bid quotation on the OTC Bulletin Board for Maxum Common Stock was
$1.125 per share and for AHS Common Stock was $0.50 per share. On May 6, 1996,
the closing bid quotation for Maxum Common Stock was $2.88 per share and for
AHS Common Stock was $.84 per share. Stockholders are encouraged to obtain
current quotations for the market prices of Maxum Common Stock and AHS Common
Stock before voting on the Merger Proposal.

The approximate date of mailing of this Joint Proxy Statement/Prospectus and
the accompanying proxy is May 13, 1996.

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

FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED WHEN
EVALUATING THE TRANSACTIONS CONTEMPLATED BY THIS JOINT PROXY
STATEMENT/PROSPECTUS, SEE "RISK FACTORS."

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

NEITHER THE MERGER NOR THE SECURITIES TO BE ISSUED IN THE MERGER HAVE BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

The date of this Joint Proxy Statement/Prospectus is May 9, 1996.

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TABLE OF CONTENTS

<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................................... 8
SUMMARY..................................................................... 9
General................................................................... 9
InSight Health Services Corp.............................................. 9
The Companies............................................................. 9
MXHC Acquisition Company.................................................. 10
AHSC Acquisition Company.................................................. 10
Terms of the Merger....................................................... 10
Management Following the Merger........................................... 12
Interests of Certain Persons in the Merger................................ 13
Potential Adverse Consequences to Stockholders............................ 15
Closing and Effective Time of the Merger.................................. 15
Operation of InSight After the Merger..................................... 15
Reasons for the Merger.................................................... 15
Effect on Derivative Securities........................................... 16
Recommendation of the Boards of Directors................................. 17
Opinions of Financial Advisors............................................ 17
Meetings of the Stockholders.............................................. 18
Record Date and Vote Required............................................. 19
Exchange of Stock Certificates............................................ 20
Government and Regulatory Approvals....................................... 20
Federal Income Tax Considerations......................................... 20
Accounting Treatment...................................................... 20
Dissenters' Rights of Appraisal........................................... 21
Common Stock Market Prices and Per Share Data............................. 21
Listing of InSight Common Stock........................................... 23
GE Medical Financial Transactions......................................... 23
UNAUDITED SUMMARY PRO FORMA SELECTED FINANCIAL DATA OF INSIGHT.............. 25
SUMMARY FINANCIAL DATA...................................................... 26
RISK FACTORS................................................................ 28
THE MAXUM STOCKHOLDER MEETING............................................... 36
Time, Date and Place of Maxum Meeting..................................... 36
Business to be Conducted at the Maxum Meeting............................. 36
Proxies: Voting and Revocation............................................ 36
Proxy Solicitation........................................................ 37
Vote Required............................................................. 37
Other Matters............................................................. 37
THE AHS STOCKHOLDER MEETING................................................. 38
Time, Date and Place of AHS Meeting....................................... 38
Business to be Conducted at the AHS Meeting............................... 38
Proxies: Voting and Revocation............................................ 38
Proxy Solicitation........................................................ 38
Vote Required............................................................. 38
Other Matters............................................................. 39
BACKGROUND OF THE MERGER.................................................... 40
General................................................................... 40
Events Leading to the Merger.............................................. 40
Maxum's Reasons for the Merger and Board of Directors' Recommendation..... 42
Opinion of PFS............................................................ 43
AHS Reasons for the Merger and Board of Directors' Recommendation......... 48
</TABLE>

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<TABLE>
<S> <C>
Opinion of Shattuck Hammond............................................. 49
FAILURE OF MERGER TO OCCUR................................................ 55
THE MERGER................................................................ 56
Closing and Effective Time of the Merger................................ 56
Conditions of the Merger Agreement...................................... 56
Termination of the Merger Agreement..................................... 57
Sharing and Reimbursement of Expenses................................... 58
Interests of Certain Persons in the Merger.............................. 58
Stockholder Approvals................................................... 61
Rights of Security Holders.............................................. 62
Governmental and Regulatory Approvals................................... 66
Federal Income Tax Considerations....................................... 67
Accounting Treatment.................................................... 69
Dissenters' Rights of Appraisal under DGCL.............................. 69
Effects of the Merger................................................... 72
Assumption of Existing Stock Options and Warrants....................... 73
Federal Income Tax Consequences with Respect to Stock Options........... 75
Termination of Maxum Stock Purchase Plan................................ 76
Exchange of Stock Certificates.......................................... 77
Payment in Lieu of Fractional Shares.................................... 77
Resales of InSight Common Stock and Registration Rights................. 78
DEBT RESTRUCTURING AND ISSUANCE OF PREFERRED STOCK TO GE MEDICAL.......... 78
Financial Accommodations to Maxum and the Maxum Subsidiaries............ 79
Financial Accommodations to AHS......................................... 79
Warrants of GE Medical.................................................. 80
Conditions Subsequent................................................... 80
Covenants of InSight.................................................... 81
Events of Default and Remedies.......................................... 81
Master Service Agreement Addendum....................................... 81
Payment of GE Medical Legal Fees........................................ 82
OPERATION, MANAGEMENT AND BUSINESS OF INSIGHT AFTER THE MERGER............ 82
Business of InSight..................................................... 82
Management of InSight................................................... 83
InSight Principal Stockholders.......................................... 84
Description of Capital Stock of InSight................................. 86
Listing of InSight Common Stock......................................... 89
Transfer Agent.......................................................... 89
PRICE RANGE OF COMMON STOCK............................................... 90
Market for Maxum Common Stock and Related Stockholder Matters........... 90
Market for AHS Common Stock and Related Stockholder Matters............. 90
UNAUDITED PRO FORMA CAPITALIZATION OF INSIGHT............................. 91
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS........... 92
MAXUM SELECTED CONSOLIDATED FINANCIAL DATA................................ 102
MAXUM'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................... 103
Prior Restructure of Operations and Financial Obligations............... 103
Acquisitions............................................................ 103
Financial Condition, Liquidity and Capital Resources.................... 104
Pending Merger.......................................................... 105
Results of Operations................................................... 106
Termination of Management Contract...................................... 109
Inflation............................................................... 109
</TABLE>

5
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<TABLE>
<S> <C>
AHS SELECTED CONSOLIDATED FINANCIAL DATA.................................. 110
AHS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................... 111
Results of Operations................................................... 111
Financial Condition, Liquidity and Capital Resources.................... 113
BUSINESS OF MAXUM......................................................... 116
Services................................................................ 116
General Development of Business......................................... 116
Ownership Structure..................................................... 116
Customers and Fees...................................................... 117
Reimbursement........................................................... 117
Strategy and Marketing.................................................. 118
Competition............................................................. 119
Government Regulation................................................... 120
Human Resources......................................................... 120
Insurance............................................................... 120
Properties.............................................................. 121
Legal Proceedings....................................................... 121
MANAGEMENT OF MAXUM....................................................... 122
Directors and Executive Officers........................................ 122
Board of Directors...................................................... 122
Executive Officers...................................................... 123
Compensation Committee Interlocks and Insider Participation............. 123
Compensation of Directors............................................... 124
Certain Transactions.................................................... 124
EXECUTIVE COMPENSATION OF MAXUM........................................... 126
Summary Compensation Table.............................................. 126
Option Grants in the Last Fiscal Year................................... 127
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Op-
tion Values............................................................ 127
Indemnification Agreements.............................................. 127
Employment Contracts and Terminations of Employment and Change-in-Con-
trol Arrangements...................................................... 127
MAXUM PRINCIPAL STOCKHOLDERS.............................................. 129
DESCRIPTION OF CAPITAL STOCK OF MAXUM..................................... 130
Common Stock............................................................ 130
Preferred Stock......................................................... 130
Preferred Stock Contemplated to be Issued to GE Medical................. 130
Warrant................................................................. 130
Antitakeover Provisions................................................. 131
Transfer Agent and Registrar............................................ 131
BUSINESS OF AHS........................................................... 131
Description of Business................................................. 131
Imaging and Treatment Center Profile.................................... 132
Centers in Operation.................................................... 133
Diagnostic Imaging Technology........................................... 133
Government Regulation................................................... 135
Managed Care............................................................ 137
Liability Insurance..................................................... 137
Competition............................................................. 137
Supply of Diagnostic Imaging and Gamma Knife Systems.................... 137
Financing of Diagnostic Imaging and Gamma Knife Systems................. 138
New Technology and Possible Obsolescence................................ 139
Employees............................................................... 139
</TABLE>

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<TABLE>
<S> <C>
Properties............................................................... 139
Legal Proceedings........................................................ 139
MANAGEMENT OF AHS.......................................................... 140
Directors and Executive Officers......................................... 140
Board of Directors....................................................... 141
Executive Officers....................................................... 142
Compensation Committee Interlocks and Insider Participation.............. 142
Audit Committee.......................................................... 142
Compensation of Directors................................................ 143
Certain Transactions..................................................... 143
EXECUTIVE COMPENSATION OF AHS.............................................. 145
Option Grants in the Last Fiscal Year.................................... 145
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Op-
tion Values............................................................. 146
Indemnification Agreements............................................... 146
Employment Agreements and Severance Arrangements......................... 146
AHS PRINCIPAL STOCKHOLDERS................................................. 147
DESCRIPTION OF CAPITAL STOCK OF AHS........................................ 149
Common Stock............................................................. 149
Preferred Stock.......................................................... 149
Warrants................................................................. 150
Preferred Stock Contemplated to be Issued to GE Medical.................. 151
PROPOSAL NO. 2 APPROVAL OF THE INSIGHT OPTION PLANS PROPOSAL............... 151
Employee Stock Option Plan............................................... 151
Directors' Stock Option Plan............................................. 153
Federal Income Tax Consequences.......................................... 154
Accounting Treatment..................................................... 155
Stockholder Approval and Board Recommendation............................ 155
MAXUM PROPOSAL NO. 3 APPROVAL OF MAXUM OPTION RATIFICATION PROPOSAL........ 156
Background............................................................... 156
Persons Benefitting...................................................... 156
Other Terms of the Options............................................... 156
Tax and Accounting Features.............................................. 156
Board Recommendation..................................................... 157
AHS PROPOSAL NO. 3 APPROVAL OF AHS PLAN AMENDMENT PROPOSAL................. 157
FUTURE STOCKHOLDER PROPOSALS............................................... 158
EXPERTS.................................................................... 159
LEGAL MATTERS.............................................................. 159
APPENDICES:
A.Agreement and Plan of Merger (excluding exhibits)...................... A-1
B.Opinion of Principal Financial Securities, Inc......................... B-1
C.Opinion of Shattuck Hammond Partners, Inc.............................. C-1
D.Delaware General Corporation Law--Section 262.......................... D-1
E.InSight 1996 Employee Stock Option Plan................................ E-1
F.InSight 1996 Directors' Stock Option Plan.............................. F-1
G.Amendments to AHS Plans................................................ G-1
H. Audited Consolidated Financial Statements of Maxum at December 31,
1995 and 1994, and for each of the Three Years Ended December 31, 1995
and Financial Statements of Business Acquired at March 31, 1995 (unau-
dited) and December 31, 1994, and for the Three Months Ended March 31,
1995 (unaudited) and for the Year Ended December 31, 1994............. H-1
I. Audited Consolidated Financial Statements of AHS at December 31, 1995
and 1994, and for each of the Three Years Ended December 31, 1995..... I-1
J. Audited Balance Sheet of InSight at May 7, 1996....................... J-1
</TABLE>

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AVAILABLE INFORMATION

Each of Maxum and AHS are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and must in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Reports, proxy statements
and other information filed by Maxum and AHS can be inspected and copied at
prescribed rates at the public reference facilities maintained by the SEC at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
and at the regional offices of the SEC located at 5670 Wilshire Boulevard,
11th Floor, Los Angeles, California 90036; 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New
York, New York 10048.

InSight has filed a registration statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with the SEC covering the InSight Common Stock to be issued pursuant to
the Merger Agreement. As permitted by the rules and regulations of the SEC,
this Joint Proxy Statement/Prospectus does not contain all information set
forth in the Registration Statement and exhibits thereto. For further
information, please refer to the Registration Statement, including the
exhibits thereto, all of which are available for inspection and copying as set
forth above. Statements contained in this Joint Proxy Statement/Prospectus
relating to the contents of any contract or other document referred to herein
are not necessarily complete, and reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement
or such other document, each such statement being qualified in all respects by
such reference.

* * *

All information in this Joint Proxy Statement/Prospectus concerning Maxum
and its affiliates has been furnished by Maxum; all information in this Joint
Proxy Statement/Prospectus concerning AHS and its affiliates has been
furnished by AHS; and all information in this Joint Proxy Statement/Prospectus
concerning InSight, MXHC Acquisition and AHSC Acquisition has been furnished
by InSight.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS JOINT
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO EXCHANGE OR SELL,
OR A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED
HEREBY, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR TO
ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SHARES OF INSIGHT COMMON STOCK MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE INFORMATION
SET FORTH HEREIN OR THE AFFAIRS OF INSIGHT, MAXUM, AHS, MXHC ACQUISITION OR
AHSC ACQUISITION SINCE THE DATE HEREOF.

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SUMMARY

The following is a summary of certain information contained elsewhere in this
Joint Proxy Statement/Prospectus. Reference is made to, and this Summary is
qualified in its entirety by, the more detailed information contained in this
Joint Proxy Statement/Prospectus and the Appendices hereto.

GENERAL

This Joint Proxy Statement/Prospectus is provided to stockholders of Maxum
Health Corp., a Delaware corporation ("Maxum"), and American Health Services
Corp., a Delaware corporation ("AHS" and together with Maxum, the "Companies",
and individually, a "Company"), in connection with the solicitation of proxies
by the Board of Directors of Maxum (the "Maxum Board") and the Board of
Directors of AHS (the "AHS Board") for use at the special meeting of
stockholders of Maxum (the "Maxum Special Meeting") and the special meeting of
stockholders of AHS (the "AHS Special Meeting"), respectively, each of which
will be held on Tuesday, June 25, 1996 (collectively, the "Special Meetings").
At the Special Meetings, stockholders of each of the Companies will consider
and vote on a proposal to approve the Agreement and Plan of Merger, dated as of
February 26, 1996 (the "Merger Agreement"), by and among InSight Health
Services Corp., a newly formed Delaware corporation ("InSight"), AHS, Maxum and
two wholly-owned subsidiaries of InSight--MXHC Acquisition Company, a Delaware
corporation ("MXHC Acquisition"), and AHSC Acquisition Company, a Delaware
corporation ("AHSC Acquisition")--and the transactions contemplated by the
Merger Agreement. Pursuant to the Merger Agreement, MXHC Acquisition will merge
with and into Maxum and AHSC Acquisition will merge with and into AHS
(collectively, the "Merger"). The proposal to approve the Merger Agreement and
the transactions contemplated thereby is referred to herein as the "Merger
Proposal." At the Special Meetings, the stockholders of each of the Companies
will also consider and vote on a proposal to approve the InSight Health
Services Corp. 1996 Employee Stock Option Plan and the InSight Health Services
Corp. 1996 Directors' Stock Option Plan (collectively, the "InSight Option
Plans"), which proposal is referred to herein as the "InSight Option Plans
Proposal." Stockholders of Maxum will also consider and vote on a proposal to
ratify the grant of ten-year nonqualified options to purchase Maxum Common
Stock to the directors of Maxum, none of whom are employees of Maxum (the
"Maxum Option Ratification Proposal"). Stockholders of AHS will also consider
and vote on a proposal to approve certain amendments to the four existing AHS
option and incentive plans (the "AHS Plan Amendment Proposal").

INSIGHT HEALTH SERVICES CORP.

InSight is a Delaware corporation formed in connection with the Merger.
Currently, InSight has no material assets and liabilities other than under the
Merger Agreement and the other documents entered into in connection therewith.
InSight is the holder of all of the capital stock of each of MXHC Acquisition
and AHSC Acquisition. At the effective time of the Merger (the "Effective
Time"), each Company will become a wholly-owned subsidiary of InSight. The
principal executive offices of InSight are located at 4440 Von Karman Avenue,
Suite 320, Newport Beach, California 92660, and its telephone number is (714)
476-0733.

THE COMPANIES

Maxum Health Corp. Maxum is a provider of diagnostic imaging and related
management services in 24 states throughout the Central and Eastern United
States. Maxum delivers its services through a network of 48 mobile magnetic
resonance imaging ("MRI") facilities ("Mobile MRI Facilities"), six fixed-site
MRI facilities ("Fixed MRI Facilities"), and five multi-modality imaging
centers ("Imaging Centers"). In its Imaging Centers, Maxum offers various
services in addition to MRI which include diagnostic and fluoroscopic x-ray,
ACR accredited mammography, diagnostic and vascular ultrasound, nuclear
medicine, nuclear cardiology, computerized tomography ("CT") and cardiovascular
services. Maxum also offers additional services through a variety of
arrangements, including equipment rental, technologist services and
training/applications, marketing,

9
<PAGE>

management services, patient scheduling, utilization review, and billing and
collection services. The principal executive offices of Maxum are located at
14850 Quorum Drive, Suite 400, Dallas, Texas 75240, and its telephone number is
(214) 716-6200.

American Health Services Corp. AHS operates 17 diagnostic imaging and
treatment centers located in seven states. AHS also operates two Leksell
Stereotactic Gamma Unit ("Gamma Knife") treatment centers and one radiation
oncology center. AHS also operates an additional radiation oncology center as
part of one of its centers. Its centers provide outpatient diagnostic services
in the areas of MRI, CT, general radiology, cardiology, ultrasound,
mammography, nuclear medicine and neurosciences. AHS also offers additional
services through a variety of arrangements, including equipment rental,
marketing, management services, technologist services, utilization review, and
billing and collection services. The principal executive offices of AHS are
located at 4440 Von Karman Avenue, Suite 320, Newport Beach, California 92660,
and its telephone number is (714) 476-0733.

MXHC ACQUISITION COMPANY

MXHC Acquisition is a wholly-owned subsidiary of InSight, newly formed for
the purpose of merging with and into Maxum in the Merger. MXHC Acquisition has
no material assets and has not engaged in any activities except in furtherance
of the transactions contemplated by the Merger Agreement.

AHSC ACQUISITION COMPANY

AHSC Acquisition is a wholly-owned subsidiary of InSight, newly formed for
the purpose of merging with and into AHS in the Merger. AHSC Acquisition has no
material assets and has not engaged in any activities except in furtherance of
the transactions contemplated by the Merger Agreement.

TERMS OF THE MERGER

Pursuant to the terms of the Merger Agreement, at the Effective Time (i) MXHC
Acquisition will merge with and into Maxum and AHSC Acquisition will merge with
and into AHS, (ii) each outstanding share of common stock, par value $.01 per
share, of Maxum ("Maxum Common Stock") will be converted into the right to
receive .598 of a share of common stock, par value $.001 per share, of InSight
("InSight Common Stock") ("Maxum Common Exchange Ratio"), (iii) each
outstanding share of Series B Preferred Stock, par value $.01 per share, of
Maxum ("Maxum Series B Preferred Stock"), which is contemplated to be issued
immediately prior to the Effective Time, will be converted into the right to
receive 83.392 shares of Series A Preferred Stock, par value $.001 per share,
of InSight ("InSight Series A Preferred Stock"), (iv) each outstanding share of
common stock, par value $.03 per share, of AHS ("AHS Common Stock") will be
converted into the right to receive one-tenth of a share of InSight Common
Stock ("AHS Common Exchange Ratio"), (v) each outstanding share of Series B
Senior Convertible Preferred Stock, par value $.03 per share, of AHS ("AHS
Series B Preferred Stock"), which is currently convertible into 100 shares of
AHS Common Stock, will be converted into the right to receive 10 shares of
InSight Common Stock, (vi) each outstanding share of Series C Preferred Stock,
par value $.03 per share, of AHS ("AHS Series C Preferred Stock"), which is
contemplated to be issued immediately prior to the consummation of the Merger,
will be converted into the right to receive 1.25088 shares of InSight Series A
Preferred Stock and (vii) each outstanding option, warrant or other right to
purchase Maxum Common Stock or AHS Common Stock will be converted into the
right to acquire, on the same terms and conditions, shares of InSight Common
Stock, with the number of shares and exercise price applicable to such options,
warrants or other rights adjusted based on the applicable exchange ratio for
the underlying Maxum Common Stock or AHS Common Stock, as the case may be.

Based upon the number of outstanding shares of Maxum Common Stock, AHS Common
Stock and AHS Series B Preferred Stock as of May 6, 1996, approximately
2,710,240 shares of InSight Common Stock would be outstanding at the Effective
Time, assuming that (i) no stockholders of Maxum or AHS exercise their
appraisal

10
<PAGE>

rights, (ii) no cash is paid in lieu of fractional shares, (iii) no options or
warrants to purchase in the aggregate 420,566 shares of InSight Common Stock to
be in existence at the Effective Time are exercised and (iv) no conversion of
InSight Series A Preferred Stock. Of such shares, 1,360,332 shares,
representing approximately 50.2% of the total, will be held by former Maxum
stockholders, and 1,349,908 shares, representing approximately 49.8% of the
total, will be held by former AHS stockholders. The Maxum Common Exchange Ratio
and the AHS Common Exchange Ratio were determined by arm's length negotiations
between Maxum and AHS. See "Background of the Merger--Events Leading to the
Merger."

As a condition precedent to the Merger and in exchange for the financial
accommodations described below that are contemplated to be given by General
Electric Company, acting through GE Medical Systems, the primary creditor of
each of AHS and Maxum ("GE Medical," and together with its affiliate General
Electric Capital Corporation, the "GE Parties"), (i) Maxum will issue to GE
Medical 15,000 shares of Maxum Series B Preferred Stock and (ii) AHS will issue
to GE Medical 1,000,000 shares of AHS Series C Preferred Stock pursuant to a
Preferred Stock Acquisition Agreement dated as of February 26, 1996 (the "Stock
Acquisition Agreement"), among AHS, Maxum, InSight and GE Medical. GE Medical's
obligations to provide such financial accommodations under the Stock
Acquisition Agreement are subject to the satisfaction or waiver of a number of
terms and conditions set forth in such agreement. In accordance with the Merger
Agreement, at the Effective Time, the Maxum Series B Preferred Stock and the
AHS Series C Preferred Stock held by GE Medical will be converted into the
right to receive an aggregate of 2,501,760 shares of InSight Series A Preferred
Stock, which will constitute all of the issued and outstanding shares of
preferred stock of InSight on such date and will be convertible into InSight
Common Stock representing approximately 48% of InSight Common Stock outstanding
at the Effective Time (after giving effect to such conversion).

The financial accommodations contemplated to be provided by the GE Parties
include, (a) with respect to AHS, a reduction of the outstanding principal
amount of a term loan by approximately $6.2 million, an aggregate reduction in
required annual lease payments by approximately $814,000 and the release of
certain deferred obligations in the outstanding principal amount of
approximately $4.5 million and (b) with respect to Maxum, an aggregate
reduction of the outstanding principal amount of indebtedness by approximately
$9.0 million and an aggregate reduction in required lease payments over the
terms of the leases by approximately $1.3 million. See "Debt Restructuring and
Issuance of Preferred Stock to GE Medical."

In addition, as part of the financial accommodations contemplated to be
provided by GE Medical, the warrants previously issued to GE Medical by Maxum
to acquire 700,000 shares of Maxum Common Stock, and by AHS to acquire
1,589,072 shares of AHS Common Stock will be canceled. The Stock Acquisition
Agreement may be terminated by mutual consent of the parties thereto and may be
terminated by any of the parties thereto if the Merger has not been consummated
on or before September 30, 1996. See "Debt Restructuring and Issuance of
Preferred Stock to GE Medical." The approximate percentage interests of InSight
Common Stock to be held by former Maxum stockholders and former AHS
stockholders at the Effective Time, assuming no conversion by GE Medical of its
InSight Series A Preferred Stock into InSight Common Stock, will be 50.2% and
49.8%, respectively. The approximate percentage interests of InSight Common
Stock to be held by former Maxum stockholders, former AHS stockholders and GE
Medical as of the Effective Time, assuming the conversion by GE Medical of its
InSight Series A Preferred Stock into InSight Common Stock, will be 26.1%,
25.9% and 48%, respectively.

Furthermore, at the Effective Time, GE Medical will have the right to receive
for ten years annual payments (the "Supplemental Service Fee") under its
maintenance agreements with InSight, Maxum and AHS equal to 14% of pre-tax
income, subject to certain adjustments, of InSight, and further subject to
proportional reductions for certain post-Merger acquisitions. InSight may
terminate the Supplemental Service Fee at any time during such ten-year period
by making a payment to GE Medical equal to $8 million minus the discounted
value

11
<PAGE>

(calculated at a discount rate of 15% per annum) of Supplemental Service Fee
payments made through the date of such termination payment. See "Debt
Restructuring and Issuance of Preferred Stock to GE Medical--Maintenance
Service Agreement Addendum."

The consummation of the Merger is subject to a number of conditions which, if
not fulfilled or waived, permit termination of the Merger Agreement. If the
stockholders of either Maxum or AHS fail to approve the Merger, or if the
conditions to the obligations of GE Medical to consummate the Stock Acquisition
Agreement are neither satisfied nor waived by GE Medical, the Merger will not
be consummated. The Merger Agreement may also be terminated at any time prior
to the Effective Time by the mutual consent of Maxum and AHS and may be
terminated by either Maxum or AHS if the Merger has not been consummated on or
before September 30, 1996. See "The Merger--Conditions of the Merger Agreement"
and "--Termination of the Merger Agreement."

Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement shall be paid by the party incurring such
expenses, except as otherwise provided in the Merger Agreement. Certain
expenses will be shared equally by Maxum and AHS. Additionally, if the Merger
does not occur due to a breach by Maxum or AHS of the Merger Agreement or the
failure of their stockholders to approve the Merger, the party who breaches or
fails to obtain stockholder approval shall reimburse the other for legal costs
incurred in connection with the Merger. Each of Maxum and AHS has agreed to
reimburse GE Medical an amount equal to 40% of the legal costs incurred by GE
Medical from and after July 1, 1995, in connection with the Merger, debt
restructuring and preferred stock issuances. See "The Merger--Sharing and
Reimbursement of Expenses," "Debt Restructuring and Issuance of Preferred Stock
to GE Medical," "Business of AHS--Certain Transactions" and "Business of
Maxum--Certain Transactions."

MANAGEMENT FOLLOWING THE MERGER

At the Effective Time, the Board of Directors of InSight (the "InSight
Board") will consist of the current four members thereof, two of whom have been
designated by the Maxum Board in anticipation of the Merger, and two of whom
have been designated by the AHS Board in anticipation of the Merger. See
"Operation, Management and Business of InSight After the Merger--Management of
InSight." Maxum has designated Leonard H. Habas and Ronald G. Pantello as
directors of InSight. AHS has designated E. Larry Atkins and Frank E. Egger as
directors of InSight. Under the terms of the Merger Agreement, at the Effective
Time, the parties have agreed that InSight shall extend an invitation to Grant
R. Chamberlain, a Vice President of Shattuck Hammond Partners Inc., the
financial advisor to AHS ("Shattuck Hammond"), to join the InSight Board. The
Chairman of the Board of InSight is, and at the Effective Time will be, Frank
E. Egger, the current Chairman of the Board of the AHS Board. The President and
Chief Executive Officer of InSight is, and at the Effective Time will be, E.
Larry Atkins, the current President and Chief Executive Officer of AHS. Glenn
P. Cato, the current President, Chief Executive Officer, Chief Financial
Officer and Secretary of Maxum, is, and at the Effective Time will be, the
Senior Executive Vice President and Chief Operating Officer of InSight. Thomas
V. Croal, the current Vice President and Chief Financial Officer of AHS, is,
and at the Effective Time will be, the Executive Vice President, Chief
Financial Officer and Secretary of InSight. Michael A. Boylan, a current
Executive Vice President of Maxum, is, and at the Effective Time will be, a
Senior Vice President--Operations of InSight. Robert N. LaDouceur, a current
Executive Vice President of Maxum, is, and at the Effective Time will be, a
Senior Vice President--Operations of InSight. Michael D. Cragin, the current
Regional Vice President of Western Operations of AHS, is, and at the Effective
Time will be, a Senior Vice President--Operations of InSight. Deborah M.
MacFarlane, the current Vice President--Marketing of AHS, is, and at the
Effective Time will be, the Senior Vice President--Marketing of InSight. See
"Operation, Management and Business of InSight After the Merger--Management of
InSight."

Each of Messrs. Atkins, Croal, LaDouceur, Boylan and Cragin and Ms.
MacFarlane have entered into an employment agreement with InSight, which shall
become effective as to employment at the Effective Time. Any

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<PAGE>

officer may be removed at any time by the InSight Board, subject to certain
severance rights under such officer's employment agreement with InSight. See
"The Merger--Interests of Certain Persons in the Merger."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Due to the benefits received by certain affiliates of AHS and Maxum in
connection with the Merger, as described below, the interests of these
affiliates may be different from the interests of stockholders. Stockholders
should consider such affiliates' interests in the Merger in connection with
their recommendation of the Merger. For further details relating to the
benefits summarized below, see "The Merger--Interests of Certain Persons in the
Merger," "Proposal No. 2: Approval of the InSight Option Plans Proposal,"
"Maxum Proposal No. 3: Approval of Maxum Option Ratification Proposal," "AHS
Proposal No. 3: Approval of the AHS Plan Amendment Proposal," "Executive
Compensation of AHS--Employment Agreements and Severance Arrangements" and
"Executive Compensation of Maxum--Employment Contracts and Terminations of
Employment and Change-in-Control Arrangements."

In anticipation of the consummation of the Merger, certain executive officers
of Maxum and AHS and Mr. Egger have executed employment or consulting
agreements with InSight, each of which as to employment or consulting becomes
effective at the Effective Time. Each of such employment or consulting
agreements with InSight expressly supersedes any employment or consulting
agreement between such person and Maxum or AHS. In addition, each AHS executive
officer has waived his rights to payments or other benefits which would
otherwise vest at the Effective Time under any agreement with AHS. The
following table sets forth for each such executive officer and Mr. Egger of
Maxum and AHS and Mr. Egger the name, current position and severance payments
payable under that person's present employment or consulting agreement, and the
severance payment that such person would receive upon the termination of his
employment or consulting agreement with InSight. See "The Merger--Interests of
Certain Persons in the Merger."

SEVERANCE ARRANGEMENTS(1)

<TABLE>
<CAPTION>
PAYMENT PAYMENT UNDER
CURRENT UNDER INSIGHT
NAME POSITION PRESENT AGREEMENT AGREEMENT
---- -------- ----------------- -------------
<C> <S> <C> <C>
Frank E. Egger(2)......... Director of AHS $100,000 $ 85,000
E. Larry Atkins(3)........ President, Chief 246,000 246,000
Executive Officer and
Director of AHS
Glenn P. Cato............. President and Chief 180,000(4) 180,000
Executive Officer,
Chief Financial Officer
and Secretary of Maxum
Thomas V. Croal(3)........ Vice President, Chief 175,230 175,230
Financial Officer and
Director of AHS
Michael A. Boylan......... Executive Vice President 165,000(4) 165,000(3)
of Maxum
Robert N. LaDouceur....... Executive Vice President 165,000(4) 165,000(3)
of Maxum
Deborah M. MacFarlane(3).. Vice President-- 112,200 112,200
Marketing of AHS
</TABLE>
- --------
(1) Michael D. Cragin, the current Regional Vice President of Western
Operations of AHS, is not entitled to severance payments with AHS. From and
after the Effective Time, he will be entitled to severance payments equal
to $100,000, which represents 12 months of his base salary, upon
termination of his employment on the same terms and conditions as the other
executives of InSight.
(2) If Mr. Egger's consulting agreement is terminated due to (i) Mr. Egger's
becoming disabled, (ii) discretionary action of the InSight Board or (iii)
a corporate reorganization that diminishes or impairs Mr. Egger's
responsibilities, he is entitled to the amounts listed above representing
12 months of consulting payments.

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<PAGE>

(3) If employment is terminated (i) due to disability, (ii) without cause or
(iii) due to a change in control, the executive shall be entitled to the
above payments representing 12 months of the executive's salary.
(4) The Maxum employment agreements provide for an offset for income earned by
Messrs. Cato, Boylan and LaDouceur. The agreements of Messrs. Cato, Boylan
and LaDouceur with InSight do not provide for such offset.

The vesting of certain stock options held by directors of Maxum will
accelerate prior to the Effective Time. Options to purchase 25,000 shares of
Maxum Common Stock at a weighted average exercise price of $0.75 per share
(which, pursuant to the Merger, will be converted into options to purchase
14,950 shares of InSight Common Stock at a weighted average exercise price of
$1.25 per share) held by directors of Maxum will accelerate to become
immediately and fully exercisable prior to the Effective Time.

Certain stock options held by the current members of the Maxum Board and the
stock options held by the four current non-employee members of the AHS Board
that would otherwise terminate in accordance with their terms 90 days after the
Effective Time due to such optionees' termination of service to AHS or Maxum
will, following the Effective Time, be converted into InSight stock options
that do not terminate due to such termination of service by the optionee,
subject, (i) in the case of an aggregate of 75,000 shares of Maxum Common Stock
issuable upon exercise of options, to the approval by the stockholders of Maxum
of the Maxum Option Ratification Proposal and (ii) in the case of the AHS
options, to approval by the AHS stockholders of the AHS Plan Amendment
Proposal. These options currently cover (i) for Maxum, an aggregate of 75,000
shares of Maxum Common Stock with a weighted average exercise price of $0.75
per share (which will, pursuant to the Merger, be converted into options to
purchase an aggregate of 44,850 shares of InSight Common Stock with a weighted
average exercise price of $1.25 per share) and (ii) for AHS, an aggregate of
210,000 shares of AHS Common Stock, with a weighted average exercise price of
$0.86 per share (which will, pursuant to the Merger, be converted into options
to purchase an aggregate of 21,000 shares of InSight Common Stock with a
weighted average exercise price of $8.60 per share).

Certain stock options held by three executive officers of Maxum that, at the
Effective Time, would otherwise terminate will, following the Effective Time,
without requiring the executives to exercise any or all of such options, be
converted into options to purchase InSight Common Stock. These options
currently are exercisable for an aggregate of 90,000 shares of Maxum Common
Stock with a weighted average exercise price of $0.50 per share which will,
pursuant to the Merger, be converted into options to purchase an aggregate of
53,820 shares of InSight Common Stock with a weighted average exercise price of
$0.84 per share.

In consideration for the issuance of warrants to purchase an aggregate of
50,000 shares of InSight Common Stock at the Effective Time, the holders of AHS
Series B Preferred Stock have each agreed to (i) vote in favor of the Merger
Proposal, the InSight Option Plans Proposal and the AHS Plan Amendment Proposal
at the AHS Special Meeting and (ii) waive any rights to dividends, liquidation
preferences, voting and redemption they may have in connection with the Merger
on certain other rights. The exercise price for the warrants will be the fair
market value of InSight Common Stock based on its average closing price for the
20 trading days commencing on the eleventh trading day after the Effective
Time. Such warrants are exercisable at any time after the Effective Time and
will expire five years thereafter. Subject to certain conditions, the holders
of such warrants will have certain "piggy back" registration rights to register
under the Securities Act the InSight Common Stock subject to such warrants. See
"Description of Capital Stock of AHS--Warrants."

At the Effective Time, each director then serving on the InSight Board will
be granted under the 1996 Directors' Stock Option Plan an option to purchase
15,000 shares of InSight Common Stock at an exercise price per share equal to
the fair market value of InSight Common Stock on the date of grant. Thereafter,
each director of InSight who commences service after the Effective Time shall
be granted an option to purchase 15,000 shares of InSight Common Stock. These
initial grants will vest monthly on a pro rata basis over a three-year period,
so

14
<PAGE>

long as the optionee remains on the InSight Board, or is an employee or
independent contractor of InSight or one of its subsidiaries. However, in the
agreement evidencing such stock option, the InSight Board may modify the
vesting conditions in the event of the death or disability of the optionee. At
the end of such three-year period, and annually thereafter during the term of
the 1996 Directors' Stock Option Plan, so long as the optionee remains on the
InSight Board he will be granted an option to purchase 5,000 shares of InSight
Common Stock. These additional grants vest monthly over one year on the same
terms as the initial grants.

POTENTIAL ADVERSE CONSEQUENCES TO STOCKHOLDERS

Stockholders of either Company may be adversely affected due to material
differences between the provisions of the certificate of incorporation and
bylaws of such Company and the InSight Certificate of Incorporation (the
"InSight Certificate") and Bylaws. Such material differences include the rights
of holders of InSight Series A Preferred Stock, including the rights of such
holders to vote as a separate class on a number of transactions. In addition,
such material differences include provisions in the InSight Certificate and
Bylaws that may have the effect of delaying or preventing a change of control,
including a requirement that a supermajority vote (80%) of the InSight capital
stock entitled to vote be obtained (a) for removal of directors, which may be
effected only for cause, and (b) for amending certain provisions of the InSight
Certificate and all provisions of the Bylaws. The Insight Certificate also
includes a requirement that a supermajority vote (80%) of the entire InSight
Board (which must include one director vote from each class of InSight
directors) be obtained before the number of directors on the InSight Board may
be increased. See "The Merger--Rights of Security Holders."

CLOSING AND EFFECTIVE TIME OF THE MERGER

The Effective Time will occur upon the completion of the filing of properly
executed Certificates of Merger with the Secretary of State of the State of
Delaware reflecting the respective mergers of AHSC Acquisition with and into
AHS and MXHC Acquisition with and into Maxum, which filings will be made after
satisfaction of certain conditions set forth in the Merger Agreement, including
approval by the stockholders of each Company. For more information, see "The
Merger--Closing and Effective Time of the Merger" below.

OPERATION OF INSIGHT AFTER THE MERGER

From and after the Effective Time, each of AHS and Maxum will be a wholly-
owned subsidiary of InSight. When deemed appropriate by management, InSight
will integrate the operations of each of AHS and Maxum in order to take
advantage of efficiencies in providing nationwide coverage using the Companies'
existing facilities. InSight's principal executive offices will be located in
Newport Beach, California. See "Operation, Management and Business of InSight
After the Merger."

REASONS FOR THE MERGER

The factors considered by the Maxum Board in approving the Merger included,
among others, (i) the cost savings, enhanced marketing capabilities, increased
market presence and greater financial resources that should be available as a
result of the Merger, which the Maxum Board believed would increase the
Companies' ability to compete effectively, and thereby enhance value to former
Maxum stockholders, (ii) Maxum's desire to be part of a pro-active, influential
industry leader in its core markets, (iii) the accelerating pace of change
taking place in the diagnostic imaging industry and the need for companies in
such industry to reach sufficient size to compete effectively, (iv) the
presentation made by Principal Financial Securities, Inc. ("PFS") to the Maxum
Board and (v) the greater likelihood that InSight Common Stock would be listed
on a stock exchange or the Nasdaq Stock Market than would Maxum Common Stock.
The Maxum Board also considered the direct costs associated with the
negotiation, solicitation and consummation of the Merger. In addition, the
Maxum Board noted that there would be significant additional, but presently
undeterminable, costs related to the necessary consolidation of the Companies'
existing operations. See "The Merger--Interests of Certain Persons in the
Merger," "Notes to Unaudited Pro Forma Condensed Combined Financial
Statements--Adjustments to Unaudited Pro Forma Condensed Combined Financial
Statements," and "Risk Factors--Integration of Business."

15
<PAGE>

The factors considered by the AHS Board in approving the Merger included,
among others, (i) the accelerating pace of change taking place in the
diagnostic imaging industry and the need for companies in such industry to
reach sufficient size to compete effectively, (ii) the opportunity that the
Merger will provide for stockholders of AHS to have continued equity
participation in a larger, more diversified enterprise with enhanced geographic
presence and greater financial and marketing resources, (iii) the presentation
made by Shattuck Hammond to the AHS Board, (iv) the desire to reduce the debt
and operating lease obligations of AHS and (v) the greater likelihood that
InSight's Common Stock would be listed on a stock exchange or the Nasdaq Stock
Market than AHS Common Stock. The AHS Board also considered the direct costs
associated with the negotiation, solicitation and consummation of the Merger.
In addition, the AHS Board noted that there would be additional, but presently
undeterminable, costs related to the integration of the Companies' existing
operations. See "Background of the Merger--AHS' Reasons for the Merger and
Board of Directors Recommendation," "The Merger--Interests of Certain Persons
in the Merger" and "Notes to Unaudited Pro Forma Condensed Combined Financial
Statements--Adjustments to Unaudited Pro Forma Condensed Combined Financial
Statements" and "Risk Factors--Integration of Business."

For a more detailed discussion of the reasons considered by the Maxum Board
and AHS Board in approving the Merger Proposal, see "Events Leading to the
Merger--Maxum's Reasons for the Merger and Board of Directors' Recommendation,"
and "--AHS's Reasons for the Merger and Board of Directors' Recommendation."

EFFECT ON DERIVATIVE SECURITIES

A vote in favor of the Merger Proposal will also be a vote in favor of
InSight's assumption of the stock option plans under which options to acquire
AHS Common Stock and Maxum Common Stock are currently outstanding. Under the
Merger Agreement, with certain exceptions set forth herein, each option,
warrant or other right to purchase or receive AHS Common Stock and Maxum Common
Stock existing at the Effective Time (an "Existing Derivative Security") will
be converted into an option, warrant or other right to purchase or receive the
same number of shares of InSight Common Stock (an "InSight Derivative
Security") as the holder of such Existing Derivative Security would have
received had he exercised his Existing Derivative Security in full immediately
prior to the Effective Time, with the exercise price per share to be
proportionately adjusted. Accordingly, the adjusted exercise price per share
for each Existing Derivative Security currently exercisable for shares of AHS
Common Stock and Maxum Common Stock will be determined by dividing the exercise
price in effect for that Existing Derivative Security immediately prior to the
Effective Time by .100 and .598, respectively. As of May 6, 1996, there were
outstanding Existing Derivative Securities to purchase an aggregate of
1,215,000 shares of AHS Common Stock and Existing Derivative Securities to
purchase an aggregate of 341,250 shares of Maxum Common Stock (excluding shares
subject to options being considered for stockholder ratification under the
Maxum Option Ratification Proposal). As of such date, there were outstanding
Existing Derivative Securities to purchase an aggregate of 565,000 shares of
AHS Common Stock and an aggregate of 31,250 shares of Maxum Common Stock at
exercise prices in excess of the closing bid quotations on the OTC Bulletin
Board of those shares on May 6, 1996. Accordingly, a total of 75,187 shares of
InSight Common Stock issuable upon exercise of the Existing Derivative
Securities to be assumed by InSight in the Merger will have adjusted exercise
prices expected to be in excess of the closing bid quotation per share of
InSight Common Stock after the Merger, and these InSight Derivative Securities
will accordingly have value only if the market value of InSight Common Stock
purchasable thereunder after the Merger appreciates over the remaining term of
the InSight Derivative Securities. See "The Merger--Interests of Certain
Persons in the Merger--Stock and Option Holdings of Directors and Officers" and
"--Assumption of Existing Stock Options and Warrants."

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<PAGE>

RECOMMENDATION OF THE BOARDS OF DIRECTORS

The Merger Proposal. The Maxum Board and the AHS Board have each unanimously
approved the Merger Proposal and separately determined that the Merger is fair
to, and in the best interests of, their respective stockholders. ACCORDINGLY,
THE MAXUM BOARD AND THE AHS BOARD EACH UNANIMOUSLY RECOMMEND APPROVAL OF THE
MERGER PROPOSAL BY THEIR RESPECTIVE STOCKHOLDERS.

The InSight Option Plans Proposal. The AHS Board and the Maxum Board have
each unanimously approved the InSight Options Plans as an equity incentive
program which is intended to attract and retain the services of valuable and
highly-qualified employees, non-employee directors and independent consultants.
Under the InSight Option Plans, a total of up to 882,433 shares of InSight
Common Stock will be available for issuance to officers and employees of, and
consultants to, InSight or any of its operating subsidiaries (including, after
the Effective Time, AHS and Maxum), and to the non-employee members of the
InSight Board or the board of directors of any operating subsidiary.
ACCORDINGLY, THE AHS BOARD AND THE MAXUM BOARD EACH UNANIMOUSLY RECOMMEND
APPROVAL OF THE INSIGHT OPTION PLANS PROPOSAL BY THEIR RESPECTIVE STOCKHOLDERS.

The Maxum Option Ratification Proposal. On August 17, 1994, the Maxum Board
authorized a one-time grant of a ten-year nonqualified option to purchase
15,000 shares of Maxum Common Stock, with an exercise price of $.0625 per
share, to each of its five directors, none of whom are employees. The stock
option grants were expressly conditioned on their ratification by the
stockholders of Maxum. ACCORDINGLY, THE MAXUM BOARD UNANIMOUSLY RECOMMENDS
APPROVAL OF THE MAXUM OPTION RATIFICATION PROPOSAL BY THE STOCKHOLDERS OF
MAXUM.

The AHS Plan Amendment Proposal. The AHS Board has unanimously approved
certain amendments to the AHS Plans (as defined under "AHS Proposal No. 3:
Approval of AHS Plan Amendment Proposal"), which would ensure that the options
held by three AHS executive officers and one AHS director who will serve
InSight in similar capacities, and options held by the four AHS non-employee
directors who will resign from the AHS Board as a condition to and upon the
consummation of the Merger, will not terminate as a result of any deemed or
actual termination of employment or service in connection with the Merger. THE
AHS BOARD UNANIMOUSLY RECOMMENDS APPROVAL OF THE AHS PLAN AMENDMENT PROPOSAL BY
THE STOCKHOLDERS OF AHS.

OPINIONS OF FINANCIAL ADVISORS

PFS delivered to the Maxum Board its written opinion, dated February 23,
1996, to the effect that, as of the date of such opinion and based upon and
subject to certain matters stated therein, the consideration to be received in
the Merger was fair, from a financial point of view, to the current holders of
Maxum Common Stock. In arriving at its opinion, PFS (i) reviewed the Merger
Agreement, the Stock Acquisition Agreement and certain related agreements, (ii)
reviewed internal financial projections of Maxum prepared by the management of
Maxum for the six calendar years ended December 31, 2000, (iii) reviewed
internal financial projections of InSight prepared by the management of Maxum
and AHS, including statements of operations for the first two years of
operations, and projected balance sheet as of June 30, 1996, (iv) reviewed the
historical stock prices and trading volume of Maxum Common Stock, (v) reviewed
the financial terms, to the extent publicly available, of certain comparable
transactions, which are similar in certain respects to the Merger, (vi)
discussed with the management of Maxum the operations of and business prospects
for Maxum assuming Maxum did not consummate the Merger, (vii) discussed with
management of Maxum and AHS the operations of and business prospects for
InSight and the anticipated financial results of the Merger, including the
effect of the Supplemental Service Fee, (viii) compared the historical and
projected financial results of Maxum to comparable publicly traded companies
which are similar in certain respects to Maxum, (ix) compared the pro forma
historical and projected financial results of InSight to comparable publicly
traded companies and (x) considered such other information, financial

17
<PAGE>

studies and analyses, and financial, economic and market criteria as PFS deemed
relevant. A copy of the written opinion of PFS, dated February 23, 1996, which
sets forth the assumptions made, procedures followed, matters considered,
limitations on and the scope of the review by PFS in rendering its opinion, is
attached to this Joint Proxy Statement/Prospectus as Appendix B and should be
read carefully by stockholders in its entirety. See "Events Leading to the
Merger--Opinion of PFS."

Shattuck Hammond delivered its written opinion dated February 22, 1996, as
investment bankers, to the AHS Board, to the effect that, as of the date of
such opinion and based upon and subject to certain matters set forth therein,
the AHS Common Exchange Ratio was fair, from a financial point of view, to the
holders of shares of AHS Common Stock. In connection with its opinion, Shattuck
Hammond (i) reviewed certain publicly available business and historical
financial information relating to each of AHS and Maxum, (ii) reviewed certain
financial information and other data provided by AHS and Maxum that is not
publicly available relating to the business and prospects of each of AHS, Maxum
and InSight, (iii) discussed the businesses, operations and prospects of AHS,
Maxum and InSight with the respective managements of AHS and Maxum, (iv)
reviewed the Merger Agreement, the Stock Acquisition Agreement and certain
related agreements, (v) reviewed the historical market prices and trading
values of AHS Common Stock and Maxum Common Stock, (vi) reviewed publicly
available financial and stock market data with respect to other publicly-traded
companies in lines of business Shattuck Hammond believed to be generally
comparable to those of AHS and Maxum, (vii) reviewed the exchange ratios
implied by the historical stock prices of AHS Common Stock and Maxum Common
Stock and (viii) conducted such other studies, analyses, investigations and
inquiries, and considered such other information, as Shattuck Hammond deemed
relevant. A copy of Shattuck Hammond's written opinion dated February 22, 1996,
which sets forth the assumptions made, procedures followed, matters considered,
limitations on and the scope of the review by Shattuck Hammond in rendering its
opinion, is attached to this Joint Proxy Statement/Prospectus as Appendix C and
should be read carefully by stockholders in its entirety. See "Events Leading
to the Merger--Opinion of Shattuck Hammond."

MEETINGS OF THE STOCKHOLDERS

The Maxum Special Meeting will be held at 10:00 a.m., Central Daylight Time,
on Tuesday, June 25, 1996, at Dallas Medallion, 4099 Valley View Lane (LBJ
Freeway and Midway Road), Dallas, Texas 75244.

The AHS Special Meeting will be held at 10:00 a.m., Pacific Daylight Time, on
Tuesday, June 25, 1996, at The Sutton Place Hotel, 4500 MacArthur Boulevard,
Newport Beach, California 92660.

At the Special Meetings, stockholders of the respective Companies will be
asked to consider and vote upon the Merger Proposal. A copy of the Merger
Agreement is attached to this Joint Proxy Statement/Prospectus as Appendix A.
The stockholders will also be asked to consider and vote upon the InSight
Option Plans Proposal. The principal provisions of the InSight Options Plans
are described in the section below entitled "Proposal No. 2: Approval of the
InSight Option Plans Proposal." The InSight Option Plans are attached to this
Joint Proxy Statement/Prospectus as Appendices E and F.

At the Maxum Special Meeting, the Maxum stockholders will also be asked to
consider and vote on a proposal to ratify the grant of ten-year nonqualified
options to purchase Maxum Common Stock previously authorized by the Maxum Board
to the directors of Maxum. See "Maxum Proposal No. 3: Approval of Maxum Option
Ratification Proposal."

At the AHS Special Meeting, the AHS stockholders will also be asked to
consider and vote on a proposal to approve certain amendments to the four
existing AHS stock option and incentive plans which would ensure that stock
options held by certain AHS executive officers and one AHS director who will
serve InSight in similar capacities and options held by the four AHS non-
employee directors who will resign from the AHS Board, as a

18
<PAGE>

condition to and upon consummation of the Merger, will not terminate as a
result of any deemed or actual termination of employment or service due to the
Merger. See "AHS Proposal No.3: Approval of the AHS Plan Amendment Proposal."

All shares of Maxum Common Stock, AHS Common Stock and AHS Series B Preferred
Stock represented by properly executed proxies will be voted at the appropriate
Special Meeting in accordance with the directions on the proxies, unless such
proxies have been previously revoked. If no direction is indicated, the shares
will be voted FOR approval of the Merger Proposal, FOR approval of the InSight
Option Plans Proposal, and in the case of the Maxum Special Meeting, FOR
approval of the Maxum Option Ratification Proposal, and in the case of the AHS
Special Meeting, FOR approval of the AHS Plan Amendment Proposal. Any Maxum or
AHS stockholder giving a proxy may revoke his proxy at any time before its
exercise at the appropriate Special Meeting by (i) giving written notice of
such revocation to the Secretary of Maxum or AHS, as the case may be, (ii)
signing and delivering to such Secretary a proxy bearing a later date or (iii)
attending the appropriate Special Meeting and voting in person. However, the
mere presence at a Special Meeting of a Maxum or AHS stockholder who previously
delivered a valid proxy will not of itself revoke that proxy. See "The Maxum
Special Meeting--Proxies: Voting and Revocation" and "The AHS Special Meeting--
Proxies: Voting and Revocation."

RECORD DATE AND VOTE REQUIRED

The record date for stockholders of Maxum entitled to vote at the Maxum
Special Meeting is May 7, 1996. The record date for stockholders of AHS
entitled to vote at the AHS Special Meeting is May 7, 1996. The Merger Proposal
must be approved by holders of a majority of the outstanding shares of each of
(i) Maxum Common Stock, (ii) AHS Common Stock, and (iii) AHS Series B Preferred
Stock. In each case, abstentions and broker non-votes will have the same effect
as a vote against the Merger Proposal. If the stockholders of either Company
fail to approve the Merger Proposal, the Merger will not be consummated.

Pursuant to agreements dated February 23, 1996, executed by each of the
holders of AHS Series B Preferred Stock, in consideration for the issuance at
the Effective Time of warrants to purchase an aggregate of 50,000 shares of
InSight Common Stock, each of such holders agreed to (i) vote in favor of the
Merger Proposal, the InSight Option Plans Proposal and the AHS Plan Amendment
Proposal at the AHS Special Meeting and (ii) waive any rights to dividends,
liquidation preferences, voting and redemption they may have in connection with
the Merger and certain other rights. See "The Merger--Interests of Certain
Persons in the Merger."

The affirmative vote of a majority of the issued and outstanding shares of
common stock of each of MXHC Acquisition and AHSC Acquisition is also required
for approval of the Merger Proposal. InSight, as owner of all such outstanding
shares, has voted such shares to approve the Merger Proposal.

The affirmative vote of a majority of shares of Maxum Common Stock present in
person or represented by proxy at the Maxum Special Meeting is required for
approval by Maxum of the InSight Option Plans Proposal and the Maxum Option
Ratification Proposal. The affirmative vote of a majority of the votes
represented by the AHS Common Stock (entitled to one vote per share) and AHS
Series B Preferred Stock (entitled to 100 votes per share), voting together as
a class, present in person or represented by proxy at the AHS Special Meeting,
is required for approval by AHS of the InSight Option Plans Proposal and the
AHS Plan Amendment Proposal. As referenced above, the holders of AHS Series B
Preferred Stock have previously agreed to vote in favor of the InSight Option
Plans Proposal and the AHS Plan Amendment Proposal at the AHS Special Meeting.

As of May 6, 1996, (i) the directors and officers of AHS and their respective
affiliates held 2,050,599 shares of AHS Common Stock and 34,691.26 shares of
AHS Series B Preferred Stock, exclusive of options and warrants to purchase AHS
Common Stock, representing approximately 41.9% of the outstanding shares of AHS
Common Stock (including AHS Common Stock issuable upon conversion of the AHS
Series B Preferred Stock) and (ii) the directors and officers of Maxum and
their respective affiliates held 117,905 shares of Maxum

19
<PAGE>

Common Stock, exclusive of options to purchase Maxum Common Stock, representing
approximately 5.2% of the outstanding shares of Maxum Common Stock. All such
directors and officers have indicated their intention to vote in favor of the
Merger Proposal, the InSight Option Plans Proposal, the AHS Plan Amendment
Proposal and the Maxum Option Ratification Proposal, as applicable.

EXCHANGE OF STOCK CERTIFICATES

Promptly after the Effective Time, American Stock Transfer & Trust Company,
or such other bank or trust company designated by InSight (the "Exchange
Agent"), will mail written transmittal materials concerning exchange of stock
certificates to each record holder of outstanding shares of AHS Common Stock,
AHS Series B Preferred Stock and Maxum Common Stock. The transmittal materials
will contain instructions with respect to the proper method of surrender of
certificates formerly representing shares of AHS Common Stock, AHS Series B
Preferred Stock or Maxum Common Stock in exchange for certificates representing
shares of InSight Common Stock. Upon surrender to the Exchange Agent by an AHS
or Maxum stockholder of certificates formerly representing shares of AHS Common
Stock, AHS Series B Preferred Stock or Maxum Common Stock for cancellation,
together with properly completed transmittal materials, such stockholder will
be entitled to receive a certificate representing the number of whole shares of
InSight Common Stock into which the stockholder's shares of AHS Common Stock,
AHS Series B Preferred Stock or Maxum Common Stock have been converted and a
check for cash in lieu of the issuance of any fractional share of InSight
Common Stock. Former AHS or Maxum stockholders will not be entitled to receive
interest on any such cash to be received in the Merger. See "The Merger--
Exchange of Stock Certificates" and "--Payment in Lieu of Fractional Shares."

GOVERNMENT AND REGULATORY APPROVALS

The Companies are not aware of any material federal or state regulatory
approvals required to be obtained in order to consummate the Merger. See "The
Merger--Government and Regulatory Approvals."

FEDERAL INCOME TAX CONSIDERATIONS

The Merger is intended to be a Section 351 transaction for federal income tax
purposes, and the consummation of the Merger is conditioned upon the receipt of
opinions to that effect from Storey Armstrong Steger & Martin, P.C., counsel to
Maxum, and Arent Fox Kintner Plotkin & Kahn, counsel to AHS, as described in
"The Merger--Federal Income Tax Considerations." Subject to the limitations set
forth in such opinions, stockholders of AHS and Maxum generally will recognize
no gain or loss for federal income tax purposes as a result of their exchange
of AHS Common Stock, AHS Series B Preferred Stock and Maxum Common Stock for
InSight Common Stock in the Merger, except to the extent that such stockholders
receive cash in lieu of fractional shares or AHS or Maxum stockholders exercise
their appraisal rights. THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES INCLUDED
HEREIN IS BASED ON CURRENT LAW. THE TAX TREATMENT OF THE MERGER PROPOSAL MAY
VARY DEPENDING UPON A STOCKHOLDER'S INDIVIDUAL CIRCUMSTANCES. EACH STOCKHOLDER
SHOULD CONSULT SUCH STOCKHOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE MERGER PROPOSAL TO SUCH STOCKHOLDER, INCLUDING TAX RETURN
REPORTING REQUIREMENTS AND THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL,
FOREIGN, OR OTHER TAX LAWS. See "The Merger--Federal Income Tax
Considerations."

ACCOUNTING TREATMENT

The Merger will be accounted for as a purchase for accounting and financial
reporting purposes, with Maxum being treated as the acquiror. See "The Merger--
Accounting Treatment."

20
<PAGE>

DISSENTERS' RIGHTS OF APPRAISAL

Pursuant to the Delaware General Corporation Law (the "DGCL"), any
stockholder of record of AHS Common Stock, AHS Series B Preferred Stock or
Maxum Common Stock who does not desire to have such shares converted into
shares of InSight Common Stock pursuant to the Merger Agreement and who has
made written demand prior to the vote of AHS or Maxum stockholders, as the case
may be, on the Merger Proposal at the applicable Special Meeting may dissent
from the Merger and elect to have the fair value of such stockholder's shares
of AHS Common Stock, AHS Series B Preferred Stock or Maxum Common Stock
(excluding any element of value arising from the accomplishment or expectation
of the Merger) together with a fair rate of interest, judicially determined and
paid to the stockholder in cash, provided that the stockholder complies with
the provisions of Section 262 of the DGCL, a copy of which is included in this
Joint Proxy Statement/Prospectus as Appendix D hereto. If any stockholder of
record of shares of AHS Common Stock, AHS Series B Preferred Stock or Maxum
Common Stock elects to exercise appraisal rights, such stockholder of record
must deliver a written demand for appraisal of the stockholder's shares to AHS
or Maxum, as applicable, prior to the vote of the stockholders of AHS and
Maxum, at the applicable Special Meeting. This written demand must inform AHS
or Maxum, as the case may be, of the identity of the stockholder of record and
that the stockholder thereby demands the appraisal of the stockholder's shares.
Any stockholder choosing to exercise his appraisal rights may not vote such
shares in favor of the Merger. The failure of any dissenting stockholder to
follow the appropriate procedure will result in the termination or waiver of
that stockholder's rights to appraisal. See "The Merger--Dissenters' Rights
under DGCL," and Appendix D attached hereto.

COMMON STOCK MARKET PRICES AND PER SHARE DATA

Currently, Maxum Common Stock and AHS Common Stock each trade over the
counter on the OTC Bulletin Board. Maxum's Common Stock was traded on the
American Stock Exchange under the symbol "MXH" until November 26, 1993, when
its Common Stock was delisted for failure to meet the exchange's capital and
certain other requirements. AHS Common Stock was quoted on the Nasdaq National
Market System under the symbol "AHTS" until July 16, 1993, when its Common
Stock was delisted for failure to meet capital and surplus requirements.

21
<PAGE>

The following table sets forth, for the periods indicated, the high and low
bid quotations per share on the OTC Bulletin Board for Maxum Common Stock and
AHS Common Stock. The quotations represent quotations between dealers without
adjustment for retail markup, markdown or commission, and may not necessarily
represent actual transactions.

<TABLE>
<CAPTION>
1994 LOW HIGH
---- ----- ------
<S> <C> <C> <C>
First Quarter Maxum 1/32 5/16
AHS 5/32 9/16
Second Quarter Maxum 1/20 1/4
AHS 3/16 3/8
Third Quarter Maxum 1/20 1/16
AHS 1/8 7/16
Fourth Quarter Maxum 1/20 3/8
AHS 3/32 1/2
<CAPTION>
1995 LOW HIGH
---- ----- ------
<S> <C> <C> <C>
First Quarter Maxum 3/8 11/16
AHS 5/32 3/8
Second Quarter Maxum 1/2 11/16
AHS 1/8 11/32
Third Quarter Maxum 1/2 2
AHS 1/8 5/8
Fourth Quarter Maxum 1/2 1 3/4
AHS 3/16 1/2
<CAPTION>
1996 LOW HIGH
---- ----- ------
<S> <C> <C> <C>
First Quarter Maxum 13/16 1 5/8
AHS 1/4 1 7/16
Second Quarter Maxum 1 3/8 3 1/8
(through May 6, 1996) AHS 1/2 15/16
</TABLE>

The following table sets forth the closing bid quotations per share of Maxum
Common Stock and AHS Common Stock as traded on the OTC Bulletin Board on
February 26, 1996 (the date preceding public announcement of the execution and
delivery of the Merger Agreement) and on May 6, 1996. Stockholders are
encouraged to obtain current quotations for the market prices of Maxum Common
Stock and AHS Common Stock before voting on the Merger Proposal.

<TABLE>
<CAPTION>
MAXUM AHS
DATE COMMON STOCK COMMON STOCK
---- ------------ ------------
<S> <C> <C>
February 26, 1996............................ 1 1/8 1/2
May 6, 1996.................................. 2 7/8 27/32
</TABLE>

The quotations per share of Maxum Common Stock and AHS Common Stock are based
upon extremely light trading activity. Aggregate trading of Maxum Common Stock
and AHS Common Stock during the entire first quarter of 1996 was only 545,215
and 2,510,966 shares, respectively. Therefore, the stock price data above may
not be a reliable indicator of what the stock prices for Maxum Common Stock or
AHS Common Stock would be in a better developed market.

The following table presents selected pro forma data per share of InSight and
after giving effect to the Merger on a purchase accounting basis, assuming the
Merger had been effective during the period presented, and historical per share
data for Maxum and AHS. The pro forma data of InSight is based on 2,710,240
shares of InSight Common Stock and 2,501,760 shares of InSight Series A
Preferred Stock outstanding for the book value computation. This data should be
read in conjunction with the financial statements and other financial and pro
forma financial information with respect to InSight, Maxum and AHS included
elsewhere in this Joint Proxy

22
<PAGE>

Statement/Prospectus. Neither Maxum nor AHS has paid any cash dividends with
respect to its Common Stock. In the event the Merger is not consummated,
neither Maxum nor AHS anticipates that any dividends will be paid on their
respective shares of Common Stock in the foreseeable future. InSight has no
present intention to pay dividends with respect to InSight Common Stock.

<TABLE>
<CAPTION>
INSIGHT MAXUM AHS
PRO FORMA HISTORICAL HISTORICAL
--------- ---------- ----------
<S> <C> <C> <C>
Book value per share of Common Stock as of De-
cember 31, 1995.............................. $ 1.90 $(1.76) $(1.25)
Net loss per common share for the year ended
December 31, 1995............................ $(0.84) $(1.92) $(0.12)
</TABLE>

LISTING OF INSIGHT COMMON STOCK.

Application has been made to list InSight Common Stock on the Nasdaq SmallCap
Market. There can be no assurance, however, that InSight Common Stock will be
accepted for listing on the Nasdaq SmallCap Market. If not, it is anticipated
after the Effective Time that InSight Common Stock will be quoted on the OTC
Bulletin Board. Following the Effective Time, neither Maxum Common Stock nor
AHS Common Stock will be quoted on the OTC Bulletin Board.

GE MEDICAL FINANCIAL TRANSACTIONS

The GE Parties have agreed, concurrently with the consummation of the
transactions contemplated by the Stock Acquisition Agreement and subject to the
conditions set forth therein, to enter into the Master Debt Restructuring
Agreement (the "Restructuring Agreement") with InSight, AHS, Maxum and each of
the subsidiaries of Maxum named therein (the "Maxum Subsidiaries" and, together
with InSight, AHS and Maxum referred to herein, collectively, as the "Credit
Parties").

The Restructuring Agreement provides for the consent by the GE Parties to the
Merger and the granting of certain financial accommodations to the Credit
Parties, including (i) amendments and waivers of certain terms and conditions
of, and the release of AHS of certain obligations thereof under, various
installment sales contracts, lease agreements, financing agreements, service
agreements, promissory notes and installment notes (collectively, the "AHS
Financing Agreements"), including the Loan and Security Agreement, dated as of
June 1, 1993 (the "Existing AHS Agreement"), between General Electric Capital
Corporation ("GECC") and AHS, and (ii) amendments and waivers of certain terms
and conditions of, and the release of Maxum and the Maxum Subsidiaries of
certain obligations thereof under, various installment sales contracts, lease
agreements, financing agreements, service agreements, promissory notes and
installment notes (collectively, the "Maxum Financing Agreements"), including
the Agreement, dated as of June 1, 1993 (the "Existing Maxum Agreement"), among
GE Medical and Maxum and the Maxum Subsidiaries.

In exchange for such consent and financial accommodations, pursuant to the
Stock Acquisition Agreement, immediately prior to the Effective Time, (i) AHS
will issue to GE Medical 1,000,000 shares of AHS Series C Preferred Stock which
is convertible into AHS Common Stock representing approximately 48% of AHS
Common Stock outstanding at the Effective Time (after giving effect to such
conversion and assuming the conversion of the AHS Series B Preferred Stock) and
(ii) Maxum will issue to GE Medical 15,000 shares of Maxum Series B Preferred
Stock which is convertible into Maxum Common Stock representing approximately
48% of Maxum Common Stock outstanding at the Effective Time (after giving
effect to such conversion).

Immediately after the consummation of the transactions contemplated by the
Restructuring Agreement and the Stock Acquisition Agreement and as a condition
subsequent to GE Medical's acquisition of the AHS Series C Preferred Stock and
the Maxum Series B Preferred Stock, and the effectiveness of the transactions
contemplated in the Restructuring Agreement, the Merger will occur and the AHS
Series C Preferred Stock and the Maxum Series B Preferred Stock will be
exchanged for an aggregate of 2,501,760 shares of InSight Series A Preferred
Stock. Such shares of InSight Series A Preferred Stock will constitute all of
the issued and outstanding shares of preferred stock of InSight at the
Effective Time and will be convertible into InSight Common Stock representing
approximately 48% of InSight Common Stock outstanding at the Effective Time
(after giving effect to such conversion).

23
<PAGE>

In addition, as part of the granting of certain financial accommodations
contemplated to be provided by GE Medical, at the Effective Time, warrants
previously issued to GE Medical by AHS to acquire 1,589,072 shares of AHS
Common Stock, and warrants previously issued to GE Medical by Maxum to acquire
700,000 shares of Maxum Common Stock, will be canceled. Furthermore, after the
Effective Time, GE Medical will have the right to receive for ten years the
Supplemental Service Fee under its maintenance agreements with InSight, AHS and
Maxum equal to 14% of pre-tax income, subject to certain adjustments, of
InSight, and further subject to proportional reductions for certain post-Merger
acquisitions. InSight may terminate the Supplemental Service Fee at any time
during this ten-year period by making a payment to GE Medical equal to $8
million less the discounted value of the aggregate amount of such Supplemental
Service Fee (calculated at a discount rate of 15% per annum) paid through the
date of such termination payment.

The above-described transactions are collectively referred to herein as the
"GE Medical Financial Transactions." See "Debt Restructuring and Issuance of
Preferred Stock to GE Medical."

24
<PAGE>

UNAUDITED SUMMARY PRO FORMA SELECTED FINANCIAL DATA OF INSIGHT

The following unaudited summary pro forma selected financial data presents
unaudited summary pro forma selected operations data for the fiscal year ended
December 31, 1995, after giving effect to the Merger as if the Merger were
consummated on January 1, 1995, and unaudited pro forma selected balance sheet
data at December 31, 1995, giving effect to the GE Medical Financial
Transactions with Maxum and AHS and to the Merger, in each case, as if
consummated on such date, using the purchase method of accounting, with Maxum
being treated as the acquiror.

The following unaudited pro forma selected financial data is provided for
comparative purposes only and should be read in conjunction with the unaudited
pro forma condensed consolidated financial statements and notes thereto, the
audited consolidated financial statements of Maxum and the related notes
thereto and the audited consolidated financial statements of AHS and the
related notes thereto contained elsewhere herein. The following unaudited pro
forma selected financial data does not purport to be indicative of the results
that actually would have occurred if the Merger and acquisitions had been
consummated on the dates indicated or which may be obtained in the future.

(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
--------------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $86,971
Income from:
Company operations.................................. 1,274
Unconsolidated partnerships......................... 348
Operating income...................................... 1,622
Net loss.............................................. (3,005)
Net loss per common share............................. $ (1.11)
Weighted average common shares outstanding............ 2,710,240
<CAPTION>
AT DECEMBER 31, 1995
--------------------
<S> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................. $ (576)
Property and equipment, net........................... 32,555
Intangible assets..................................... 17,402
Total assets.......................................... 73,966
Total long-term liabilities........................... 39,406
Stockholders' equity.................................. 9,886
</TABLE>

25
<PAGE>

SUMMARY FINANCIAL DATA

The following tables set forth selected consolidated historical financial
data for Maxum and AHS. The data have been derived in part from, and should be
read in conjunction with, the audited consolidated financial statements and the
related notes thereto and other financial information with respect to Maxum and
AHS set forth elsewhere in this Joint Proxy Statement/Prospectus, and such data
are qualified in their entirety by reference thereto.

MAXUM

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1995(4) 1994 1993 1992 1991
------------------------ ----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $50,609 $45,868 $45,075 $ 45,135 $34,388
Income (loss) from:
Company opera-
tions(1)............. (1,541) (3,611) (6,725) (6,941) 2,455
Unconsolidated part-
nerships............. 348 834 685 1,020 428
----------- ----------- ----------- ----------- -----------
Operating income
(loss)................. (1,193) (2,777) (6,040) (5,921) 2,883
Income (loss) before ex-
traordinary gain(2).... (4,319) 814 (7,813) (8,312) (763)
Extraordinary gain...... -- 3,342 1,036 -- --
----------- ----------- ----------- ----------- -----------
Net income (loss)....... (4,319) 4,156 (6,777) (8,312) (763)
Preferred stock divi-
dends, net........... -- -- -- -- (254)
----------- ----------- ----------- ----------- -----------
Income (loss) applicable
to common stock........ $ (4,319) $ 4,156 $ (6,777) $ (8,312) $ (1,017)
=========== =========== =========== =========== ===========
Income (loss) per share
before extraordinary
gain................... $ (1.92) $ 0.35 $ (2.69) $ (2.93) $ (0.61)
Net income (loss) per
common share(3)........ $ (1.92) $ 1.77 $ (2.33) $ (2.93) $ (0.61)
Weighted average common
shares outstanding(3).. 2,248,883 2,345,209 2,912,786 2,840,471 1,679,409
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------
1995(4) 1994 1993 1992 1991
------------------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (defi-
cit)................... $ (2,228) $ 1,587 $ (8,594) $(14,607) $ (2,009)
Property and equipment,
net.................... 12,386 5,272 9,791 18,772 25,638
Intangible assets....... 4,047 1,194 1,263 2,513 1,641
Total assets............ 28,926 23,050 23,566 38,043 42,203
Total long-term liabili-
ties................... 19,723 9,575 7,967 8,368 19,244
Stockholders' equity
(deficit).............. (4,005) 300 (3,857) 2,502 10,150
</TABLE>
- --------
(1) Includes a (net credit) provision for prior restructuring costs of $(0.5)
million and $7.5 million in 1993 and 1992, respectively.
(2) 1995 includes a $1.5 million provision for Maxum's securities litigation
settlement and 1994 includes a $4.8 million gain, net of income tax
provision of $0.2 million, on the sale of Maxum's lithotripsy partnership
interests.
(3) Amounts for 1991 are computed on a pro forma basis as if the
recapitalization leading to the initial public offering in 1991 had
occurred at January 1, 1991.
(4) Includes two significant acquisitions which were completed during the year.
See "Maxum's Management's Discussion and Analysis of Financial Condition
and Results of Operations--Acquisitions" included herein, and Note 4 of
Appendix H attached hereto.

26
<PAGE>

AHS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $ 36,999 $ 36,046 $ 37,515 $ 38,347 $ 41,850
Expenses..................... 30,729 29,971 32,580 34,947 35,495
--------- --------- -------- --------- --------
Income from center opera-
tions....................... 6,270 6,075 4,935 3,400 6,355
Corporate operating ex-
penses...................... 3,886 3,474 3,452 3,892 3,077
Other expenses(1)............ -- -- -- 11,873 --
Net interest expense......... 3,492 4,015 3,921 2,319 2,230
--------- --------- -------- --------- --------
Income (loss) before provi-
sion for income taxes....... (1,108) (1,414) (2,438) (14,684) 1,048
Income (loss) from continuing
operations.................. (1,138) (1,451) (2,466) (14,715) 1,018
Extraordinary gain(2)........ -- 306 -- -- --
--------- --------- -------- --------- --------
Net income (loss)............ $ (1,138) $ (1,145) $ (2,466) $ (14,715) $ 1,018
========= ========= ======== ========= ========
EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing
operations.................. $ (0.12) $ (0.15) $ (0.25) $ (1.51) $ 0.07
Extraordinary gain........... -- 0.03 -- -- --
--------- --------- -------- --------- --------
Earnings (loss) per share.... $ (0.12) $ (0.12) $ (0.25) $ (1.51) $ 0.07
========= ========= ======== ========= ========
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (defi-
cit)(3)..................... $ (11,194) $ 2,588 $ 3,310 $ 4,623 $ 7,459
Property and equipment, net.. 20,169 25,521 28,303 15,588 16,622
Intangible assets............ 2,755 2,106 1,754 1,718 3,585
Total assets................. 36,440 40,223 43,467 31,168 35,622
Total long-term liabilities.. 22,230 41,097 42,408 27,905 19,794
Stockholders' equity (defi-
cit)(4)..................... (12,102) (10,964) (9,849) (7,477) 6,287
</TABLE>
- --------
(1) Other expenses were approximately $11,873 for the year ended December 31,
1992. These other expenses consisted of (i) write-downs of certain
equipment and lease rights to the estimated realizable value of the assets
($5,093), (ii) the establishment of reserves for centers which AHS has
closed or considered closing ($5,380), and (iii) the write-off of certain
transactional costs associated with financing activities with its primary
lender which were never consummated ($1,400). No other expenses were
recorded in 1995, 1994, 1993 and 1991, respectively.
(2) In 1994, as a result of a long-term debt restructuring agreement with GE
Medical, AHS recorded an extraordinary gain on restructuring of long-term
debt.
(3) The decrease in working capital of $13,782 from 1994 to 1995 is primarily
due to the reclassification of long-term liabilities to current liabilities
as a result of scheduled debt maturities.
(4) There have been no dividends declared by AHS since January 1, 1991 other
than the Series A Preferred Stock dividends declared and payable on January
1, and April 1, 1991, to the holders of record of the Series A Preferred
Stock (which has since been canceled) on such dates.

27
<PAGE>

RISK FACTORS

The following factors, in addition to those discussed elsewhere in this
Joint Proxy Statement/Prospectus, should be carefully considered in evaluating
the Merger and the receipt by Maxum and AHS stockholders of InSight Common
Stock in connection therewith.

HISTORY OF LOSSES; UNCERTAIN PROFITABILITY PROSPECTS

Each of the Companies has experienced a net loss during each of the three
years ended December 31, 1993, 1994 and 1995, except that Maxum had a net
profit of approximately $4.2 million for the year ended December 31, 1994, due
primarily to a gain of approximately $4.8 million, net of related income
taxes, from the sale of its interests in three partnerships which provided
mobile lithotripsy services and due to an extraordinary net gain from the
extinguishments of debt of approximately $3.3 million. The net losses for
Maxum for the years ended December 31, 1993 and 1995 were $7.8 million (before
extraordinary gain of $1.0 million) and $4.3 million, respectively, and for
AHS for the years ended December 31, 1993, 1994 and 1995 were $2.5 million,
$1.5 million (before extraordinary gain of $0.3 million) and $1.1 million,
respectively. There can be no assurance that InSight will achieve
profitability at any time in the near term or at any time in the future. See
"Maxum's Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "AHS Management's Discussion and Analysis of Results
of Operations and Financial Condition."

INTEGRATION OF THE BUSINESSES

The Merger involves the integration of two companies that have previously
operated independently. There can be no assurance that InSight will not
encounter difficulties in integrating the operations of Maxum and AHS or that
the benefits expected from such integration will be realized. Any material
delays or unexpected costs incurred in connection with such integration will
have a material adverse effect on the business, results of operations,
liquidity and financial condition of InSight. Furthermore, there can be no
assurance that the operations, managements and personnel of the two Companies
will be compatible or that Maxum or AHS will not experience the loss of key
personnel. Among the factors considered by the Maxum Board and AHS Board in
connection with their approval of the Merger Proposal were the opportunities
for efficiencies expected to result from the Merger. While Maxum and AHS
expect to achieve annual savings in overhead and administrative costs as a
result of the Merger (including, without limitation, integration of office
facilities, information systems and support functions), such anticipated
savings cannot be quantified at this time. There can be no assurance that
InSight will achieve the desired levels of efficiencies and cost savings as a
result of the integration of the Companies. Failure to achieve such desired
levels of efficiencies and cost savings will have a material adverse effect on
the business, results of operation, liquidity and financial condition of
InSight.

UNCERTAINTIES RELATING TO INSIGHT'S ABILITY TO CARRY OUT ITS BUSINESS STRATEGY

The diagnostic imaging industry is subject to a number of uncertainties and
risks that may impede InSight's prospects for profitable operations. As a
result, InSight's strategy is expected to include (i) increasing its market
share by acquisitions or business combinations and (ii) entering other lines
of business that are related to diagnostic imaging. InSight's ability to carry
out this strategy will be dependent upon a number of factors, some of which
will be beyond its control, including the availability of opportunities to
acquire or combine with other businesses, the availability of additional
capital, obtaining consents of GE Medical as its creditor and holder of its
preferred stock and effecting such actions with non-cash consideration.
InSight's inability to carry out this strategy will have a material adverse
effect on the business, results of operations, liquidity and financial
condition of InSight and will result in a lack of profitability for InSight.

POSSIBLE LIMITATIONS ON AND DELAYS IN REIMBURSEMENT BY THIRD-PARTY PAYORS

Because most patients who utilize the services of Maxum and AHS rely on
third-party or government reimbursement in payment for health care, the amount
and availability of third-party and government reimbursement for diagnostic
imaging directly impacts the use and, therefore, revenues, of the Companies.
Reductions in third-party and government reimbursement have occurred in
response to national concern over

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rising health care costs. Future reductions in third-party and government
reimbursement for the Companies' services could have a material adverse effect
on the business, results of operations, liquidity and financial condition of
InSight.

In addition to the foregoing, managed care organizations, which represent an
increasingly significant source of reimbursement to the Companies, are placing
downward pressure both on the prices the Companies can obtain for their
services and on utilizations of high cost procedures. Such managed care
organizations either negotiate capitated payment arrangements for imaging
services, pursuant to which providers are compensated by fixed rates per
member per month regardless of the total cost of services rendered, or use the
abundance of capacity to force reimbursement to lower levels, and thereby
achieve similar results to those arising from capitation. Most managed care
organizations limit imaging services to contracted providers. As an increasing
percentage of patients come under the control of managed care entities, the
Companies believe that InSight's success will, in part, be dependent upon its
ability to negotiate managed care contracts with health maintenance
organizations ("HMOs"), preferred provider organizations ("PPOs"), and other
private third-party payors. Such contracts with HMOs often shift much of the
financial risk of providing care (particularly regarding patient utilization)
from the payor to the provider. There can be no assurance that InSight will be
able to negotiate additional satisfactory arrangements on a capitated or other
risk sharing basis or that any managed care contracts it enters into will not
adversely affect InSight.

Any of the interrelated lowering of reimbursement rates, reductions in
utilization of high-cost procedures, and negotiating for reduced contract
rates and capitated contracts could have a material adverse effect on the
business, results of operations, liquidity and financial condition of InSight.
See "Business of Maxum--Reimbursement," "--Customers and Fees" and "Business
of AHS--Governmental Regulation."

CONTRACT RENEWALS AND FINANCIAL STABILITY OF CUSTOMERS

Each year, a large percentage of Maxum's fee-for-service agreements come up
for renewal. Fee-for-service contracts, covering approximately 36%, 36% and
28% of Maxum's annual revenues are subject to renewal during 1996, 1997 and
thereafter, respectively. Since certain high volume accounts have historically
chosen to purchase their own imaging equipment, Maxum expects that certain
contracts will not be renewed. The non-renewal of a single customer contract
would not have a material impact on revenues. However, non-renewals in the
aggregate, if comprised of several significant contracts, could have a
material impact on fee-for-service revenues. If the impact of the non-renewal
of such contracts is not offset by contracts with new customers and growth in
revenues from existing customers, such events would have a material adverse
effect on the business, results of operations, liquidity and financial
condition of InSight. There can be no assurance that InSight will be able to
replace contracts that are not renewed with new accounts or expand services to
existing accounts. In addition, AHS revenues in certain markets depend to a
significant extent on certain customers with large volumes of business. If, in
the future, reimbursement levels of such customers were to decline or cease,
if such customers were to close in connection with the consolidation of
hospitals in InSight's markets, or if such customers were to become
financially insolvent, such events would have a material adverse effect on the
business, results of operations, liquidity and financial condition of InSight.
While no single source accounts for more than 10% of the revenues of Maxum or
AHS, individually, AHS has six individual contracts with the County of Los
Angeles (the "County") covering six separate sites. In the aggregate, these
sites represent approximately 24% of the annual revenues of AHS. From time to
time, the County has experienced financial difficulties. Should the County
terminate these contracts or otherwise curtail its activities with AHS, such
actions would have a material adverse effect on the business, results of
operations, liquidity and financial condition of InSight. See "Business of
Maxum--Customers and Fees" and "Business of AHS--Imaging and Treatment Center
Profile."

TECHNOLOGICAL CHANGES

The diagnostic imaging industry has been characterized by rapid
technological advances. Customers of diagnostic imaging services often require
their radiology providers to operate high-field imaging equipment. Radiology
providers who operate state of the art, high-field equipment, therefore, have
a competitive advantage

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over those providers who do not. A material portion of Maxum's equipment is
not high-field equipment, and a failure to upgrade such equipment could have a
material adverse effect on the business, results of operations, liquidity and
financial condition of InSight. For a more detailed description of Maxum's
equipment, see "Business of Maxum--Strategy and Marketing."

There can be no assurance that certain recently available upgrades will be
economically feasible for InSight to acquire in the future or acceptable to
InSight's customers or potential customers. In addition, the development of
new technologies or refinements of existing ones could potentially make
existing equipment technologically obsolete, or cause a reduction in the value
of, or reduce the need for, such equipment. There can be no assurance that
technological developments that would be likely to materially and adversely
affect the business, results of operations, liquidity and financial condition
of InSight will not occur; or, should such developments occur, there can be no
assurance that InSight will be able to acquire any new or improved equipment
or upgrades to the extent necessary to service its customers and to compete
effectively in the industry. The cost of purchasing new equipment could also
have a material adverse effect on the business, results of operation,
liquidity and financial condition of InSight. See "Business of Maxum--New
Technology and Possible Obsolescence" and "Business of AHS--Strategy and
Marketing."

LIQUIDITY AND CASH FLOW PRESSURES; LEVERAGE

InSight will operate in a capital intensive industry that recently has been
burdened by external pressures to contain costs and reduce fees. InSight may
not be in a position to maintain adequate liquidity and respond to further
expected and unexpected industry pressures. Financial covenants contained in
existing agreements limit InSight's ability to incur additional debt, enter
into additional leases for equipment, raise capital or conduct acquisitions or
other corporate transactions. Consequently, InSight will be substantially
dependent upon cash flow from operations to satisfy debt service and other
obligations. If cash provided by operations is not sufficient, InSight may
experience difficulty in meeting its obligations to creditors, vendors and
lessors. Additionally, InSight will be a highly leveraged company. As such,
InSight is very vulnerable to economic pressures in the health care industry
and is limited in its ability to alter its financial or capital structure to
respond to these pressures. Therefore, despite the restructuring of
indebtedness with the GE Parties and the economies of scale and operating
efficiencies anticipated as a result of the Merger, there can be no assurance
that future defaults on indebtedness and lease obligations will not occur and,
if waivers cannot be obtained, that the amounts owing will not be accelerated,
leaving InSight facing potential insolvency. See "Maxum's Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources," "AHS Management's Discussion and Analysis of
Financial Condition and Results of Operations--Financial Condition, Liquidity
and Capital Resources" and "Debt Restructuring and Issuance of Preferred Stock
to GE Medical."

GOVERNMENTAL REGULATION

Many aspects of the health care industry in the United States are presently
subject to extensive federal and state governmental regulation. Moreover,
health care reform efforts have stimulated closer scrutiny of each patient's
need for diagnostic testing, with the aim of eliminating unnecessary tests and
thereby reducing the total volume of tests and the overall cost of health
care. Although each of the Companies believes it is in material compliance
with all applicable federal and state laws and regulations, there can be no
assurance that such laws or regulations will not be amended, interpreted or
applied in the future in such a way as to have a material adverse effect on
the business, results of operations, liquidity and financial condition of
InSight.

The following discussion of certain laws and regulations is not intended to
be inclusive of all laws and regulations that affect InSight, but is only a
brief summary of certain key laws and regulations that may affect InSight. For
further discussion, see "Business of Maxum--Government Regulations," "--
Reimbursement" and "Business of AHS--Government Regulations."

Fraud and Abuse/Anti-Kickback Provisions. The relationships among providers
of health care services, such as the Companies, physicians, hospitals and
clinicians are subject to extensive and increasing regulations at

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the federal and state levels. Federal Medicare-Medicaid fraud and abuse
statutes and similar state statutes prohibit bribes, kickbacks and rebates,
and any direct or indirect remuneration in connection with the furnishing or
arranging of services, items or equipment for which payment may be made in
whole or in part under the Medicare or Medicaid program and other governmental
health care programs. Laws regulating the provision of health care services
include the fraud and abuse provisions of the Medicare and Medicaid statutes,
which prohibit the solicitation, payment, receipt or offering of any direct or
indirect remuneration for the referral of Medicare or Medicaid patients or for
the recommending, leasing, arranging, ordering or providing of Medicare or
Medicaid covered services, items or equipment. Other federal and state laws
impose significant penalties and repayment provisions for false or improper
billings for physician services. Violation of these statutes may result in
substantial civil or criminal penalties, including civil money penalties,
imprisonment, and/or possible exclusion from the Medicare, Medicaid and other
governmental programs. In recent years, there has been increasing scrutiny by
law enforcement authorities, the United States Department of Health and Human
Services, various state agencies, the federal and state courts and Congress of
financial arrangements between health care providers and potential sources of
patient and similar referrals of business to ensure that such arrangements are
not designed as mechanisms to pay for patient referrals. While each of the
Companies believes it is in compliance with such laws, due to the potentially
broad prohibitions contained in these federal and state laws and the
infrequent interpretations of such laws, there can be no assurance that the
business practices of the Companies would be construed to comply with these
laws in all respects by applicable federal or state authorities. Furthermore,
there can be no assurance that the failure to comply with such laws would not
have a material adverse effect on the business, results of operations,
liquidity and financial condition of InSight.

Physician Self-Referral. Federal legislation prohibits, after December 31,
1994, physician referrals of Medicare and Medicaid patients to diagnostic
imaging centers in which the physician has a financial interest. Certain
states have enacted similar legislation. Violations of the laws could result
in substantial fines, exclusion from Medicare, Medicaid and other governmental
programs and the denial of payments for the service or the requirement to
refund payment for the service. Physicians with compensation arrangements with
the Companies, such as interpreting physicians, are subject to these referral
prohibitions, unless the arrangement fits within an exception in the law.
While each of the Companies believes it is in compliance with this
legislation, there can be no assurance that the business practices of the
Companies would be construed to be in compliance with such law in all respects
by applicable federal or state authorities.

Certificates of Need. In some states, a certificate of need ("CON") or
similar regulatory approval is required prior to the acquisition of medical
equipment or provision of medical services. CON regulations can limit or
preclude a provider from providing diagnostic imaging services or equipment.
The CON application process may be lengthy and costly. A significant increase
in the number of states regulating the businesses within the CON framework
could adversely affect the Companies. Conversely, repeal of existing CON
regulations in jurisdictions where the Companies have obtained a CON could
also have an adverse effect, since obtaining a CON provides the Companies with
a competitive advantage in obtaining and retaining customers in such
jurisdictions.

Licensing and Related Restrictions. The operations of outpatient imaging
centers are subject to federal and state regulations relating to licensure,
standards of testing, accreditation of certain personnel, and compliance with
governmental reimbursement programs. The operation of these centers requires a
number of federal and state licenses, including licenses for technical
personnel and certain equipment, the failure to obtain any of which could have
a material adverse effect on the business, results of operations, liquidity
and financial condition of InSight. While each of the Companies believes it is
in compliance with applicable federal and state licensure requirements, there
can be no assurance that such requirements could not be applied or construed
in a way that is materially adverse to the business, results of operations,
liquidity and financial condition of InSight. Each of the Companies believes
that diagnostic testing will continue to be subject to intense regulation at
the federal and state levels and cannot predict the scope and effect thereof.

The laws of many states prohibit physicians from splitting fees with
nonphysicians and prohibit nonphysician entities (such as the Companies) from
practicing medicine and, in certain circumstances, from

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employing physicians. Each of the Companies believes its current activities do
not constitute fee-splitting or the corporate practice of medicine as
contemplated by these statutes. There can be no assurance, however, that
future interpretations of such laws will not require structural and
organizational modifications of the Companies' existing relationships with
physicians. In addition, statutes in some states could restrict expansion of
InSight's operations into those jurisdictions.

FDA Regulation. The use of diagnostic imaging systems is subject to
regulation by the Food and Drug Administration ("FDA") as a medical device.
For example, diagnostic imaging centers performing mammography services must
meet federal, and in some jurisdictions, state standards for quality, as well
as certification requirements. The FDA has approved the devices used by the
Companies in substantially all currently utilized procedures. Although
considered by the Companies to be unlikely, there can be no assurance that the
FDA will not promulgate additional, more restrictive regulations in the future
that may affect the use of diagnostic imaging systems and the business
practices of InSight.

CERTAIN RIGHTS OF PRIMARY CREDITOR

As a result of the GE Medical Financial Transactions, after the Effective
Time, InSight will be significantly restricted in its ability to raise
capital, incur additional debt or engage in numerous other corporate
transactions without first obtaining a waiver or consent from GE Medical. For
example, the Restructuring Agreement contains certain covenants that, among
other things, either prohibit or substantially restrict InSight from (i)
changing the nature or conduct of its business, (ii) consolidating, merging or
making any acquisition of all or substantially all of the assets of another
entity or division, (iii) making any distributions, (iv) increasing salaries
of its management, (v) entering into transactions with affiliates, (vi)
providing guaranties, (vii) creating liens on its assets, (viii) incurring
indebtedness (except for the indebtedness owed to the GE Parties), (ix)
disposing of its assets, (x) changing its capital structure and (xi) except in
the ordinary course of business, creating or becoming a member or a partner in
a joint venture or a partnership, without first obtaining a waiver or consent
from GE Medical.

In addition, even if all indebtedness to GE Medical were paid in full, the
terms of the InSight Series A Preferred Stock that GE Medical will receive at
the Effective Time will require the affirmative approval of GE Medical, as
holder of such stock, in order to effectuate a number of transactions,
including, but not limited to, certain asset sales, the liquidation or
dissolution of InSight, a merger of InSight, the issuance of equity securities
having a preference over or on a parity with InSight Series A Preferred Stock,
and the amendment of InSight's charter documents. GE Medical, as the holder of
InSight Series A Preferred Stock, will have the ability to prohibit or
substantially restrict InSight's activities in raising additional capital and
engaging in certain acquisitions and other corporate transactions. See "Debt
Restructuring and Issuance of Preferred Stock to GE Medical."

POTENTIAL CONFLICTS OF INTEREST OF HOLDER OF INSIGHT SERIES A PREFERRED STOCK

GE Medical, which will hold Insight Series A Preferred Stock at the
Effective Time convertible into approximately 48% of the InSight Common Stock
issued and outstanding (after giving effect to such conversion), is a major
manufacturer and distributor of medical diagnostic imaging equipment. In
connection therewith, GE Medical also has significant interests, generally as
a creditor and in some cases as the holder of equity securities or the right
to purchase equity securities, in other companies that provide diagnostic
imaging and related management services. As a result of such interests in
competitors of InSight, potential conflicts of interest exist for GE Medical
in its role as a stockholder of InSight. These conflicts could have a material
adverse effect upon the business, results of operations, liquidity and
financial condition of InSight.

UNCERTAINTY REGARDING HEALTH CARE ENVIRONMENT; PENDING LEGISLATION

The health care industry in the United States has undergone substantial
changes in recent years, and political, economic, legislative and regulatory
influences can be expected to result in significant changes in the

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future. Although the United States Congress has thus far failed to pass
comprehensive health care reform legislation, the Companies anticipate that
both Congress and state legislatures will continue to review and assess
alternative health care delivery and payment systems, and may in the future
propose and adopt legislation that will effect fundamental changes in the
nation's health care system. Congress has recently considered major reductions
in the rate of increase of Medicare and Medicaid spending as part of efforts
to balance the budget of the United States. The Companies cannot predict the
ultimate timing, scope or effect of any legislation concerning health care
reform, including legislation affecting the Medicare, Medicaid and other
governmental programs. Any proposed federal legislation, if adopted, could
result in significant changes in the availability, delivery, pricing and
payment for health care services and products. Various state agencies also
have undertaken or are considering significant health care reform initiatives,
particularly with their state Medicaid programs, and will continue to do so
either in contemplation of or reaction to health care reform measures adopted
at the federal level. Any such reforms on the federal or state level could
have a material adverse effect on the business, results of operations,
liquidity and financial condition of InSight.

ADVERSE UTILIZATION TRENDS FOR CERTAIN DIAGNOSTIC IMAGING PROCEDURES

Currently, the supply of diagnostic imaging equipment exceeds the demand for
such equipment in the market. Moreover, following the Merger, the demand for
utilization of diagnostic imaging equipment may be negatively affected by
perceptions that diagnostic imaging services such as those provided by the
Companies are overutilized. In some instances, federal and state governments,
the insurance industry and third-party payors have determined that such
imaging procedures are overutilized by referring physicians and may be
medically unnecessary. As a result, certain payors have been denying and/or
delaying payment for these procedures based on the diagnosis and the number of
diagnostic procedures performed on the patient. The current excess capacity
for diagnostic imaging equipment, coupled with an increased rate of denials
of, or delays in, payment by payors, could have a material adverse effect on
the business, results of operations, liquidity and financial condition of
InSight. In addition, hospitals comprise a large portion of the Companies'
customers. Continued consolidation in the hospital industry will cause certain
hospitals to close and, as a result, will decrease utilization of the
Companies' services. Such continued trends will have a material adverse effect
on the business, results of operations, liquidity and financial condition of
InSight.

POTENTIAL ADVERSE EFFECT OF CERTAIN LITIGATION

Maxum is a party to securities litigation which, if determined adversely,
could have a material adverse effect on the business, results of operations,
liquidity and financial condition of InSight. Maxum has entered into a
Stipulation of Settlement providing for the settlement of this securities
litigation, and if the litigation is settled as provided in such agreement,
Maxum should have no material liability therefor in excess of the accrued
liability included in its 1995 year end financial statements. If the foregoing
litigation against Maxum is not resolved as contemplated by the Stipulation of
Settlement, the ultimate result of such litigation could have a material
adverse effect on the business, results of operations, liquidity and financial
condition of InSight. See "Business of Maxum--Legal Proceedings."

POSSIBLE LOSS OF OR INABILITY TO ATTRACT KEY PERSONNEL

The success of InSight will depend largely on the ability to retain and
attract highly qualified managerial personnel. In particular, InSight will be
highly dependent on each of its executive officers as of the Effective Time.
Furthermore, the success of InSight's centers after the Merger will continue
to depend on the ability of the Companies to retain and attract competent
managers for each location. There can be no assurance that InSight will be
successful in attracting or retaining key personnel. The inability to attract
and retain key personnel could have a material adverse effect on the business,
results of operations, liquidity and financial condition of InSight. See "The
Merger--Interests of Certain Persons in the Merger" and "Operation, Management
and Business of InSight After the Merger--Management of InSight."

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COMPETITION

The health care industry, including the market for diagnostic imaging
services, is highly competitive. InSight will compete with other fixed-site
and mobile providers of imaging services, equipment manufacturers, individual
hospitals and hospital chains, networks of radiologists and radiology groups,
outpatient centers, private clinics and physician groups and managed care
organizations. Many of these competitors have substantially greater resources
than InSight and operate, or have the resources available to operate, imaging
equipment that is technologically more advanced than that of InSight. In
addition, some competitors have existing relationships in local medical
communities which may be superior to those of InSight, thereby making
expansion into these markets difficult. There can be no assurance that
competition in existing or new markets will not have a material adverse effect
on the business, results of operations, liquidity and financial condition of
InSight.

POTENTIAL PROFESSIONAL LIABILITY

Maxum and AHS each maintain medical professional liability insurance. In
addition, the Companies require either the health care professionals and/or
the hospitals with whom they contract to maintain insurance. However, there
can be no assurance that claims will not exceed the amount of insurance
maintained or that all such claims will be covered by insurance. These
insurance policies must be renewed annually. While the Companies have been
able to obtain liability insurance in the past, such insurance may not be
available in the future on terms acceptable to InSight, if at all. A
successful claim in excess of the insurance coverage could have a material
adverse effect on the business, results of operations, liquidity and financial
condition of InSight. Claims, regardless of their merit or eventual outcome,
also may have a material adverse effect on the business, results of
operations, liquidity and financial condition of InSight.

DILUTION OF VOTING POWER; POTENTIAL ADVERSE IMPACT OF FUTURE SALE OF INSIGHT
SHARES

Based upon the number of outstanding shares of Maxum Common Stock, AHS
Common Stock, and AHS Series B Preferred Stock as of May 6, 1996,
approximately 2,710,240 shares of InSight Common Stock would be outstanding at
the Effective Time, assuming that (i) no stockholders of Maxum or AHS exercise
their appraisal rights, (ii) no cash is paid in lieu of fractional shares,
(iii) no options or warrants to purchase in the aggregate 420,566 shares of
InSight Common Stock to be in existence at the Effective Time are exercised
and (iv) there is no conversion of the InSight Series A Preferred Stock. Of
such shares of InSight Common Stock, 1,360,332 shares, representing
approximately 50.2% of the total, will be held by former Maxum stockholders,
and 1,349,908 shares, representing approximately 49.8% of the total, will be
held by former AHS stockholders. As a result, the stockholders of Maxum and
AHS will experience immediate and substantial voting dilution upon the
Effective Time. Additionally, after the Effective Time, if GE Medical converts
all or a substantial portion of its InSight Series A Preferred Stock into
InSight Common Stock, the former stockholders of AHS and Maxum will experience
further substantial and immediate voting dilution inasmuch as such InSight
Series A Preferred Stock will convert into approximately 48% of all
outstanding shares of InSight Common Stock as of the Effective Time (after
giving effect to such conversion). See "Debt Restructuring and Issuance of
Preferred Stock to GE Medical."

Shares of Maxum Common Stock and AHS Common Stock that are outstanding prior
to the Effective Time will, after conversion into shares of InSight Common
Stock, be freely tradeable without restriction under the Securities Act,
except those shares that are received by persons who are "affiliates" of
InSight, Maxum or AHS. Additional shares of InSight Common Stock, including
420,566 shares issuable upon exercise of options, warrants and other rights to
purchase shares of Maxum Common Stock and AHS Common Stock outstanding as of
May 6, 1996, will also become available for sale in the public market from
time to time in the future. See "The Merger--Resales of InSight Common Stock."
GE Medical will also have the right, after a year following the Effective
Time, under certain circumstances, to require InSight to register the InSight
Common Stock issuable upon the conversion of its InSight Series A Preferred
Stock. Upon registration, the InSight Common Stock issuable upon conversion of
GE Medical's InSight Series A Preferred Stock will be freely tradeable

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<PAGE>

without restriction under the Securities Act. A sale of all or a substantial
part of such InSight Common Stock in the market could adversely affect the
trading prices of InSight Common Stock. See "Operation, Management and
Business of InSight after the Merger--Description of Capital Stock of
InSight."

DIFFERENCES AMONG THE CORPORATE GOVERNANCE DOCUMENTS OF INSIGHT, MAXUM AND AHS

There are certain material differences between the InSight Certificate and
Bylaws when they are compared to the corporate governance documents of Maxum
and AHS. Such material differences include the rights of holders of InSight
Series A Preferred Stock, including the rights of such holders to vote as a
separate class on a number of transactions. In addition, such material
differences include provisions in the InSight Certificate and Bylaws that may
have the effect of delaying or preventing a change of control of InSight,
including a requirement that a supermajority vote (80%) of the InSight capital
stock entitled to vote be obtained to remove a director of InSight. See "The
Merger--Rights of Security Holders."

POTENTIAL IMPACT OF LIQUIDATION PREFERENCE OF INSIGHT SERIES A PREFERRED
STOCK; ADJUSTMENTS TO CONVERSION PRICE OF INSIGHT SERIES A PREFERRED STOCK
RESULTING FROM CERTAIN ISSUANCES OF INSIGHT COMMON STOCK

Pursuant to the terms of the InSight Certificate, the holders of InSight
Series A Preferred Stock will be entitled to receive a preferential
liquidation distribution of InSight's assets over the holders of InSight
Common Stock if InSight liquidates its assets, dissolves or winds up its
business, either voluntarily or involuntarily. The aggregate liquidation
preference for the entire InSight Series A Preferred Stock is an amount equal
to declared and unpaid dividends thereon, plus either (i) in the event of
certain bankruptcy or other proceedings or arrangements relating to InSight's
insolvency, $24.0 million or (ii) in other specified circumstances, including
certain sales of stock or assets, the greater of $16.0 million or a value
based upon certain trading prices of InSight Common Stock. Initially, the
aggregate market capitalization of InSight (including the valuation of InSight
Series A Preferred Stock at the market price of InSight Common Stock into
which it is convertible) could be less than $24.0 million or even $16.0
million.

Pursuant to the InSight Certificate, each share of InSight Series A
Preferred Stock is convertible, at the option of the holder thereof, into such
number of shares of InSight Common Stock determined by dividing the Original
Price (which is equal to the greater of (i) $16.0 million divided by the total
number of shares outstanding at the Effective Time of the Merger or (ii) the
average of the closing prices of InSight Common Stock during the 20-trading
day period ending 30 trading days after the Effective Time) by the "Conversion
Price." The initial Conversion Price is equal to the Original Price, but, in
certain circumstances, is subject to adjustment in the event InSight issues,
after the Effective Time, additional shares of InSight Common Stock for
consideration per share that is less than the Conversion Price in effect
immediately before the issuance of such InSight Common Stock.

There can be no assurance, after the Effective Time, that an event
triggering the InSight Series A Preferred Stock's liquidation preference will
not occur and, if so, that any assets of InSight will remain available for
distribution to the holders of InSight Common Stock after payments are made to
the holders of InSight Series A Preferred Stock. The occurrence of such event
could have a material adverse effect on the market price of InSight Common
Stock, at least until such time, if any, as the market capitalization of
InSight increases to a point at which it substantially exceeds the aggregate
liquidation preference of the InSight Series A Preferred Stock described
above. The effect of any adjustments to the Conversion Price described in the
preceding paragraph will be to cause immediate dilution to the interests of
the holders of InSight Common Stock because holders of InSight Series A
Preferred Stock will be entitled to convert their shares of preferred stock
into a greater number of shares of InSight Common Stock at the Effective Time.
This provision may tend to depress trading prices of InSight Common Stock or
the prices at which new issuances of InSight Common Stock can be effected. See
"Description of Capital Stock of InSight--InSight Series A Preferred Stock to
be issued to GE Medical."

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THIRD-PARTY CONSENTS TO THE MERGER

It is a condition to the obligations of each of Maxum and AHS to consummate
the Merger that each party obtain all consents to the Merger pursuant to
contracts with third parties, including customers, except where the failure to
obtain any such consent would not have a material adverse effect on the
consummation of the Merger or on InSight or any of its subsidiaries taken as a
whole. The consummation of the Merger may entitle certain customers of either
of the Companies, particularly a material customer of AHS, to terminate
certain contracts with such Company. There can be no assurance that all
consents that are being sought by the Companies will be obtained. The Merger
could be consummated without some or all of such third-party consents, and
certain customer contracts (which in the case of AHS could be material) might
be terminated resulting in a material adverse effect on the business, results
of operations, liquidity and financial condition of InSight.

LIMITATION ON AVAILABILITY OF NET OPERATING LOSS CARRY FORWARDS FOR FEDERAL
INCOME TAX PURPOSES

THE MAXUM STOCKHOLDER MEETING

TIME, DATE AND PLACE OF MAXUM MEETING

The Maxum Special Meeting will be held at 10:00 a.m., Central Daylight Time,
on Tuesday, June 25, 1996, at Dallas Medallion, 4099 Valley View Lane (LBJ
Freeway and Midway Road), Dallas, Texas 75244.

BUSINESS TO BE CONDUCTED AT THE MAXUM MEETING

Each copy of this Joint Proxy Statement/Prospectus mailed to Maxum
stockholders is accompanied by a form of proxy solicited by the Maxum Board
for use at the Maxum Special Meeting and at any adjournment thereof. At the
Maxum Special Meeting, the Maxum stockholders will vote upon the Merger
Proposal. See "The Merger." The Maxum stockholders will also be asked at the
Maxum Special Meeting to vote upon the InSight Option Plans Proposal. The
principal provisions of the InSight Option Plans are described in the section
below entitled "Proposal No. 2: Approval of the InSight Option Plans
Proposal." The Maxum stockholders will be further asked to consider and vote
upon the Maxum Option Ratification Proposal. See "Maxum Proposal No. 3:
Approval of Maxum Option Ratification Proposal."

PROXIES: VOTING AND REVOCATION

When a Maxum proxy is properly executed and returned, the shares of Maxum
Common Stock will be voted in accordance with the directions indicated on the
proxy, or if no directions are indicated, the shares will be voted FOR each of
the Merger Proposal, the InSight Option Plans Proposal and the Maxum Option
Ratification Proposal. Any Maxum stockholder giving a proxy may revoke his or
her proxy at any time before its exercise at the Maxum Special Meeting by (i)
giving written notice of such revocation, (ii) signing and delivering a proxy
bearing a later date, to Glenn P. Cato, Secretary, Maxum Health Corp., 14850
Quorum Drive, Suite 400, Dallas, Texas 75240 or (iii) by attending the Maxum
Special Meeting and voting in person. However, the mere presence at the Maxum
Special Meeting of a Maxum stockholder who has delivered a valid proxy will
not of itself revoke that proxy.

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MAXUM STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY TO MAXUM IN THE ENCLOSED POSTAGE-PAID ENVELOPE,
EVEN IF THEY ARE PLANNING TO ATTEND THE MAXUM SPECIAL MEETING.

PROXY SOLICITATION

Maxum will bear the costs of soliciting proxies from its stockholders.
Proxies may be solicited by directors, officers, or employees of Maxum in
person, by telephone or through other forms of communication without payment
of additional compensation to such persons. Additionally, arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of proxy solicitation materials to beneficial owners of Maxum
Common Stock held of record by such custodians, nominees and fiduciaries and
for payment of reasonable expenses incurred in connection therewith. Maxum has
retained a proxy solicitor to aid in the solicitation of proxies, the costs of
which are expected to be $5,000.

VOTE REQUIRED

The presence in person or by proxy of persons entitled to vote a majority of
the outstanding Maxum Common Stock is necessary to constitute a quorum at the
Maxum Special Meeting. Under the DGCL, the holders of a majority of the
outstanding shares of Maxum Common Stock must approve the Merger Proposal.
Abstentions and broker non-votes will have the same effect as a vote against
the Merger Proposal. The affirmative vote of a majority of the outstanding
shares of Maxum Common Stock present or represented and entitled to vote on
the proposals at the Special Meeting is required for approval of the InSight
Option Plans Proposal and the Maxum Option Ratification Proposal. Abstentions
will have the same effect as a vote against the InSight Option Plans Proposal
and the Maxum Option Ratification Proposal, but broker non-votes will not be
taken into account for purposes of determining whether the requisite
stockholder approval has been obtained. Neither the charter documents nor the
Bylaws of Maxum contains any provisions with respect to the treatment or
effect of abstentions or broker non-votes.

Immediately prior to the Effective Time and pursuant to the Stock
Acquisition Agreement, the Maxum Series B Preferred Stock will be issued to GE
Medical by Maxum. It is a condition to the consummation of the Merger that GE
Medical, as the holder of Maxum Series B Preferred Stock, consent to the
Merger Proposal. As contemplated by the Stock Acquisition Agreement and
subject to the conditions set forth therein, the GE Parties will enter into
the Restructuring Agreement discussed under "Debt Restructuring and Issuance
of Preferred Stock to GE Medical," which agreement, upon its execution
immediately prior to the Effective Time, includes the consent of the GE
Parties to the Merger Proposal.

Only holders of record of Maxum Common Stock at the close of business on May
7, 1996, are entitled to receive notice of, and to vote at, the Maxum Special
Meeting. At that date, there were 2,273,555 shares of Maxum Common Stock
outstanding and entitled to vote, with each such share entitled to one vote,
and 162 holders of record thereof. As of that date, the directors and
executive officers of Maxum, together with their affiliates, beneficially held
an aggregate of 117,905 shares of Maxum Common Stock, exclusive of options,
warrants or other rights to purchase Maxum Common Stock (representing
approximately 5.2% of the outstanding shares of Maxum Common Stock). The
directors and executive officers of Maxum have indicated that they will vote
all of the shares held by them FOR the approval of the Merger Proposal, the
InSight Option Plans Proposal and the Maxum Option Ratification Proposal.

OTHER MATTERS

Maxum is not aware of any other business to be brought before the Maxum
Special Meeting. If any matters come before the Maxum Special Meeting which
are not directly referred to in this Joint Proxy Statement/Prospectus or the
enclosed proxy, including matters incident to the conduct of the Maxum Special
Meeting, the proxy holders will vote the shares represented by the proxies in
accordance with the recommendations of Maxum management.

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THE AHS STOCKHOLDER MEETING

TIME, DATE AND PLACE OF AHS MEETING

The AHS Special Meeting will be held at 10:00 a.m., Pacific Daylight Time,
on Tuesday, June 25, 1996, at The Sutton Place Hotel, 4500 MacArthur
Boulevard, Newport Beach, California 92660.

BUSINESS TO BE CONDUCTED AT THE AHS MEETING

Each copy of this Joint Proxy Statement/Prospectus mailed to AHS
stockholders is accompanied by a form of proxy solicited by the AHS Board for
use at the AHS Special Meeting and at any adjournment thereof. At the AHS
Special Meeting, the AHS stockholders will vote upon the Merger Proposal. See
"The Merger." The AHS stockholders will also be asked at the AHS Special
Meeting to vote upon the InSight Option Plans Proposal. The principal
provisions of the InSight Stock Option Plans are described in the section
below entitled "Proposal No. 2: Approval of the InSight Option Plans
Proposal." In addition, the AHS stockholders will be asked at the Special
Meeting to vote upon the AHS Plan Amendment Proposal, which is discussed in
the section below entitled "AHS Proposal No. 3: Approval of the AHS Plan
Amendment Proposal."

PROXIES: VOTING AND REVOCATION

When an AHS proxy is properly executed and returned, the shares of AHS
Common Stock will be voted in accordance with the directions indicated on the
proxy, or if no directions are indicated, the shares will be voted FOR the
approval of the Merger Proposal, FOR the approval of the InSight Option Plans
Proposal and FOR approval of the AHS Plan Amendment Proposal. Any AHS
stockholder giving a proxy may revoke his or her proxy at any time before its
exercise at the AHS Special Meeting by (1) giving written notice of such
revocation, (2) signing and delivering a proxy bearing a later date, to Thomas
V. Croal, Secretary, American Health Services Corp., 4440 Von Karman, Suite
320, Newport Beach, California 92660, or (3) by attending the AHS Special
Meeting and voting in person. However, the mere presence at the AHS Special
Meeting of an AHS stockholder who has delivered a valid proxy will not of
itself revoke that proxy.

AHS STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY TO AHS IN THE ENCLOSED POSTAGE-PAID ENVELOPE,
EVEN IF THEY ARE PLANNING TO ATTEND THE AHS SPECIAL MEETING.

PROXY SOLICITATION

AHS will bear the costs of soliciting proxies from its stockholders. Proxies
may be solicited by directors, officers or employees of AHS in person, by
telephone or through other forms of communication without payment of
additional compensation to such persons. Additionally, arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of proxy solicitation materials to beneficial owners of AHS
Common Stock held of record by such custodians, nominees and fiduciaries and
for payment of reasonable expenses incurred in connection therewith. AHS may
also retain a proxy solicitor to aid in the solicitation of proxies, the costs
of which are not expected to exceed $5,000.

VOTE REQUIRED

The presence in person or by proxy of persons entitled to vote a majority of
the outstanding shares of each of the AHS Common Stock and the AHS Series B
Preferred Stock is necessary to constitute a quorum at the AHS Special Meeting
with respect to the Merger Proposal. The affirmative vote of a majority of the
outstanding shares of each of the AHS Common Stock and the AHS Series B
Preferred Stock, voting as separate classes, is required to approve the Merger
Proposal. Abstentions and broker non-votes will have the same effect as a vote
against the Merger Proposal. The presence in person or by proxy of persons
entitled to cast a majority of votes represented by the outstanding shares of
AHS Common Stock (entitled to one vote per share) and AHS Series B Preferred
Stock (entitled to 100 votes per share), voting together as one class, is
necessary to constitute a quorum at the AHS Special Meeting with respect to
the InSight Option Plans Proposal and the AHS Plan Amendment

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Proposal. The affirmative vote of a majority of votes represented by the AHS
Common Stock and AHS Series B Preferred Stock, voting together as one class,
present or represented at the AHS Special Meeting is required to approve the
InSight Option Plans Proposal and the AHS Plan Amendment Proposal. Abstentions
will have the same effect as a vote against the approval of such Proposals,
but broker non-votes will not be taken into account for purposes of
determining whether the requisite stockholder approval has been obtained.
Neither the charter documents nor the Bylaws of AHS contain any provisions
with respect to the treatment or effect of abstentions or broker non-votes.

Pursuant to agreements dated February 23, 1996, executed by the holders of
AHS Series B Preferred Stock, each such holder agreed (i) to vote in favor of
the Merger Proposal, the InSight Option Plans Proposal and the AHS Plan
Amendment Proposal at the AHS Special Meeting and to (ii) waive any rights to
dividends, liquidation preferences, voting and redemption they may have in
connection with the Merger and certain other rights.

Only holders of record of AHS Common Stock and AHS Series B Preferred Stock
at the close of business on May 7, 1996, are entitled to receive notice of,
and to vote at, the AHS Special Meeting. At that date, there were (i) 483
holders of record of 9,713,647 shares of AHS Common Stock outstanding and
entitled to vote, with each such share entitled to one vote, and (ii) eight
holders of record of 37,837.83 shares of AHS Series B Preferred Stock
outstanding and entitled to vote, with each such share entitled to 100 votes.
At May 7, 1996, the directors and executive officers of AHS, together with
their affiliates, beneficially held an aggregate of (i) 2,050,599 shares of
AHS Common Stock, exclusive of options, warrants or other rights to purchase
AHS Common Stock (representing approximately 21% of the outstanding shares of
AHS Common Stock), and (ii) 37,837.83 shares of AHS Series B Preferred Stock
(representing 100% of the outstanding shares of AHS Series B Preferred Stock).
The current directors and executive officers of AHS have indicated that they
will vote all of the shares held by them FOR the approval of the Merger
Proposal, the InSight Option Plans Proposal and AHS Plan Amendment Proposal.

OTHER MATTERS

AHS is not aware of any other business to be brought before the AHS Special
Meeting. If any matters come before the AHS Special Meeting which are not
directly referred to in this Joint Proxy Statement/Prospectus or the enclosed
proxy, including matters incident to the conduct of the AHS Special Meeting,
the proxy holders will vote the shares represented by the proxies in
accordance with the recommendations of AHS management.

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BACKGROUND OF THE MERGER

GENERAL

The descriptions in this Proxy Statement/Prospectus of the terms and
conditions of the Merger Proposal are qualified in their entirety by reference
to the copy of the Merger Agreement attached as Appendix A to this Joint Proxy
Statement/Prospectus, and to each of the other Appendices to this Joint Proxy
Statement/Prospectus.

The Merger Agreement provides for Maxum and AHS each to become a wholly-
owned subsidiary of InSight through the mergers of MXHC Acquisition with and
into Maxum and AHSC Acquisition with and into AHS, provided that all
conditions to the consummation of the Merger are satisfied or waived. Each
stockholder of Maxum and AHS (other than those stockholders who exercise their
rights to appraisal under the DGCL) will receive shares of InSight Common
Stock in exchange for their shares of Maxum Common Stock, AHS Common Stock and
AHS Series B Preferred Stock (with the number of shares received based on a
separate exchange ratio for each class and series of stock of each Company).
In addition, GE Medical will receive shares of InSight Series A Preferred
Stock immediately at the Effective Time, in exchange for its shares of Maxum
Series B Preferred Stock and AHS Series C Preferred Stock, in accordance with
the applicable exchange ratios. It is contemplated that the Merger will occur
as soon as practicable after the AHS Special Meeting and the Maxum Special
Meeting, and upon satisfaction or waiver of all of the other conditions set
forth in the Merger Agreement. The Merger is presently anticipated to occur on
or before June 30, 1996. See "The Merger."

EVENTS LEADING TO THE MERGER

Having implemented restructuring plans in recent years, each of the
Companies recognized that market conditions, leading to the original need for
restructuring, are likely to continue into the foreseeable future. For
descriptions of developments that have caused Maxum and AHS to believe that
these conditions will persist, see "Risk Factors--Possible Limitations on and
Delays in Reimbursement by Third-Party Payors," "--Contract Renewals and
Financial Stability of Customers," "--Technological Changes," "--Uncertainty
Regarding Health Care Environment," "Pending Legislation" and "--Adverse
Utilization Trends for Certain Diagnostic Imaging Procedures." The Companies
believed the existence of these market factors would continue exerting
downward pressure on revenues, thus negatively affecting profitability and
cash flow. Each Company believed that its ability to survive and grow, given
these expected market changes, would be increased if certain anticipated
benefits from the Merger were realized.

On January 24, 1995, representatives from both Companies met to explore
synergistic opportunities within certain markets in which both Companies
operated. Participants in this meeting were, for Maxum, Glenn P. Cato
(President and Chief Executive Officer), Michael A. Boylan and Robert N.
LaDouceur (each an Executive Vice President) and Anthony J. LeVecchio (a
Director). AHS representatives at the meeting were E. Larry Atkins (President,
Chief Executive Officer and Director), Thomas V. Croal (Vice President, Chief
Financial Officer and Director), Deborah M. MacFarlane (Vice President,
Marketing) and Frank E. Egger (a Director who has subsequently been elected
Chairman). As a result of this meeting, representatives of Maxum and AHS
recognized that a merger or other business combination was also a strategic
alternative worthy of consideration. This initial meeting led to a series of
meetings with the same participants on February 23 and 24, 1995, March 9 and
10, 1995 and March 20, 1995 in which representatives discussed not only market
strategies, but conducted limited due diligence of each other and discussed
perspectives about market conditions. As a result of these meetings, each
Company concluded that it was compatible with the other in financial
condition, expectations of future market changes, and business philosophies.
Each Company also acknowledged that its management team possessed strengths
that would be compatible and complementary with that of the other Company. By
the March 20th meeting, Maxum and AHS were developing merger and debt
restructuring concepts for presentation to GE Medical, as the principal
creditor of both Maxum and AHS. Such presentation, together with the
presentation of a business strategy for the combined company, was made to
senior management of GE Medical at a meeting on March 23, 1995. GE Medical did
not discourage the concept, and the Maxum and AHS representatives determined
that the business combination concept should be pursued. Both sets of
representatives apprised their

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respective boards of the discussions informally. Based upon their experiences
in seeking financial accommodations from GE Medical, both Maxum and AHS
recognized that a merger or other business combination was necessary to
achieve the level of financial accommodation required to be a viable
competitor in the medical diagnostic imaging industry. Therefore, neither
Maxum nor AHS approached GE Medical separately after discussions commenced.
Based upon the highly complementary nature of the two Companies as to markets,
management, facilities, and business philosophies, and the similar need for
restructuring of debt and other liabilities by their common creditor (GE
Medical), Maxum and AHS managements both concluded that a combination would
present strategic opportunities not available from other potential acquirors
or merger partners. Therefore, no other alternative merger partners or
acquirors were contacted by Maxum or AHS after discussions commenced.

Largely during the second quarter of 1995, each Company, along with its
legal and financial advisors, commenced negotiations regarding a restructuring
of their debt and lease obligations with GE Medical and developed projections
relating to a possible business combination with each other. At a meeting on
March 29 and 30, 1995, Messrs. Cato, Boylan, LaDouceur, LeVecchio, Atkins,
Croal and Egger and Ms. MacFarlane discussed merger and financial
restructuring terms, but no agreement was reached. Furthermore, the parties
recognized that no transaction could be agreed upon without the approval of,
and restructuring of debt and other liabilities by, the GE Parties. Detailed
presentations were jointly developed by Maxum and AHS and Shattuck Hammond, in
part during two meetings among the aforenamed representatives held in the
first half of May, 1995. GE Medical, Maxum and AHS representatives met on May
22, 1995 and Maxum and AHS presented a proposed merger structure, financial
pro formas, and proposed restructuring. Negotiations continued without closure
as to the terms of the restructure, which the Companies believed was essential
to their merger, through the summer of 1995. By this time, Maxum and AHS had
reached general agreement on many of the terms of their merger, although
several material issues had not been resolved.

The Companies and GE Medical agreed upon a general outline of financial
restructuring terms acceptable to GE Medical in late September, although
several material economic and structural issues related thereto remained
unresolved. In the fourth quarter of 1995, the Companies began negotiating the
Merger Agreement and resumed their respective due diligence reviews of each
other, as a result of which the terms and conditions of a business combination
were more fully developed. The terms of the InSight Series A Preferred Stock
to be issued to GE Medical pursuant to the Merger were negotiated over an
extended period, and certain material terms remained unresolved through mid-
February of 1996. In addition, due to the uncertainty associated with Maxum's
pending securities litigation, Maxum and AHS were unwilling to enter into the
Merger Agreement until Maxum had reached an agreement related to the
settlement of this litigation.

On February 14, 1996, PFS, which had been engaged by Maxum in the second
quarter of 1995 to advise the Maxum Board of directors as to the fairness of
the Merger to Maxum's stockholders from a financial point of view, presented a
written report (but not its written opinion) to the Maxum's board of directors
during Maxum's quarterly board meeting.

On February 21, 1996, the Maxum Board and the AHS Board held their
respective meetings to approve all of the proposals (except that the AHS Board
did not consider the Maxum Option Ratification Proposal and the Maxum Board
did not consider the AHS Plan Amendment Proposal), subject to approval by
their respective stockholders. On such date, PFS delivered its oral opinion to
the Maxum Board and Shattuck Hammond delivered its oral opinion to the AHS
Board.

On February 23, 1996, PFS delivered its written opinion to the Maxum Board
confirming its oral opinion and on February 22, 1996, Shattuck Hammond
delivered its written opinion to the AHS Board confirming its oral opinion.

On February 23, 1996, the InSight Board held a meeting to consider all of
the proposals, and unanimously approved such proposals, subject to appropriate
approval by stockholders.

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Settlement discussions regarding Maxum's securities litigation were renewed
in late 1995, but were protracted due to negotiations with multiple parties as
to the size of the settlement, the parties' respective contributions thereto,
and financing of Maxum's share thereof. Maxum and other interested parties
executed a Stipulation of Settlement dated as of February 23, 1996.

On February 23, 1996, agreements with the holders of AHS Series B Preferred
Stock were executed and delivered, and on February 26, 1996, the Merger
Agreement and Stock Acquisition Agreement were executed and delivered (a
condition to execution of the Merger Agreement).

MAXUM'S REASONS FOR THE MERGER AND BOARD OF DIRECTORS' RECOMMENDATION

The Maxum Board believes that the Merger is fair to and in the best
interests of Maxum and its stockholders, that the terms of the Merger
Agreement are fair to Maxum and its stockholders, and has unanimously approved
the Merger Proposal. THE MAXUM BOARD UNANIMOUSLY RECOMMENDS THAT MAXUM'S
STOCKHOLDERS VOTE IN FAVOR OF THE MERGER PROPOSAL.

At meetings held on February 14 and February 22, 1996, the Maxum Board, with
the assistance of PFS and Maxum's outside legal and other advisors, considered
the terms and structure of the Merger and the related transactions and
reviewed the legal, financial and other ramifications of the Merger and the
related transactions. All of the material factors considered by the Maxum
Board in reaching its decision to adopt the Merger Proposal are set forth
below:

1. The Maxum Board noted Maxum's future liquidity needs and that its
liquidity position would be strengthened as a result of the restructuring
of its indebtedness to its primary creditor, thereby increasing the
resources available to implement its business plan which, among other
things, involves continued expansion of operations through acquisitions.

2. The Maxum Board concluded that adverse market conditions such as
increased competition, excess equipment capacity, reimbursement declines
driven by lower Medicare rates, increasing influence of managed care
organizations, and the continuation of rapid changes to equipment
technology, would likely require future concessions from lenders or a
future restructuring. The Maxum Board observed that InSight would be a
larger company with an enhanced geographic presence and greater financial
resources. Moreover, the Maxum Board believed that the combined entity
would have a greater base of stockholders who could potentially trade on
the open market, providing for a more active, liquid trading market.
Consequently, Maxum, as a part of the combined entity, would face an
increased chance of success in the marketplace and of maximizing
stockholder return.

3. The enhanced possibility that the Merger would allow the listing of
InSight's Common Stock on a stock exchange or the Nasdaq Stock Market.

4. The Maxum Board determined that the businesses of each of Maxum and
AHS are compatible. Consequently, the Maxum Board concluded that Maxum, as
part of InSight, would be better positioned to withstand adverse market
conditions through the realization of cost savings expected through
elimination of redundant overhead and operating expenses.This conclusion
was based on projections jointly prepared by management of Maxum and AHS.
The projections reflected a total overhead and operations expense savings
from combining the Maxum and AHS infrastructures ranging from $1.0 to $2.0
million. The Maxum Board did not prepare a separate analysis of such
savings.

5. The Maxum Board concluded that the Merger would enhance Maxum's
ability to compete more effectively and that the Merger presented the most
viable alternative for achieving a competitive position in the industry and
penetrating the managed care market. In Maxum's mobile MRI business, it is
difficult to compete effectively in the managed care market in some
geographic areas. This difficulty is due to Maxum's services in these areas
being limited to MRI (rather than having a broader range of diagnostic
imaging capabilities) and to Maxum having fewer facilities, and therefore,
a more limited presence, in such areas. The Maxum Board concluded that by
combining Maxum's mobile MRI business with the operations of AHS, which are
primarily fixed sites, InSight would have a broader geographic presence and
would offer a

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greater imaging network than that of either Maxum or AHS individually. The
Maxum Board believes that this presence and network are significant factors
in competing for managed care contracts.

6. The Maxum Board, with the assistance of PFS and analyses prepared by
PFS, reviewed the financial condition, results of operations and prospects
of each of Maxum and AHS, both separately and in relation to the value of
the consideration to be received by the stockholders of each Company in the
Merger. The Maxum Board placed special emphasis and relied on the opinion
of PFS to the effect that, as of the date of such opinion and based upon
and subject to certain matters stated therein, the consideration to be
received by the holders of Maxum Common Stock pursuant to the Merger was
fair, from a financial point of view, to the holders of Maxum Common Stock.
The Maxum Board considered as a whole the various financial and comparative
analyses relating to each of AHS and Maxum both on an historical and
prospective basis and as separate and combined entities, as set forth in
PFS' presentation to the Maxum Board, and believed that such analyses,
taken as a whole, supported a conclusion that the Maxum Common Exchange
Ratio was fair, from a financial point of view, to the Maxum stockholders.
See "--Opinion of PFS." Such conclusion was a key factor in the Maxum
Board's decision to recommend approval of the Merger.

7. The terms of the Merger Agreement and the Merger generally, including
the amount and form of consideration to be received, were reviewed with the
assistance of Maxum's counsel and other advisors, and, taken as a whole,
were considered equitable to Maxum and contained relatively few impediments
to closing the Merger. See "The Merger--Terms of the Merger Agreement."

8. The structure of the Merger permitting the holders of Maxum Common
Stock to exchange their shares for InSight Common Stock on a tax-free
basis. See "--Federal Income Tax Consequences." Business combination
transactions in which there is a material cash component as part of the
consideration to be received by stockholders, as opposed to an exchange of
shares as in the Merger transaction, may result in a taxable event to such
shareholders upon consummation of such transaction.

In light of the factors enumerated above, the Maxum Board concluded that the
Merger was in the best interests of Maxum and its stockholders. The Maxum
Board also concluded that the Merger Proposal was fair to the stockholders of
Maxum in light of the factor numbered six above. Due to the variety of factors
considered, the Maxum Board did not find it practical to and did not assign
any particular weight to any of the foregoing factors. The Maxum Board
identified one negative factor relating to the Merger. AHS, as well as Maxum,
had a highly leveraged capital structure and a history of operating losses.
See "Risk Factors--History of Losses; Uncertain Profitability Prospects."
However, the Maxum Board concluded that the benefits associated with the
Merger outlined above far outweighed this factor. (All eight of the numbered
factors listed above were believed to support recommending approval of the
Merger Proposal to the stockholders of Maxum.)

OPINION OF PFS

PFS was engaged by Maxum to render an opinion as to the fairness from a
financial point of view, of the consideration to be received by the current
stockholders of Maxum, pursuant to the Merger. No limitations were placed on
PFS by the Maxum Board or management of Maxum with respect to the
investigation made or the procedures followed by PFS in preparing its fairness
opinion.

PFS provides retail and institutional brokerage, investment banking and
underwriting services. As part of its investment banking business, PFS
regularly issues fairness opinions and is continually engaged in the valuation
of companies and their securities in connection with business reorganizations,
private placements, negotiated underwritings, mergers and acquisitions, and
valuations for estate, corporate and other purposes. In the ordinary course of
business, PFS and its affiliates at any time may hold long or short positions,
and may trade or otherwise effect transactions as principal or for the
accounts of customers, in debt or equity securities or options on securities
of Maxum.

On February 14, 1996, PFS made an oral presentation to the Maxum Board to
the effect that the consideration to be received in the Merger is fair from a
financial point of view to the current stockholders of Maxum. On February 23,
1996, PFS updated its oral presentation, and subsequently delivered its
written opinion

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to the Maxum Board to the effect that the consideration to be received in the
Merger is fair, from a financial point of view, to the current stockholders of
Maxum. THE FULL TEXT OF THE WRITTEN OPINION OF PFS, DATED FEBRUARY 23, 1996,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, LIMITATIONS, IF
ANY, ON AND THE SCOPE OF THE REVIEW UNDERTAKEN AND PROCEDURES FOLLOWED BY PFS
IN RENDERING ITS OPINION IS ATTACHED AS APPENDIX B TO THIS JOINT PROXY
STATEMENT/PROSPECTUS, AND IS INCORPORATED HEREIN BY REFERENCE. MAXUM'S
STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PFS OPINION IN ITS ENTIRETY. THE
PFS OPINION IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW,
OF THE CONSIDERATION TO BE RECEIVED IN THE MERGER AND WAS PROVIDED FOR THE USE
OF THE MAXUM BOARD IN ITS EVALUATION OF THE MERGER. THE PFS OPINION DOES NOT
ADDRESS ANY OTHER ASPECT OF THE MERGER OR ANY RELATED TRANSACTION AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY MAXUM STOCKHOLDER AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE AT THE MAXUM SPECIAL MEETING. THE SUMMARY OF THE
OPINION OF PFS SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.

In connection with its opinion, PFS (i) reviewed the Merger Agreement, the
Stock Acquisition Agreement and certain related agreements, (ii) reviewed
internal financial projections of Maxum prepared by the management of Maxum
for the six calendar years ended December 31, 2000, (iii) reviewed internal
financial projections of InSight prepared by the management of Maxum and AHS
including statements of operations for the first two years of operations, and
balance sheet as of June 30, 1996, (iv) reviewed the historical stock prices
and trading volume of Maxum Common Stock, (v) reviewed the financial terms, to
the extent publicly available, of certain comparable transactions, which are
similar in certain respects to the Merger, (vi) discussed with the management
of Maxum the operations of and business prospects for Maxum assuming Maxum did
not consummate the Merger, (vii) discussed with managements of Maxum and AHS
the operations of and business prospects for InSight and the anticipated
financial results of the Merger, including the effect of the Supplemental
Service Fee to be due to GE Medical upon the future anticipated financial
results of InSight, (viii) compared the historical and projected financial
results of Maxum to comparable publicly traded companies which are similar in
certain respects to Maxum, (ix) compared the pro forma historical and
projected financial results of InSight to comparable publicly traded companies
which are similar in certain respects to InSight, and (x) considered such
other information, financial studies and analyses, and financial, economic and
market criteria as PFS deemed relevant.

The financial projections of Maxum referenced above were projections of
Maxum's current business base (the "Maxum Base Case"). The Maxum Base Case
assumed (i) no acquisitions would be completed in the future; (ii) benefits
associated with the GE Medical Financial Transactions would not be realized;
and (iii) none of the cost savings expected to be realized from the Merger
would be realized in the future. AHS also provided base case financial
projections (the "AHS Base Case") with assumptions consistent with those
reflected in the Maxum Base Case. In addition, the Maxum Base Case and the AHS
Base Case utilized conservative assumptions as to revenue growth due to the
capital and liquidity constraints facing each of the Companies without the
benefit of debt restructuring such as that contemplated by the GE Medical
Financial Transactions. See "Failure of Merger to Occur." For this reason,
annual revenues under the Maxum Base Case were projected to decline, in
contrast to increases in Maxum's historical revenues from 1993 through 1995.

The financial projections of InSight referenced above incorporated the Maxum
Base Case and the AHS Base Case financial projections and included the
following assumptions: (i) benefits associated with the GE Medical Financial
Transactions would be realized; (ii) cost savings expected to be realized from
the Merger would be realized; and (iii) completion of possible acquisitions
with mutually agreed upon parameters during the first two years of InSight's
operations. As a result of the incorporation of the foregoing, and in
particular the completion of possible acquisitions referenced in clause (iii)
above, InSight's projected revenues, operating income and earnings for 1996
and 1997 were substantially greater than those that would be derived solely
from combining the Maxum Base Case and the AHS Base Case. In rendering its
opinion, PFS placed particular emphasis on the benefits and cost savings and
acquisition strategy underlying the financial projections for InSight.

In rendering its opinion, PFS relied upon and assumed, without independent
verification, the accuracy, completeness and fairness of all of the financial
and other information that was reviewed by PFS from public

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sources, or provided to PFS by either Maxum or AHS or any of their
representatives. PFS also relied, without independent investigation, upon the
estimates of the managements of Maxum and AHS of the operating synergies
achievable as a result of the Merger. With respect to the financial
projections supplied to PFS for Maxum, AHS and InSight, PFS assumed that all
such information has been reasonably derived on bases reflecting the best
currently available estimates and judgments of Maxum's management as to the
future operating and financial performance of Maxum, AHS's management as to
the future operating and financial performance of AHS, and the management of
Maxum and AHS as to the future operating and financial performance of InSight,
including the effect of the Supplemental Service Fee. In addition, PFS did not
make an independent evaluation or appraisal of the assets of Maxum, AHS or
InSight. PFS assumed that the Merger will be, in all respects, in compliance
with all laws and regulations that are applicable to Maxum, InSight or the
proposed Merger (and PFS relied as to all legal matters thereto on counsel to
Maxum).

The projections reviewed by PFS were prepared by the managements of Maxum
and AHS. Such projections were not prepared with a view towards public
disclosure. The projections were based on numerous variables and assumptions
which are inherently uncertain, including without limitation factors related
to general economic and competitive conditions. Accordingly, actual results
could vary significantly from those set forth in such projections.

Theoretical Entity Value of InSight. In deriving a value for the combination
of Maxum and AHS as InSight, PFS reviewed estimates prepared by the
managements of Maxum and AHS of the proforma financial projections regarding
the merger of Maxum and AHS as InSight. To determine the theoretical value of
InSight, PFS examined financial and trading data of certain publicly-traded
companies that PFS deemed similar in certain respects to the proposed
operations of InSight. These companies were Alliance Imaging, Inc., American
Health Services Corp., Coram Healthcare Corporation, Diagnostic Health
Services, Inc., HealthCare Imaging Services, Inc., Health Images, Inc., Maxum
Health Corp., Medical Imaging Centers of America, Inc., NMR of America, Inc.,
SMT Health Services, Inc. and U.S. Diagnostics Labs, Inc. PFS considered
Health Images, Inc. to be the most comparable company to the proposed InSight
due to similarities in the nature and size of its operations to InSight, and
its recent acquisition of MedAlliance Inc.'s imaging center operations in
April 1995.

PFS also relied upon estimates provided by the management of Maxum and AHS
for the number of InSight common shares to be outstanding immediately
following the Merger in order to calculate a per share theoretical value of
InSight. The number provided to PFS, as of the date of its oral presentation
to the Maxum Board, was 5,200,000 common and common equivalent shares
outstanding.

PFS then examined certain financial ratios of the comparable companies,
which included price to latest 12 months' earnings, price to projected current
year earnings, price to projected next year earnings, enterprise value to
latest 12 months' earnings before interest and taxes ("EBIT"), and enterprise
value to latest 12 months' earnings before interest, taxes, depreciation and
amortization ("EBITDA"). PFS then applied the ratios of Health Images Inc.,
and the full sample's mean, median and stripped mean multiples to the
corresponding pro forma dollar amounts of InSight. (The stripped mean removes
the minimum and maximum values and any statistical outliers from the full
sample of comparable companies' ratios before deriving the average, or mean. A
statistical outlier is defined as any value more than two standard deviations
above or below the sample's mean). PFS believes that using the stripped mean
of the full sample of comparable companies provides the most accurate
valuation multiple because it eliminates statistical outliers that are
captured in the mean and the median values. These statistical outliers can
significantly distort the mean and median measures, potentially resulting in
misleading values.

PFS then applied discounts ranging from 10% to 30% to give effect to the
"going public discount" for InSight and the uncertainty involved in the future
operations of a recently combined entity. In applying these discounts, PFS
believed that, while both Maxum and AHS are public, their stocks are
relatively illiquid due to very light trading.

The price to projected next year earnings ratio of comparable companies was
applied to InSight's next year projected earnings. Utilizing the most
comparable company to InSight and applying the aforementioned discounts
yielded a range of values of $21.7 million ($4.17 per share) to $27.9 million
($5.37 per share).

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Assuming a 30% discount, the full sample of comparable companies' stripped
mean was $23.1 million ($4.44 per share), the mean was $42.7 million ($8.21
per share), and the median was $26.6 million ($5.11 per share).

The price to projected current year earnings ratio of comparable companies
was applied to InSight's next year projected earnings. Utilizing the most
comparable company to InSight and applying the aforementioned discounts
yielded a range of values of $25.5 million ($4.90 per share) to $32.8 million
($6.31 per share). Assuming a 30% discount, the full sample of comparable
companies' stripped mean was $27.4 million ($5.27 per share). The mean was
$27.4 million ($5.27 per share), and the median was $23.4 million ($4.51 per
share).

The price to latest twelve months' earnings ratio of comparable companies
was applied to InSight's next year projected earnings. Utilizing the most
comparable company to InSight and applying the aforementioned discounts
yielded a range of values of $50.8 million ($9.77 per share) to $65.3 million
($12.56 per share). Assuming a 30% discount, the full sample of comparable
companies' stripped mean was $30.3 million ($5.83 per share), the mean was
$30.3 million ($5.83 per share), and the median was $21.8 million ($4.20 per
share).

The ratio of enterprise value to latest twelve months' EBIT of comparable
companies was applied to InSight's next year projected EBIT. (Enterprise value
is defined as market capitalization plus long-term debt, net of current
portions, less cash and cash equivalents.) Utilizing Health Images, Inc. and
applying the aforementioned discounts yielded a range of values of
approximately $43.5 million ($8.37 per share) to $56.0 million ($10.77 per
share). Assuming a 30% discount, the full sample of the stripped mean of
comparable companies utilized by PFS was $48.8 million ($9.38 per share), the
mean was $23.5 million ($4.52 per share), and the median was $15.2 million
($2.92 per share).

The ratio of enterprise value to latest twelve months' EBITDA of comparable
companies was applied to InSight's next year projected EBITDA. Utilizing
Health Images, Inc. and applying the aforementioned discounts yielded a range
of values of approximately $41.3 million ($7.94 per share) to $53.1 million
($10.21 per share). Assuming a 30% discount, the full sample of the stripped
mean of comparable companies utilized by PFS was $36.2 million ($6.96 per
share), the mean was $20.5 million ($3.93 per share), and the median was $19.9
million ($3.83 per share).

To determine the theoretical entity value of InSight, PFS used the stripped
means of the above-detailed methods and assumed a 30% discount. Accordingly,
PFS determined InSight's theoretical entity value to be in the range of
approximately $23.1 million to $48.8 million, or $4.44 to $9.38 per share,
with the average of the preceding methods being approximately $33.2 million,
or $6.38 per share. In establishing the theoretical entity value of InSight,
PFS made no representation or guarantee as to the market price of InSight
Common Stock, and InSight Common Stock may trade at prices below this range of
values following the Effective Time.

Stock Market Analysis. PFS examined financial and trading data of certain
publicly traded companies that PFS deemed similar in certain respects to the
operations of Maxum. These companies were Alliance Imaging, Inc., American
Health Services Corp., Coram Healthcare Corporation, Diagnostic Health
Services, Inc., HealthCare Imaging Services, Inc., Health Images, Inc.,
Medical Imaging Centers of America, Inc., NMR of America, Inc., SMT Health
Services, Inc. and U.S. Diagnostics Labs, Inc.

PFS then examined certain financial ratios of these companies which included
price to latest 12 months' earnings, price to projected current year earnings,
price to projected next year earnings, enterprise value to latest 12 months'
EBIT, enterprise value to latest 12 months' EBITDA, and market capitalization
to book value. PFS then applied these ratios to the appropriate financial
number of Maxum.

The market value to book value ratio and each of the ratios involving
earnings, EBIT, and EBITDA, when applied to Maxum, resulted in a negative
value due to Maxum's stockholder deficit, and its historical and projected
losses. PFS noted that these negative values were less than Maxum's 26.1%
share of the theoretical entity value of InSight established above.

Merger Analysis. PFS examined the financial data of certain recent mergers
and acquisitions deemed similar in certain respects to the Merger of Maxum and
AHS. These transactions, involving diagnostic imaging providers, medical labs
and medical equipment rental companies, took place between July 1, 1994 and

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February 6 , 1996. PFS then determined the ratio of total consideration paid
in these transactions to the target's book value, latest 12 months' earnings,
EBIT, and EBITDA and applied these ratios to the appropriate financial numbers
of Maxum.

In each case, the particular ratio when applied to Maxum yielded a negative
value because of Maxum's recent losses and negative book value. PFS noted that
these negative values were less than Maxum's 26.1% share of InSight's
theoretical entity value as established above.

Net Present Value Analysis. In examining the alternative of continuing
operation of Maxum, PFS reviewed management's estimates of revenues, costs and
capital expenditures, assuming continuous operation of Maxum through December
31, 2000, when the assets were assumed sold to a third-party buyer. For
purposes of determining the ultimate disposition price for the assets at
December 31, 2000, PFS estimated such amount based upon: projected 1996
through 2000 discounted operating cash flows (net income adjusted for
depreciation and amortization, proceeds from sale of assets, capital
contributions to partnerships and excess distributions, capital expenditures,
and acquisitions); less any net working capital deficit (as calculated
relative to the current ratio of comparable public companies); less long-term
debt, net of current portions; plus a range of multiples of two to six times a
"terminal value" (the year 2000's discounted operated cash flow). The
resulting streams of cash were discounted to present value using a discount
rate of 15%. This benchmark was selected as consistent with the minimum return
an unaffiliated third party investor would seek in the current financial
environment. Based on these calculations, PFS derived the estimated net
present value of Maxum to be negative. PFS noted that this negative value was
less than Maxum's 26.1% share of InSight's theoretical entity value as
established above.

Liquidation Analysis. In examining the alternative of liquidating Maxum, the
sale for cash of Maxum's assets and the liquidation of the Company was assumed
to take place on December 31, 1995. PFS reviewed management's estimates of
liquidation values which were based upon (i) the probable prices a third-party
would pay for Maxum's assets, which consist primarily of magnetic resonance
imaging (MRI) equipment and mobile units housing said equipment and (ii)
management's estimates of Maxum's net working capital less liabilities and the
value of its other assets, as of such date. The resulting value was reduced by
the estimated cost of effecting the sale and liquidation, management's
estimate of the cost to settle pending lawsuits, and management's estimate of
severance and "wind-down" costs in the event the Company were to cease
operations. Based on these calculations and assumptions, the net worth of
Maxum was negative. PFS noted that this value was less than Maxum's 26.1%
share of InSight's theoretical entity value as established above.

Stock Trade Analysis. PFS examined recent trading activity as to price and
volume of Maxum Common Stock up to and including February 9, 1996. PFS noted
that for the one-week, 30-day, 60-day, 90-day, 180-day and 12-month trading
periods prior to this date, Maxum Common Stock had an average market
capitalization of approximately $2.1 million ($0.905 per share), $2.0 million
($0.897 per share), $2.4 million ($1.051 per share), $2.0 million ($0.873 per
share), and $2.1 million ($0.904 per share) for these periods, respectively,
assuming 2,273,555 shares of Maxum Common Stock outstanding. PFS noted that
the greatest of these prices was less than Maxum's share of InSight's
theoretical entity value as established above. All such prices discussed
herein were based on the closing bid quotations of Maxum Common Stock as
quoted on the OTC Bulletin Board.

Conclusion. The preparation of fairness opinions involves various
determinations as to the most appropriate and relevant quantitative and
qualitative methods of financial analyses and the application of those methods
to the particular circumstances. Accordingly, the preparation of a fairness
opinion is not necessarily susceptible to partial analysis or summary
description. As such, PFS believes that its analyses and the summary set forth
above must be considered as a whole and that selecting portions of such
analyses, without considering all factors and analyses, would create an
incomplete view of the processes underlying its fairness opinion. The fact
that any specific analysis has been referred to in the summary above is not
meant to indicate that such analysis was given greater weight than any other
analysis, unless specifically indicated.

In rendering its fairness opinions, PFS applied its judgment to the
foregoing analyses and assumptions. PFS gave less weight to the Stock Trade
Analysis because Maxum Common Stock is very thinly traded compared to other
public companies. The assumptions made and judgments applied by PFS in
rendering its opinion are not readily susceptible to description beyond that
set forth in this summary or the fairness opinion itself.

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As compensation for rendering its fairness opinion to Maxum, Maxum has
agreed to pay PFS a total fee of $85,000, $30,000 of which was paid on June
12, 1995, $25,000 of which was paid on June 20, 1995, and $30,000 of which was
paid on March 5, 1996. Maxum has also agreed to reimburse PFS for its
reasonable out-of-pocket expenses, $4,504 of which was paid on March 5, 1996,
including the fees and expenses of its legal counsel, and to indemnify PFS and
its affiliates against certain liabilities relating to its engagement.

AHS REASONS FOR THE MERGER AND BOARD OF DIRECTORS' RECOMMENDATION

The AHS Board believes that the Merger is fair to and in the best interests
of AHS and its stockholders, believes that the terms of the Merger Agreement
are fair to AHS and its stockholders, and has unanimously approved the Merger
Proposal. THE AHS BOARD UNANIMOUSLY RECOMMENDS THAT AHS STOCKHOLDERS VOTE IN
FAVOR OF THE MERGER PROPOSAL.

At a meeting held on February 21, 1996, the AHS Board, with the assistance
of Shattuck Hammond, legal counsel and other advisors, considered the terms
and structure of the Merger and the related transactions and reviewed the
legal, financial and other ramifications of the Merger and the related
transactions. In reaching its decision to enter into the Merger Agreement and
to recommend approval of the Merger Proposal, the AHS Board considered a
number of factors, all of which were deemed material but were given varying
priorities by individual directors, including the following:

1. The AHS Board's desire to reduce AHS' debt and operating lease
obligations. The AHS Board noted AHS' future liquidity needs and that the
Companies' liquidity position would allow them to further expand their
operations and better manage cash flow with reduced debt.

2. Market conditions in the diagnostic imaging industry. Pricing, managed
care and governmental regulation pressures are driving a trend toward
consolidation of diagnostic imaging companies. The AHS Board was of the
view that, in light of these market pressures, it will be difficult for
companies such as AHS and Maxum to effectively compete and realize
profitable margins on a stand-alone basis. The AHS Board believes that
consolidation is the most effective strategy to address these market
pressures.

3. The enhanced possibility that the Merger would allow the listing of
InSight Common Stock on a stock exchange or the Nasdaq Stock Market.

4. The opportunity that the Merger will provide for AHS' stockholders to
have continued equity participation in a larger, more diversified
enterprise with enhanced geographic presence and generally greater
managerial, financial and marketing resources and opportunities. The AHS
Board concluded that by combining its resources with Maxum, AHS' ability to
compete more effectively against other companies in the industry, several
of which have significantly greater resources than AHS, would be enhanced.

5. The possibility of the combined entity to realize cost savings from
combined synergies. The AHS Board was of the view that, with the pricing
pressures prevalent in the industry, a way to possibly achieve
profitability is through reduction of operating expenses, including the
consolidation of corporate offices, reduction of overlapping field
operating costs, and improved purchasing power with suppliers that could be
brought about as a result of the Merger. This conclusion was based on
projections jointly prepared by management of Maxum and AHS. The
projections reflected a total overhead and operations expense savings from
combining the Maxum and AHS infrastructures ranging from $1.0 to $2.0
million. The AHS Board did not prepare a separate analysis of such savings.

6. The terms of the Merger Agreement and the Merger generally, including
the conditions to closing, which require both Companies to significantly
restructure portions of their existing debt into equity, the structure of
the InSight Board, permitting joint involvement by representatives of AHS
and Maxum, and the strength of the proposed management of the combined
entity.

7. The presentation of Shattuck Hammond to the AHS Board on February 21,
1996, confirmed by its written opinion to the effect that the AHS Common
Exchange Ratio was fair, from a financial point of view, to the holders of
AHS Common Stock. The AHS Board considered the various financial,
comparative, pro

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forma and contribution analyses of AHS and Maxum, included in Shattuck
Hammond's presentation, and felt that such analyses, taken as a whole,
supported a conclusion that the AHS Common Exchange Ratio was fair, from a
financial point of view, to the holders of AHS Common Stock. See "Opinion
of Shattuck Hammond." Such conclusion was a key factor in the AHS Board's
decision to recommend approval of the Merger Proposal.

In view of the variety of factors considered by the AHS Board in connection
with its evaluation of the Merger, the Board did not find it practical to, and
did not quantify or otherwise assign relative weights to such factors. The AHS
Board identified two negative factors relating to the Merger. First, Maxum was
heavily involved in mobile MRI services, a business AHS had previously
determined that it should exit. However, Maxum had started to transition away
from its dependence on mobile MRI services. Second, Maxum, as well as AHS, had
a highly leveraged capital structure and a history of operating losses. See
"Risk Factors--History of Losses; Uncertain Profitability Prospects." However,
the AHS Board concluded that the benefits associated with the Merger outlined
above far outweighed these factors. All seven of the numbered factors listed
above were believed to support recommending approval of the Merger Proposal to
the stockholders of AHS.

The AHS Board concluded, in light of these factors, that the Merger Proposal
is in the best interests of AHS and its stockholders and is fair to its
stockholders. The AHS Board concluded that the Merger Proposal is fair to the
stockholders of AHS in light of the factor numbered seven above.

OPINION OF SHATTUCK HAMMOND

The AHS Board retained Shattuck Hammond to provide financial advisory and
investment banking services to AHS in connection with a merger or other
business combination between AHS and Maxum, and to provide an opinion as to
the fairness, from a financial point of view, of the consideration to be
received by stockholders of AHS in such transaction. In connection therewith,
the GE Medical Financial Transactions (as defined in "Debt Restructuring and
Issuance of Preferred Stock to GE Medical") will be consummated.

On February 21, 1996, the date on which the AHS Board approved the Merger,
Shattuck Hammond delivered to the AHS Board its oral opinion as investment
bankers, which was subsequently confirmed in a written opinion addressed to
the AHS Board, that the AHS Common Exchange Ratio is fair to the holders of
AHS Common Stock from a financial point of view. The full text of the written
opinion of Shattuck Hammond which sets forth the assumptions made, procedures
followed, matters considered, limitations on and the scope of the review by
Shattuck Hammond in rendering its opinion is attached as Appendix C to this
Joint Proxy Statement/Prospectus. The summary of the opinion of Shattuck
Hammond set forth in this Proxy Statement/Prospectus is qualified in its
entirety by the reference to the full text of such opinion. AHS stockholders
are urged to read Shattuck Hammond's opinion in its entirety. The opinion of
Shattuck Hammond did not state that any specific exchange ratio constituted
the appropriate AHS Common Exchange Ratio for the Merger and did not
constitute a recommendation as to any action the AHS Board should take in
connection with the Merger. The opinion of Shattuck Hammond is directed only
to the fairness from a financial point of view of the AHS Common Exchange
Ratio to holders of AHS Common Stock and does not constitute a recommendation
to any AHS stockholder as to how such stockholder should vote at the AHS
Special Meeting. Shattuck Hammond has expressed no opinion as to the
structure, terms or effect of any other aspect of the Merger, including,
without limitation, the tax consequences of the Merger to AHS or any
stockholder of AHS.

In connection with its written opinion, Shattuck Hammond (i) reviewed
certain publicly available business and historical financial information
relating to each of AHS and Maxum, (ii) reviewed certain financial information
and other data provided to it by AHS and Maxum that is not publicly available
relating to the business and prospects of each of AHS, Maxum and InSight,
(iii) discussed the businesses, operations and prospects of AHS, Maxum and
InSight with the respective managements of AHS and Maxum, (iv) reviewed the
Merger Agreement and the Stock Acquisition Agreement and certain related
agreements, (v) reviewed the historical market prices and trading values of
AHS Common Stock and Maxum Common Stock, (vi) reviewed

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publicly available financial and stock market data with respect to other
publicly traded companies in lines of business Shattuck Hammond believed to be
generally comparable to those of AHS and Maxum, (vii) reviewed the exchange
ratios implied by the historical stock prices of AHS Common Stock and Maxum
Common Stock, and (viii) conducted such other studies, analyses,
investigations and inquiries, and considered such other information as it
deemed relevant.

In rendering its opinion, Shattuck Hammond assumed and relied upon the
accuracy and completeness of all information supplied or otherwise made
available to it by AHS and Maxum or obtained by Shattuck Hammond from other
sources, and relied upon the assurances of AHS' and Maxum's respective
managements that they were unaware of any information or facts that would make
the information provided to Shattuck Hammond incomplete or misleading.
Shattuck Hammond did not independently verify such information, undertake an
independent appraisal of the assets or liabilities (contingent or otherwise)
of AHS or Maxum, nor was Shattuck Hammond furnished with any such appraisals.
With respect to financial forecasts furnished to Shattuck Hammond by AHS and
Maxum with regard to AHS, Maxum and InSight, Shattuck Hammond was advised by
the managements of AHS and Maxum, as the case may be, and assumed, that they
had been reasonably prepared and reflected the best currently available
estimates and judgment of the managements of AHS and Maxum, as the case may
be, as to the expected future financial performance of AHS, Maxum and InSight,
including the effect of the Supplemental Service Fee payable to GE Medical
upon the future anticipated results of InSight. Shattuck Hammond also assumed,
based upon the advice from AHS' independent public accountants and legal
counsel, that the Merger will be treated as a purchase transaction in
accordance with generally accepted accounting principles and as a tax free
reorganization for federal income tax purposes. Shattuck Hammond did not
express any opinion as to the value of the securities of InSight to be issued
to holders of AHS Common Stock upon consummation of the Merger, or the prices
at which such securities may trade at any time. Shattuck Hammond's opinion was
necessarily based upon market, economic and other conditions that existed and
could be evaluated as of the date of such opinion, and on information
available to Shattuck Hammond as of the date thereof. Shattuck Hammond has
disclaimed any undertaking or obligations to advise any person of any change
in any fact or matter affecting the opinion expressed herein which may come or
be brought to its attention after the date thereof. In arriving at its
opinion, Shattuck Hammond was not authorized to solicit, and did not solicit,
interest from any party with respect to the acquisition of AHS or any of its
assets. No other limitations were imposed upon Shattuck Hammond by AHS with
respect to the investigations to be made or procedures to be followed by it in
rendering its opinion.

The following paragraphs summarize the most significant quantitative and
qualitative analyses performed by Shattuck Hammond in arriving at its opinion
presented to the AHS Board and does not purport to be a complete description
of the analyses performed by Shattuck Hammond. The information presented below
is based upon the financial condition of AHS and Maxum as of a date or dates
shortly before the delivery of its opinion on February 22, 1996 and stock
price information through the close of the market on February 13, 1996. In the
course of performing its analyses, Shattuck Hammond noted that both AHS and
Maxum currently had negative cash flows, each had substantial amounts of debt
that were non-amortizing or back-end loaded, both Companies had negative
stockholder equity and that it had been the forbearance of the GE Parties that
allowed AHS and Maxum to continue operating. Accordingly, the valuation
methodologies utilized by Shattuck Hammond and its assessment of the fairness
of the AHS Common Exchange Ratio were more subjective than they would have
been in a more typical fairness opinion context.

Historical Financial Comparison. Shattuck Hammond conducted a historical
financial comparison of AHS and Maxum, the results of which included the
following: over the past four years, AHS revenues were flat, while Maxum
revenues increased by approximately 12%; over the past three years, AHS
earnings before interest, taxes, depreciation, amortization and equipment
leases ("EBITDAL") remained relatively stable, while Maxum EBITDAL increased
by approximately 25%; over the past three years, the AHS loss before
extraordinary items improved from (6.5%) to (3.1%) of revenues, while the
Maxum loss before extraordinary items improved from (17.3%) to (5.6%) of
revenues; as of December 31, 1995, AHS had a stockholders' deficit of ($12.1
million), while Maxum had a stockholders' deficit of ($2.5 million); and as of
December 31, 1995, AHS had $10.7 million

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of debt paying interest only and $17.5 million of back-end loaded debt, while
Maxum had $8.6 million of debt paying interest only. Shattuck Hammond's
conclusion in its opinion to the AHS Board that the AHS Common Exchange Ratio
is fair to the holders of AHS Common Stock from a financial point of view is
supported by the historical financial information reviewed by Shattuck Hammond
which indicated that over the past four years, the revenues and EBITDAL of
Maxum exceeded those of AHS; Maxum's stockholders' deficit at December 31,
1995 was lower than that of AHS; and as of December 31, 1995, the amount of
Maxum debt that was paying interest only was less than that of AHS.

Pro Forma Merger Analysis. Shattuck Hammond analyzed certain pro forma
financial information of InSight reflecting the combination of the core
businesses of AHS and Maxum, taking into account projected interest and lease
savings associated with the GE Medical Financial Transactions, anticipated
overhead savings, the Supplemental Service Fee payment and goodwill
amortization resulting from purchase accounting. Such pro forma analysis
indicated that InSight has the potential to achieve profitability in the first
full fiscal year after the Merger. Shattuck Hammond's analysis of the
financial forecasts of AHS and Maxum on a stand-alone basis indicated that
neither AHS nor Maxum would achieve profitability during the periods covered
by the forecasts. In addition, such pro forma analysis indicated the potential
for post-Merger increases in revenues, EBITDAL, EBIT and net income of InSight
arising out of the expansion of InSight's business through acquisitions and
opening of additional diagnostic imaging facilities, which Shattuck Hammond
did not believe, based on the information available to it, would be realizable
by either AHS or Maxum alone. The actual operating results or financial
position achieved by AHS, Maxum and/or InSight could vary from the projected
results, and the variations could be material. See "Risk Factors--
Uncertainties Relating to InSight's Ability to Carry Out Its Business
Strategy."

Theoretical Entity Value. In order to assess the value of the interest in
InSight to be owned by the holders of AHS Common Stock, Shattuck Hammond
created a theoretical equity valuation model which projects the potential
value of the equity of InSight. This model employs the financial projections
of InSight provided to Shattuck Hammond and an analysis of comparable
companies in the diagnostic imaging company industry. Of the comparable
diagnostic imaging companies which Shattuck Hammond analyzed, Shattuck Hammond
determined that only six were stable enough to be relevant comparables for
purposes of its analysis (U.S. Diagnostic Labs, Inc., Alliance Imaging, Inc.,
Health Images, Inc., NMR of America, Inc., Medical Resources, Inc. and Medical
Imaging Centers of America, Inc.). Shattuck Hammond then assessed these
comparable companies' market values based on three different ratio analyses:
price to earnings, total market capitalization to EBIT and total market
capitalization to revenues. The mean and median multiples determined by
Shattuck Hammond for each of these three ratio analyses were: price to
earnings ratio analysis - the mean was 10.9 and the median 11.3; total market
capitalization to EBIT ratio analysis - the mean was 10.2 and the median was
10.0; and total market capitalization to revenues ratio analysis - the mean
was 1.5 and the median was 1.3. Since the InSight financial projections
provided to Shattuck Hammond were forward-looking (or "leading") forecasts and
only historical financial information was available on the six comparable
companies, Shattuck Hammond performed two adjustments to account for the
"leading" as opposed to "trailing" differential: annualization of the most
recent quarterly results of the six comparable companies and discounting of
the multiples by 15% to calculate the range of theoretical entity values of
InSight. Based on the foregoing, Shattuck Hammond's analysis indicated that
InSight had a theoretical equity value of between $25.0 million and $50.0
million of which the interest of the holders of AHS Common Stock would be in
the range of $6.5 million to $13.0 million based on the AHS Common Exchange
Ratio. Shattuck Hammond did not express any opinion as to the value of the
securities of InSight to be issued to holders of AHS Common Stock upon
consummation of the Merger, or the prices at which such securities may trade
at any time. Shattuck Hammond established the low range of the theoretical
entity value of InSight by using the average theoretical entity value of the
above-named comparable companies calculated by using for the above-named
comparable companies the lowest price to earnings, total market capitalization
to EBIT and total market capitalization to revenues multiples; i.e., price to
earnings ratio - 6.2; total market capitalization to EBIT - 9.0; and total
market capitalization to revenues - 1.0. Shattuck Hammond established the
upper range of theoretical entity value of InSight by using the average
theoretical entity value of the above-named comparable companies calculated by
using for the above-named comparable companies the mean price to earnings,
total market capitalization to EBIT and total market capitalization to

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revenues multiples; i.e., price to earnings ratio - 10.9; total market
capitalization to EBIT - 10.2; and total market capitalization to revenues -
1.5. Shattuck Hammond contrasted the results of such analysis with the current
fully diluted equity capitalization of AHS of $5.2 million. Further, based on
the foregoing, Shattuck Hammond's analysis indicated that InSight Common Stock
had a theoretical equity value of between $4.80 and $9.60 per share.

Liquidation Analysis. Shattuck Hammond performed a liquidation analysis to
assess what value, if any, would accrue to the holders of AHS Common Stock if
AHS were liquidated. In order to gather information necessary to perform this
analysis, Shattuck Hammond (i) reviewed with the management and accountants of
AHS the probable value of AHS accounts receivable, (ii) reviewed with the
management of AHS and the used equipment asset management organization of GE
Medical the probable value of owned medical equipment of AHS and (iii)
reviewed with the management of AHS the probable value of its owned real
properties. This analysis, performed on both aggressive and conservative sets
of assumptions, focused on the collectability of AHS receivables and the
liquidation values of AHS tangible and intangible assets. Under both the
aggressive and conservative sets of assumptions, the amounts which Shattuck
Hammond calculated to be recoverable would not satisfy the obligations of AHS
to its secured creditors. Accordingly, if AHS were to be liquidated, this
analysis indicated that there would be no residual value which would accrue to
the holders of AHS Common Stock.

Analysis of the GE Medical Financial Transactions. Shattuck Hammond analyzed
the value of the financial concessions to be given by the GE Parties in
relation to the interest the GE Parties will own in InSight in order to
determine the fairness of the GE Medical Financial Transactions to the holders
of AHS Common Stock. Such analysis consisted of three parts: a liquidation
scenario analysis; an analysis of the earnings value creation to InSight as
the result of the concessions to be made by the GE Parties; and an analysis of
the relative shares of the theoretical entity value of InSight to be held by
holders of AHS Common Stock and by the GE Parties.

In its liquidation scenario analysis (see "Liquidation Analysis" above),
Shattuck Hammond determined that given the current financial condition of AHS
and its current debt and lease obligations in 1996 and beyond, there was no
reasonable financial forecast that could demonstrate AHS' ability to meet
those obligations without an event of default. Shattuck Hammond also noted
that the GE Parties have a blanket security interest in all of the AHS assets.
Based on the foregoing and the Liquidation Analysis discussed above, Shattuck
Hammond concluded that there was no residual capital value accruing to the
holders of AHS Common Stock in a liquidation, while the Merger does provide
for value.

Shattuck Hammond then calculated the net, after tax income benefit to
InSight in the first full fiscal year after the consummation of the GE Medical
Financial Transactions resulting from the forgiveness by the GE Parties of
$19.9 million of debt obligations of AHS and Maxum (AHS--$11.3 million and
Maxum--$8.6 million) and $4.6 million of operating lease concessions to be
granted by GE Medical (AHS--$3.2 million and Maxum--$1.4 million), after
taking into account the Supplemental Service Fee payment to be made to GE
Medical by InSight. Shattuck Hammond determined that such first full fiscal
year net income benefit to InSight resulting from the GE Parties' aggregate
debt and operating lease concessions to AHS and Maxum would be approximately
$1.7 million. Utilizing the range of theoretical entity values of InSight
(between $25.0 million and $50.0 million) determined pursuant to the
theoretical entity value analysis discussed above and the amount which it had
calculated to be the net income benefit to InSight as the result of the GE
Medical Financial Transactions ($1.7 million per year) together with other
relevant elements of the GE Medical Financial Transactions, Shattuck Hammond
calculated the range of values accruing to GE Medical from the issuance to it
of shares of InSight Series A Preferred Stock convertible into shares of
InSight Common Stock equal to 48% of the outstanding InSight Common Stock
(after giving effect to such conversion) at the Effective Time of the Merger
together with the value to GE Medical of the Supplemental Service Fee and the
range of values accruing to holders of AHS Common Stock as the result of the
concessions to be granted by the GE Parties in the GE Medical Financial
Transactions. Utilizing the upper range theoretical entity value of InSight of
$50.0 million, Shattuck Hammond determined the value to the GE Parties to be
approximately $27.3 million (comprised of its

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48% fully diluted interest in InSight Common Stock ($24.0 million) and the
Supplemental Service Fee ($3.3 million)). Utilizing the lower range
theoretical entity value of InSight of $25.0 million, Shattuck Hammond
determined the value to the GE Parties to be approximately $17.7 million
(comprised of its 48% fully diluted interest in InSight Common Stock ($14.4
million) and the Supplemental Service Fee ($3.3 million)). The $3.3 million
value which Shattuck Hammond utilized as the value to the GE Parties of the
Supplemental Service Fee was calculated by assuming that InSight's actual
financial performance would equal the financial projection for InSight
provided to Shattuck Hammond discounted at a rate of 15% per year (the same
annual discount rate which would be applicable if InSight were to exercise its
right to terminate its obligation to make Supplemental Service Fee payments by
making a single lump sum payment to GE Medical). With respect to the range of
values accruing to holders of AHS Common Stock as the result of the
concessions to be granted by the GE Parties, Shattuck Hammond calculated the
value accruing to AHS and Maxum common stockholders to be approximately $30.9
million based upon the upper range theoretical entity value of InSight of
$50.0 million ($5.0 million representing the value of the GE Medical warrants
to acquire 1.6 million shares of AHS Common Stock which are to be surrendered
by GE Medical and the value resulting from the $1.7 million annual net income
benefit to InSight calculated as discussed above which was multiplied by a
factor of 15), and approximately $19.5 million based upon the lower range
theoretical entity value of InSight of $25.0 million ($2.3 million
representing the value of the GE Medical warrants to acquire 1.6 million
shares of AHS Common Stock which are to be surrendered by GE Medical and the
value resulting from the approximately $1.7 million annual net income benefit
to InSight as discussed above which was multiplied by a factor of 10). The
foregoing multiplication factors of 15 and 10, respectively, were used by
Shattuck Hammond as being representative of the upper and lower ranges of the
market prices at which shares of InSight Common Stock would likely trade,
based on the upper and lower ranges of the market prices of the six comparable
diagnostic imaging companies which Shattuck Hammond analyzed. Under both the
upper and lower range theoretical entity calculations, the values accruing to
holders of AHS and Maxum common stock from the GE Parties' concessions to be
granted in the GE Medical Financial Transactions ($30.9 million and $19.5
million, respectively) exceeded the values accruing to GE Medical from the
InSight Series A Preferred Stock and the Supplemental Service Fee it would
receive ($27.3 million and $15.3 million, respectively).

Shattuck Hammond also calculated the comparative multiples of value created
for holders of AHS Common Stock and for the GE Parties as the result of the GE
Medical Financial Transactions. In order to determine the multiples of value
created for holders of AHS Common Stock, Shattuck Hammond compared the average
market capitalization of AHS Common Stock for a period of approximately 4 1/2
months ending on February 13, 1996 of $5.24 million to the value of the
InSight Common Stock which holders of AHS Common Stock would receive in the
Merger based upon the upper range of the theoretical entity valuation of
InSight, as discussed above (26% of $50.0 million or $12.95 million), and also
to the value of the InSight Common Stock which holders of AHS Common Stock
would receive in the Merger based upon the lower range of the theoretical
entity valuation of InSight (26% of $25.0 million or $6.48 million) which
yielded multiples of value created for holders of AHS Common Stock of 2.5
(upper range of theoretical entity valuation of InSight) and 1.2 (lower range
of theoretical entity valuation of InSight). To determine the multiple of
value created for the GE Parties as the result of the GE Medical Financial
Transactions, Shattuck Hammond compared the total value of the debt and lease
concessions to be granted by the GE Parties of $24.5 million less the
estimated annual value to the GE Parties of the Supplemental Service Fee of
$3.3 million (i.e., $21.2 million) and compared such amount to the value of
the InSight Common Stock which GE Medical would be entitled to receive upon
conversion at the Effective Time of its InSight Series A Preferred Stock to be
received by it in the Merger, based upon the upper range of the theoretical
entity valuation of InSight, as discussed above (48% of $50.0 million or $24.0
million), and also to the value of such InSight Common Stock based upon the
lower range of the theoretical entity valuation of InSight (48% of $25.0
million or $12.0 million) which yielded multiples of value created for the GE
Parties of 1.1 (upper range of theoretical entity valuation of InSight) and
0.6 (lower range of theoretical entity valuation of InSight). Accordingly,
under these analyses, the multiples of value to be created for holders of AHS
Common Stock as the result of the GE Medical Financial Transactions (2.5 upper
range valuation and 1.2 lower range valuation)

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exceed the multiples of value to be created for the GE Parties as the result
of such transaction (1.1 upper range valuation and 0.6 lower range valuation).

Discounted Cash Flow Analysis. Shattuck Hammond conducted a discounted cash
flow analysis to determine ranges of implied business enterprise values of AHS
and Maxum, utilizing five year projections of each of AHS and Maxum provided
to it, terminal valuation multiples of four, five and six and discount rates
of between 18% and 22%. In performing this analysis, Shattuck Hammond noted
that there are inherent limitations in five year operating result projections
for AHS and Maxum because of the negative cash flow positions of both AHS and
Maxum and both Companies' inability to meet their payment obligations.
Shattuck Hammond's discounted cash flow analysis of AHS and Maxum utilized two
different methodologies for determining terminal values of the two entities:
terminal value based on EBIT multiple and terminal value based on multiple of
revenues. The results of Shattuck Hammond's discounted cash flow analysis
based on EBIT multiple showed for AHS a range of between $0.5 million and
($7.2 million) with a mean of ($3.5 million), and for Maxum a range of ($6.6
million) to ($12.3 million) with a mean of ($9.5 million). The results of
Shattuck Hammond's discounted cash flow analysis based on multiple of revenues
showed for AHS a range of $6.1 million to ($6.3 million) with a mean of ($0.4
million), and for Maxum a range of $11.2 million to ($5.4 million) with a mean
of $2.5 million. Shattuck Hammond advised that the results of such analysis
indicating primarily negative equity valuations were inconclusive but not
inconsistent with Shattuck Hammond's opinion that the AHS Common Exchange
Ratio is fair to the holders of AHS Common Stock from a financial point of
view.

Comparative Market Capitalization Analysis. In connection with its analysis
of the relative values of AHS and Maxum based on their respective market
capitalizations, Shattuck Hammond noted six factors which indicate that an
assessment of the relative values of AHS and Maxum based solely on the market
value of equity may not be an appropriate methodology to determine the
fairness of exchange ratios: (i) the market value of "penny stocks" is often
determined (or at least heavily influenced) by the number of outstanding
shares, (ii) shares of AHS Common Stock and Maxum Common Stock have been
delisted from the Nasdaq National Market System and the American Stock
Exchange, respectively, (iii) shares of AHS Common Stock and Maxum Common
Stock are thinly traded, often several days passing with no trading, (iv) the
bid-ask spreads of AHS Common Stock and Maxum Common Stock can change the
relative values of the two Companies by as much as 50%, (v) the market prices
of AHS Common Stock and Maxum Common Stock have been extremely volatile, with
very significant swings of market capitalization within a single week even in
the absence of company or industry announcements, and (vi) the financial
conditions of both AHS and Maxum. Having noted the foregoing six factors,
Shattuck Hammond did perform analyses of the relative common share market
capitalizations of AHS and Maxum both based on common shares outstanding only
and on a fully diluted basis using the treasury share method.

Shattuck Hammond has expressed its view that it did not believe that the
disparity between the market capitalizations of AHS and Maxum at February 13,
1996 reflected a fundamental difference in the relative values of AHS and
Maxum. Shattuck Hammond noted that, in the most recent 12-month period, there
were several periods for which there was no disparity between the market
capitalizations of AHS and Maxum. In its analysis of the market capitalization
of AHS, Shattuck Hammond did not attribute any value to the AHS Series B
Preferred Stock of AHS for two reasons: such preferred stock does not trade
publicly; and if such preferred stock were converted, the market value of the
AHS Common Stock would, in Shattuck Hammond's opinion, decline substantially.

The preparation of fairness opinions involves various determinations as to
the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances. Accordingly, such opinions are not readily susceptible to
summary description. In arriving at its opinion, Shattuck Hammond did not
attribute any particular weight to any analysis or factor considered by it,
but rather made qualitative judgments as to the significance and relevance of
each analysis and factor. Shattuck Hammond, therefore, believes its analyses
must be considered as a whole and that considering any portion of such
analyses could create a misleading or incomplete view of the process
underlying its opinion. In its analyses, Shattuck Hammond considered the
following aspects of the industry in which AHS and Maxum are engaged and

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made the following assumptions with respect to industry performance, general
business and other conditions and matters, many of which are beyond the
control of AHS and Maxum: significant over-capacity; high level of
fragmentation, especially in the imaging center segment in which there are
approximately 2,000 diagnostic imaging centers; the small number
(approximately ten) of public companies with characteristics similar to those
of AHS and Maxum; consolidation of providers has already begun; downward
reimbursement pressure driven by managed care has begun to plateau; managed
care utilization and volume pressures are continuing; pressured by managed
care, health care systems are seeking to outsource diagnostic imaging
services, thus creating new opportunities for companies that can deliver the
most cost-effective unit of information to a broad base of the population;
recent niche businesses have evolved in the diagnostic imaging industry that
InSight should be capable of exploiting (such as utilization review/management
companies and network/scan brokers); and certain governmental laws and
regulations (principally prohibitions against referrals to facilities in which
the referring physicians hold an interest) have recently helped to level the
playing field for all diagnostic imaging companies. Any estimates contained in
these analyses are not necessarily indicative of actual values or predictive
of future results or values, which may be significantly more or less favorable
than as set forth therein. In addition, analyses relating to the value of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold.

Shattuck Hammond was retained by the AHS Board on the basis of its
experience as financial advisors in connection with mergers and acquisitions.
The AHS Board retained Shattuck Hammond to provide financial advisory and
investment banking services to AHS pursuant to a letter agreement dated May 3,
1995. Pursuant to that agreement, AHS agreed to pay Shattuck Hammond (i) an
advisory retainer of $50,000, (ii) a retainer of $5,000 per month payable
monthly commencing June 1, 1995 and continuing until the closing of any
transaction, (iii) a fairness opinion fee of $100,000 payable on the date of
delivery of the fairness opinion and (iv) a transaction fee of $400,000 (less
the previously paid amounts set forth in (i) and (ii) above) payable at the
Effective Time. AHS also agreed to reimburse Shattuck Hammond for expenses
including fees and expenses of its legal counsel incurred by it and to
indemnify Shattuck Hammond for certain liabilities that may arise out of the
rendering of its services or opinions.

Shattuck Hammond is a nationally recognized investment banking firm. As part
of its investment banking business, Shattuck Hammond is continually engaged in
the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of
securities, private placements and other purposes. In addition, it is
contemplated that a vice president of Shattuck Hammond will accept an
appointment to the InSight Board following the consummation of the Merger. In
March 1996, Shattuck Hammond was engaged by General Electric Company to
provide certain investment banking services.

FAILURE OF MERGER TO OCCUR

The consummation of the AHS and Maxum debt restructuring with GE Medical is
conditioned upon the approval of the Merger Proposal by the respective
stockholders of AHS and Maxum. See "The Merger--Conditions of the Merger
Agreement." Management of each of AHS and Maxum believes that its Company will
be able to meet its respective long-term debt, operating lease and other
ongoing obligations through the first quarter of 1996. Without the
consummation of the Merger and the financial accommodations contemplated to be
provided by the GE Parties sometime in the second quarter of 1996, each
Company will be unable to meet its respective financial obligations and will
require further modifications to its respective debt and lease repayment
schedules. If each Company is unable to obtain such modifications, it may face
insolvency proceedings. See "Maxum's Management's Discussion And Analysis of
Financial Condition and Results of Operation--Financial

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Condition, Liquidity and Capital Resources," "AHS Management's Discussion and
Analysis of Financial Condition and Results of Operation--Liquidity and
Capital Resources" and "Risk Factors--Liquidity and Cash Flow Pressures;
Leverage."

THE MERGER

The Merger Agreement was entered into by and among InSight, AHS, Maxum, AHSC
Acquisition and MXHC Acquisition on February 26, 1996, following approval by
the boards of directors of each party to such agreement. Pursuant to the terms
of the Merger Agreement, Maxum and AHS will each become a wholly-owned
subsidiary of InSight through the mergers of MXHC Acquisition with and into
Maxum and AHSC Acquisition with and into AHS. Descriptions of the Merger
Agreement herein are qualified in their entirety by reference to the Merger
Agreement set forth as Appendix A hereto.

CLOSING AND EFFECTIVE TIME OF THE MERGER

The Merger will become effective upon the completion of the filing of
properly executed Certificates of Merger with the Secretary of State of the
State of Delaware reflecting the respective mergers of MXHC Acquisition with
and into Maxum and AHSC Acquisition with and into AHS, which filings will be
made after satisfaction of certain conditions set forth in the Merger
Agreement. Neither of the two filings will be made unless both filings are
made. See "Conditions of the Merger Agreement" below.

CONDITIONS OF THE MERGER AGREEMENT

Conditions to the closing of the Merger Agreement include, but are not
limited to, the following:

1. Consummation of GE Medical Financial Transaction Documents: The
requisite parties shall have executed, delivered and consummated the
Restructuring Agreement and shall have consummated the Stock Acquisition
Agreement, and the transactions related thereto.

2. Registration Statement: The SEC shall have declared the Registration
Statement effective, no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the
Joint Proxy Statement/Prospectus, shall have been initiated or threatened
in writing by the SEC.

3. Stockholder Approval: The Merger Proposal shall have been approved and
adopted by (i) the affirmative vote of the holders of a majority of the
outstanding shares of each of AHS Common Stock, AHS Series B Preferred
Stock, and Maxum Common Stock, and (ii) the written consent of the sole
stockholder of each of AHSC Acquisition and MXHC Acquisition. If the
stockholders of any one or more of the Companies fail to approve the Merger
Proposal, the Merger will not be consummated.

4. Injunctions, Consents, Governmental Action: There shall be no
preliminary or permanent injunction or other order in effect that prohibits
the consummation of all or part of the Merger, nor shall there be any
consent or approval required that has not been obtained, unless the failure
to obtain such consent shall not have a material adverse effect upon the
consummation of the Merger or the surviving corporations or their
subsidiaries, taken as a whole. All state securities, blue sky and other
permits necessary to issue the InSight Common Stock and InSight Series A
Preferred Stock and consummate the Merger shall have been obtained. There
shall not have been any action taken or any statute, rule, regulation or
order executed which shall so restrict the surviving corporations or its
subsidiaries which would so materially adversely affect the economic or
business benefits of the Merger and related transactions as to render the
Merger inadvisable.

5. Limit on Cash Payments: The aggregate amount of cash required to be
paid to AHS or Maxum stockholders who validly exercise their right to
dissent shall not exceed 10% of the value of the InSight Common Stock
issuable in exchange for AHS Common Stock and Maxum Common Stock. For
purposes of valuing InSight Common Stock issuable in exchange for AHS
Common Stock and Maxum Common

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Stock, Maxum and AHS have agreed to use the sum of (a) the number of shares
of Maxum Common Stock outstanding immediately prior to the Merger
multiplied by the average closing bid quotation on the OTC Bulletin Board
for Maxum Common Stock for the last ten trading days immediately preceding
the Merger, plus (b) the number of shares of AHS Common Stock outstanding
immediately prior to the Merger multiplied by the average closing bid
quotation on the OTC Bulletin Board for AHS Common Stock for the last ten
trading days immediately preceding the Merger.

6. Option Plans Adopted and Employment Agreements Offered: InSight shall
have taken all necessary action to adopt the InSight Option Plans and shall
have offered to enter into employment agreements with each of Messrs.
Atkins, Cato, Croal, Boylan, LaDouceur and Cragin and Ms. MacFarlane as of
the Effective Time. (Such employment agreements have been executed by all
of the aforementioned persons except Mr. Cato.)

7. Performance of Obligations: Each of AHS and Maxum shall have performed
in all material respects its obligations under the Merger Agreement
required to be performed by it at or prior to the Effective Time.

8. Tax Opinions: AHS shall have received an opinion from Arent Fox
Kintner Plotkin and Kahn, its outside legal counsel, and Maxum shall have
received an opinion from Storey Armstrong Steger & Martin, P.C., its
outside legal counsel, each substantially to the effect that the Merger
will be treated for federal income tax purposes as a transaction described
in Section 351 of the Code. See "The Merger--Federal Income Tax
Consequences to Stockholders" below.

9. Performance by Holders of AHS Series B Preferred Stock: The
obligations of Maxum are subject to fulfillment of the obligations of the
record holders of the AHS Series B Preferred Stock as provided in their
respective agreements with AHS and Maxum.

TERMINATION OF THE MERGER AGREEMENT

The Merger Agreement may be terminated prior to the Effective Time upon
certain occurrences, including but not limited to the following:

1. By mutual written consent of all of InSight, AHS, Maxum, AHSC
Acquisition, and MXHC Acquisition (collectively, the "Parties," and
individually, a "Party").

2. By any Party if the Merger shall not have been consummated on or
before September 30, 1996.

3. By any Party upon the termination of the Stock Acquisition Agreement
by GE Medical, provided that such Party is not in breach of its obligations
under the Merger Agreement or the Stock Acquisition Agreement.

4. By any Party if the Board of Directors of any other Party withdraws or
adversely modifies its approval or recommendation of the Merger Proposal,
or shall have resolved to do so.

5. By any Party if there shall have been any material breach of a
material obligation of another Party under the Merger Agreement and, if
such breach is curable, such default is not remedied within ten days after
written notice is received from the other Party. The ten-day cure period
shall be extended as long as the breaching Party is making diligent
attempts to cure such default.

6. By any Party if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger, and such order, decree, ruling or other
action shall have become final and nonappealable.

7. By written notice from any Party to the others if any approval of the
stockholders of a Party required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote
at a duly held meeting of the stockholders or any adjournment thereof.

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SHARING AND REIMBURSEMENT OF EXPENSES

Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Proposal shall be paid by the party incurring such
expenses, except as otherwise provided in the Merger Agreement. The Merger
Agreement provides that the following expenses will be shared equally by AHS
and Maxum if the Merger is not consummated: (i) the filing fees in connection
with the filing of the Registration Statement with the SEC, under state blue
sky laws and with Nasdaq, and (ii) the expenses incurred in connection with
the printing and mailing of this Joint Proxy Statement/Prospectus and the
Registration Statement. If the Merger does not occur by reason of a breach of
the obligations of either AHS or Maxum under the Merger Agreement or the
failure of the stockholders of either AHS or Maxum to approve the Merger, the
party who breaches or fails to obtain stockholder approval shall reimburse the
other for its legal costs incurred in connection with the Merger.

Each of Maxum and AHS has agreed to reimburse GE Medical in an amount equal
to 40% of the legal costs incurred by GE Medical from and after July 1, 1995,
in connection with the Merger and the GE Medical Financial Transactions. See
"Business of Maxum--Certain Transactions" and "Business of AHS--Certain
Transactions."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Stock and Option Holdings of Directors and Officers. Under the Merger
Agreement, with certain exceptions set forth therein, from and after the
Effective Time, each Existing Derivative Security to purchase or receive Maxum
Common Stock or AHS Common Stock will be converted into a InSight Derivative
Security to purchase or receive the same number of shares of InSight Common
Stock as the holder of such Existing Derivative Security would have received
had he exercised his Existing Derivative Security in full immediately prior to
the Effective Time, with the exercise price per share to be proportionately
adjusted. Accordingly, the adjusted exercise price per share for each Existing
Derivative Security currently covering shares of Maxum Common Stock will be
determined by dividing the exercise price in effect for that Existing
Derivative Security immediately prior to the Effective Time of the Merger by
.598. The adjusted exercise price per share for each Existing Derivative
Security currently covering shares of AHS Common Stock will be determined by
dividing the exercise price in effect for that Existing Derivative Security
immediately prior to the Effective Time of the Merger by .100.

As of May 6, 1996, there were outstanding Existing Derivative Securities to
purchase an aggregate of 341,250 shares of Maxum Common Stock (excluding
shares subject to stockholder ratification under the Maxum Option Ratification
Proposal) and Existing Derivative Securities to purchase an aggregate of
1,215,000 shares of AHS Common Stock. As of such date, there were outstanding
Existing Derivative Securities to purchase an aggregate of 31,250 shares of
Maxum Common Stock and an aggregate of 565,000 shares of AHS Common Stock at
exercise prices in excess of the closing bid quotations on the OTC Bulletin
Board of those shares on May 6, 1996. Accordingly, a total of 75,187 shares of
InSight Common Stock issuable under the Existing Derivative Securities to be
assumed by InSight in the Merger will have adjusted exercise prices expected
to be in excess of such price per share of InSight Common Stock after the
Merger, and these InSight Derivative Securities will accordingly have value
only if the market value of the InSight Common Stock purchasable under these
InSight Derivative Securities after the Merger appreciates over the remaining
option term of each InSight Derivative Security.

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<PAGE>

The chart below indicates as to the specified individuals and groups (i) the
number of options outstanding under each of the Maxum and AHS stock option
plans which have exercise prices in excess of the market value of those shares
on May 6, 1996 and (ii) the weighted average exercise price of these out-of-
the-money options.

MAXUM

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE
OPTION HOLDER OPTION SHARES(1) PER SHARE
------------- ---------------- ----------------
<S> <C> <C>
All Executive Officers as a group (1 person)................. 5,000 $9.35
All Non-Employees other than Directors as a group (1 per-
son)........................................................ 11,250 $9.35
All Non-Employee Directors as a group (2 persons)............ 15,000 $9.35
- --------
(1) Number of option shares equals the aggregate, for each individual or group
listed, of shares subject to options to purchase Maxum Common Stock with
an exercise price in excess of $2.88 per share, which was the closing bid
quotation on the OTC Bulletin Board for Maxum Common Stock on May 6, 1996.

AHS

<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE
OPTION HOLDER OPTION SHARES(2) PER SHARE
------------- ---------------- ----------------
<S> <C> <C>
All Executive Officers as a group (3 persons)................ 475,000 $1.19
All Non-Employee Directors as a group (3 persons)............ 90,000 $1.39
</TABLE>
- --------
(2) Number of option shares equals the aggregate, for each individual or group
listed, of shares subject to options to purchase AHS Common Stock with an
exercise price in excess of $0.84 per share, which was the closing bid
quotation on the OTC Bulletin Board for AHS Common Stock on May 6, 1996.

Certain stock options held by all of the current members of the Maxum Board
and the stock options held by the four current non-employee members of the AHS
Board that would otherwise terminate in accordance with their terms 90 days
after the Effective Time due to such optionees' termination of service to AHS
or Maxum will, following the Effective Time, be converted into InSight stock
options that do not terminate due to such termination of service by the
optionee, subject, (i) in the case of an aggregate of 75,000 shares of Maxum
Common Stock issuable upon exercise of options, to the approval by the
stockholders of Maxum of the Maxum Option Ratification Proposal and (ii) in
the case of the AHS options, to the approval by the AHS stockholders of the
AHS Plan Amendment Proposal. These options currently cover (i) for Maxum, an
aggregate of 150,000 shares of Maxum Common Stock with a weighted average
exercise price of $0.41 per share (which will, pursuant to the Merger, be
converted into options to purchase an aggregate of 89,700 shares of InSight
Common Stock with a weighted average exercise price of $0.68) and (ii) for
AHS, an aggregate of 210,000 shares of AHS Common Stock, with a weighted
average exercise price of $0.86 per share (which will, pursuant to the Merger,
be converted into options to purchase an aggregate of 21,000 shares of InSight
Common Stock with a weighted average exercise price of $8.60).

Certain stock options held by three executive officers of Maxum that, at the
Effective Time, would otherwise terminate will, following the Effective Time,
without requiring the executives to exercise any or all of such options, be
converted into options to purchase InSight Common Stock. These options
currently cover an aggregate 90,000 shares of Maxum Common Stock with a
weighted average exercise price of $0.50 per share which will, pursuant to the
Merger, be converted into options to purchase an aggregate 53,820 shares of
InSight Common Stock with a weighted average exercise price of $0.84 per
share.

The vesting of certain options held by directors of Maxum will accelerate
prior to the Effective Time. In the aggregate, options to purchase 25,000
shares of Maxum Common Stock held by directors of Maxum at a weighted exercise
price of $0.75 per share (which, pursuant to the Merger, will be converted
into options to

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<PAGE>

purchase 14,950 shares of InSight Common Stock at a weighted average exercise
price of $1.25 per share) will accelerate to become immediately and fully
exercisable prior to the Effective Time. No options held by executive officers
of Maxum or by executive officers and directors of AHS will accelerate upon
the consummation of the Merger.

The following table sets forth the number of shares subject to unvested
options held by each director of Maxum which will accelerate or become subject
to acceleration in the Merger (assuming the Merger is consummated on or before
October 29, 1996, at which time such options will fully vest assuming
continued service by such director), and the number of such shares as
converted to InSight Common Stock at the Effective Time:

<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO UNVESTED WEIGHTED
OPTIONS WHICH WEIGHTED AVERAGE
ACCELERATE ON AVERAGE AS CONVERTED EXERCISE PRICE
MAXUM DIRECTOR OR CONSUMMATION EXERCISE TO INSIGHT FOLLOWING
EXECUTIVE OFFICER OF MERGER PRICE COMMON STOCK MERGER
----------------- ------------------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Leonard H. Habas........ 5,000 $0.75 2,990 $1.25
Gaines W. Hammond, Jr... 5,000 $0.75 2,990 $1.25
Anthony J. LeVecchio.... 5,000 $0.75 2,990 $1.25
Ronald G. Pantello...... 5,000 $0.75 2,990 $1.25
Andrew Tofe............. 5,000 $0.75 2,990 $1.25
TOTAL................... 25,000 $0.75 14,950 $1.25
</TABLE>

In the aggregate, as of May 6, 1996, (i) Maxum's directors and executive
officers and their affiliates beneficially owned approximately 16.2% of the
outstanding Maxum Common Stock, including 11.7% representing options, warrants
and other rights to purchase Maxum Common Stock which were exercisable within
60 days and (ii) current directors and executive officers of AHS and their
affiliates beneficially owned approximately 45.7% of the outstanding AHS
Common Stock, including approximately 91.6% of the AHS Common Stock issuable
upon conversion of AHS Series B Preferred Stock and approximately 8.7%
representing options, warrants and other rights to purchase AHS Common Stock
which were exercisable within sixty days. Upon the Effective Time, it is
anticipated that (i) the directors and executive officers of Maxum and their
affiliates will beneficially own approximately 8.7% of the outstanding shares
of InSight Common Stock, including options, warrants and other rights to
purchase approximately 6.2% of such shares and (ii) the current directors and
executive officers of AHS and their affiliates will beneficially own
approximately 23.0% of the outstanding shares of InSight Common Stock,
including shares subject to options, warrants and other rights to purchase
InSight Common Stock. All of the current directors and executive officers of
each Company have indicated that they will vote their shares of Common Stock
in the respective Company FOR approval of the Merger Proposal. For more
information, see "Operation, Management and Business of InSight After the
Merger--InSight Principal Stockholders," "AHS Principal Stockholders," and
"Maxum Principal Stockholders."

Employment, Consulting and Severance Arrangements. In anticipation of the
consummation of the Merger, certain of the executive officers and directors of
AHS and Maxum have been named as executive officers and directors of InSight.
See "Operation, Management and Business of InSight After the Merger--
Management of InSight."

In anticipation of the consummation of the Merger, each of E. Larry Atkins,
Michael A. Boylan, Glenn P. Cato, Michael D. Cragin, Thomas V. Croal, Robert
N. LaDouceur, and Deborah M. MacFarlane has executed an employment agreement
with InSight (an "InSight Employment Agreement"), each of which becomes
effective as to employment at the Effective Time. The InSight Employment
Agreements provide the same annual salary that each executive is currently
earning pursuant to his or her employment agreement with AHS or Maxum, as the
case may be, and each provides severance compensation equal to 12 months of
compensation in the event the executive's employment is terminated (i) because
of "physical or mental disability" (as defined therein), (ii) other than for
"Cause" (as defined therein) or (iii) voluntarily by the executive due to a
"Change of Control"

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<PAGE>

(as defined therein). In consideration for such severance compensation, each
executive has agreed not to solicit, entice, divert or otherwise contact any
customer or employee of InSight for any provision of services which constitute
Company Business (as defined therein) during the period that the executive is
receiving severance compensation or for a period of 12 months after the
executive's termination of employment, whichever is later. Each InSight
Employment Agreement expressly supersedes any employment agreement between the
executive and AHS or Maxum. In addition, Messrs. Atkins, Cragin and Croal and
Ms. MacFarlane have waived their rights to payments or other benefits which
would otherwise vest at the Effective Time under any agreement with AHS.

Each of Frank E. Egger and Anthony J. LeVecchio has entered into a
consulting agreement with InSight, to be effective at the Effective Time,
providing for compensation at the rate of $7,083.33 per month. Mr. Egger's
agreement provides for severance payments equal to 12 months of compensation
in the event that the agreement is terminated as a result of (i) Mr. Egger
becoming physically or mentally disabled, (ii) discretionary action of the
InSight Board or (iii) a corporate reorganization that has the effect of
diminishing or impairing Mr. Egger's consulting responsibilities. Mr.
LeVecchio's agreement may be terminated upon 30 days' notice by either party.
Mr. Egger's consulting agreement with InSight expressly supersedes his
consulting agreement with AHS dated April 6, 1995. Mr. LeVecchio's consulting
agreement with InSight expressly supersedes all of his prior consulting
arrangements with Maxum.

Issuance of Warrants to Holders of AHS Series B Preferred Stock. In
consideration for the issuance of warrants to purchase an aggregate of 50,000
shares of InSight Common Stock at the Effective Time, the holders of AHS
Series B Preferred Stock have agreed to vote in favor of the Merger Proposal,
the InSight Option Plans Proposal and the AHS Plan Amendment Proposal at the
AHS Special Meeting and have further agreed to waive any rights to dividends,
liquidation preferences, voting and redemption they may have in connection
with the Merger and certain other rights. The exercise price of such warrants
will be the fair market value of the InSight Common Stock based on its average
closing price for the 20 trading days commencing on the 11th trading day after
the Effective Time. Such warrants are exercisable at any time after the
Effective Time until five years thereafter. Subject to certain conditions, the
holders of the warrants will have certain "piggy back" registration rights to
register the shares subject to the warrants under the Securities Act. See
"Description of Capital Stock of AHS--Warrants."

InSight Director Options. At the Effective Time, each director then serving
on the InSight Board will be granted under the 1996 Directors' Stock Option
Plan an option to purchase 15,000 shares of InSight Common Stock at an
exercise price per share equal to the fair market value of InSight Common
Stock on the date of grant. Each director of InSight who commences service
after the Effective Time shall be granted an option to purchase 15,000 shares
of InSight Common Stock. These initial grants will vest monthly on a pro rata
basis over a three-year period, so long as the optionee remains on the InSight
Board, or is an employee or independent contractor of InSight or one of its
subsidiaries. However, in the agreement evidencing such stock option, the
InSight Board may modify the vesting conditions in the event of the death or
disability of the optionee. At the end of such three-year period, and annually
thereafter during the term of the 1996 Directors' Stock Option Plan, so long
as the optionee remains on the InSight Board he will be granted an option to
purchase 5,000 shares of InSight Common Stock. These additional grants vest
monthly over one year on the same terms as the initial grants. See "Proposal
No. 2: Approval of InSight Option Plans Proposal."

STOCKHOLDER APPROVALS

Maxum Stockholder Approval. The DGCL requires the affirmative vote of a
majority of the issued and outstanding shares of Maxum Common Stock for
approval of the Merger Proposal.

AHS Stockholder Approval. The affirmative vote of a majority of the issued
and outstanding shares of AHS Common Stock and a majority of the issued and
outstanding shares of AHS Series B Preferred Stock voting as separate classes
is required for approval of the Merger Proposal. The directors and officers of
AHS and their affiliates as a group hold voting power over 2,049,819 shares of
AHS Common Stock and 34,691.26 shares of

61
<PAGE>

AHS Series B Preferred Stock, representing 21.1% and 91.6%, respectively, of
the total votes entitled to be cast for approval of the Merger Proposal. All
of such shares are expected to be voted in favor of the Merger Proposal.

MXHC Acquisition Stockholder Approval. The DGCL requires the affirmative
vote of a majority of the issued and outstanding shares of common stock of
MXHC Acquisition for approval of the Merger Proposal. InSight owns all of such
shares and has voted such shares to approve the Merger Proposal.

AHSC Acquisition Stockholder Approval. The DGCL requires the affirmative
vote of a majority of the issued and outstanding shares of common stock of
AHSC Acquisition for approval of the Merger Proposal. InSight owns all of such
shares and has voted such shares to approve the Merger Proposal.

RIGHTS OF SECURITY HOLDERS

The stockholders of each of Maxum and AHS should be aware that upon receipt
of InSight Common Stock, their rights as stockholders, which are governed by
the laws of the State of Delaware and the Certificates of Incorporation and
Bylaws of their respective companies (the "Governance Documents"), will
continue to be governed by the laws of the State of Delaware, the state of
incorporation of InSight, and will be governed by InSight's Certificate and
Bylaws (the "InSight Bylaws"). At the Effective Time, the rights of the
stockholders of each of Maxum and AHS will be different, and possibly
adversely affected, due to differences between the Governance Documents and
the InSight Certificate and the InSight Bylaws. Accordingly, the stockholders
of each of the Companies should carefully review the following, which the
Companies believe addresses all material differences in the rights of the
stockholders upon the Effective Time, to understand how certain of their
rights as stockholders will be affected upon consummation of the Merger.

The following is a brief description of those differences. This description
does not purport to be a complete explanation of all of the differences
between the rights of InSight stockholders and the stockholders of each of
Maxum and AHS. Furthermore, the identification of specific differences is not
meant to indicate that other differences do not exist. The following summary
is also qualified in its entirety by reference to the DGCL, the Governance
Documents and the InSight Certificate and InSight Bylaws.

Rights of InSight Series A Preferred Stock. At the Effective Time, GE
Medical will receive shares of InSight Series A Preferred Stock representing
48% of the outstanding capital stock of InSight, on an as converted basis,
subject to certain adjustments. The stockholders of each of Maxum and AHS
should be aware that upon the receipt of InSight Common Stock, their rights
will be subject to the rights of GE Medical as the holder of InSight Series A
Preferred Stock. GE Medical will be entitled to vote as a separate class on a
number of transactions, including, but not limited to, the sale of assets, the
liquidation or dissolution of InSight, a merger of InSight, the issuance of
equity securities having a preference over or on a parity with InSight Series
A Preferred Stock, and the amendment of InSight's charter documents. See "Risk
Factors--Certain Rights of Primary Creditor" and "Operation Management and
Business of InSight after the Merger--Description of Capital Stock of
InSight."

Distributions and Redemptions. Holders of the AHS Series B Preferred Stock
have certain dividend redemption and other rights which have priority over the
rights of the holders of AHS Common Stock. Accordingly, other than the loss of
such rights of the AHS Series B Preferred Stock, the closing of the Merger
will not affect the rights of the Maxum or AHS stockholders in this regard.

Staggered Board of Directors. The DGCL permits a corporation's certificate
of incorporation or bylaws to provide for a staggered board of directors
divided into three classes. The Restated Certificates of Maxum and AHS each
provide for a staggered Board of Directors consisting of three classes with
initial terms of one year, two years and three years, respectively, with
three-year terms thereafter. The InSight Certificate also provides for a
staggered Board of Directors. In addition, the InSight Certificate provides
that a director may only be removed for cause and by the affirmative vote of
the holders of 80% of the InSight capital stock entitled to vote. These
provisions, when coupled with the provisions in the InSight Certificate and
Bylaws authorizing only the InSight Board to fill vacant directorships, will
preclude stockholders from replacing the InSight Board at one

62
<PAGE>

time and will also prevent stockholders from removing incumbent directors
without cause and simultaneously gaining control of the InSight Board by
filling the vacancies created by such removal with their nominees. The
foregoing provisions of the DGCL and the InSight Certificate may have certain
anti-takeover effects.

Stockholder Voting Requirements. Under the DGCL, directors are generally
elected by a plurality of the votes cast by the stockholders entitled to vote
at a stockholder's meeting at which a quorum is present. Under the DGCL,
unless otherwise provided by the DGCL or a Delaware corporation's certificate
of incorporation or bylaws, if a quorum exists, action on a matter is approved
by the affirmative vote of a majority of the shares represented at a meeting
and entitled to vote on the matter. Accordingly, under the DGCL, abstentions
have the same effect as votes against a matter.

Unless otherwise required by law or Maxum's Restated Certificate or Bylaws,
an action requiring Maxum stockholder approval must be approved by a majority
of the shares present in person or represented by proxy and entitled to vote
on the subject matter at a meeting at which a quorum is present. The Maxum
Restated Certificate provides for the following exceptions to the foregoing
general rule:

(1) Provisions of the Maxum Certificate relating to Maxum Preferred Stock
may not be amended, modified or waived without the consent of the holders
of at least 66 2/3% of the outstanding Series A Preferred Stock.

(2) Articles Six (directors), Seven (denying the stockholders the right
to actions by written consent), Eight (stockholder vote in special
circumstances) and Nine (alteration, amendment, repeal or adoption of the
Maxum Bylaws) may not be altered, amended, changed or repealed without the
consent of at least 80% of the shares entitled to vote in the election of
directors voting as one class.

(3) The following events require either a vote of 80% or more of the
outstanding shares of Maxum entitled to vote thereon, or a vote of two-
thirds of the Maxum Board, if any corporation, person or entity owns or
controls, directly or indirectly, 5% or more of the outstanding shares of
Maxum entitled to vote (a "Controlling Stockholder"):

(a) any merger or consolidation of Maxum or any of its subsidiaries
with or into such Controlling Stockholder;

(b) any sale, lease, exchange or other disposition of all or any
substantial part of the assets of Maxum or any of its subsidiaries to
or with such Controlling Stockholder;

(c) the issuance or delivery of any voting securities of Maxum or any
of its subsidiaries to such Controlling Stockholder in exchange for
cash, other assets or securities, or a combination thereof; or

(d) any dissolution or liquidation of Maxum.

Maxum's Governance Documents also provide that a nominee for director may be
elected only by the affirmative vote of more than 50% of Maxum's outstanding
shares entitled to vote for the election of directors.

Unless otherwise required by law or AHS' Restated Certificate or Bylaws, an
action requiring stockholder approval must be approved by a majority of the
shares present in person or represented by proxy and entitled to voted on the
subject matter at a meeting at which a quorum is present. The election of
directors, however, requires a plurality vote.

The AHS Restated Certificate and Bylaws provide for the following exceptions
to the general rule regarding stockholder voting:

(1) The AHS Bylaws may be altered, amended, repealed or adopted by the
affirmative vote of either (a) a majority of the AHS Board, or (b) at least
66 2/3% of the outstanding AHS Voting Stock (as defined below for the
purposes of this section only), unless one or more Related Persons (as
defined below for the purposes of this section only) exist, in which case
the required vote is at least 66 2/3% of the Disinterested Shares (as
defined below for the purposes of this section only).

(2) Subject to the rights of the holders of any series of preferred stock
of AHS, any director, or the entire AHS Board may be removed at any time,
with or without cause, by the affirmative vote of the holders

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<PAGE>

of a majority of AHS' outstanding Voting Stock, unless the proposal to
remove a director is made by a Related Person or a director affiliated with
a Related Person, in which case in addition to the foregoing vote, any
removal shall also require the affirmative vote of the holders of not less
than 66 2/3% of the Disinterested Shares.

(3) Certain types of business combinations involving AHS require either
(i) the affirmative vote of at least 66 2/3% of the Disinterested Shares or
(ii) the affirmative vote required by law or the AHS Restated Certificate
if the business combination is approved by a majority of the directors (the
"Continuing Directors") who (i) are not a Related Person or affiliated with
a Related Person and (ii) either (a) were a director on April 30, 1988 or
(b) became a director subsequent to such date and was recommended, elected
or nominated by a majority of the Continuing Directors.

(4) The amendment, alteration, repeal or rescission of the AHS Restated
Certificate requires the approval of a majority of the AHS Board and the
affirmative vote of the holders of a majority of the outstanding Voting
Stock of AHS; provided, however, that any such amendment, alteration,
repeal or rescission of Articles Nine (alteration, amendment, repeal or
adoption of the AHS Bylaws), Ten (directors), Eleven (denying stockholders
the right to actions by written consent), Twelve (definitions) or Thirteen
(alteration, amendment, repeal or adoption of the AHS Restated Certificate)
must be approved by (i) a majority of the Continuing Directors, or (ii) by
the affirmative vote of the holders of not less than 66 2/3% of the
outstanding Voting Stock, and if the alteration, amendment, repeal or
rescission is proposed by or on behalf of a Related Person or a director
affiliated with a Related Person, by the affirmative vote of the holders of
not less than 66 2/3% of the Disinterested Shares.

For purposes of the AHS Certificate, the following definitions shall apply:

"Voting Stock" means all outstanding shares of capital stock of AHS entitled
to vote generally in the election of directors of AHS. "Related Person" means
and includes any individual, corporation, partnership or other person or
entity, or any group of two or more of the foregoing that have agreed to act
together, which together with its Affiliates and Associates (as defined below
for the purposes of this section only), Beneficially Owns (as defined below
for the purposes of this section only), in the aggregate 15% or more of the
outstanding Voting Stock, and any Affiliate or Associate of any such
individual, corporation, partnership or other entity; provided, however, that
the term "Related Person" shall not include any individual, corporation,
partnership or other person, entity or group, or any affiliate or Association
thereof, which Beneficially Owned on December 23, 1987 15% or more of the
outstanding Voting Stock of AHS. "Disinterested Shares" means, as to any
Related Person, shares of Voting Stock Beneficially Owned by stockholders
other than such Related Person. "Affiliate" and "Associate" have the meanings
set forth in Rule 12b-2 under the Exchange Act as in effect on December 31,
1987. "Beneficially Owns" has the meaning set forth in Rule 13d-3 under the
Exchange Act as in effect on December 31, 1987.

Holders of AHS Series B Preferred Stock are entitled to vote separately as a
class under certain circumstances, including the election of two of the seven
AHS directors, and otherwise vote together with the AHS Common Stock as a
single class. Such separate voting rights will be eliminated as a result of
the Merger.

Unless otherwise required by law or by InSight's Certificate or Bylaws, an
action requiring InSight stockholder approval must be approved by a majority
of the shares present in person or represented by proxy and entitled to vote
on the subject matter at a meeting where a quorum is present. In addition, the
InSight Certificate and Bylaws provide that a nominee to be an InSight
director may be elected only by a plurality of the votes cast in the election
of that nominee.

The InSight Certificate also provides that certain provisions of the InSight
Certificate and all provisions of the InSight Bylaws may only be amended by
the affirmative vote of the holders of at least 80% of the combined voting
power of all shares of InSight entitled to vote, including the provisions
governing: (i) the number, election and terms of directors, (ii) stockholder
nomination of director candidates and the introduction of business at annual
meetings, (iii) filling newly created directorships and vacancies, (iv) the
removal of directors, (v) the calling of special meetings, (vi) the
stockholders' inability to act by written consent, (vii) the rights of the

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directors and officers of InSight with respect to indemnification under
Article 7 of the InSight Bylaws and (viii) the amendment, repeal or adoption
of, or approval of any provision inconsistent with, those provisions of the
InSight Bylaws related to (i) through (vii) above. Accordingly, these
supermajority voting provisions may have certain antitakeover effects.

Notice Procedures for Stockholder Proposals. AHS' Restated Certificate and
InSight's Bylaws establish advance notice procedures with regard to the
nomination, other than by or at the direction of the Board of Directors, of
persons for election as directors. The Maxum Governance Documents do not
establish such procedures. The AHS and InSight procedures for stockholder
nominations for the election of directors at an annual meeting must be in
writing and received by the Secretary of AHS or InSight, not less than 60 days
nor more than 90 days prior to the meeting. If less than 40 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder must be received by the Secretary not
later than the close of business on the 10th day following the day notice of
the date of the meeting was mailed or such public disclosure was made. The
notice of nomination must set forth certain information with respect to the
stockholder and each nominee for director. Although these procedures do not
give the AHS or InSight Boards any power to approve or disapprove stockholder
nominations for election of directors, they may have the effect of precluding
a nomination for election of directors, if the proper procedures are not
followed, and could discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors, even if such
solicitation might be beneficial to InSight or its stockholders. Accordingly,
these provisions may have certain antitakeover effects to which the Maxum
stockholders are not currently subject.

Reductions or Expansion of Board. The InSight Bylaws provide that (i) to
decrease the number of directors on the InSight Board, such action requires
the approval of a majority of the InSight Board and at least one director from
each class of directors, and (ii) to increase the number of directors on the
InSight Board, such action requires the approval of 80% of the entire InSight
Board and at least one director from each class of directors. Amendment of the
foregoing clause (ii) to eliminate the 80% approval provision requires the
approval of 80% of the directors.

The Maxum Restated Certificate requires that the number of directors on the
Maxum Board be fixed from time to time by a majority of the entire Maxum Board
and at least one director from each class of directors. The AHS Bylaws require
a majority vote of the directors present at a meeting to approve an action,
including changing the number of directors on the AHS Board. Accordingly,
after the closing of the Merger, it may be more difficult for the InSight
Board to increase or decrease the number of members on the InSight Board than
it was for the Maxum Board or AHS Board to increase or decrease their
membership. Consequently, the InSight Certificate provisions may have certain
antitakeover effects.

Removal of Directors. The DGCL provides that, except with respect to
corporations with classified boards of directors or cumulative voting, a
director may be removed, with or without cause, by the holders of the majority
of the shares entitled to vote at an election of directors. The Maxum Restated
Certificate and Bylaws allow for the removal of directors only for cause, by
the affirmative vote of the holders of a majority of the voting stock entitled
to elect directors. The AHS Governance Documents allow directors to be
removed, with or without cause, only by the affirmative vote of the holders of
a majority of the company's outstanding voting stock, subject to the rights of
holders of preferred stock of AHS, provided that, if a removal proposal is
made by a person who owns 15% or more of the Voting Stock of AHS, such vote
shall require approval of 66 2/3% of the Disinterested Stockholders. The
affirmative vote of holders of a majority of the AHS Series B Preferred Stock
is required to remove the directors elected by such holders. The InSight
Certificate allows directors to be removed from office only for cause and only
by the affirmative vote of the holders of 80% of the combined voting power of
the then outstanding stock entitled to vote. Accordingly, after the closing of
the Merger, the ability of InSight stockholders to remove a director of
InSight will be more restrictive than currently is the case for Maxum and AHS.

Amendments to Charter. Unless a specific section of the DGCL or a
corporation's certificate of incorporation require a greater vote, an
amendment to a Delaware corporation's certificate of incorporation generally
must be approved by a majority of the votes entitled to be cast on the
amendment. Certain provisions

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of the Maxum Restated Certificate and AHS Restated Certificate may only be
amended by the affirmative vote of the holders of more than a majority of the
outstanding shares of their respective Common Stock.

The Maxum Restated Certificate provides as follows:

(1) Provisions relating to Maxum Preferred Stock may not be amended,
modified or waived without the consent of the holders of at least 66 2/3%
of the outstanding Series A Preferred Stock; and

(2) Articles Six (the number, election and terms of directors; filling of
newly created directorships and vacancies; and removal of directors), Seven
(denying the stockholders the right to actions by written consent), Eight
(stockholder vote in special circumstances, including business
combinations, disposition of assets and dissolution or liquidation of
Maxum) and Nine (alteration, amendment, repeal or adoption of the Maxum
Bylaws) of the Maxum Restated Certificate may not be altered, amended,
changed or repealed without the consent of at least 80% of the shares
entitled to vote in the election of directors voting as one class.

The AHS Restated Certificate provides that the amendment, alteration, repeal
or rescission of the AHS Restated Certificate requires the approval of a
majority of the AHS Board and the affirmative vote of the holders of a
majority of the outstanding Voting Stock of AHS; provided, however, that any
such amendment, alteration, repeal or rescission of Articles Nine (alteration,
amendment, repeal or adoption of the AHS Bylaws), Ten (directors), Eleven
(denying stockholders the right to actions by written consent), Twelve
(definitions) or Thirteen (alteration, amendment, repeal or adoption of the
AHS Restated Certificate) must be approved by (i) a majority of the Continuing
Directors, or (ii) by the affirmative vote of the holders of not less than 66
2/3% of the outstanding Voting Stock, and, if the alteration, amendment,
repeal or rescission is proposed by or on behalf of a Related Person or a
director affiliated with a Related Person, by the affirmative vote of the
holders of not less than 66 2/3% of the Disinterested Shares.

The InSight Certificate provides that certain provisions of the InSight
Certificate and InSight Bylaws may not be amended by the vote of the
stockholders, unless approval is received from at least 80% of the combined
voting power of all shares of InSight entitled to vote in the election of
directors, plus any approval required by the terms of preferred stock then
outstanding. Such provisions include those governing: (i) the number, election
and terms of directors, (ii) stockholder nomination of director candidates and
the introduction of business at annual meetings, (iii) filling newly created
directorships and vacancies, (iv) the removal of directors, (v) the calling of
special meetings, (vi) the stockholders' inability to act by written consent,
(vii) the rights of the directors and officers of InSight with respect to
indemnification under Article 7 of the InSight Bylaws and (viii) the
amendment, repeal or adoption of, or approval of any provision inconsistent
with, those provisions of the InSight Bylaws related to (i) through (vii)
above. Accordingly, after the closing of the Merger, it may be more difficult
for the stockholders of InSight to amend certain sections of the InSight
Certificate than currently is the case for stockholders of Maxum and AHS. This
could be deemed a benefit or detriment to such stockholders depending upon a
stockholder's position with respect to a particular issue.

Special Meetings of Stockholders. Special meetings of the stockholders of a
Delaware corporation may be called by the board of directors or by the persons
authorized in the corporation's certificate of incorporation or bylaws. The
Maxum Bylaws provide that special meetings of the stockholders may be called
by the Maxum Board or President. The AHS Bylaws provide that special meetings
of the stockholders of the corporation may be called by the Chairman of the
Board, President, or the AHS Board or its Executive Committee, or on written
request of the holders of at least 20% of the shares outstanding and entitled
to vote. The InSight Bylaws provide that a special meeting shall be called at
the written request of stockholders holding 10% of the voting power of all
InSight Common Stock, and may be called by the Chairman of the Board, the
Board of Directors or the President. Accordingly, each of the stockholders of
AHS and Maxum will be subject to a different standard as stockholders of
InSight with respect to the calling of special meetings of stockholders after
the Merger.

GOVERNMENTAL AND REGULATORY APPROVALS

At any time before or after the Effective Time, the Federal Trade Commission
or the Antitrust Division of the United States Department of Justice or any
state could take action under the federal or state antitrust laws to

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seek to enjoin the consummation of the Merger. Private parties may also seek
to take legal action under the antitrust laws. Based on information available
to them, Maxum and AHS believe that the Merger can be effected in compliance
with federal and state antitrust laws. However, there can be no assurance that
a challenge to the consummation of the Merger on antitrust grounds will not be
made or that, if such a challenge were made, that AHS and Maxum would prevail.
InSight, Maxum and AHS are aware of no governmental or regulatory approvals
required for the consummation of the Merger, other than compliance with
federal and applicable state securities and corporate laws, and the required
transfer of or amendment to certain of AHS' and Maxum's licenses and permits.

FEDERAL INCOME TAX CONSIDERATIONS

The following summary is a general discussion of certain expected federal
income tax consequences of the Merger. This summary is based upon the Code,
regulations and rulings now in effect or proposed thereunder, current
administrative rulings and practice and judicial authority, all of which are
subject to change. Any such change, which may or may not be retroactive, could
alter the tax consequences to stockholders of AHS and Maxum set forth herein.
While this summary, in the opinions of Storey Armstrong Steger & Martin, P.C.,
and Arent Fox Kintner Plotkin & Kahn, addresses all material federal income
tax consequences generally applicable to such stockholders, this summary does
not discuss all aspects of federal income taxation that may be relevant to a
particular investor (including, but not limited to, GE Medical) in light of
personal circumstances or to certain types of investors subject to special
treatment under the federal income tax laws (for example, life insurance
companies, tax-exempt organizations, foreign investors, dealers in securities
and taxpayers subject to the alternative minimum tax) and does not discuss any
aspect of state, local or foreign tax laws.

Consummation of the Merger is subject to the condition that Maxum shall have
received an opinion of Storey Armstrong Steger & Martin, P.C., its outside
counsel, dated as of the Effective Time, and that AHS shall have received an
opinion of Arent Fox Kintner Plotkin & Kahn, its outside counsel, dated as of
the Effective Time. Such opinions will state that, based on the information
set forth in the Merger Agreement, the Restructuring Agreement and the Stock
Acquisition Agreement, as well as the representations set forth in such
opinions, and subject to the facts, limitations and assumptions set forth in
such opinions, (i) the Merger will be treated, for federal income tax
purposes, as a transaction described in Code Section 351, and (ii) the tax
consequences to the stockholders of AHS and the stockholders of Maxum will be
as follows: (a) a stockholder of AHS or Maxum will not recognize gain or loss
on the conversion of his shares of stock of AHS or of Maxum into shares of
stock in InSight; (b) a stockholder of AHS or Maxum who receives cash in lieu
of fractional shares will recognize gain equal to the lesser of (1) the amount
of cash received or (2) the excess of the sum of the value of the InSight
shares received and the cash received over the tax basis for his AHS or Maxum
shares surrendered (assuming such stockholder held his shares of AHS or Maxum
stock as a capital asset, such gain would be capital gain); (c) a stockholder
of AHS or Maxum who receives cash upon the exercise of dissenters' appraisal
rights will recognize gain or loss equal to the difference between the amount
of cash received and such stockholder's tax basis for his shares of AHS or
Maxum stock (if the shares of AHS or Maxum stock were a capital asset in the
hands of such a dissenting stockholder, the gain or loss recognized would be a
capital gain or loss); (d) the aggregate basis of shares of InSight stock
received in the Merger by a stockholder of AHS or stockholder of Maxum will be
the same as such stockholder's aggregate tax basis for his shares of AHS or
Maxum stock surrendered in exchange therefor decreased by the amount of any
cash received and increased by any gain recognized; and (e) if a stockholder
of AHS or Maxum held his shares of AHS or Maxum stock as a capital asset
immediately prior to the Merger, his holding period for the shares of InSight
Common Stock received in the Merger will include the period during which he
held the shares of AHS or Maxum stock. InSight, AHS and Maxum do not intend to
apply for a ruling from the IRS with respect to the federal income tax
consequences of the Merger.

If the Merger constitutes a Code Section 351 transaction, the following
would be the material federal income tax consequences of the Merger to the
stockholders of AHS and Maxum: (i) no gain or loss will be recognized by
stockholders of AHS and Maxum upon their receipt of InSight Common Stock in
exchange for their AHS Common Stock and Maxum Common Stock, except that
stockholders who receive cash proceeds for fractional interests in InSight
Common Stock will recognize gain or loss equal to the difference between such
proceeds

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and the tax basis allocated to their fractional share interests, and such gain
or loss will constitute capital gain or loss if their AHS Common Stock or
Maxum Common Stock is held as a capital asset at the Effective Time and will
be long-term capital gain or loss if such shares had been held for more than
one year at the Effective Time, (ii) the tax basis of the shares of InSight
Common Stock (including fractional share interests) received by the
stockholders of AHS or Maxum will be the same as the tax basis of their AHS
Common Stock or Maxum Common Stock, and (iii) the holding period for federal
income tax purposes of the InSight Common Stock in the hands of the
stockholders of AHS and Maxum will include the holding period of their AHS
Common Stock or Maxum Common Stock, provided such AHS Common Stock or Maxum
Common Stock is held as a capital asset at the Effective Time.

Holders of AHS Common Stock or Maxum Common Stock who receive cash upon the
exercise of dissenter's rights generally will recognize gain or loss measured
by the difference between the amount of cash received and their adjusted tax
basis in such shares. Such gain or loss generally will be capital gain or
loss, provided such shares are held as capital assets at the Effective Time,
and will be long-term capital gain or loss if such shares had been held for
more than one year at the Effective Time.

GE Medical will provide certain services to InSight following the Merger
pursuant to the AHS Master Agreement and the MHC Master Agreement. In
connection therewith, InSight will agree to make payments of the Supplemental
Service Fee to GE Medical in amounts equal to a portion or all of the
discounts currently provided by GE Medical from its list prices for these
services; such payments could, in certain cases, be in amounts constituting a
premium over such list prices. See "Debt Restructuring and Issuance of
Preferred Stock to GE Medical--Master Service Agreement Addendum." Such
payments to GE Medical under the Master Service Agreement Addendum may be
characterized as non-deductible dividends for purposes of calculating
InSight's federal income taxes, which would substantially increase the amount
of tax that InSight is required to pay. While there is no specific authority,
it is also possible that payments made by InSight to GE Medical of the
Supplemental Service Fee, as well as the termination payment with respect
thereto, will be deemed to create a deemed dividend in an indeterminate amount
to all InSight stockholders at the time of such payments. Tax counsel to AHS
and Maxum believe that it is more likely than not that such a deemed dividend
will not result. There can be no assurance that the IRS and the courts will
agree.

Both Maxum and AHS have substantial pre-Merger net operating loss carry
forwards ("NOLs"). In general, NOLs represent tax attributes that can be
carried forward to offset future taxable income of a taxpayer. After the
Effective Time, however, neither Maxum nor AHS is expected to have any
meaningful NOLs available to offset future income of InSight for two reasons.
First, their respective NOLs will be largely utilized to offset the
cancellation of debt income created when Maxum and AHS issue to GE Medical the
Maxum Series B Preferred Stock and AHS Series C Preferred Stock. Second,
whatever NOLs remain thereafter will be restricted under Code Section 382. As
a result, Maxum and AHS do not believe that the NOLs will provide material
benefits to InSight after the Merger. The amount, if any, of NOLs available
for annual use by AHS, Maxum or InSight cannot be quantified at this time for
several reasons. These include (i) the actual amount of NOLs remaining after
the cancellation of debt transaction is calculated using the value of the
Maxum Series B Preferred Stock and AHS Series C Preferred Stock (which cannot
be currently predicted with certainty), (ii) the formula for determining the
NOLs' availability on an annual basis is the value of Maxum and AHS multiplied
by the federal long-term tax exempt rate (both as of the Effective Time, and
neither of which can be currently predicted with certainty) and (iii) the
rules governing the filing of consolidated returns will limit the Companies'
ability to use the pre-transaction losses of AHS to offset future income of
Maxum or InSight and may limit InSight and Maxum's use of AHS' NOLs.

THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. SUCH DISCUSSION MAY NOT BE APPLICABLE TO A STOCKHOLDER WHO
ACQUIRED SHARES OF AHS OR MAXUM COMMON STOCK PURSUANT TO THE EXERCISE OF AN
EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION. AHS AND MAXUM STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS FOR MORE SPECIFIC AND DEFINITE
ADVICE AS TO THE FEDERAL INCOME TAX CONSEQUENCES TO THEM ON THE

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EXCHANGE OF THEIR AHS COMMON AND MAXUM COMMON STOCK PURSUANT TO THE MERGER
PROPOSAL AND THE TRANSACTIONS CONTEMPLATED IN CONNECTION THEREWITH, AS WELL AS
ADVICE AS TO THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS. THE PARTIES TO THE MERGER HAVE NOT REQUESTED A RULING FROM THE
INTERNAL REVENUE SERVICE WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER PROPOSAL AND THE TRANSACTIONS CONTEMPLATED IN CONNECTION
THEREWITH. WITHOUT SUCH A RULING, THERE CAN BE NO ASSURANCE THAT THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER PROPOSAL AND THE TRANSACTIONS
CONTEMPLATED IN CONNECTION THEREWITH WILL BE AS DESCRIBED HEREIN. THE
DISCUSSION ABOVE REGARDING SUCH THE FEDERAL INCOME TAX CONSEQUENCES IS NOT
BINDING ON THE INTERNAL REVENUE SERVICE OR ANY COURT.

ACCOUNTING TREATMENT

The Merger will be accounted for under the "purchase" method of accounting,
in accordance with generally accepted accounting principles. Maxum is treated
as the acquiror for accounting purposes, based on relative revenues, book
values and other factors which are reflected in the stock apportionment. The
purchase price of AHS, including direct costs of the Merger, will be allocated
based upon the fair value of the assets acquired and liabilities assumed, with
the excess purchase consideration allocated to goodwill. The exchange of Maxum
Common Stock for InSight Common Stock will be treated as a reorganization with
no change in the recorded amount of Maxum's assets and liabilities. The
financial statements of Maxum will become the financial statements of InSight.
The results of InSight will include the results of AHS from and after the
Effective Time.

The Unaudited Pro Forma Condensed Consolidated Financial Statements
appearing elsewhere in this Joint Proxy Statement/Prospectus are based upon
certain assumptions and allocate the purchase price of AHS based upon
preliminary estimates of the fair value of the assets acquired and liabilities
assumed. The unaudited pro forma adjustments and consolidated amounts are
included for informational purposes only. If the Merger is consummated, then
InSight's financial statements will reflect effects of acquisition adjustments
only from and after the Effective Time. The actual allocation of the purchase
price may differ significantly from the allocation reflected in the Unaudited
Pro Forma Condensed Consolidated Financial Statements.

DISSENTERS' RIGHTS OF APPRAISAL UNDER DGCL

Holders of record of Maxum or AHS Common Stock who comply with the
applicable procedures summarized herein will be entitled to appraisal rights
under Section 262 of the DGCL. A person having a beneficial interest in AHS
Common Stock or Maxum Common Stock held of record in the name of another
person, such as a broker or nominee, must act promptly to cause the record
holder to follow the steps summarized below properly and in a timely manner to
perfect appraisal rights. It is a condition to the consummation of the
transactions contemplated under the Merger Agreement that the aggregate amount
of cash required to be paid to dissenting stockholders of AHS and Maxum at the
Effective Time shall not exceed 10% of the value of InSight Common Stock to be
issued in the Merger. See "The Merger--Conditions of the Merger Agreement."

THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE
FULL TEXT OF SECTION 262 WHICH IS REPRINTED IN ITS ENTIRETY AS APPENDIX D TO
THIS PROXY STATEMENT. ALL REFERENCES IN SECTION 262 AND IN THIS SUMMARY TO A
"STOCKHOLDER" ARE TO THE RECORD HOLDER OF MAXUM COMMON STOCK OR AHS COMMON
STOCK AS TO WHICH APPRAISAL RIGHTS ARE ASSERTED. VOTING AGAINST, ABSTAINING
FROM VOTING OR FAILURE TO VOTE ON APPROVAL AND ADOPTION OF THE MERGER PROPOSAL
WILL NOT CONSTITUTE A DEMAND FOR APPRAISAL WITHIN THE MEANING OF SECTION 262
OF THE DGCL.

Under the DGCL, holders of Maxum Common Stock or AHS Common Stock who follow
the procedures set forth in Section 262 will be entitled to have their AHS or
Maxum Common Stock appraised by the Chancery Court and to receive payment in
cash of the "fair value" of such Common Stock, exclusive of any element of

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value arising from the accomplishment or expectation of the Merger, together
with a fair rate of interest, if any, as determined by such court. Each
Company's respective shares of common stock will be appraised separately, but
the stockholders of each Company must follow the procedures set forth in
Section 262.

Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, must notify each of its stockholders who was a stockholder on the
record date for such meeting with respect to shares for which appraisal rights
are available, that appraisal rights are so available, and must include in
such notice a copy of Section 262.

This Joint Proxy Statement/Prospectus constitutes such notice to the holders
of Maxum or AHS Common Stock and the applicable statutory provisions of the
DGCL are attached to this Joint Proxy Statement/Prospectus as Appendix D. Any
stockholder who wishes to exercise such appraisal rights or who wishes to
preserve his right to do so should review the following discussion and
Appendix D carefully because failure to timely and properly comply with the
procedures specified will result in the loss of appraisal rights under the
DGCL.

A holder of Maxum or AHS Common Stock wishing to exercise such holder's
appraisal rights (i) must not vote in favor of adoption of the Merger Proposal
and (ii) must deliver to the Company's office listed below, prior to the vote
on the Merger Proposal at the Special Meetings to be held on Tuesday, June 25,
1996 for AHS and Maxum, a written demand for appraisal of such holder's Maxum
Common Stock or AHS Common Stock. A holder of Maxum Common Stock or AHS Common
Stock wishing to exercise such holder's appraisal rights must be the record
holder of such Common Stock on the date the written demand for appraisal is
made and must continue to hold such Common Stock of record until the Effective
Time. Accordingly, a holder of Maxum Common Stock or AHS Common Stock who is
the record holder of such Common Stock on the date the written demand for
appraisal is made, but who thereafter transfers such Common Stock prior to the
Effective Time, will lose any right to appraisal in respect of such Common
Stock.

Only a holder of record of Maxum Common Stock or AHS Common Stock is
entitled to assert appraisal rights for the Maxum Common Stock or AHS Common
Stock registered in that holder's name. A demand for appraisal should be
executed by or on behalf of the holder of record, fully and correctly, as such
holder's name appears on such holder's stock certificates. If the Maxum Common
Stock or AHS Common Stock is owned of record in a fiduciary capacity for the
record owner, such as by a trustee, guardian or custodian, execution of the
demand should be made in that capacity, and if Maxum Common Stock or AHS
Common Stock is owned of record by more than one person as in a joint tenancy
or tenancy in common, the demand should be executed by or on behalf of all
joint owners. An authorized agent, including an agent for two or more joint
owners, may execute a demand for appraisal on behalf of a holder of record;
however, the agent must identify the record owner or owners and expressly
disclose the fact that, in executing the demand, the agent is agent for such
owner or owners. A record holder such as a broker who holds Maxum Common Stock
or AHS Common Stock as nominee for several beneficial owners may exercise
appraisal rights with respect to the Maxum Common Stock or AHS Common Stock
held for one or more beneficial owners while not exercising such rights with
respect to the Maxum Common Stock or AHS Common Stock held for other
beneficial owners. In such case, the written demand should set forth the
number of shares of Maxum Common Stock or AHS Common Stock as to which
appraisal is sought and where no number of shares of Maxum Common Stock or AHS
Common Stock is expressly mentioned in the demand will be presumed to cover
all such shares of Common Stock held in the name of the record owner.
Stockholders who hold their Maxum Common Stock or AHS Common Stock in
brokerage accounts or other nominee forms and who wish to exercise appraisal
rights are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such a nominee.

All written demands for appraisal of Maxum Common Stock should be sent or
delivered to Maxum at 14850 Quorum Drive, Suite 400, Dallas, Texas 75240,
Attention: Corporate Secretary.

All written demands for appraisal of AHS Common Stock should be sent or
delivered to AHS at 4440 Von Karman Avenue, Suite 320, Newport Beach,
California 92660, Attention: Corporate Secretary.

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Maxum and AHS shall within ten days after the Effective Time notify each
stockholder who has complied with the statutory requirements summarized above
that the Merger has become effective. Within 120 days after the Effective
Time, but not thereafter, each Company or any stockholder who has complied
with the statutory requirements summarized above may file a petition in the
Chancery Court demanding a determination of the fair value of their Maxum
Common Stock or AHS Common Stock. Neither Maxum nor AHS is under any
obligation to and has no present intention to file a petition with respect to
the appraisal of the fair value of their respective shares of Common Stock.
Accordingly, it is the obligation of the stockholders to initiate all
necessary action to perfect their appraisal rights within the time prescribed
in Section 262.

Within 120 days after the Effective Time, any stockholder who has complied
with the requirements for exercise of appraisal rights will be entitled, upon
written request, to receive from Maxum or AHS, whichever is appropriate, a
statement setting forth the aggregate number of shares of Maxum Common Stock
or AHS Common Stock not voted in favor of adoption of the Merger Proposal and
with respect to which demands for appraisal have been received and the
aggregate number of holders of such Common Stock. Such statements must be
mailed within ten days after a written request therefor has been received by
Maxum or AHS, whichever is applicable.

If a petition for an appraisal is timely filed, after a hearing on such
petition, the Chancery Court will determine the stockholders entitled to
appraisal rights and will appraise the "fair value" of their Maxum Common
Stock or AHS Common Stock, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
Stockholders considering seeking appraisal should be aware that the fair value
of their Maxum Common Stock or AHS Common Stock as determined under Section
262 could be more than, the same as or less than the consideration they would
receive pursuant to the Merger Agreement if they did not seek appraisal of
their Maxum Common Stock or AHS Common Stock and that investment banking
opinions as to fairness from a financial point of view are not necessarily
opinions as to fair value under Section 262. The Delaware Supreme Court has
stated that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered in the appraisal proceedings.

The Chancery Court will determine the amount of interest, if any, to be paid
upon the amounts to be received by persons whose Maxum Common Stock or AHS
Common Stock has been appraised. The costs of the action may be determined by
the Chancery Court and taxed upon the parties as the Chancery Court deems
equitable. The Chancery Court may also order that all or a portion of the
expenses incurred by any stockholder in connection with an appraisal,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts utilized in the appraisal proceeding, be charged pro rata
against the value of all of the Maxum Common Stock or AHS Common Stock
entitled to appraisal.

Any holder of Maxum Common Stock or AHS Common Stock who has duly demanded
an appraisal in compliance with Section 262 will not, after the Effective
Time, be entitled to vote their Maxum Common Stock or AHS Common Stock subject
to such demand for any purpose or be entitled to the payment of dividends or
other distributions on those shares of Maxum Common Stock or AHS Common Stock
(except dividends or other distributions payable to holders of record of Maxum
Common Stock or AHS Common Stock, as the case may be, as of a record date
prior to the Effective Time of the Merger).

If any stockholder who properly demands appraisal of such stockholder's
Maxum Common Stock or AHS Common Stock under Section 262 fails to perfect, or
effectively withdraws or loses, such stockholder's right to appraisal as
provided in the DGCL, the Maxum Common Stock or AHS Common Stock held by such
stockholder will be converted into the right to receive the consideration
receivable with respect to such Common Stock in accordance with the Merger
Agreement. A stockholder will fail to perfect, or effectively lose or
withdraw, his right to appraisal if, among other things, no petition for
appraisal is filed within 120 days after the Effective Time or if the
stockholder delivers to Maxum or AHS, whichever is applicable, a written
withdrawal

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of his demand for appraisal and acceptance of the Merger. Any such attempt to
withdraw an appraisal demand more than 60 days after the Effective Time will
require the written approval of Maxum or AHS, whichever is applicable. No
appraisal proceeding in the Chancery Court shall be dismissed as to any
stockholder without the approval of the court, and such approval may be
conditioned on such terms as the Chancery Court deems just.

Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights (in which
event a stockholder will be entitled to receive the consideration receivable
in the Merger with respect to his Maxum Common Stock or AHS Common Stock in
accordance with the Merger Agreement).

Delaware courts have decided that the statutory appraisal remedy, depending
on factual circumstances, may or may not be a dissenter's exclusive remedy.
Several decisions by the Delaware courts have held that a controlling
stockholder of a company involved in a merger has a fiduciary duty to the
other stockholders which requires that the merger be "entirely fair" to such
other stockholders. In determining whether a merger is fair to minority
stockholders, the Delaware courts have considered, among other things, the
type and amount of consideration to be received by stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court has
stated that although the remedy ordinarily available in a merger that is found
not to be "fair" to minority stockholders is the right to appraisal described
above, such appraisal remedy may not be adequate "in certain cases,
particularly where fraud, misrepresentation, self-dealing, deliberate waste of
corporate assets, or gross and palpable overreaching are involved," and that
in such cases the Chancery Court would be free to fashion any form of
appropriate relief.

Dissenting stockholders are urged to consult legal counsel with respect to
appraisal rights under the DGCL. Maxum and AHS stockholders considering the
exercise of appraisal rights should consider the information set forth under
"The Merger--Federal Income Tax Considerations."

EFFECTS OF THE MERGER

As of the Effective Time, the following will occur:

1. The separate existence of MXHC Acquisition will cease, and MXHC
Acquisition will be merged with and into Maxum.

2. The separate existence of AHSC Acquisition will cease, and AHSC
Acquisition will be merged with and into AHS.

3. Each issued and outstanding share of Maxum Common Stock (except for
those held by stockholders who perfect their appraisal rights under the
DGCL) will be converted into the right to receive .598 of a fully paid and
nonassessable share of InSight Common Stock.

4. Each issued and outstanding share of Maxum Series B Preferred Stock,
which is contemplated to be issued immediately prior to the consummation of
the Merger, will be converted into the right to receive 83.392 shares of
InSight Series A Preferred Stock.

5. Each issued and outstanding share of AHS Common Stock (except for
those held by stockholders who perfect their appraisal rights under the
DGCL) will be converted into the right to receive one-tenth of a fully paid
and nonassessable share of InSight Common Stock.

6. Each issued and outstanding share of AHS Series B Preferred Stock will
be converted into the right to receive 10 fully paid and nonassessable
shares of InSight Common Stock.

7. Each issued and outstanding share of AHS Series C Preferred Stock,
which is contemplated to be issued immediately prior to the consummation of
the Merger, will be converted into the right to receive 1.25088 shares of
InSight Series A Preferred Stock.

8. Each share of Maxum Common Stock or AHS Common Stock held in the
treasury of any such Company, and each share of such Common Stock held by
InSight, MXHC Acquisition or AHSC Acquisition, will be canceled and retired
and cease to exist.

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9. The Maxum Series B Preferred Stock and the AHS Series C Preferred
Stock held by GE Medical will convert immediately into the right to receive
an aggregate of 2,501,760 shares of InSight Series A Preferred Stock.

10. Each share of common stock of MXHC Acquisition and AHSC Acquisition
issued and outstanding immediately prior to the Effective Time will be
converted into one share of common stock of, respectively, of Maxum or AHS
(in each case, as the surviving corporation of the Merger).

11. Each Existing Derivative Security, whether vested or unvested (except
for warrants of Maxum and AHS held by GE Medical, which will be canceled),
will be assumed by InSight and converted into the right to acquire or
receive, on the same terms and conditions as were applicable under the
Existing Derivative Securities, the number of shares of InSight Common
Stock equal to the number of shares subject to the Existing Derivative
Security multiplied by the applicable exchange ratio for the underlying
shares of Maxum Common Stock or AHS Common Stock, at an exercise price per
share of InSight Common Stock equal to the former exercise price per share
under the Existing Derivative Security divided by the applicable exchange
ratio.

ASSUMPTION OF EXISTING STOCK OPTIONS AND WARRANTS

In connection with the Merger and the adjustments to be made to the
outstanding options and warrants to purchase Maxum Common Stock and AHS Common
Stock, InSight will assume the outstanding obligations of Maxum and AHS under
the various stock option plans and agreements under which those options and
warrants are currently outstanding. No further options will be granted under
the assumed plans, except in connection with any repricing of currently
outstanding options which the Compensation Committee of the InSight Board may
from time to time determine in its sole discretion to implement. The plans and
agreements to be so assumed by InSight may be summarized as follows:

Maxum Plans:

1989 STOCK OPTION PLAN. The Maxum 1989 Stock Option Plan (the "Maxum Plan")
originally had 412,500 shares of Maxum Common Stock reserved for issuance. In
1992, the shares available for issuance were increased by 250,000 shares for a
total of 662,500, with such amendment being approved by the stockholders at
the 1992 Annual Meeting. As of May 6, 1996, Maxum had options outstanding
under the Maxum Plan to purchase an aggregate of 341,250 shares of Maxum
Common Stock (excluding shares subject to the options being considered for
stockholder ratification under the Maxum Option Ratification Proposal) at an
average exercise price of $1.23 per share. The Maxum Plan is administered by
the Compensation Committee of the Maxum Board (the "Maxum Compensation
Committee"). In the event of a merger, acquisition or consolidation, sale of
substantially all of Maxum's assets, or sale of Maxum, options to non-employee
directors of Maxum vest on a date set by the Maxum Board that is prior to the
effective date of such event. Since the Merger triggers this vesting
acceleration provision of the Maxum Plan for all of Maxum's five directors,
options covering an aggregate of 25,000 shares of Maxum Common Stock held by
Maxum's directors will accelerate to become immediately and fully exercisable
prior to the Effective Time. See "The Merger--Interests of Certain Persons in
the Merger."

At the Effective Time, each outstanding option to purchase Maxum Common
Stock under the Maxum Plan will be converted into the right to acquire on the
same terms and conditions shares of InSight Common Stock equal to the number
of shares subject to each option immediately prior to the Effective Time
multiplied by .598, with the exercise price per share being adjusted by
dividing the exercise price in effect for each option immediately prior to the
Effective Time by .598. See "The Merger--Effects of the Merger."

Grants of Stock Options to Directors Which are the Subject of Maxum Proposal
No. 3:

As of August 17, 1994, Maxum granted ten-year nonqualified options to
purchase 15,000 shares of Maxum Common Stock to its directors, none of whom
are employees of Maxum. Such grants were not made pursuant to

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any plan, and are conditioned upon receiving stockholder ratification pursuant
to Maxum Proposal No. 3: Approval of Maxum Option Ratification Proposal set
forth below.

AHS Plans:

EMPLOYEE STOCK OPTION PLAN (1983). The AHS Employee Stock Option Plan (1983)
(the "1983 Plan") was originally adopted by the AHS Board and the AHS
stockholders in 1983. The 1983 Plan was amended in 1985 to provide for the
issuance of options to purchase up to 800,000 shares of AHS Common Stock to
key employees on such terms and conditions as the AHS Board or its
Compensation Committee (the "AHS Compensation Committee") determined.

As of May 6, 1996, AHS had options outstanding under the 1983 Plan to
purchase an aggregate of 255,000 shares of AHS Common Stock at an average
exercise price of $1.34 per share, all of which options are exercisable. The
1983 Plan was terminated on a prospective basis in 1992 upon approval of the
AHS 1992 Option and Incentive Plan (the "1992 Plan") described below.

Each of the stock option agreements pursuant to which options have been
granted under the 1983 Plan provide that the vesting period of the stock
option will be accelerated in the event AHS or its stockholders enter into an
agreement to dispose of all or substantially all of the assets of AHS or
outstanding AHS Common Stock by sale, exchange, merger, consolidation,
reorganization, dissolution or liquidation, provided, however, that if the
stock option is to be assumed or replaced with a comparable substitute option
as a requirement of the Merger, then there will be no acceleration. Since all
of such options will be assumed by InSight at the Effective Time, the vesting
period under none of the options outstanding under the 1983 Plan will
accelerate.

1987 STOCK OPTION PLAN. The AHS 1987 Stock Option Plan (the "1987 Plan") was
adopted by the AHS Board and approved by the AHS stockholders in 1987. The
1987 Plan provides for the issuance of options to purchase up to 500,000
shares to eligible employees, nonemployee directors and outside consultants of
AHS on such terms and conditions as the AHS Board or the AHS Compensation
Committee may determine from time to time. Options to purchase no more than
200,000 shares of AHS Common Stock were grantable to non-employee directors of
AHS under the 1987 Plan.

As of May 6, 1996, AHS had options outstanding under the 1987 Plan to
purchase an aggregate of 190,000 shares of AHS Common Stock at an average
exercise price of $1.41 per share, all of which options are exercisable. The
1987 Plan was terminated on a prospective basis in 1992 effective upon
approval of the 1992 Plan.

Each of the stock option agreements, pursuant to which options have been
granted under the 1987 Plan, provide that the vesting period of stock options
will be accelerated in the event that (i) AHS or its stockholders enter into
an agreement to dispose of, whether by sale, exchange, merger, consolidation,
reorganization, dissolution or liquidation, (a) not less than 80% of the
assets of AHS, or (b) a portion of the outstanding AHS Common Stock such that
one person or "group" (as defined by the SEC) owns, of record or beneficially,
not less than 80% of the outstanding AHS Common Stock, or (ii) AHS issues and
sells to one person or "group" (as defined by the SEC) such number of shares
of AHS Common Stock that said person or group owns, of record or beneficially,
not less than 80% of the AHS Common Stock outstanding after such issuance.
However, if the optionee consents to the assumption of the option or
replacement of the stock option with a comparable substitute option, then
there will be no acceleration. Since none of the above-referenced provisions
will be triggered as a result of the Merger, the vesting period under none of
the options outstanding under the 1987 Plan will accelerate.

1989 STOCK INCENTIVE PLAN. The AHS 1989 Stock Incentive Plan (the "1989
Plan") was adopted by the AHS Board and approved by the AHS stockholders in
1989. Employees regularly employed by AHS, and non-employee directors, were
eligible to participate in the 1989 Plan. The maximum number of shares of AHS
Common Stock available for sale or issuance under the 1989 Plan was 500,000.

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As of May 6, 1996, AHS had options outstanding under the 1989 Plan to
purchase an aggregate of 120,000 shares of AHS Common Stock at an average
exercise price of $1.48 per share, all of which options are exercisable. The
1989 Plan was terminated on a prospective basis in 1992, effective upon
approval of the 1992 Plan. As a result of the assumption of the options
granted under the 1989 Plan in the Merger, no acceleration of vesting of such
options will occur.

Provisions Relating to the 1983, 1987 and 1989 Plans. Both incentive stock
options ("Incentive Options"), as defined in the Code, and nonqualified stock
options were grantable pursuant to the 1983, 1987 and 1989 Plans. These Plans
also provide that the aggregate market value during any calendar year under
all AHS stock option plans (determined at the time each Incentive Option is
granted) of the stock with respect to which Incentive Options are exercisable
for the first time by each optionee shall not exceed $100,000. Incentive
Options are also subject to other requirements provided by law. If the
optionee's employment with AHS terminates, the period for exercising any
option then held by him or her will be reduced to a period of three months
following the cessation of his employment; provided that if the optionee's
employment terminates by reason of death or disability, such period will be
one year. The termination provisions of awards granted under the 1989 Plan are
determined by the AHS Compensation Committee.

1992 OPTION AND INCENTIVE PLAN. The 1992 Plan was adopted by the AHS Board
and approved by the AHS stockholders in 1992. The 1992 Plan replaced the 1983,
1987 and 1989 Plans which terminated upon stockholder approval of the 1992
Plan. The 1992 Plan provides for the issuance of options to directors,
officers, key employees of and persons otherwise performing valuable services
for AHS. The maximum aggregate number of shares of AHS Common Stock that may
be optioned and sold under the 1992 Plan is 500,000.

As of May 6, 1996, AHS had options outstanding under the 1992 Plan to
purchase an aggregate of 450,000 shares of AHS Common Stock at an average
exercise price of $0.26 per share, of which 186,000 are exercisable. As of May
6, 1996, options to purchase 30,000 shares of AHS Common Stock had been
exercised and options to purchase 20,000 shares were available for future
grants under the 1992 Plan. As a result of the assumption of the options
granted under the 1992 Plan in the Merger, no acceleration of vesting will
occur.

At the Effective Time, each outstanding option to purchase AHS Common Stock
under the AHS Plans will be converted into the right to acquire on the same
terms and conditions shares of InSight Common Stock equal to the number of
shares subject to each option immediately prior to the Effective Time
multiplied by .100, with the exercise price per share being adjusted by
dividing the exercise price in effect for each option immediately prior to the
Effective Time by .100. See "The Merger--Effects of the Merger."

AHS Warrants:

In November 1994, AHS granted to a stockholder a warrant to purchase 200,000
shares of AHS Common Stock at a per share exercise price of $0.25 in
consideration of certain financing activities. This warrant is exercisable at
any time for a period of five years from the date of issuance. Subject to
certain conditions, the holder of this warrant has certain "piggy back"
registration rights to register the shares subject to such warrant under the
Securities Act. See "Description of Capital Stock of AHS--Warrants."

FEDERAL INCOME TAX CONSEQUENCES WITH RESPECT TO STOCK OPTIONS

The following summary of federal income tax consequences will generally
apply to stock options granted under the Maxum Plan and the AHS Plans, and is
based on current statutes, regulations and interpretations. The description
does not purport to be a complete statement of law in this area and does not
include state or local income tax consequences. In addition, the description
is not intended to address specific tax consequences applicable to an
individual participant who receives a stock option.

Incentive Stock Options. There will not be any federal income tax
consequences to either the participant or InSight as a result of the grant to
an employee of an incentive stock option. The exercise by a participant of an
incentive stock option also will not result in any federal income tax
consequences to InSight or the participant, except that (i) an amount equal to
the excess of the fair market value of the shares acquired upon exercise of
the

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incentive stock option, determined at the time of exercise, over the amount
paid for the shares by the participant will be includable in the participant's
alternative minimum taxable income for purposes of the alternative minimum
tax, and (ii) the participant may be subject to an additional excise tax if
any amounts are treated as excess parachute payments (see explanation below).
If the participant disposes of the shares acquired upon exercise of an
incentive stock option, the federal income tax consequences will depend upon
how long the participant has held the shares. If the participant does not
dispose of the shares within two years after the incentive stock option was
granted, nor within one year after the participant exercised the incentive
stock option, then the participant will recognize a long-term capital gain or
loss. The amount of the long-term capital gain or loss will be equal to the
difference between (i) the amount the participant realized on the disposition
of the shares and (ii) the option price at which the participant acquired the
shares. InSight is not entitled to any compensation expense deduction under
these circumstances. If the participant does not satisfy both of the above
holding period requirements (a "disqualifying disposition"), then the
participant will be required to report as ordinary income, in the year the
participant disposes of the shares, the amount by which the lesser of (i) the
fair market value of the shares at the time of exercise of the incentive stock
option or (ii) the amount realized on the disposition of the shares, exceeds
the option price for the shares. InSight will be entitled to a compensation
expense deduction in an amount equal to the ordinary income includable in the
taxable income of the participant. This compensation income may be subject to
withholding. The remainder of the gain recognized on the disposition, if any,
or any loss recognized on the disposition, will be treated as long-term or
short-term capital gain or loss, depending on the holding period.

Nonstatutory Stock Options. Neither the participant nor InSight incurs any
federal income tax consequences as a result of the grant of a nonstatutory
stock option. Upon exercise of a nonstatutory stock option, a participant will
recognize ordinary income, subject to withholding, on the exercise date in an
amount equal to the difference between (i) the fair market value of the shares
purchased, determined on the exercise date, and (ii) the consideration paid
for the shares. The participant may be subject to an additional excise tax if
any amounts are treated as excess parachute payments (see explanation below).
At the time of a subsequent sale or disposition of any shares of common stock
obtained upon exercise of a nonstatutory stock option, any gain or loss will
be a capital gain or loss. Such capital gain or loss will be long-term capital
gain or loss if the sale or disposition occurs more than one year after the
exercise date and short-term capital gain or loss if the sale or disposition
occurs one year or less after the exercise date. In general, InSight will be
entitled to a compensation expense deduction in connection with the exercise
of a nonstatutory stock option for any amounts includable in the taxable
income of the participant as ordinary income, provided InSight complies with
any applicable withholding requirements.

Excise Tax on Parachute Payments. The Code also imposes a 20% excise tax on
the recipient of "excess parachute payments," as defined in the Code and
denies tax deductibility to InSight on excess parachute payments. Generally,
parachute payments are payments in the nature of compensation to employees of
a company who are officers, stockholders or highly compensated individuals,
which payments are contingent upon a change in ownership or effective control
of the company, or in the ownership of a substantial portion of the assets of
the company. Should the value of the parachute payments made to such an
individual exceed 2.99 times his average annual W-2 wages for a period of
years (not to exceed five years) prior to the calendar year in which the
change occurs, then an excess parachute payment will arise to the extent the
value of such parachute payments exceed one times the individual's average
annual W-2 wages. For example, acceleration of the exercisability of options
upon a change in control of InSight may constitute parachute payments, and in
certain cases, "excess parachute payments."

TERMINATION OF MAXUM STOCK PURCHASE PLAN

The Amended and Restated Employee Stock Purchase Plan of Maxum (the "Stock
Purchase Plan") provides for the sale of up to 375,000 shares of Maxum Common
Stock through payroll deductions to employees who are employed by Maxum for
more than 20 hours per week. The Stock Purchase Plan is administered by the
Maxum Compensation Committee. Pursuant to the Stock Purchase Plan, Maxum
applies the amount contributed

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by a participant during each six-month offering period under the plan
(December 1 through May 31 and June 1 through November 30) to purchase whole
shares of Maxum Common Stock at a purchase price equal to the lesser of 85% of
the fair market value of the shares at the time of purchase or at the time of
enrollment for the six-month period. As of May 6, 1996, 112,339 shares of
Maxum Common Stock have been purchased by employees under the Stock Purchase
Plan.

The Maxum Board has the right to terminate the Stock Purchase Plan at any
time. Prior to the Effective Time, the Maxum Board will terminate the Stock
Purchase Plan. All contributions made by participants after November 30, 1995,
will be returned to such participants.

EXCHANGE OF STOCK CERTIFICATES

Upon surrender to the Exchange Agent of certificates formerly representing
shares of Maxum Common Stock and AHS Common Stock for cancellation, together
with properly completed transmittal materials, each stockholder will be
entitled to receive a certificate representing the number of whole shares of
InSight Common Stock into which the stockholder's shares of AHS Common Stock
and Maxum Common Stock have been converted and a check for cash in lieu of the
issuance of any fractional share of InSight Common Stock. Stockholders will
not be entitled to receive interest on any such cash to be received in the
Merger.

Until they have surrendered their Maxum Common Stock and AHS Common Stock
certificates for exchange, stockholders will not be entitled to receive any
dividends or other distributions that may be declared and payable to holders
of record of InSight Common Stock. Upon the surrender of Maxum Common Stock
and AHS Common Stock certificates, InSight Common Stock certificates (together
with any such withheld dividends or other distributions without interest) will
be delivered. At the same time or as soon as possible thereafter, any cash
payment for a fractional share will be paid (without interest). See "The
Merger--Payment in Lieu of Fractional Shares."

After the Effective Time, certificates representing shares of Maxum Common
Stock and AHS Common Stock converted into InSight Common Stock in the Merger
will be deemed for all corporate purposes to evidence ownership of the shares
of InSight Common Stock into which they were converted. Any stockholder whose
certificate for Maxum Common Stock and AHS Common Stock has been lost,
destroyed or stolen will be entitled to issuance of a certificate representing
the shares of InSight Common Stock into which such Maxum Common Stock and AHS
Common Stock will have been converted upon compliance with such requirements
as InSight and the Exchange Agent customarily apply in connection with lost,
stolen or destroyed certificates representing shares of InSight Common Stock.

PAYMENT IN LIEU OF FRACTIONAL SHARES

No fractional shares of InSight will be issued as a result of the Merger. In
lieu of the issuance of fractional shares, each stockholder who otherwise
would be entitled to a fractional share of InSight Common Stock will receive a
cash payment, without interest, rounded to the nearest cent, equal to the
product obtained by multiplying the fractional share interest to which such
holder would otherwise be entitled by the value of a share of InSight Common
Stock as determined by the InSight Board. For this purpose, the InSight Board
will value each share of InSight Common Stock by using the quotient of (i) the
sum of (a) the number of shares of Maxum Common Stock outstanding immediately
prior to the Merger multiplied by the average closing bid quotation for Maxum
Common Stock for the last ten trading days immediately preceding the Merger,
plus (b) the number of shares of AHS Common Stock outstanding immediately
prior to the Merger multiplied by the average closing bid quotation for AHS
Common Stock for the last ten trading days immediately preceding the Merger,
divided by (ii) the number of shares of InSight Common Stock issued in respect
of shares of Maxum Common Stock and AHS Common Stock .

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RESALES OF INSIGHT COMMON STOCK AND REGISTRATION RIGHTS

Shares of Maxum Common Stock and AHS Common Stock that are outstanding prior
to the Effective Time will, after conversion into shares of InSight Common
Stock, be freely tradeable without restrictions under the Securities Act after
the Effective Time, except that shares of InSight Common Stock received by
persons who are deemed to be "affiliates" (as that term is defined in Rule 144
under the Securities Act) of InSight, AHS or Maxum (the "Restricted Holders")
may be resold by them only in transactions permitted by the resale provisions
of Rule 145 or as otherwise permitted under the Securities Act. At the
Effective Time, approximately 622,477 shares of InSight Common Stock will be
held by the Restricted Holders. Options and warrants to purchase approximately
324,277 shares of InSight Common Stock exercisable within 60 days of May 6,
1996, will be outstanding at the Effective Time (assuming approval by Maxum
stockholders of the Maxum Option Ratification Proposal and the AHS Amendment
Proposal), of which options and warrants to purchase approximately 272,700
shares of InSight Common Stock exercisable within 60 days of May 6, 1996 will
be held by the Restricted Holders.

In addition, GE Medical will also have the right, exercisable on and after
the first anniversary of the Effective Time, under certain circumstances, to
require InSight to register the InSight Common Stock issuable upon conversion
of its InSight Series A Preferred Stock. Upon registration, the InSight Common
Stock issuable upon conversion of the InSight Series A Preferred Stock will be
freely tradeable without restriction under the Securities Act. Open market
sales of all or a substantial portion of the shares of InSight Common Stock
held by GE Medical could adversely affect the trading prices of InSight Common
Stock. See "Operation, Management and Business of InSight after the Merger--
Description of Capital Stock of InSight." Moreover, a holder of warrants to
purchase 200,000 shares of AHS Common Stock that will be assumed by InSight at
the Effective Time has, subject to certain conditions, certain "piggy back"
registration rights. See "Description of Capital Stock of AHS--Warrants." At
the Effective Time, warrants to purchase 50,000 shares of InSight Common Stock
will also have, subject to certain conditions, certain "piggy back"
registration rights. See "Operation, Management and Business of InSight After
the Merger--Description of Capital Stock."

DEBT RESTRUCTURING AND ISSUANCE OF
PREFERRED STOCK TO GE MEDICAL

The following is a brief description of the Restructuring Agreement. Such
description does not purport to be complete and is subject to and qualified in
its entirety by reference to the Restructuring Agreement, a copy of which is
filed as an Exhibit to the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part.

Under the Restructuring Agreement, the GE Parties provide their consent to
the Merger and certain financial accommodations to the Credit Parties,
including (a) amendments and waivers of certain terms and conditions of, and
the release of Maxum and the Maxum Subsidiaries of certain obligations thereof
under, the Maxum Financing Agreements, including the Existing Maxum Agreement
among GE Medical and Maxum and the Maxum Subsidiaries, and (b) amendments and
waivers of certain terms and conditions of, and the release of AHS of certain
obligations thereof under, the AHS Financing Agreements, including the
Existing AHS Agreement between GECC and AHS.

In exchange for such consent and financial accommodations, pursuant to the
Stock Acquisition Agreement, (i) Maxum will issue to GE Medical the Maxum
Series B Preferred Stock and (ii) AHS will issue to GE Medical the AHS Series
C Preferred Stock.

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Series A Preferred Stock, which will constitute all of the issued and
outstanding shares of preferred stock of InSight as of the Effective Time and
will be convertible into InSight Common Stock representing 48% of InSight
Common Stock outstanding at the Effective Time (after giving effect to such
conversion). See "Operation, Management and Business of InSight After the
Merger--Description of Capital Stock of InSight."

If the Merger Proposal is not approved by the Maxum stockholders and the AHS
stockholders, the Restructuring Agreement will not be executed and, therefore,
will have no force or effect.

FINANCIAL ACCOMMODATIONS TO MAXUM AND THE MAXUM SUBSIDIARIES

The Restructuring Agreement contemplates that GE Medical will (a) release
Maxum of all of its obligations under certain Maxum Financing Agreements
described in the Restructuring Agreement (including, among other things, an
aggregate reduction of indebtedness of approximately $9.0 million) and (b)
permit the return of each of the equipment units described in the
Restructuring Agreement to GE Medical by Maxum in exchange for Maxum's payment
of an early termination fee of $40,000 with respect to each such equipment
unit and, upon such payment and delivery to a location designated by GE
Medical, at the sole cost and expense of Maxum, release Maxum of all of its
obligations (including, among other things, an aggregate reduction in lease
payments of approximately $1.3 million) under certain Maxum Financing
Agreements described in the Restructuring Agreement. The GE Parties will not,
however, so release any of such obligations in the event there shall have
occurred and be continuing a payment default with respect to any of such
obligations as of the effectiveness of the Restructuring Agreement (the
"Closing Date").

Upon the effectiveness of the Restructuring Agreement, the Existing Maxum
Agreement will be amended to, among other things, reduce the amount of the
Minimum Lease Payment (as such term is defined in the Existing Maxum
Agreement) payable under the Existing Maxum Agreement with respect to each of
the leases between GE Medical and Maxum that are described in the
Restructuring Agreement, resulting in an aggregate reduction of approximately
$20,000 per month as of the Closing Date in lease payments made by Maxum to GE
Medical.

Maxum and the Maxum Subsidiaries will also agree to guarantee, jointly and
severally, the obligations of AHS under the AHS Financing Agreements to the GE
Parties pursuant to the Guaranty, dated as of the Closing Date (the "Maxum
Guaranty"), to be made by Maxum and the Maxum Subsidiaries in favor of the GE
Parties. The obligations of Maxum and the Maxum Subsidiaries under the Maxum
Guaranty will be secured by the collateral described in the Security
Agreement, dated as of June 1, 1993 (the "Maxum Security Agreement"), among
Maxum, the Maxum Subsidiaries and GE Medical. The collateral described in the
Maxum Security Agreement that will secure Maxum's obligations under the Maxum
Guaranty includes substantially all of the assets of Maxum. In connection with
such guaranty, the definition of "Obligations" in the Maxum Security Agreement
will be amended to include the obligations of Maxum and the Maxum Subsidiaries
under the Maxum Guaranty.

FINANCIAL ACCOMMODATIONS TO AHS

Upon the Closing Date, the Existing AHS Agreement will be amended to, among
other things, (i) reduce the outstanding principal amount of the term loan
under the Existing AHS Agreement (the "Term Loan") from approximately $13.7
million (as of May 6, 1996) to $7.5 million and (ii) increase the interest
rate on the Term Loan from 10.5% per annum to 10.75% per annum.

In addition, AHS will guarantee the obligations of Maxum and the Maxum
Subsidiaries under the Maxum Financing Agreements to GE Medical pursuant to
the Guaranty, dated as of the Closing Date (the "AHS Guaranty"), to be made by
AHS in favor of GE Medical. The obligations of AHS under the AHS Guaranty will
be secured by the collateral described in the Existing AHS Agreement. The
collateral described in the Existing AHS Agreement that will secure the
obligations of AHS under the AHS Guaranty includes substantially all of the
assets of AHS. In connection with such guaranty, the Existing AHS Agreement
will be amended to include the obligations of AHS under the AHS Guaranty as a
"Guaranteed Liability."

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The Restructuring Agreement contemplates that GE Medical will also (i)
release AHS of all of its obligations under certain AHS Financing Agreements
relating to the seven locations of AHS operations described in the
Restructuring Agreement (including, among other things, an aggregate reduction
of lease payments of approximately $426,000 annually), (ii) permit the return
of certain equipment described in the Restructuring Agreement to GE Medical by
AHS and, upon delivery to a location designated by GE Medical, at the sole
cost and expense of AHS, release AHS of all of its obligations under certain
AHS Financing Agreements described therein (including, among other things, an
aggregate reduction of lease payments of approximately $388,000 annually),
(iii) consent, on behalf of itself and GECC, to the sale by AHS of certain
equipment described in the Restructuring Agreement to Northwest Hospital and,
in connection with such sale and the assumption by Northwest Hospital of the
obligations of Radiosurgery Centers, Inc., a wholly-owned subsidiary of AHS,
to GE Medical, forgive Radiosurgery Centers, Inc. of a portion of such
obligations in the amount of $415,000 and (iv) release AHS of all of its
obligations under certain AHS Financing Agreements evidencing deferred
obligations of AHS as described in the Restructuring Agreement of
approximately $4.5 million. GE Medical will not, however, so release any of
such obligations in the event there will have occurred and be continuing a
payment default with respect to any of such obligations as of the Closing
Date.

The Restructuring Agreement provides for the amendment of the amortization
schedules of three promissory notes, the aggregate outstanding principal
amount of which is, as of May 6, 1996, approximately $11.6 million made by AHS
in favor of Philips Credit Corporation ("PCC") and purchased by GECC from PCC
in December 1992 (collectively, the "Re-Amortized Notes"). The Re-Amortized
Notes originally bore interest rates between 12% and 12.5% per annum. Two of
the Re-Amortized Notes in the aggregate amount of approximately $10.1 million
had balloon payments due in January 1996 (which have been extended to June 30,
1996). The third Re-Amortized Note in the amount of approximately $1.5 million
has a balloon payment due in August 1996. AHS will be required to repay the
principal amount of each of the Re-Amortized Notes, together with interest
accrued thereon, in consecutive monthly installments through December 2002.
The unpaid principal amount of each of the Re-Amortized Notes will bear
interest at the rate of 10.75% per annum. InSight will be required to cause
AHS to prepay annually the outstanding principal amount of each Re-Amortized
Note in an amount equal to the amount (the "AHS Prepayment Amount") by which
(a) InSight Excess Cash Flow (as such term is defined in the Restructuring
Agreement) for the immediately preceding fiscal year exceeds (b) an amount
equal to 6% of InSight's consolidated net revenues as reflected in the
consolidated statement of operations of InSight and its subsidiaries for such
immediately preceding fiscal year. InSight Excess Cash Flow includes, among
other things, consolidated net income and consolidated depreciation expense of
InSight and its subsidiaries. Upon full payment by AHS with InSight Excess
Cash Flow of approximately $2.1 million (the "Total Balloon Payment Amount"),
which is the sum of the installments due on the last business day of December
2002 under the Re-Amortized Notes, the rate of interest on the principal
amount of each Re-Amortized Note will be reduced from 10.75% per annum to
10.25% per annum.

WARRANTS OF GE MEDICAL

GE Medical currently holds certain warrants exercisable for (a) AHS Common
Stock issued by AHS and (b) Maxum Common Stock issued by Maxum. The
Restructuring Agreement contemplates that, as part of the GE Medical Financial
Transactions, GE Medical will surrender such warrants to AHS and Maxum for
cancellation. See "Description of Capital Stock of AHS--Warrants" and
"Description of Capital Stock of Maxum--Warrant."

CONDITIONS SUBSEQUENT

In addition to certain conditions precedent customary for transactions of
the type contemplated by the Restructuring Agreement, the Restructuring
Agreement also contains certain conditions subsequent to the consummation of
the transactions contemplated thereby, including the consummation of the
Merger, and the resulting exchange of the AHS Series C Preferred Stock and the
Maxum Series B Preferred Stock for InSight Series A Preferred Stock in
accordance with the Stock Acquisition Agreement.

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COVENANTS OF INSIGHT

The Restructuring Agreement contains certain covenants that, among other
things, either prohibit or substantially restrict InSight from (i) changing
the nature or conduct of its business, (ii) consolidating, merging or making
any acquisition of all or substantially all of the assets of another entity or
division thereof, (iii) making any distributions to stockholders, (iv)
increasing salaries of its management, (v) making capital expenditures,
(vi) entering into leases, (vii) entering into transactions with affiliates,
(viii) providing guaranties, (ix) creating liens on its assets, (x) incurring
indebtedness (except for the indebtedness owed to GE Parties), (xi) disposing
of its assets, (xii) changing its capital structure and (xiii) creating or
becoming a member or a partner in a joint venture or a partnership. Under the
Existing AHS Agreement and the Existing Maxum Agreement, as amended by the
Restructuring Agreement, similar prohibitions and restrictions apply to AHS,
Maxum and certain of Maxum's subsidiaries. See "Risk Factors--Certain Rights
of Primary Creditor."

EVENTS OF DEFAULT AND REMEDIES

"Events of Default" under the Restructuring Agreement include, among other
things (i) the failure of InSight to pay any amount payable under the
Restructuring Agreement within ten days after the due date relating to such
amount, (ii) the breach, in any material respect, of any term, condition,
representation, warranty, covenant, duty or obligation of InSight under the
Restructuring Agreement, (iii) certain events of bankruptcy, insolvency or
dissolution, (iv) the rendering of certain judgments against InSight, (v) the
invalidity of any material provision of the AHS Guaranty or the Maxum
Guaranty, (vi) the occurrence of a material adverse change in the business,
assets, financial condition or results of operations of InSight or any of the
subsidiaries of InSight, (vii) the occurrence of an "Event of Default" under
the Existing AHS Agreement, as amended by the Restructuring Agreement, or any
AHS Financing Agreement and (viii) the occurrence of an "Event of Default"
under the Existing Maxum Agreement, as amended by the Restructuring Agreement,
or any Maxum Financing Agreement.

Upon the occurrence of an Event of Default, the GE Parties will have the
right to declare all or any portion of the liabilities of the Credit Parties
owed to the GE Parties immediately due and payable, whereupon all or any
portion of such liabilities, as appropriate, will become due and payable
without presentment, demand, protest or further notice of any kind.

MASTER SERVICE AGREEMENT ADDENDUM

Simultaneously with the execution and delivery of the Restructuring
Agreement, GE Medical, InSight, AHS and Maxum will enter into the Master
Service Agreement Addendum (the "InSight Master Addendum"), which Addendum
supplements and extends (i) the Master Agreement Imaging Systems, dated as of
March 30, 1992 (the "AHS Master Agreement"), between GE Medical and AHS
pertaining to GE Medical's services with respect to the GE Diagnostic Imaging
Systems of AHS) and (ii) the Master MR Service Agreement, dated as of July 1,
1994 (the "MHC Master Agreement"), between GE Medical and Maxum pertaining to
GE Medical's services with respect to the GE MR Max and Signa Systems and
Diasonic's MRT-35 MR Systems of Maxum.

From and after the Effective Time, the aggregate amount of discounts
currently in effect under the AHS Master Agreement and the MHC Master
Agreement (which amount is equal to approximately 15% of GE Medical's current
list prices) will be reduced or eliminated by, and in certain cases, premium
payments will be made in the form of, the Supplemental Service Fee under the
InSight Master Addendum.

The Supplemental Service Fee will be paid by InSight to GE Medical for each
fiscal year during ten consecutive fiscal years of InSight from July 1, 1996
through June 30, 2006, in an amount equal to 14% (the "Adjustment Percentage")
of the pre-tax income, subject to certain adjustments, of InSight as follows:
(i) 65% of the Supplemental Service Fee (the "First Installment") within 30
days after the delivery to GE Medical of the audited annual consolidated
financial statements of InSight and (ii) the remaining 35% of the Supplemental
Service Fee for such fiscal year in 60 equal monthly installments, payable on
the last business day of each calendar month, evidenced by a promissory note
made by InSight in favor of GE Medical (the "Distribution Note"). After the
Total Balloon Payment Amount is paid in full by AHS (see "--Financial
Accommodations to

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AHS"), InSight Excess Cash Flow in an amount equal to the AHS Prepayment
Amount will continue to be applied as a prepayment of each of the Distribution
Notes in the inverse order of their stated maturity. In the event the monthly
installments under the Distribution Notes include an interest portion, upon
any such payment, the remaining monthly installments will be re-amortized to
reflect the prepayment of principal.

Interest on the unpaid principal amount of each Distribution Note will
accrue at the rate of interest from time to time for three-year U.S. Treasury
notes plus four and three-quarters percent. Such interest will be payable on
the last business day of each calendar month. In the event, however, InSight
fails to (i) deliver its audited annual consolidated financial statements to
GE Medical on or before 105 days following the close of the immediately
preceding fiscal year or (ii) pay the First Installment on or before 120 days
following the close of the immediately preceding fiscal year, the outstanding
principal amount of the First Installment for such fiscal year will bear
interest from the 120th day following the close of the immediately preceding
fiscal year until payment thereof in full at the rate of interest equal to the
rate of interest from time to time for three-year U.S. Treasury notes plus 8
3/4%, payable on the last business day of each calendar month.

Upon the occurrence of a "Major Acquisition" by InSight whereby InSight
acquires, directly or indirectly, all of the outstanding capital stock or
substantially all of the assets of any person or entity, which person or
entity had annual net revenues in excess of $20.0 million for the most recent
fiscal year of such person or entity, the Adjustment Percentage with respect
to all subsequent fiscal years will decrease to a percentage which is the
product of (i) the Adjustment Percentage prior to consummation of the Major
Acquisition multiplied by (ii) a fraction (a) the numerator of which is the
total number of shares of capital stock of InSight outstanding on a fully-
diluted basis immediately prior to consummation of the Major Acquisition and
(b) the denominator of which is the total number of shares of capital stock of
InSight outstanding on a fully-diluted basis immediately after the Major
Acquisition.

InSight may, at any time, terminate GE Medical's right to receive any future
Supplemental Service Fee by making a payment to GE Medical in an amount (the
"Buyout Amount") equal to $8.0 million less the discounted value of the
aggregate Supplemental Service Fee received by GE Medical from InSight
(calculated at a discount rate of 15% per annum), paid through the date of
payment of such Buyout Amount, provided that the payment of the Buyout Amount
will have no effect on the obligation of InSight to repay the then-outstanding
Distribution Notes in accordance with their respective terms.

PAYMENT OF GE MEDICAL LEGAL FEES

In connection with the Merger and the GE Medical Financial Transactions
described above, each of AHS and Maxum have agreed to reimburse GE Medical an
amount equal to 40% of the legal costs incurred thereby in connection with the
Merger or the GE Medical Financial Transactions from and after July 1, 1995.
Such reimbursement is required to be made by AHS and Maxum, whether or not the
Merger or the GE Medical Financial Transactions are consummated.

OPERATION, MANAGEMENT AND BUSINESS OF INSIGHT
AFTER THE MERGER

BUSINESS OF INSIGHT

From and after the Effective Time, each of AHS and Maxum will be a wholly-
owned subsidiary of InSight. InSight will consolidate its principal executive
offices into one location (in Newport Beach, California) in order to reduce
overhead costs. InSight expects that decisions as to the continuing employment
of AHS and Maxum employees, and the continuing operation of business at each
Company's facilities, will be made on a case-by-case basis after the Effective
Time based upon InSight's evaluation of the combined operations of the two
Companies. See "Business of AHS--Description of Business" and "Business of
Maxum--Description of Business."

The strategy of InSight will be focused on three interrelated initiatives:
(i) consolidation of the highly fragmented, diagnostic imaging industry
through acquisition of organizations which either strategically fit into its
regional networking strategy or provide significant cost savings, (ii)
development of regional networks of radiology providers and physicians
designed to provide the highest quality and most cost-effective unit of

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diagnostic information to the broadest population in a given market and (iii)
new business initiatives focused on broadening its range of services to
managed care organizations, hospitals and physician management companies to
include radiology management services; information management services;
unbundling of current core services such as billing and collections,
technician training and staffing, and asset management and continued
evaluation of opportunities with emerging technologies. InSight will be
holding discussions with third parties routinely in its efforts to implement
these initiatives.

MANAGEMENT OF INSIGHT

Executive Officers. Pursuant to the terms and conditions of the Merger
Agreement, from and after the Effective Time, the following individuals will
be executive officers of InSight:

<TABLE>
<CAPTION>
EXECUTIVE OFFICER AGE POSITION WITH INSIGHT PRESENT POSITION
----------------- --- --------------------- ----------------
<S> <C> <C> <C>
Frank E. Egger.......... 51 Chairman of the Board and Chairman of the Board and
Director Director of AHS
E. Larry Atkins......... 49 President, Chief Executive President, Chief Executive
Officer and Director Officer and Director of AHS
Glenn P. Cato........... 43 Senior Executive Vice President, Chief Executive
President and Chief Officer, Chief Financial Officer
Operating Officer and Secretary of Maxum
Thomas V. Croal......... 36 Executive Vice President, Vice President, Chief Financial
Chief Financial Officer and Officer, Secretary and Director
Secretary of AHS
Michael A. Boylan....... 40 Senior Vice President-- Executive Vice President of
Operations Maxum
Robert N. LaDouceur..... 51 Senior Vice President-- Executive Vice President of
Operations Maxum
Michael D. Cragin....... 48 Senior Vice President-- Regional Vice President of
Operations Western Operations of AHS
Deborah M. MacFarlane... 40 Senior Vice President-- Vice President--Marketing of AHS
Marketing
</TABLE>

For more information concerning each of the proposed executive officers of
InSight, see "Management of InSight--Directors," "Management of AHS" and
"Management of Maxum."

In anticipation of the consummation of the Merger, Messrs. Atkins, Cato,
Croal, LaDouceur, Boylan and Cragin and Ms. McFarlane have each entered into
an InSight Employment Agreement, each of which is effective as to employment
with InSight at the Effective Time. Any officer may be removed at any time by
the InSight Board, subject to any severance rights under such officer's
InSight Employment Agreement. See "The Merger--Interests of Certain Persons in
the Merger."

Directors. The InSight Board is, and at the Effective Time will be,
comprised of four members. The following individuals have been elected as the
initial directors of InSight:

<TABLE>
<CAPTION>
DIRECTOR AGE PRESENT POSITION POSITION HELD SINCE
-------- --- ---------------- -------------------
<S> <C> <C> <C>
Frank E. Egger.......... 51 Chairman of the Board and Director February 1996
E. Larry Atkins......... 49 President, Chief Executive Officer and February 1996
Director
Leonard H. Habas........ 52 Director February 1996
Ronald G. Pantello...... 52 Director February 1996
</TABLE>

For information on each of the directors of InSight who presently are
directors or executive officers of AHS or Maxum, see "Management of AHS" and
"Management of Maxum."

The InSight Board will be comprised of three classes of directors. The first
class will serve until the annual meeting of stockholders held in 1997 and
will initially consist of E. Larry Atkins. The second class of directors shall
serve until the annual meeting of stockholders held in 1998 and shall
initially consist of Ronald G. Pantello. The third class of directors shall
serve until the annual meeting of stockholders held in 1999 and shall
initially

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consist of Leonard H. Habas and Frank E. Egger. All subsequent terms of each
class of directors after such class first stand for re-election shall expire
at the third succeeding annual meeting of stockholders after their election.

The parties to the Merger Agreement have agreed that, immediately after the
Effective Time, InSight shall extend an invitation to Grant R. Chamberlain to
join the InSight Board. Should he accept, he would become a member of the
second class of InSight directors. Mr. Chamberlain, who is 31, is a Vice
President of Shattuck Hammond, which he joined in 1995. Prior to joining
Shattuck Hammond, Mr. Chamberlain served for four years as Manager of
Strategic Investments & Restructurings for GE Medical and, before his service
with GE Medical, for three years as an employee of GECC's Corporate Finance
Group. While serving in these positions, all of which primarily involve
corporate finance, Mr. Chamberlain has had extensive involvement with
companies in the health care industry.

Directors who are not employees of InSight will receive annual director fees
of $15,000 and be granted options to purchase InSight Common Stock as provided
in the InSight 1996 Directors' Stock Option Plan. See "Proposal No. 2: InSight
Option Plans Proposal."

INSIGHT PRINCIPAL STOCKHOLDERS

The following table sets forth certain information known to Maxum and AHS
with respect to certain principal stockholders of Maxum Common Stock and AHS
Common Stock as of May 6, 1996, as adjusted to reflect the consummation of the
Merger (assuming that none of the individuals or entities listed below who
hold Maxum Common Stock or AHS Common Stock exercise their appraisal rights),
by (1) each person who is projected to own beneficially more than 5% of the
outstanding shares of InSight Common Stock, (2) each of InSight's directors,
(3) each of InSight's executive officers, and (4) all of InSight's directors
and executive officers as a group.

<TABLE>
<CAPTION>
5% STOCKHOLDERS, DIRECTORS, EXECUTIVE
OFFICERS, SHARES TO BE PERCENT TO
AND DIRECTORS AND EXECUTIVE OFFICERS AS A BENEFICIALLY BE BENEFICIALLY
GROUP OWNED OWNED(1)
----------------------------------------- ------------ ---------------
<S> <C> <C>
GE Medical(2).................................... 2,501,760 48%
E. Larry Atkins(3)............................... 42,100 1.53%
Frank E. Egger(4)................................ 23,418 *
Leonard H. Habas(5)(6)........................... 13,455 *
Estate of Cal Kovens(7).......................... 454,082 16.6%
Roz Kovens(8).................................... 529,652 19.4%
Ronald G. Pantello(5)............................ 8,970 *
Glenn P. Cato(9)................................. 46,345 1.7%
Thomas V. Croal(10).............................. 17,500 *
Michael A. Boylan(11)............................ 32,890 1.2%
Robert N. LaDouceur(11).......................... 32,890 1.2%
Michael D. Cragin................................ 0 0
Deborah M. MacFarlane(12)........................ 5,000 *
All Officers and Directors as a Group(13) (12
Persons)........................................ 222,568 7.7%
</TABLE>
- --------
* Less than 1%

(1) Except as indicated in the footnotes to this table and pursuant to
community property laws, the persons named in the table have sole voting
and investment power with respect to all shares of InSight Common Stock.
(2) Includes 2,501,760 shares of Common Stock into which InSight Series A
Preferred Stock held by GE Medical are convertible at any time, subject
to certain antidilution adjustments if holders of AHS or Maxum options
or warrants exercise their current rights to purchase AHS Common Stock
or Maxum Common Stock, as the case may be, prior to the Effective Time,
and to other adjustments. See "Debt Restructuring and Issuance of
Preferred Stock to GE Medical," and "Operations, Management and Business
of InSight After the Merger--Description of Capital Stock of InSight."

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<PAGE>

(3) Includes (i) options to purchase 18,000 shares of InSight Common Stock at
an exercise price of $13.40 per share, (ii) options to purchase 12,000
shares of InSight Common Stock at an exercise price of $13.10 per share,
and (iii) options to purchase 7,000 shares of InSight Common Stock at an
exercise price of $2.50 per share. Does not include an option to purchase
10,500 shares of InSight Common Stock at an exercise price of $2.50 per
share, which is not currently exercisable.
(4) Includes (i) an option to purchase 3,000 shares of InSight Common Stock
at an exercise price of $16.20 per share, and (ii) an option to purchase
1,200 shares of InSight Common Stock at an exercise price of $2.50 per
share. Does not include an option to purchase 1,800 shares of InSight
Common Stock at an exercise price of $2.50 per share, which is not
currently exercisable. The InSight Common Stock and warrants held by Mr.
Egger are pledged to the estate of Cal Kovens as security for the
repayment of a loan. If the loan is not repaid when due, the estate of
Mr. Kovens would have the right to sell such of the pledged securities
as are necessary to satisfy the indebtedness. Does not include warrants
to purchase 2,268 shares of InSight Common Stock to be issued by InSight
at the Effective Time.
(5) Includes options to purchase 8,970 shares of InSight Common Stock at an
exercise price of $1.25 per share for each of Messrs. Habas and
Pantello. Does not include options to purchase 8,970 shares of InSight
Common Stock at an exercise price of $0.10 per share for each of Messrs.
Habas and Pantello pursuant to which approval of Maxum stockholders is
required. See "Maxum Proposal No. 3: Approval of Maxum Stock Option
Grants to Directors."
(6) Includes options to purchase 4,485 shares of InSight Common Stock at an
exercise price of $15.64 per share.
(7) Includes (i) 1,925 shares of InSight Common Stock held by each of the
M.K. Boca Trust, S.K. Boca Trust, K.K. Boca Trust and B.K. Boca Trust,
over which Mr. Kovens did not have or share voting or dispositive power
and (ii) warrants to purchase 20,000 shares of InSight Common Stock at
an exercise price of $2.50 per share. Does not include 72,385 and 48,881
shares beneficially owned by Roz Kovens and Marc Kovens, respectively.
Does not include warrants to purchase 33,645 shares of InSight Common
Stock to be issued by InSight at the Effective Time.
(8) Includes (i) 454,082 shares beneficially owned by the estate of Cal
Kovens with respect to which Mrs. Kovens is the personal representative,
and (ii) an option to purchase 1,200 shares of InSight Common Stock at
an exercise price of $2.50 per share. Does not include an option to
purchase 1,800 shares of InSight Common Stock at an exercise price of
$2.50 per share, which is not currently exercisable, or warrants to
purchase 7,660 shares of InSight Common Stock to be issued by InSight at
the Effective Time.
(9) Includes (i) options to purchase 25,415 shares of InSight Common Stock
at an exercise price of $0.42 per share, (ii) options to purchase 8,970
shares of InSight Common Stock at an exercise price of $0.10 per share,
and (iii) options to purchase 11,960 shares of InSight Common Stock at
an exercise price of $0.84 per share. Does not include an option to
purchase 5,980 shares of InSight Common Stock at an exercise price of
$0.84 per share, which is not currently exercisable.
(10) Includes (i) options to purchase 7,500 shares of InSight Common Stock at
an exercise price of $13.40 per share, (ii) options to purchase 5,000
shares of InSight Common Stock at an exercise price of $13.50 per share
and (iii) options to purchase 5,000 shares of InSight Common Stock at an
exercise price of $2.50 per share. Does not include an option to
purchase 7,500 shares of InSight Common Stock at an exercise price of
$2.50 per share, which is not currently exercisable.
(11) Includes (i) options to purchase 8,970 shares of InSight Common Stock at
an exercise price of $0.10 per share, (ii) options to purchase 11,960
shares of InSight Common Stock at an exercise price of $0.42 per share,
and (iii) options to purchase 11,960 shares of InSight Common Stock at
an exercise price of $0.84 per share. Does not include an option to
purchase 5,980 shares of InSight Common Stock at an exercise price of
$0.84 per share, which is not currently exercisable.
(12) Includes an option to purchase 5,000 shares of InSight Common Stock at
an exercise price of $15.00 per share.
(13) Assumes the exercise in full of all currently exercisable warrants and
options described in footnotes (3), (4), (6), (7), (8), (9), (10), (11)
and (12).

For more information, see "AHS Principal Stockholders" and "Maxum Principal
Stockholders."

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DESCRIPTION OF CAPITAL STOCK OF INSIGHT

The authorized capital stock of InSight consists of 25,000,000 shares of
InSight Common Stock and 3,500,000 shares of preferred stock, par value $.001
per share.

Common Stock. The holders of InSight Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of
stockholders. The holders of InSight Common Stock have no cumulative voting
rights in the election of directors. Subject to the prior rights of holders of
InSight Series A Preferred Stock and preferred stock of InSight which may be
issued in the future, the holders of InSight Common Stock are entitled to
dividends, when, as and if declared by the InSight Board, out of funds legally
available therefor. In the event of the liquidation, dissolution or winding up
of InSight, the holders of InSight Common Stock are entitled to share ratably
in all assets remaining after payment of liabilities and the liquidation
preferences of any outstanding shares of preferred stock, including the
InSight Series A Preferred Stock contemplated to be issued to GE Medical. See
"--InSight Series A Preferred Stock to be Issued to GE Medical." Holders of
InSight Common Stock have no preemptive rights and have no right to convert
InSight Common Stock into any other securities. All shares of InSight Common
Stock issued pursuant to the Merger will be, when issued, fully paid and
nonassessable.

Preferred Stock. Subject to the class voting rights of the holders of
InSight Series A Preferred Stock described below, the InSight Board has the
authority, without further stockholder approval, to issue authorized but
unissued shares of preferred stock in one or more series and to determine the
preferences, rights, privileges and restrictions of any series, including the
dividend rights, conversion rights, voting rights, rights and terms of
redemption, liquidation preferences and number of shares constituting, and
designation of, such series. Such issuance of preferred stock may adversely
affect, among other things, the voting rights of existing stockholders. There
are no shares of InSight Series A Preferred Stock currently outstanding. Other
than the InSight Series A Preferred Stock contemplated to be issued to GE
Medical, InSight has no present plans to issue any shares of preferred stock.

InSight Series A Preferred Stock to be Issued to GE Medical. Under the
InSight Certificate, 2,501,760 shares of the authorized preferred stock of
InSight are designated as InSight Series A Preferred Stock. At the Effective
Time, InSight will issue an aggregate of 2,501,760 shares of InSight Series A
Preferred Stock to GE Medical (subject to certain antidilution adjustments if
holders of AHS or Maxum options or warrants exercise their current rights to
purchase AHS Common Stock or Maxum Common Stock prior to the Effective Time)
in exchange for GE Medical's 1,000,000 shares of AHS Series C Preferred Stock
and 15,000 shares of Maxum Series B Preferred Stock acquired by GE Medical
immediately prior to the Merger pursuant to the Stock Acquisition Agreement.

The holders of InSight Series A Preferred Stock have no preemptive rights
with respect to any shares of capital stock of InSight or any other securities
of InSight convertible into or carrying rights or options to purchase any such
shares.

The following is a brief description of the rights, preferences and
privileges of the InSight Series A Preferred Stock as set forth in the InSight
Certificate. Such description does not purport to be complete and is subject
to and qualified in its entirety by reference to InSight's Certificate, a copy
of which is filed as an Exhibit to the Registration Statement of which this
Joint Proxy Statement/Prospectus is a part.

DIVIDEND RIGHTS. Each holder of InSight Series A Preferred Stock is
entitled to receive dividends (when, as and if declared by the InSight
Board) together with the holders of InSight Common Stock on a basis
proportionate to the number of shares of InSight Common Stock held by such
holder (assuming conversion of all InSight Series A Preferred Stock). No
dividends will be paid on any InSight Common Stock unless and until the
holders of InSight Series A Preferred Stock shall have been paid in full
their pro rata portion thereof.

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LIQUIDATION PREFERENCE. In the event of any Liquidating Event (defined as
(i) the commencement by InSight of a voluntary case concerning itself under
the bankruptcy laws of the United States, as now or hereafter in effect, or
the commencement of an involuntary case against InSight with respect to
which the petition shall not be controverted within ten days, or be
dismissed within 60 days, after commencement thereof, (ii) the appointment
of a custodian for, or the taking charge by a custodian of, all or
substantially all of the property of InSight, or the commencement by
InSight of any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction (whether now or hereafter in
effect) relating to InSight, or the commencement against InSight of any
such proceeding which is not controverted within ten days thereof, or (iii)
the adjudication of InSight as insolvent or bankrupt), holders of InSight
Series A Preferred Stock will be entitled to receive, prior and in
preference to any distribution of any of the assets of InSight to holders
of InSight Common Stock, an amount per share equal to the sum of (I) the
Liquidating Preference Price (defined as, for each share of InSight Series
A Preferred Stock, an amount equal to the quotient of (A) $24.0 million,
divided by (B) the aggregate number of shares of InSight Series A Preferred
Stock issued at the Effective Time), plus (II) all accrued but unpaid
dividends on such InSight Series A Preferred Stock. Thereafter, all
remaining assets of InSight available for distribution to stockholders
shall be distributed among the holders of InSight Common Stock
proportionate to the number of shares of InSight Common Stock held by each
such holder. The Liquidation Preference Price at the Effective Time will be
$9.59 for each share of InSight Series A Preferred Stock.

In the event of any Corporate Transaction (defined as the closing of (I)
the acquisition of the capital stock of InSight by another entity by means
of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation), or (II) a sale of
all or substantially all of the assets of InSight, unless, in either case,
InSight's stockholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by
virtue of securities issued as consideration for InSight's acquisition or
sale or otherwise) hold at least 50% of the voting power of the surviving
or acquiring entity in such acquisition or sale), holders of InSight Series
A Convertible Preferred Stock will be entitled to receive, prior and in
preference to any distribution of any of the assets of InSight to holders
of InSight Common Stock, an amount per share equal to the sum of (A) the
greater of (x) $16.0 million divided by the aggregate number of shares of
InSight Series A Preferred Stock issued at the Effective Time, or (y) the
average of the closing prices of InSight Common Stock on the Nasdaq Stock
Market or as traded over-the-counter during the 20-trading day period
ending 30 trading days after the date of the Effective Time, plus (B) all
accrued but unpaid dividends on such InSight Series A Preferred Stock.
Thereafter, all remaining assets of InSight available for distribution to
stockholders shall be distributed among the holders of InSight Common Stock
on a basis proportionate to the number of shares of InSight Common Stock
held by each such holder.

CONVERSION RIGHTS. Holders of the InSight Series A Preferred Stock have
the right, at any time, to convert their shares of InSight Series A
Preferred Stock into shares of InSight Common Stock at a ratio based on the
then-applicable conversion price of the InSight Series A Preferred Stock.
No fractional shares will be issued upon conversion of the InSight Series A
Preferred Stock; if any such conversion price calculation results in a
fraction, such fraction shall be rounded up to a whole share. Each share of
InSight Series A Preferred Stock shall be automatically converted into
shares of InSight Common Stock at a ratio based on the then-applicable
conversion price upon the consummation of an underwritten public offering
of shares of InSight Common Stock, the public offering price of which is
not less than five times such then-applicable conversion price and the net
proceeds to InSight of which are not less than $75.0 million in the
aggregate (net of all discounts, commissions and other expenses allowed,
paid or incurred by InSight for any such underwriting or otherwise in
connection therewith).

Each share of InSight Series A Preferred Stock is initially convertible,
without payment, by the holder thereof, into one share of InSight Common
Stock (subject to adjustment as described below) based upon a price-based
calculation where the conversion ratio is initially calculated by a
"conversion price" equal to the greater of (I) $16.0 million divided by the
aggregate number of shares of InSight Series A Preferred

87
<PAGE>

Stock issued as of the Effective Time, or (II) the average of the closing
prices of InSight Common Stock on the Nasdaq Stock Market or as traded
over-the-counter during the 20-trading day period ending 30 trading days
after the Effective Time. The conversion price of the InSight Series A
Preferred Stock is subject to adjustment in certain events, including stock
dividends, stock splits, reverse stock splits or other subdivisions,
combinations or recapitalizations of the InSight Common Stock. In addition,
if InSight shall issue any shares of InSight Common Stock or any securities
convertible into, or exercisable for, shares of InSight Common Stock at a
common stock equivalent price of less than the conversion price of the
InSight Series A Preferred Stock in effect at the time of such issuance,
then such conversion price of the InSight Series A Preferred Stock shall be
adjusted in accordance with certain price-based antidilution provisions.
Moreover, if InSight shall issue, during any calendar quarter after the
Effective Time, any shares of InSight Common Stock (referred to herein,
with respect to any such calendar quarter, as "Exercised Shares") upon the
exercise of any options or warrants which were granted prior to and in
existence as of the Effective Time, then the conversion price of the
InSight Series A Preferred Stock shall be adjusted in accordance with
certain non-price-based antidilution provisions. See "Risk Factors--
Potential Impact of Liquidation Preference of InSight Series A Preferred
Stock; Adjustments to Conversion Price of InSight Series A Preferred Stock
Resulting from Certain Issuances of InSight Common Stock."

VOTING RIGHTS. The holders of InSight Series A Preferred Stock have no
voting rights other than the right to vote as a separate class on (i) (A)
the disposition (by sale, lease or otherwise) of all or substantially all
of InSight's property or business, (B) the liquidation, dissolution or
winding up of InSight's business, (C) the merger of InSight into or
consolidation with any other corporation (other than a wholly-owned
subsidiary of InSight) or (D) the consummation of any transaction or series
of related transactions in which more than 50% of the voting power of
InSight is disposed of unless, in any such case, InSight's stockholders of
record as constituted immediately prior thereto will, immediately
thereafter, hold at least 50% of the voting power of the surviving or
acquiring entity, (ii) any adverse change in the rights, preferences or
privileges of InSight Series A Preferred Stock, (iii) an increase or
decrease (other than by redemption or conversion) in the total number of
authorized shares of the InSight Series A Preferred Stock, (iv) the
authorization or issuance of any other equity security, including any other
security convertible into or exercisable for any equity security having a
preference over, or being on a parity with, certain rights of InSight
Series A Preferred Stock, (v) the redemption, purchase or other acquisition
of any additional shares of preferred stock or InSight Common Stock, except
for the repurchase of shares of InSight Common Stock for consideration not
exceeding $100,000 in the aggregate during any 12-month period, from
employees, officers, directors, consultants or other persons performing
services for InSight or any subsidiary of InSight pursuant to agreements
under which InSight has the option to repurchase such shares of InSight
Common Stock at cost, including any such option exercisable upon the
termination of employment or any other event, (vi) the amendment of
InSight's charter documents, (vii) the issuance or sale by any subsidiary
of InSight, except to InSight or any wholly-owned subsidiary of InSight, of
any equity security, including any other security convertible into or
exercisable for any equity security, of such subsidiary, (viii) the
issuance of any equity securities of InSight without consideration or for a
consideration per share less than the then-applicable conversion price of
the InSight Series A Preferred, other than (a) shares of InSight Common
Stock issuable or issued under the InSight Option Plans, or (b) other
incentive issuances to employees, consultants or directors of InSight
pursuant to stock plans approved by the stockholders and InSight Board and
pursuant to the exercise of any warrants or options which were granted
prior to and in existence at the Effective Time, but only to the extent
such issued and issuable shares of InSight Common Stock described in
clauses (a) and (b) do not exceed, in the aggregate, 1,233,000 shares of
InSight Common Stock, and (ix) the issuance of equity securities of InSight
in connection with any acquisition by InSight of any entity with annual net
revenues during such entity's most recently completed calendar or fiscal
year in excess of $20.0 million.

Registration Rights. In connection with the consummation of the Merger, GE
Medical and InSight will enter into a Registration Rights Agreement providing
the holders (the "Holders") of InSight Common Stock issuable upon the
conversion of the InSight Series A Preferred Stock with certain demand and
"piggy back" registration rights with respect to such shares of InSight Common
Stock (the "Registrable Securities"). Pursuant

88
<PAGE>

to such agreement, at any time after the first anniversary of the Effective
Time, the Holders of a majority of the Registrable Securities then outstanding
may request that InSight file a registration statement under the Securities
Act covering the registration of at least 25% of the Registrable Securities
then outstanding (or a lesser percent if the anticipated aggregate offering
price of such Registrable Securities, net of underwriting discounts and
commissions, would exceed $7.5 million). Upon such request and subject to
certain conditions, InSight generally will be required to use its best efforts
to effect any such registration. InSight is not required to effect more than
two such demand registrations.

In addition, if InSight proposes to register any of its securities, either
for its own account or for the account of other stockholders, InSight is
required, with certain exceptions, to notify the Holders and, subject to
certain limitations, to include in such registration all of the Registrable
Securities of InSight Common Stock requested to be included by the Holders.
InSight is generally obligated to bear the expenses, other than underwriting
discounts and sales commissions, of any such "piggy back" registration.

InSight is also required, at the request of the Holders of at least 25% of
the registrable securities then outstanding, to effect an unlimited number of
registrations on Form S-3, although InSight need only bear the expenses of two
such registrations.

Warrants. In consideration of certain agreements of the holders of the AHS
Series B Preferred Stock, InSight will, at the Effective Time, issue to such
holders warrants covering an aggregate of 50,000 shares of InSight Common
Stock. The exercise price of such warrants will be the fair market value of
the InSight Common Stock based on its average closing price for the 20 trading
days commencing on the eleventh trading day after the Effective Time. Such
warrants are exercisable any time after the Effective Time until five years
thereafter. Subject to certain conditions, the holders of the warrants will
have certain "piggy back" registration rights to register the shares subject
to the warrants under the Securities Act.

Certain Provisions of the Certificate of Incorporation and Bylaws. Under the
InSight Certificate, after giving effect to the issuance of shares
contemplated in the Merger and accounting for shares reserved for issuance
pursuant to the Merger, the assumed AHS and Maxum options and warrants, and
the InSight Option Plans, there will be an aggregate of approximately
19,985,000 authorized but unissued and unreserved shares of InSight Common
Stock and an aggregate of 998,240 authorized but unissued and unreserved
shares of preferred stock. These additional authorized shares may be utilized
for a variety of corporate purposes, including future public offerings to
raise additional capital and to finance corporate acquisitions. Except
pursuant to the Merger and certain Derivative Securities described in this
Joint Proxy Statement/Prospectus, InSight currently has no plans to issue
additional shares of InSight Common Stock or its preferred stock. However, one
of the effects of authorized but unissued and unreserved shares of capital
stock may be to render more difficult or discourage an attempt by a potential
acquiror to obtain control of InSight by means of a merger, tender offer,
proxy contest or otherwise, and thereby protect the continuity of InSight's
management. The issuance of such shares of capital stock may have the effect
of delaying, deferring or preventing a change in control of InSight without
any further action by the stockholders of InSight.

LISTING OF INSIGHT COMMON STOCK

Application has been made to list InSight Common Stock on the Nasdaq
SmallCap Market. There can be no assurance, however, that InSight Common Stock
will be accepted for listing on the Nasdaq SmallCap Market. If not, it is
anticipated after the Effective Time that InSight Common Stock will be quoted
on the OTC Bulletin Board. Following the Effective Time, neither AHS Common
Stock nor Maxum Common Stock will be publicly traded.

TRANSFER AGENT

American Stock Transfer & Trust Company will act as transfer agent for
InSight Common Stock following the Effective Time.

89
<PAGE>

PRICE RANGE OF COMMON STOCK

MARKET FOR MAXUM COMMON STOCK AND RELATED STOCKHOLDER MATTERS

As of May 6, 1996, Maxum Common Stock was held by 162 record owners. Maxum
shares are currently traded over the counter on the OTC Bulletin Board.
Maxum's Common Stock was traded on the American Stock Exchange under the
Symbol "MXH" until November 26, 1993, when its Common Stock was delisted due
to its failure to meet the exchange's capital and certain other requirements.
The following table sets forth the high and low bid quotations for Maxum
Common Stock, as quoted on the OTC Bulletin Board, as reported for the periods
indicated.

<TABLE>
<CAPTION>
1994 LOW HIGH
---- ----- -----
<S> <C> <C>
First Quarter.................................................... 1/32 5/16
Second Quarter................................................... 1/20 1/4
Third Quarter.................................................... 1/20 1/16
Fourth Quarter................................................... 1/20 3/8
<CAPTION>
1995 LOW HIGH
---- ----- -----
<S> <C> <C>
First Quarter.................................................... 3/8 11/16
Second Quarter................................................... 1/2 11/16
Third Quarter.................................................... 1/2 2
Fourth Quarter................................................... 1/2 1 3/4
<CAPTION>
1996 LOW HIGH
---- ----- -----
<S> <C> <C>
First Quarter ................................................... 13/16 1 5/8
Second Quarter (through May 6, 1996)............................. 1 3/8 3 1/8
</TABLE>

Dividends. Maxum has never declared or paid any cash dividends on its Common
Stock. If the Merger is not consummated, Maxum does not anticipate that any
dividends will be paid on the Maxum Common Stock in the foreseeable future.

Maxum Shares Eligible For Future Sale. As of May 6, 1996, Maxum had
2,273,555 shares of Common Stock outstanding. Of these shares, 117,905 shares
are not currently freely tradeable in the public market as a result of
limitations imposed by law (collectively, "Maxum Restricted Shares"). Except
for shares held by certain affiliates of Maxum, any Maxum Restricted Shares
restricted by securities laws will become freely tradeable upon the Effective
Time under Rule 145 of the Securities Act. See "The Merger--Resale of InSight
Common Stock."

MARKET FOR AHS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

As of May 6, 1996, AHS Common Stock was held by approximately 483 record
owners. AHS' shares are currently traded over the counter on the OTC Bulletin
Board under the symbol "AHTS." Prior to July 16, 1993, AHS Common Stock was
quoted on the Nasdaq National Market System under the symbol "AHTS" until its
Common Stock was delisted for failure to meet the capital and surplus
requirements. The following table sets forth the high and low bid quotations
for AHS Common Stock, as quoted on the OTC Bulletin Board, as reported for the
periods indicated.

<TABLE>
<CAPTION>
1994 LOW HIGH
---- ---- ------
<S> <C> <C>
First Quarter.................................................... 5/32 9/16
Second Quarter................................................... 3/16 3/8
Third Quarter.................................................... 1/8 7/16
Fourth Quarter................................................... 3/32 1/2
<CAPTION>
1995 LOW HIGH
---- ---- ------
<S> <C> <C>
First Quarter.................................................... 1/8 3/8
Second Quarter................................................... 1/8 11/32
Third Quarter.................................................... 1/8 5/8
Fourth Quarter................................................... 3/16 1/2
<CAPTION>
1996 LOW HIGH
---- ---- ------
<S> <C> <C>
First Quarter.................................................... 1/4 1 7/16
Second Quarter (through May 6, 1996)............................. 1/2 15/16
</TABLE>

90
<PAGE>

Dividends. AHS has never paid a cash dividend on its AHS Common Stock. If
the Merger is not consummated, AHS does not anticipate that any dividends will
be paid on the AHS Common Stock in the foreseeable future.

AHS Shares Eligible For Future Sale. As of May 6, 1996, AHS had 9,713,647
shares of Common Stock outstanding. Of these shares, 2,050,599 shares are not
currently freely tradeable in the public market as a result of limitations
imposed by law (collectively, "Restricted Shares"). Except for shares held by
certain affiliates of AHS, any Restricted Shares restricted by securities laws
will become freely tradeable upon the Effective Time under Rule 145 of the
Securities Act. See "The Merger--Resale of InSight Common Stock."

UNAUDITED PRO FORMA CAPITALIZATION OF INSIGHT

The following unaudited pro forma financial data presents the unaudited pro
forma capitalization of InSight at December 31, 1995, giving effect to the
Merger of MXHC Acquisition and AHSC Acquisition with and into Maxum and AHS,
respectively, as if the Merger were consummated on that date, using the
purchase method of accounting with Maxum being treated as the acquiror. Such
pro forma data is based on the Unaudited Pro Forma Condensed Consolidated
Financial Statements of Maxum and AHS presented herein. Such pro forma
statements were prepared using the historical results of both Maxum and AHS
while giving effect to the GE Medical Financial Transactions.

The following table represents the unaudited pro forma capitalization of
InSight following consummation of the Merger (amounts in thousands):

<TABLE>
<CAPTION>
PRO FORMA
ITEM AS ADJUSTED
---- -----------
<S> <C>
Current portion of long-term debt............................. $ 9,456
--------
Long-term liabilities, excluding current portion.............. 39,406
--------
Minority interest............................................. 1,602
--------
Stockholders' equity:
Series A Convertible Preferred Stock, par value $.001 per
share, 3,500,000 shares authorized, stated at.............. 6,750
Common Stock, par value $.001 per share, 25,000,000 shares
authorized................................................. 3(1)
Additional paid-in capital.................................. 23,105(1)
Accumulated deficit......................................... (19,972)
Treasury stock.............................................. --
--------
Total stockholders' equity (deficit)(2)....................... 9,886
--------
Total capitalization.......................................... $ 60,350
========
</TABLE>
- --------
(1) Excluding approximately 421,000 shares of InSight Common Stock subject to
outstanding warrants, options and other rights to purchase InSight Common
Stock at a weighted average exercise price of $4.11 per share that will
be assumed by InSight and were outstanding at December 31, 1995 (assuming
stockholder ratification of the grant of options covering 75,000 shares
of Maxum Common Stock under the Maxum Option Ratification Proposal). Does
not include 50,000 shares of InSight Common Stock subject to warrants
which will be issued at the Effective Time.
(2) Total stockholders' equity (deficit) includes intangible assets of $17.4
million.

91
<PAGE>

UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Consolidated Financial
Statements are presented in two phases. First, Unaudited Pro Forma Condensed
Consolidated Financial Statements are presented separately for each of Maxum
and AHS to show the effect of the GE Medical Financial Transactions. The GE
Medical Financial Transactions will receive troubled-debt restructuring
treatment for accounting purposes. Second, Unaudited Pro Forma Condensed
Consolidated Financial Statements are presented which reflect the Merger of
Maxum and AHS into InSight after giving effect to the GE Medical Financial
Transactions. The Merger will be accounted for using the purchase method of
accounting in accordance with generally accepted accounting principles. Maxum
is treated as the acquiror for accounting purposes, based on the relative
revenues, book values and other factors which are reflected in the stock
apportionment.

The Unaudited Pro Forma Condensed Consolidated Balance Sheets of Maxum and
AHS are based on such Company's respective historical balance sheets as of
December 31, 1995 and are presented as if the GE Medical Financial
Transactions had been consummated at that date. The Unaudited Pro Forma
Condensed Consolidated Statements of Operations are based on the historical
statements of operations of Maxum and AHS for the year ended December 31, 1995
for each Company and give effect to the GE Medical Financial Transactions, as
if they had occurred on January 1, 1995. The statement of operations of Maxum
for 1995 does not include the pro forma effects of the significant business
acquired April 1, 1995 as if it had been acquired January 1, 1995, because the
results of this business for the period prior to Maxum's ownership (the three
months ended March 31, 1995 as shown on page H-26) are not material.

The Unaudited Pro Forma Condensed Consolidated Balance Sheets of InSight are
based on the respective pro forma balance sheets of Maxum and AHS as of
December 31, 1995, and are presented as if the Merger had been consummated at
that date using purchase accounting with Maxum as the acquiror. The Unaudited
Pro Forma Condensed Consolidated Statements of Operations for InSight are
based on the pro forma statements of operations for the year ended December
31, 1995 for Maxum and AHS and are presented as if the Merger had occurred on
January 1, 1995.

The Unaudited Pro Forma Condensed Consolidated Financial Statements are
provided for informational purposes only. They do not purport to be indicative
of the results that actually would have occurred if the Merger and the GE
Medical Financial Transactions had been consummated on the dates indicated or
which may be obtained in the future. The pro forma adjustments are based on
available information and upon certain assumptions outlined in the
accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements, which the respective managements of Maxum and AHS believe are
reasonable.

The Unaudited Pro Forma Condensed Consolidated Financial Statements should
be read in conjunction with the notes thereto, the audited consolidated
financial statements of Maxum and the related notes thereto contained
elsewhere herein, and the audited consolidated financial statements of AHS and
the related notes thereto contained elsewhere herein.

92
<PAGE>

INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
ADJUSTMENTS
------------------
MAXUM AHS DEBIT CREDIT INSIGHT
-------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.................. $ 1,870 $ 6,176 $ -- $ 1,500(C) $ 6,546
Accounts receivable... 7,406 6,892 -- -- 14,298
Prepaid expenses and
other................ 1,704 448 -- 500(C) 1,652
-------- -------- ------- ------- --------
Total current
assets............. 10,980 13,516 -- 2,000 22,496
PROPERTY AND EQUIPMENT.. 12,386 20,169 -- -- 32,555
INTANGIBLE ASSETS....... 4,047 2,230 12,436(D) 1,311(D) 17,402
OTHER ASSETS............ 1,513 -- -- -- 1,513
-------- -------- ------- ------- --------
$ 28,926 $ 35,915 $12,436 $3,311 $ 73,966
======== ======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable and
accrued expenses..... $ 7,065 $ 5,661 $ -- $-- $ 12,726
Current portion of
long-term debt....... 4,710 4,746 -- -- 9,456
Deferred gain on debt
restructuring........ 890 1,176 1,176(A) -- 890
-------- -------- ------- ------- --------
Total current
liabilities........ 12,665 11,583 1,176 -- 23,072
-------- -------- ------- ------- --------
LONG-TERM LIABILITIES:
Long-term debt........ 5,569 24,621 -- -- 30,190
Capital leases........ 4,667 463 -- -- 5,130
Accrued securities
litigation
settlement........... 1,900 -- -- -- 1,900
Deferred gain on debt
restructuring........ 1,264 6,725 6,725(A) -- 1,264
Other long-term
liabilities.......... -- 922 -- -- 922
-------- -------- ------- ------- --------
Total long-term
liabilities........ 13,400 32,731 6,725 -- 39,406
-------- -------- ------- ------- --------
MINORITY INTEREST....... -- 1,602 -- -- 1,602
-------- -------- ------- ------- --------
STOCKHOLDERS' EQUITY
(DEFICIT):
Preferred stock....... 3,375 9,450 6,075(B) -- 6,750
Common stock.......... 30 290 320(B) 3(B) 3
Additional paid-in
capital.............. 19,693 9,344 9,609(B) 3,677(B) 23,105
Accumulated deficit... (19,972) (29,085) -- 29,085(B) (19,972)
Treasury stock........ (265) -- -- 265(B) --
-------- -------- ------- ------- --------
Total stockholders'
equity (deficit)... 2,861 (10,001) 16,004 33,030 9,886
-------- -------- ------- ------- --------
$ 28,926 $ 35,915 $23,905 $33,030 $ 73,966
======== ======== ======= ======= ========
</TABLE>

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated balance sheets.

93
<PAGE>

INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)

<TABLE>
<CAPTION>
ADJUSTMENTS
-----------------
MAXUM AHS DEBIT CREDIT INSIGHT
------- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>
REVENUES:
Contract services....... $38,976 $5,322 $ -- $-- $ 44,298
Patient services........ 10,605 31,040 -- -- 41,645
Other................... 1,028 -- -- -- 1,028
------- ------ ------ ---- ---------
Total revenues........ 50,609 36,362 -- -- 86,971
------- ------ ------ ---- ---------
COSTS OF OPERATIONS:
Cost of services........ 30,441 19,466 -- -- 49,907
Equipment leases........ 14,250 5,366 -- -- 19,616
Depreciation and
amortization........... 3,273 4,573 -- 152 (E) 7,694
------- ------ ------ ---- ---------
Total costs of opera-
tions................ 47,964 29,405 -- 152 77,217
------- ------ ------ ---- ---------
GROSS PROFIT.............. 2,645 6,957 -- 152 9,754
CORPORATE OVERHEAD........ 3,972 3,886 622 (F) -- 8,480
------- ------ ------ ---- ---------
INCOME (LOSS) FROM COMPANY
OPERATIONS............... (1,327) 3,071 622 152 1,274
EQUITY IN EARNINGS OF
UNCONSOLIDATED
PARTNERSHIPS............. 348 -- -- -- 348
------- ------ ------ ---- ---------
OPERATING INCOME (LOSS)... (979) 3,071 622 152 1,622
OTHER EXPENSES:
Interest expense........ (307) (1,524) (1,501)(G) -- (3,332)
Provision for securities
litigation settlement.. (1,500) -- -- -- (1,500)
Interest income and oth-
er..................... 121 148 -- -- 269
------- ------ ------ ---- ---------
INCOME (LOSS) BEFORE IN-
COME TAXES............... (2,665) 1,695 2,123 152 (2,941)
INCOME TAX EXPENSE........ -- 64 -- -- 64
------- ------ ------ ---- ---------
NET INCOME (LOSS)......... $(2,665) $1,631 $1,397 $152 $ (3,005)(H)
======= ====== ====== ==== =========
PER SHARE DATA:
Net income (loss)....... $ (1.11)
=========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING....... 2,710,240
=========
</TABLE>

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.

94
<PAGE>

INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

The Merger will be accounted for as a purchase. Maxum is the acquiror for
accounting purposes. Generally accepted accounting principles require that
transferred assets and liabilities of the acquiree be accounted for at total
acquisition cost, allocated based on their relative fair values.

The unaudited pro forma condensed consolidated balance sheet of InSight as
of December 31, 1995 gives effect to the following pro forma adjustments,
dollar amounts in thousands:

(A) As required under purchase accounting, long-term debt of the company
acquired (AHS) is restated to fair market value. This adjustment restated
the debt of AHS by reversing the deferred gain (i.e. future interest
payments) of $7,901.

(B) As part of the acquisition of AHS by Maxum, certain adjustments were
recorded as required by purchase accounting. Those adjustments are
summarized as follows:
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN ACCUMULATED TREASURY
STOCK(4) STOCK CAPITAL DEFICIT STOCK TOTAL
--------- ------ ---------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Maxum purchase account-
ing applied to AHS Eq-
uity(1)................ $(6,075) $(290) $(9,344) $29,085 $-- $13,376
Retirement of Maxum
treasury stock(2)...... -- -- (265) -- 265 --
Records issuance of In-
Sight Common Stock for
AHS Common Stock and
AHS Series A Preferred
Stock(3)............... -- 1 3,649 -- -- 3,650
Reclass to reset the par
value of InSight Common
Stock issued in ex-
change for Maxum's Com-
mon Stock.............. -- (28) 28 -- -- --
------- ----- ------- ------- ---- -------
$(6,075) $(317) $(5,932) $29,085 $265 $17,026
======= ===== ======= ======= ==== =======
</TABLE>
--------
(1) Purchase accounting entry which eliminates the equity of AHS, except
for the $3,375 of AHS Series C Preferred Stock held by GE Medical
converted to 1,250,880 shares of InSight Series A Preferred Stock
($2.70 per share), as a condition precedent of the Merger and in
exchange for certain financial accommodations.
(2) Retirement of treasury stock of Maxum.
(3) Records the issuance of 1,349,908 shares of InSight Common Stock ($.001
par value) at $3,650 ($2.70 per share) in consideration for all of the
AHS Common Stock and the AHS Series A Preferred Stock. These shares
were recorded at the estimated fair market value of AHS Common Stock.
(4) The Maxum Series B Preferred Stock and the AHS Series C Preferred Stock
will be converted into InSight Series A Preferred Stock at the
Effective Time.

(D) Records goodwill related to the purchase of AHS, which reflects the
total purchase price of $47,040 ($7,025 preferred and common stock, $38,015
of liabilities assumed and $2,000 transaction costs) less the estimated
fair market value of assets acquired of $34,604 (total AHS assets ($35,915)
less goodwill previously recorded by AHS ($1,311)).

The unaudited pro forma condensed consolidated statement of operations of
InSight for the year ended December 31, 1995 gives effect to the following pro
forma adjustments:

(E) As part of Maxum's acquisition of AHS, all of the intangible assets
of AHS were removed under purchase accounting for the year ended December
31, 1995. This amount reverses the amortization of those intangible assets
at AHS.

(F) In purchase accounting, Maxum recorded goodwill of $12,436 (see (D)
above) related to the acquisition of AHS. This entry records amortization
of goodwill over 20 years using the straight-line method.

(G) As required by purchase accounting, long-term debt is restated to
fair market value, resulting in an increase in interest expense.

(H) In the event there had been pre-tax income, 14% of that amount would
have been recorded as additional maintenance expense under the Master
Service Agreement.

95
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
-------------------------------
ADJUSTMENTS
----------------
HISTORICAL DEBIT CREDIT TOTAL
---------- ------ ------ --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................. $ 1,870 $ -- $ -- $ 1,870
Accounts receivable.............. 7,406 -- -- 7,406
Prepaid expenses and other....... 1,704 -- -- 1,704
-------- ------ ------ --------
Total current assets........... 10,980 -- -- 10,980
PROPERTY AND EQUIPMENT............. 12,386 -- -- 12,386
INTANGIBLE ASSETS.................. 4,047 -- -- 4,047
OTHER ASSETS....................... 1,513 -- -- 1,513
-------- ------ ------ --------
$ 28,926 $ -- $ -- $ 28,926
======== ====== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued ex-
penses.......................... $ 7,065 $ -- $ -- $ 7,065
Current portion of long-term
debt............................ 6,143 1,433(A) -- 4,710
Deferred gain on debt restructur-
ing............................. -- -- 890(A) 890
-------- ------ ------ --------
Total current liabilities...... 13,208 1,433 890 12,665
-------- ------ ------ --------
LONG-TERM LIABILITIES:
Long-term debt................... 13,156 7,587(A) -- 5,569
Capital leases................... 4,667 -- -- 4,667
Accrued securities litigation
settlement...................... 1,900 -- -- 1,900
Deferred gain on debt restructur-
ing............................. -- -- 1,264(A) 1,264
-------- ------ ------ --------
Total long-term liabilities.... 19,723 7,587 1,264 13,400
-------- ------ ------ --------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock.................. -- -- 3,375(A) 3,375
Common stock..................... 30 -- -- 30
Common stock warrant............. 7 7(B) -- --
Additional paid-in capital....... 19,693 -- -- 19,693
Accumulated deficit.............. (23,470) -- 3,498(A)(B) (19,972)
Treasury stock................... (265) -- -- (265)
-------- ------ ------ --------
Total stockholders' equity
(deficit)..................... (4,005) 7 6,873 2,861
-------- ------ ------ --------
$ 28,926 $9,027 $9,027 $ 28,926
======== ====== ====== ========
</TABLE>

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated balance sheets.

96
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
-----------------------
ADJUSTMENTS
------------ ---
HISTORICAL DEBIT CREDIT TOTAL
---------- ----- ------ -------
<S> <C> <C> <C> <C> <C>
REVENUES:
Contract services................... $38,976 $-- $ -- $38,976
Patient services.................... 10,605 -- -- 10,605
Other............................... 1,028 -- -- 1,028
------- ---- ------ -------
Total revenues.................... 50,609 -- -- 50,609
------- ---- ------ -------
COSTS OF OPERATIONS:
Cost of services.................... 30,441 -- -- 30,441
Equipment leases.................... 14,464 -- 214(C) 14,250
Depreciation and amortization....... 3,273 -- -- 3,273
------- ---- ------ -------
Total costs of operations......... 48,178 -- 214 47,964
------- ---- ------ -------
GROSS PROFIT.......................... 2,431 -- 214 2,645
CORPORATE OVERHEAD.................... 3,972 -- -- 3,972
------- ---- ------ -------
INCOME (LOSS) FROM COMPANY
OPERATIONS........................... (1,541) -- 214 (1,327)
EQUITY IN EARNINGS OF UNCONSOLIDATED
PARTNERSHIPS......................... 348 -- -- 348
------- ---- ------ -------
OPERATING INCOME (LOSS)............... (1,193) -- 214 (979)
OTHER EXPENSES:
Interest expense.................... (1,747) -- 1,440(D) (307)
Provision for securities litigation
settlement......................... (1,500) -- -- (1,500)
Interest income and other........... 121 -- -- 121
------- ---- ------ -------
NET INCOME (LOSS)..................... $(4,319) $-- $1,654 $(2,665)
======= ==== ====== =======
</TABLE>

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.

97
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

The unaudited pro forma condensed consolidated balance sheet of Maxum as of
December 31, 1995 gives effect to the following pro forma adjustments:

(A) Recognizes the satisfaction of Maxum's current and long-term debt
obligations of $1,433 and $7,587, respectively, resulting from the GE
Medical Financial Transactions described in "Debt Restructuring and
Issuance of Preferred Stock to GE Medical-Financial Accommodations to Maxum
and the Maxum Subsidiaries." The gain represents the difference in the
carrying value ($9,020) of the debt obligations settled over the fair value
($3,375) of the Maxum Series B Preferred Stock issued to GE Medical. (The
15,000 shares of Maxum Series B Preferred Stock are convertible into
2,098,666 shares of Maxum Common Stock.) In accordance with the provisions
of troubled debt accounting (as required by SFAS No. 15), a portion of the
gain equal to the sum of the current and long-term portions of future
interest payable on all remaining GE Medical debt and capital lease
obligations of $890 and $1,264, respectively, will be deferred and reduced
by future interest payments over the terms of the respective debt
instruments.

The gain does not take into account a potential gain that could be
recognized should Maxum return or exchange certain Mobile MRI Facilities
(which are financed under operating lease agreements) allowed for under the
GE Medical Financial Transactions.

(B) As part of the GE Medical Financial Transactions, GE Medical has
agreed to surrender its common stock warrant to Maxum for cancelation.

The unaudited pro forma condensed consolidated statement of operations of
Maxum for the year ended December 31, 1995 gives effect to the following pro
forma adjustment:

(C) As a result of the debt restructuring in connection with the GE
Medical Financial Transactions discussed in "Debt Restructuring and
Issuance of Preferred Stock to GE Medical-Financial Accommodations to Maxum
and the Maxum Subsidiaries," lease payments on four Mobile MRI Facilities
are reduced which would result in an annual reduction of lease expense of
$214 if these transactions would have occurred on January 1, 1995.

(D) To reduce interest expense on approximately $19,209 of GE Medical
debt and capital lease obligations that would not have been recognized in
the statement of operations for 1995 if the satisfaction of the debt
obligations and the deferral of the future interest payable on all other GE
Medical debt and capital lease obligations discussed in (A) above had
occurred on January 1, 1995. Interest payments on such GE Medical debt and
capital lease obligations would have been charged against the deferred gain
as discussed in (A) above, thereby decreasing Maxum's effective interest
rate.

98
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
------------------------------
ADJUSTMENTS
------------------
HISTORICAL DEBIT CREDIT TOTAL
---------- ------- ------- --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.............................. $ 6,176 $ -- $ -- $ 6,176
Accounts receivable............... 6,892 -- -- 6,892
Prepaid expenses and other........ 448 -- -- 448
-------- ------- ------- --------
Total current assets............ 13,516 -- 13,516
PROPERTY AND EQUIPMENT.............. 20,169 -- -- 20,169
INTANGIBLE ASSETS................... 2,755 -- 525(D) 2,230
-------- ------- ------- --------
$ 36,440 $ -- $ 525 $ 35,915
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued
expenses......................... $ 5,503 $ -- $ 158(E) $ 5,661
Current portion of long-term
debt............................. 19,207 14,461(A) -- 4,746
Deferred gain on debt
restructuring.................... -- -- 1,176(A) 1,176
-------- ------- ------- --------
Total current liabilities....... 24,710 14,461 1,334 11,583
-------- ------- ------- --------
LONG-TERM LIABILITIES:
Long-term debt.................... 20,845 -- 3,776(A) 24,621
Capital leases.................... 463 -- -- 463
Deferral gain on debt
restructuring.................... -- -- 6,725(A) 6,725
Other long-term liabilities....... 922 -- -- 922
-------- ------- ------- --------
Total long-term liabilities..... 22,230 -- 10,501 32,731
-------- ------- ------- --------
MINORITY INTEREST................... 1,602 -- -- 1,602
-------- ------- ------- --------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock................... 6,075 -- 3,375(B) 9,450
Common stock...................... 290 -- -- 290
Common stock warrants............. 1,116 1,116(C) -- --
Additional paid-in capital........ 9,344 -- -- 9,344
Accumulated deficit............... (28,927) 158(E) -- (29,085)
-------- ------- ------- --------
Total stockholders' equity
(deficit)...................... (12,102) 1,274 3,375 (10,001)
-------- ------- ------- --------
$ 36,440 $15,735 $15,210 $ 35,915
======== ======= ======= ========
</TABLE>

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated balance sheets.

99
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
---------------------------
ADJUSTMENTS
----------------
HISTORICAL DEBIT CREDIT TOTAL
---------- ----- ------ -------
<S> <C> <C> <C> <C>
REVENUES:
Contract services......... $ 5,322 $-- $ -- $ 5,322
Patient services.......... 31,677 637 (H) -- 31,040
------- ---- ------ -------
Total revenues.......... 36,999 637 -- 36,362
------- ---- ------ -------
COSTS OF OPERATIONS:
Cost of services.......... 19,937 -- 471(H) 19,466
Equipment leases.......... 6,205 -- 839(F) 5,366
Depreciation and
amortization............. 4,587 -- 14(H) 4,573
------- ---- ------ -------
Total costs of
operations............. 30,729 -- 1,324 29,405
------- ---- ------ -------
GROSS PROFIT................ 6,270 637 1,324 6,957
CORPORATE OVERHEAD.......... 3,886 -- -- 3,886
------- ---- ------ -------
OPERATING INCOME............ 2,384 637 1,324 3,071
OTHER EXPENSES:
Interest expense.......... (3,640) -- 2,116(G) (1,524)
Interest income and
other.................... 148 -- -- 148
------- ---- ------ -------
INCOME (LOSS) BEFORE INCOME
TAXES...................... (1,108) 637 3,440 1,695
INCOME TAX EXPENSE.......... 30 34 (I) -- 64
------- ---- ------ -------
NET INCOME (LOSS)........... $(1,138) $671 $3,440 $ 1,631
======= ==== ====== =======
</TABLE>

The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.

100
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

The unaudited pro forma condensed consolidated balance sheet of AHS as of
December 31, 1995 gives effect to the following pro forma adjustments:

(A) Reflects the restructuring of AHS's debt resulting from the GE
Medical Financial Transactions. The amount of debt outstanding December 31,
1995 which was subject to the debt restructure was $36,450. After
restructuring the debt, the outstanding amount will be $25,765, resulting
in a potential gain of $10,685. This potential gain is then offset by the
value of the preferred stock issued in consideration for the restructuring
(see (B)), less the warrants canceled by the lender (see (C)) ($3,375-
$1,116, or $2,259) and the write-off of previously established deferred
finance changes of $525 (see (D)). In accordance with the provisions of
troubled debt accounting (as required by SFAS No. 15), the remaining
potential gain of $7,901 is then offset in its entirety by the expected
future interest payments of $9,217 on the restructured debt. The amount of
gain offset by the future interest payments is therefore deferred and
reduced by future interest payments over the terms of the respective debt
instruments. Finally, the restructed debt has a gross balance of $25,765,
with a current maturity of $3,834. As a result, this adjustment reflects
the reduction in the debt, recognition of future interest payments of
$7,901 and the modified classifications of the current and long-term
portions of that debt.

(B) Reflects the issuance to GE Medical of 1,000,000 shares of the AHS
Series C Preferred Stock which is convertible into AHS Common Stock
representing approximately 48% of AHS Common Stock outstanding at the
Effective Time (after giving effect to such conversion and assuming the
conversion of the AHS Series B Preferred Stock).

(C) As part of the GE Medical Financial Transactions, GE Medical has
agreed to surrender its common stock warrants to AHS for cancelation.

(D) In 1993, AHS completed a debt restructuring with GE Medical. The
costs of that restructuring were deferred and were being amortized over the
term of the debt. As this debt is part of the current restrucuring, those
costs related to the 1993 restructuring are being written off.

(E) Adjustment reflects the Alternative Minimum Tax of two percent which
would be payable as a result of the tax gain recognition related to the
debt restructuring.

The unaudited pro forma condensed consolidated statement of operations of
AHS for the year ended December 31, 1995 gives effect to the following pro
forma adjustments:

(F) As a result of the debt restructuring in connection with the GE
Medical Financial Transactions discussed in "Debt Restructuring and
Issuance of Preferred Stock to GE Medical Financial Accommodations to AHS
and the AHS Subsidiaries," lease payments on several centers are reduced
which would result in an annual reduction of lease expense of $839 if these
transactions would have occurred on January 1, 1995.

(G) To reduce interest expense on approximately $10,685 of GE Medical
debt that would not have been recognized in the statement of operations for
1995 if the satisfaction of the debt and the deferral of the future
interest payable on all other GE Medical debt discussed in (A) above had
occurred on January 1, 1995. Interest payments on such GE Medical debt
would have been charged against the deferred gain as discussed in (A)
above, thereby decreasing AHS' effective interest rate.

In addition, this reduces the amortization of deferred finance costs of
$203 related to debt restructured by the GE Medical Financial Transactions.

(H) As part of the GE Medical Financial Transactions, AHS will close one
of its centers and return the equipment to GE Medical. This entry reflects
the reduction in both the revenues and expenses related to that center.

(I) Recognition of the Federal Alternative Minimum Tax provision
resulting from the GE Medical Financial Transactions.

101
<PAGE>

MAXUM SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below as of and for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991 are derived from the
audited Consolidated Financial Statements of Maxum and should be read in
conjunction with such Consolidated Financial Statements and related notes as
of and for the years ended December 31, 1995, 1994 and 1993 and "Maxum's
Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this Joint Proxy Statement/Prospectus. Such
Consolidated Financial Statements for 1995, 1994 and 1993 were audited by
Deloitte & Touche LLP, independent auditors, as indicated in their report
included elsewhere in this Joint Proxy Statement/Prospectus.

Any financial trends or data reflected in the consolidated selected
financial data included herein for Maxum should also be read in connection
with "Business of Maxum--Prior Restructure" appearing elsewhere in this Joint
Proxy Statement/Prospectus.

MAXUM
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1995(4) 1994 1993 1992 1991
------------------------ ----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 50,609 $ 45,868 $ 45,075 $ 45,135 $ 34,388
Income (loss) from:
Company
operations(1)........ (1,541) (3,611) (6,725) (6,941) 2,455
Unconsolidated
partnerships......... 348 834 685 1,020 428
----------- ----------- ----------- ----------- -----------
Operating income
(loss)................. (1,193) (2,777) (6,040) (5,921) 2,883
Income (loss) before
extraordinary item(2).. (4,319) 814 (7,813) (8,312) (763)
Extraordinary gain...... -- 3,342 1,036 -- --
----------- ----------- ----------- ----------- -----------
Net income (loss)....... (4,319) 4,156 (6,777) (8,312) (763)
Preferred stock
dividends, net....... -- -- -- -- (254)
----------- ----------- ----------- ----------- -----------
Income (loss) applicable
to common stock........ $ (4,319) $ 4,156 $ (6,777) $ (8,312) $ (1,017)
=========== =========== =========== =========== ===========
Income (loss) per share
before extraordinary
item(3)................ $ (1.92) $ 0.35 $ (2.69) $ (2.93) $ (0.61)
Net income (loss) per
common share(3)........ $ (1.92) $ 1.77 $ (2.33) $ (2.93) $ (0.61)
Weighted average common
share outstanding(3)... 2,248,883 2,345,209 2,912,786 2,840,471 1,679,409
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------
1995(4) 1994 1993 1992 1991
------------------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit).............. $ (2,228) $ 1,587 $ (8,594) $ (14,607) $ (2,009)
Property and equipment,
net.................... 12,386 5,272 9,791 18,772 25,638
Intangible assets....... 4,047 1,194 1,263 2,513 1,641
Total assets............ 28,926 23,050 23,566 38,043 42,203
Total long-term
obligations............ 19,723 9,575 7,967 8,368 19,244
Stockholders' equity
(deficit).............. (4,005) 300 (3,857) 2,502 10,150
</TABLE>
- --------
(1) Includes a net (credit) provision for prior restructuring costs of $(0.5)
million and $7.5 million in 1993 and 1992, respectively.
(2) 1995 includes a $1.5 million provision for Maxum's securities litigation
settlement and 1994 includes a $4.8 million gain, net of income tax
provision of $0.2 million, on the sale of Maxum's lithotripsy partnership
interests.
(3) Amounts for 1991 are computed on a pro forma basis as if the
recapitalization leading to the initial public offering in 1991 had
occurred at January 1, 1991.
(4) Includes two significant acquisitions which were completed during the
year. See "Maxum's Management's Discussion and Analysis of Financial
Condition and Results of Operations--Acquisitions" included herein, and
Note 4 of Appendix H attached hereto.

102
<PAGE>

MAXUM'S MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is provided to increase understanding
of, and should be read in conjunction with, Consolidated Financial Statements
of Maxum and accompanying notes. All references to a "Note" are to the Notes
to Consolidated Financial Statements of Maxum contained elsewhere in this
Joint Proxy Statement/Prospectus.

PRIOR RESTRUCTURE OF OPERATIONS AND FINANCIAL OBLIGATIONS

During recent years, Maxum has experienced many adverse market conditions
including significantly increased price competition, changes in equipment
technology, a surplus of equipment capacity and declining reimbursement rates.
In addition, an increased presence of managed care entities and the formation
of health care networks has created additional challenges for Maxum.

Based on these market conditions, management of Maxum concluded that the
lowest cost providers of health care services would be best positioned to meet
the challenges imposed by rapid changes in the health care industry. In 1992,
Maxum recorded a charge of $7.5 million in anticipation of a restructure of
its operations and financial obligations that was completed in 1994 (the
"Maxum Prior Restructure"). The charge included estimated costs for the
reconfiguration, consolidation and wind-down of certain mobile MRI routes, the
write-down of certain older Mobile MRI Facilities to be held for sale, accrual
for estimated termination costs associated with a reduction in work force, and
other estimated expenses and professional fees associated with the execution
of the Maxum Prior Restructure.

Execution of the Maxum Prior Restructure began in 1993 focused primarily on
reducing negative cash flow in the near-term, improving current and near-term
viability and enhancing the potential for long-term viability. During 1993,
significant progress was achieved. The reconfiguration, consolidation and
wind-down of mobile MRI routes referenced above were completed, and four
unprofitable partnerships in which Maxum had interests were terminated.
Expenses at Maxum's headquarters were reduced significantly, beginning in
1993, due primarily to a consolidation of functions, reduction in the
headquarters facility, and a significant reduction in personnel. Finally,
Maxum reached an agreement with GE Medical, its primary creditor, in early
1994, which was effective June 1993, whereby certain unpaid amounts past due
under current lease agreements with GE Medical were deferred and lease
agreements were restructured to reduce the overall lease obligations. In
addition, outstanding amounts due Maxum's senior creditor under a revolving
credit agreement were settled, resulting in a $1.0 million extraordinary gain
on debt extinguishment. Also in 1993, Maxum recorded a net credit adjustment
of $0.5 million associated with the estimated costs of the Maxum Prior
Restructure.

During 1994, the Maxum Prior Restructure was completed. Maxum recorded a
$3.3 million gain on debt extinguishments in connection with the settlement of
outstanding amounts with another significant creditor and two smaller
creditors. In addition, Maxum sold its internal maintenance division to GE
Medical. Consideration for the sale included cash and future discounts on
maintenance services to be realized over approximately five years. Finally,
Maxum sold its interests in three partnerships that provided lithotripsy
services for approximately $5.0 million in cash. The proceeds were used to
retire outstanding debt obligations, to satisfy working capital requirements
and for business expansion opportunities in the first half of 1995. This
transaction resulted in a pre-tax gain of approximately $5.0 million. Finally,
Maxum terminated two additional unprofitable partnerships in which it held
interests.

ACQUISITIONS

Maxum believes a consolidation in the diagnostic imaging industry is
occurring and is necessary in order to provide surviving companies the
opportunity to achieve operating and administrative efficiencies through the
consolidation of duplicative infrastructures. While its capital resources are
limited, Maxum continues to consider and pursue consolidation opportunities.
Maxum believes that long-term viability is contingent upon its ability to
successfully participate in this industry consolidation. Maxum also believes
that the Merger is reflective of this consolidation. See "--Pending Merger,"
and "Business of Maxum--Strategy and Marketing."

103
<PAGE>

During 1995, Maxum completed two significant acquisitions. In the first half
of the year, Maxum acquired certain assets, including Mobile MRI Facilities
and customer contracts from a competitor operating in Ohio and Indiana. In
addition, the transaction included the assumption of certain equipment related
liabilities. Proceeds from the sale of interests in three lithotripsy
partnerships discussed above were used to fund the net purchase price of $2.1
million.

In the second half of 1995, Maxum acquired Maxum Diagnostic Center-Hillcrest
Road ("MDC-H") and Maxum Diagnostic Center-Preston Road ("MDC-P"), two Imaging
Centers in Dallas, Texas. The transaction included the purchase of certain
assets, primarily diagnostic equipment, and the assumption of certain
equipment related liabilities. The net purchase price of $1.6 million and an
additional $0.7 million for working capital requirements were financed by GE
Medical. In December 1995, MDC-H was consolidated into MDC-P and MDC-F. All
three Imaging Centers were in close proximity of one another, and the
consolidation of these businesses is expected to maximize capacity utilization
and enhance profit potential at MDC-P and MDC-F.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The favorable results of the Maxum Prior Restructure summarized above have
been diminished by continued deterioration in the industry. Maxum has
continued to operate while experiencing negative cash flow by completing
transactions involving the financing of certain operating expenses by GE
Medical, and the disposal of certain assets and partnership interests. Maxum
expects that operating losses and negative cash flow will continue in 1996.
Maxum believes that it will be able to meet its long-term debt, operating
lease and other ongoing obligations through June 30, 1996; however, Maxum
believes that its ability to operate as a going concern beyond June 30, 1996,
is dependent upon the closing of the GE Medical Financial Transactions and the
consummation of the Merger.

Maxum operates in a capital intensive, high fixed cost industry that
requires significant amounts of working capital to fund operations,
particularly the initial start-up and development expenses of new operations.
Revenues and cash flow have been adversely affected by an increased collection
cycle, increased competitive pressures and major restructurings within the
health care industry. This adverse effect on revenues and cash flow is
expected to continue, especially in the mobile MRI business. See "Business of
Maxum--Strategy and Marketing".

In addition to the Merger with AHS, Maxum continues to pursue other
acquisition opportunities. Maxum believes that the expansion of its business
through acquisitions is a key factor in achieving profitability. Generally,
acquisition opportunities are aimed at increasing revenues and profits, and
maximizing utilization of existing capacity. Incremental operating profit
resulting from future acquisitions will vary depending on geographic location,
whether facilities are mobile versus fixed, range of services provided and
Maxum's ability to integrate the acquired businesses into its existing
infrastructure. If such acquisition opportunities are identified, there can be
no assurance that financing for such transactions can be obtained. If Maxum is
able to obtain such financing, there can be no assurance that any individual
transaction or several transactions in the aggregate would be significant
enough, or within a timeframe to enable Maxum to continue to operate as a
going concern, without the continued financing of certain operating costs in
the near term.

Maxum's cash and cash equivalents decreased $5.1 million during 1995,
compared with the cash and cash equivalent balance increasing $4.8 million
during 1994. This additional cash use of $9.9 million is comprised of: an
increase of $1.6 million used by operating activities, an increase of $9.7
million used by investing activities, and a decrease of $1.4 million in the
amount used by financing activities.

Net cash provided by operating activities decreased during 1995 due to: (i)
a $2.2 million net increase in payments of accounts payable and other current
liabilities as Maxum is no longer delaying the payment of obligations as it
had in connection with the Maxum Prior Restructure (which was still in
progress in 1994); (ii) a $0.5 million net increase in receivables
attributable to the acquisition completed in late 1995 which is comprised

104
<PAGE>

of receivables from patients and third-party payors in the patient services
business (which typically have a much longer collection cycle than receivables
from hospital customers in the fee-for-service business) and (iii) a $0.3
million reduction in the benefit received from the financing of operating
expenses. These decreases were partially offset by (i) $0.8 million of
sales/use tax refunds and (ii) $0.6 million improvement in cash flow due to
increased revenues, improved margins and other working capital changes.

Net cash used by investing activities increased during 1995 due to (i) a
$5.0 million decrease in the proceeds from the sale of partnership interests
received during 1994, (ii) an increase of $3.4 million for the acquisitions of
customer contracts and intangibles primarily in the fee-for-service business,
one Fixed MRI Facility and three Imaging Centers, (iii) a $0.6 million
decrease in proceeds from disposals of assets, (iv) a $0.2 million increase in
additions to property and equipment, and (v) a decrease of $0.5 million in
other investing activities, due primarily to a reduction in distributions from
the aforementioned partnership interests.

Net cash used by financing activities decreased due primarily to the receipt
of $2.3 million of proceeds from GE Medical for financing associated with the
acquisition of two Imaging Centers. The 1995 payments of debt and capital
leases include a $1.3 million balloon payment made in January 1995 to GE
Medical.

PENDING MERGER

On February 26, 1996, Maxum entered into the Merger Agreement, pursuant to
which each Company, at the Effective Time, will become a wholly-owned
subsidiary of InSight. At the Effective Time, approximately one-half of the
issued and outstanding InSight Common Stock will be held by former
stockholders of Maxum and approximately one-half will be held by former
stockholders of AHS. The Companies also entered into the Stock Acquisition
Agreement pursuant to which GE Medical, in exchange for a comprehensive
program of debt and lease restructuring of the existing obligations of Maxum
and AHS, will receive InSight Series A Preferred Stock, which will be
convertible into approximately 48% of InSight Common Stock outstanding at the
Effective Time, subject to certain adjustments. The terms and conditions of
the restructuring include, among other things (i) a reduction of the long-term
debt of Maxum by approximately $9.0 million, (ii) a restructure of certain
operating lease arrangements, (iii) the surrender by GE Medical of warrants to
purchase 700,000 shares of Maxum Common Stock and (iv) a similar restructuring
for AHS.

In addition, under the InSight Master Service Agreement Addendum, GE Medical
will have the right to receive for ten years the Supplemental Service Fee
equal to 14% of pre-tax income subject to certain adjustments, of InSight, and
further subject to proportional reductions for certain post-Merger
acquisitions. InSight may terminate the Supplemental Service Fee at any time
during this ten-year period by making a payment to GE Medical equal to $8.0
million less the discounted value of the Supplemental Service Fee (calculated
at a discount rate of 15% per annum) paid through the date of such termination
payment.

The Merger Agreement may be terminated by any of the parties thereto, and
the Merger abandoned, if the Merger has not been consummated, or the approval
of the stockholders of AHS and Maxum has not been obtained, by September 30,
1996. There can be no assurance that such transactions will be consummated in
a timely manner, if at all. If the GE Medical Financial Transactions are not
closed and the Merger is not consummated, there can be no assurance given as
to Maxum's ability to continue to operate as a going concern.

105
<PAGE>

RESULTS OF OPERATIONS

The following tables set forth selected operational data for each of the
three years in the period ended December 31, 1995 (amounts in thousands):

<TABLE>
<CAPTION>
1995(2) 1994 1993
------------ ------------ ------------
$ % $ % $ %
------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Revenues............................ $50,609 100 $45,868 100 $45,075 100
Costs of operations(1).............. 48,178 95 45,239 99 46,556 103
------- --- ------- --- ------- ---
Gross profit (loss)................. 2,431 5 629 1 (1,481) (3)
Corporate overhead.................. 3,972 8 4,240 9 5,244 12
------- --- ------- --- ------- ---
Loss from Company operations........ (1,541) (3) (3,611) (8) (6,725) (15)
Equity in earnings of partnerships.. 348 1 834 2 685 2
------- --- ------- --- ------- ---
Operating loss...................... (1,193) (2) (2,777) (6) (6,040) (13)
Interest expense, net............... (1,626) (4) (1,206) (3) (1,773) (4)
Provision for securities litigation
settlement......................... (1,500) (3) -- -- -- --
Gain on sale of partnership inter-
ests............................... -- -- 4,957 11 -- --
Income tax expense.................. -- -- (160) -- -- --
------- --- ------- --- ------- ---
(Loss) income before extraordinary
item............................... (4,319) (9) 814 2 (7,813) (17)
Extraordinary gain on debt extin-
guishments......................... -- -- 3,342 7 1,036 2
------- --- ------- --- ------- ---
Net (loss) income................... $(4,319) (9) $ 4,156 9 $(6,777) (15)
======= === ======= === ======= ===
</TABLE>
- --------
(1) Includes a credit for sales tax refunds of $0.8 million in 1995 and a net
credit adjustment for Maxum Prior Restructure costs of $0.5 million in
1993.
(2) Includes two significant acquisitions which were completed during the
year. See "--Acquisitions" included herein, and Note 4 of Appendix H
attached hereto.

YEARS ENDED DECEMBER 31, 1995 AND 1994

Revenues: Revenues increased $4.7 million, or approximately 10% in 1995,
compared to 1994. Generally, the increase in revenues is related primarily to
acquisitions. This increase was partially offset by the continued decline in
reimbursement rates and a decrease in other revenue in 1995, compared to 1994.

An increase in fee-for-service revenue of $5.0 million in 1995 compared to
1994 is attributable to: (i) the award of an exclusive capitated managed care
contract in December 1994, under which Maxum's fees are paid directly by the
managed care organization and are earned on a per-member-per-month basis; and
(ii) the acquisition of certain customer contracts in the first half of 1995.
Other fee-for-service revenue and equipment rental revenue (derived primarily
from Mobile MRI Facilities) decreased $1.8 million, compared to 1994, due to
expirations of hospital service contracts and third party equipment leases.
Management fees decreased $0.6 million in 1995, compared to 1994, due
primarily to the sale or termination of certain partnerships in late 1994.

Approximately 58% of the $2.4 million increase in patient services is due
primarily to increased patient services revenues associated with acquisitions
during 1995. Approximately 25% of the increase is attributable to a contract
awarded in the third quarter of 1994 to provide radiology and management
services at an outpatient Fixed MRI Facility for a hospital customer. The
remainder of the increase is due primarily to increases in procedure volumes
at Maxum's other Imaging Centers, offset by continued declines in
reimbursement rates.

Other revenue decreased during 1995, compared to 1994, due primarily to the
sale of Maxum's Technical Services Division in June 1994.

106
<PAGE>

Costs of Operations: Costs of operations increased $2.9 million, or
approximately 6%, in 1995, compared to 1994. Cost of services in 1995 was
reduced by $0.8 million related to sales/use tax refunds. These refunds
represent taxes paid in prior years attributable to certain mobile diagnostic
imaging equipment, and were received as a result of the taxing authority
having reached a determination that the mobile equipment was subject to motor
vehicle tax rather than sales/use tax.

Occupancy expense (which includes operating costs of facilities leased or
subcontracted by Maxum) increased $0.8 million, or approximately 88%, in 1995
compared to 1994. This increase is due primarily to subcontracting costs
incurred related to Maxum's capitated managed care contract that was awarded
in December 1994.

Reading fees increased $0.7 million, or approximately 41%, in 1995, compared
to 1994, due primarily to the increase in patient services revenues and due to
costs incurred related to Maxum's capitated managed care contract discussed
above.

In addition to the net impact of the sales/use tax refund, occupancy expense
and reading fees discussed above, all other components of cost of services
experienced a net increase of $2.0 million in 1995, compared to 1994, due
primarily to the variable costs associated with the increase in revenues
resulting primarily from acquisitions in 1995 discussed above.

Bad debt expense increased $0.5 million, or approximately 48%, in 1995,
compared to 1994, due primarily to the increase in patient services revenue
and a shift in the payor mix in Maxum's Imaging Centers related to the
penetration of managed care. This change in payor mix continues to have an
unfavorable impact on reimbursement rates realized by these centers and has
resulted in an increase in bad debt expense in 1995 associated with
unreimbursed amounts which were not subsequently collectible from patients.
Maxum expects reimbursement rates to continue to decline.

Depreciation decreased $0.2 million, or approximately 6%, in 1995 compared
to 1994. This decrease is due primarily to a purchase and sale-leaseback
transaction (in connection with Maxum's settlement with a significant creditor
in June 1994) which resulted in reductions in net book values on certain
Mobile MRI Facilities.

Gross profit: Gross profit increased $1.8 million, or 4 percentage points as
a percentage of revenues, in 1995, compared to 1994. The increase is primarily
attributable to higher profit margins from the absorption of excess capacity
associated with acquisitions completed in 1995 and the capitated managed care
contract awarded in December 1994.

Corporate Overhead: Corporate overhead decreased approximately $0.3 million,
or approximately 6% in 1995, compared to 1994. This decrease is due primarily
to reductions in legal costs and insurance premiums.

Equity in Earnings of Partnerships: Equity in earnings of partnerships
decreased $0.5 million, or approximately 58% in 1995, compared to 1994, to the
sale of certain partnerships in late 1994 discussed below.

Interest Expense: Interest expense increased $0.4 million, or approximately
35% in 1995, compared to 1994. This increase is due primarily to (i) the
addition of several capital leases of diagnostic equipment, (ii) debt
obligations incurred as a result of the acquisitions during 1995, and (iii)
interest on operating expenses financed during late 1994 and in 1995.

Provision for Securities Litigation Settlement: In anticipation of the Maxum
settlement of two class-action lawsuits originally filed in 1993, the Company
recorded a charge of $1.5 million in the fourth quarter of 1995. (See Note 14
and "Business of Maxum--Legal Proceedings" for further discussion.)

Gain on Sale of Partnership Interests: In December 1994, Maxum sold its
interests in three lithotripsy partnerships for approximately $5.0 million in
cash which resulted in a pretax gain of approximately $5.0 million.

107
<PAGE>

Extraordinary Item--Net Gain on Debt Extinguishments: During 1994, Maxum
settled its outstanding debt and lease obligations owed to a significant
creditor and two smaller creditors which resulted in a net extraordinary gain
of approximately $3.3 million, or $1.42 per share.

YEARS ENDED DECEMBER 31, 1994 AND 1993

Revenues: Revenues increased $0.8 million or approximately 2% in 1994,
compared to 1993. The increase was due primarily to an increase in patient
services revenues at MDC-E and MDC-F. In addition, in the third quarter of
1994, Maxum began providing radiology and management services at an outpatient
Fixed MRI Facility for a hospital customer which resulted in revenues of
approximately $0.8 million in 1994. These increases were partially offset by a
decrease in contract services revenues. Fee-for-service revenues decreased due
primarily to a decrease in the average revenue per procedure. Equipment lease
revenues decreased due primarily to contract terminations for rentals of
equipment to third parties. Revenues for 1993 exclude $4.5 million of fee-for-
service revenues from routes which were reconfigured during 1993 (in
connection with the Maxum Prior Restructure). The net operating losses of
these routes were charged against the accrual of estimated Maxum Prior
Restructure costs during 1993.

Costs of Operations: Costs of operations decreased $1.3 million, or 3%
during 1994, as compared to 1993. Cost of services decreased $0.6 million due
primarily to a $0.5 million provision in 1993 for the estimated settlement of
sales tax audits primarily related to prior years.

During 1993, Maxum recorded a provision for bad debts of $0.5 million
resulting from increased collection problems primarily associated with smaller
hospitals and direct patient billings. Similar one-time charges were not
necessary in 1994.

Equipment leases increased $0.6 million and depreciation decreased $1.4
million due primarily to the reclassification of certain leases from capital
to operating leases late in 1993, as a result of changes in lease terms and
financing arrangements in connection with the Maxum Prior Restructure, and due
to the settlement with a significant creditor in 1994.

The net credit of $0.5 million for estimated Maxum Prior Restructure costs
in 1993 was to adjust Maxum's estimate of the net costs of the Maxum Prior
Restructure, based on the current status of negotiations with its largest
creditors at that time. No additional provision or credit was necessary in
1994.

Costs of operations for 1993 of $46.5 million, exclude $6.1 million of costs
from routes that were reconfigured in connection with the Maxum Prior
Restructure. As previously discussed, the net operating losses of these routes
were charged against the accrual of estimated Maxum Prior Restructure costs
during 1993.

Gross profit: Gross profit increased $2.1 million, or 4 percentage points as
a percentage of revenues, in 1994, compared to 1993. The increase is primarily
attributable to benefits in 1994 resulting from the Maxum Prior Restructure,
and, as discussed above, 1993 included one-time charges associated with the
estimated settlement of sales tax audits and a provision for bad debts.

Corporate Overhead: Corporate overhead decreased approximately $1.0 million
during 1994, as compared to 1993. The decrease was due primarily to a decrease
in the amortization of intangible assets and cost reductions for personnel and
facility costs at Maxum's headquarters.

Equity in Earnings of Partnerships: Equity in earnings of Partnerships for
1994 was comparable to 1993. Partnerships which continued to operate under
Maxum's ownership after 1994, contributed $0.5 million and $0.3 million in
1994 and 1993, respectively, to equity in earnings of partnerships.

Interest Expense: Interest expense decreased $0.6 million or 32% in 1994, as
compared to 1993. The decrease is due primarily to the aforementioned
reclassification of certain leases from capital to operating leases late in
1993.

108
<PAGE>

Extraordinary Item--Net Gain on Debt Extinguishments: During 1994, Maxum
settled its outstanding debt and lease obligations owed a significant creditor
and two smaller creditors which resulted in a net extraordinary gain of
approximately $3.3 million. During 1993, Maxum finalized an agreement with a
senior creditor which resulted in a net extraordinary gain of $1.0 million on
the extinguishment of a revolving credit note agreement. See "--Prior
Restructure of Operations and Financial Obligations."

FOURTH QUARTER 1995 RESULTS

During the fourth quarter of 1995, Maxum reported a net loss of $3.3
million, or $1.44 per share, compared with net income of $4.0 million, or
$1.73 per share, in 1994. This variance is attributable to an increase in
revenues of $1.9 million, an increase in cost of services of $2.1 million, an
increase in depreciation of $0.4 million, and an increase in interest expense
of $0.2 million. The increases in revenues and cost of services are related
primarily to acquisitions completed in 1995 and the capitated managed care
contract awarded in late 1994. The increase in gross profit, resulting from
the aforementioned acquisitions and contract, was offset by a decrease in
revenues and an increase in cost of services attributable to operations which
existed in both 1995 and 1994. The resulting net decrease in gross profit is
due to the non-renewal of certain hospital contracts, decreases in volumes in
certain of Maxum's markets as a result of inclement weather, and increases in
certain operating expenses. Depreciation expense increased due primarily to
the addition of several new capital leases during 1995 and leasehold
improvements completed at several of Maxum's Fixed MRI Facilities. Interest
expense increased due primarily to the addition of the aforementioned capital
leases, due to borrowings related to acquisitions and due to the financing of
certain operating expenses during 1995. In addition, 1995 includes a $1.5
million provision for the settlement of Maxum's securities litigation, and
1994 includes a $4.8 million gain, net of a $0.2 million provision for income
taxes, on the sale of Maxum's interests in three lithotripsy partnerships.

TERMINATION OF MANAGEMENT CONTRACT

In May 1993, Maxum entered into a management agreement with Alpha
Directions--Management Company ("ADMC"). ADMC manages and provides management
services to various businesses. Management of Maxum was specifically provided
by Douglas L. Drumwright and Charles S. Mack, Jr., two principals of ADMC.
Messrs. Drumwright and Mack served as executive officers of Maxum from August
1993 through March 1994.

ADMC assisted Maxum through the negotiation process with its creditors, and
played a substantial role in reaching certain of the aforementioned
agreements. Effective March 31, 1994, Maxum terminated its management
agreement with ADMC, and Glenn P. Cato was elected President and Chief
Executive Officer.

INFLATION

Inflation in recent years has not had a significant impact on Maxum's
business, and it is not expected to adversely affect Maxum in the near future.

109
<PAGE>

AHS SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data has been derived from the
financial statements of AHS. Such consolidated financial statements of AHS for
the years ended December 31, 1991, 1992, 1993, 1994 and 1995, and the related
report of Arthur Andersen, LLP are included elsewhere in this Joint Proxy
Statement/Prospectus. The following data should be read in conjunction with
"AHS Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Consolidated Financial Statements of AHS included
elsewhere in this Joint Proxy Statement/Prospectus.

AHS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DA-
TA:
Revenues................... $ 36,999 $ 36,046 $ 37,515 $ 38,347 $ 41,850
Expenses................... 30,729 29,971 32,580 34,947 35,495
--------- -------- -------- --------- --------
Income from center
operations................ 6,270 6,075 4,935 3,400 6,355
Corporate operating
expenses.................. 3,886 3,474 3,452 3,892 3,077
Other expenses(1).......... -- -- -- 11,873 --
Net interest expense....... 3,492 4,015 3,921 2,319 2,230
--------- -------- -------- --------- --------
Income (loss) before
provision for income
taxes..................... (1,108) (1,414) (2,438) (14,684) 1,048
Income (loss) from
continuing operations..... (1,138) (1,451) (2,466) (14,715) 1,018
Extraordinary gain(2)...... -- 306 -- -- --
--------- -------- -------- --------- --------
Net income (loss).......... $ (1,138) $ (1,145) $ (2,466) $ (14,715) $ 1,018
========= ======== ======== ========= ========
EARNINGS (LOSS) PER SHARE:
Income (loss) from
continuing operations..... $ (0.12) $ (0.15) $ (0.25) $ (1.51) $ 0.07
Extraordinary gain......... -- 0.03 -- -- --
--------- -------- -------- --------- --------
Earnings (loss) per share.. $ (0.12) $ (0.12) $ (0.25) $ (1.51) $ 0.07
========= ======== ======== ========= ========
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit)(3).............. $ (11,194) $ 2,588 $ 3,310 $ 4,623 $ 7,459
Property and equipment,
net....................... 20,169 25,521 28,303 15,588 16,622
Intangible assets.......... 2,755 2,106 1,754 1,718 3,585
Total assets............... 36,440 40,223 43,467 31,168 35,622
Total long-term
liabilities............... 22,230 41,097 42,408 27,905 19,794
Stockholders' equity
(deficit) (4)............. (12,102) (10,964) (9,849) (7,477) 6,287
</TABLE>
- --------
(1) Other expenses were approximately $11,873 for the year ended December 31,
1992. These other expenses consisted of (i) write-downs of certain
equipment and lease rights to the estimated realizable value of the assets
($5,093), (ii) the establishment of reserves for centers which AHS has
closed or considered closing ($5,380), and (iii) the write-off of certain
transactional costs associated with financing activities with its primary
lender which were never consummated ($1,400). No other expenses were
recorded in 1995, 1994, 1993 and 1991, respectively.
(2) In 1994, as a result of a long-term debt restructuring agreement with GE
Medical, AHS recorded an extraordinary gain on restructuring of long-term
debt.
(3) The decrease in working capital of $13,782 from 1994 to 1995 is primarily
due to the reclassification of long-term liabilities to current
liabilities as a result of scheduled debt maturities.
(4) There have been no dividends declared by AHS since January 1, 1991 other
than the Series A Preferred Stock dividends declared and payable on
January 1, and April 1, 1991, to the holders of record of the Series A
Preferred Stock (which has since been canceled) on such dates.

110
<PAGE>

AHS MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994.

AHS reported revenues from the operation of its centers for the year ended
December 31, 1995 of approximately $36,999,000, compared to approximately
$36,046,000 for the year ended December 31, 1994, representing an increase of
approximately 3%. This increase of approximately $953,000 is due primarily to
(i) revenues generated by two new centers (approximately $3,116,000) and (ii)
increased revenues resulting from higher utilization at the majority of the
AHS remaining centers (approximately $473,000) offset by the sale or closure
of four centers and the expiration of operating agreements relating to seven
centers subsequent to December 31, 1993 (approximately $2,636,000). Management
believes that any future increases in revenues from existing centers can only
be achieved by higher utilization and not by increases in procedure prices
since reimbursement rates are declining; however, excess capacity of
diagnostic imaging equipment, increased competition, anticipated health care
reform and the expansion of managed care may impact utilization and make it
difficult for AHS to achieve revenue increases in the future, absent the
negotiation of provider agreements with managed care companies and other
payors, acquisition of profitable diagnostic imaging centers and development
of management services which are not capital intensive.

Center expenses, including the provision for doubtful accounts, for the year
ended December 31, 1995 aggregated approximately $29,963,000, compared to
approximately $29,054,000 for the year ended December 31, 1994. This increase
of approximately $909,000 or 3%, is due primarily to (i) increased expenses
related to two new centers of AHS (approximately $2,428,000) and (ii)
increased expenses related to the development of an outside billing service
(approximately $200,000). This increase was offset by the (i) elimination of
expenses at the eleven centers discussed above (approximately $1,459,000) and
(ii) a decrease in costs at the majority of AHS' remaining centers
(approximately $260,000).

AHS has agreements with its partners at certain co-venture centers which
provide for contingent payments based on annual pretax profits, as defined, of
the individual center. These contingent payments, which are charged to
operations as they become accruable, are included in the provision for center
profit distributions. Provision for center profit distributions was
approximately $766,000 for the year ended December 31, 1995, compared to
approximately $917,000 for the year ended December 31, 1994. This decrease of
approximately $151,000, or 16%, is due primarily to (i) the purchase of the
physician limited partnership interests in 1994 discussed below and (ii)
reduced income at certain other cooperative venture centers of AHS. This
decrease is partially offset by income at the two new cooperative venture
centers of AHS.

AHS reported income from center operations of approximately $6,270,000 for
the year ended December 31, 1995, compared to approximately $6,075,000 for the
year ended December 31, 1994, representing an increase of approximately
$195,000, or 3%. This increase in income from center operations is due
primarily to (i) increased income at centers of AHS which existed at December
31, 1994 (approximately $668,000), (ii) income from center operations at the
two new centers of AHS (approximately $688,000) and (iii) the decrease in
provision for center profit distributions. This increase was offset by (i) the
loss of income from center operations at the terminated centers discussed
above (approximately $1,177,000) and (ii) the loss incurred in the development
of an outside billing service (approximately $135,000).

For the year ended December 31, 1995, AHS reported corporate operating
expenses of approximately $3,886,000, compared to corporate operating expenses
of approximately $3,474,000, for the year ended December 31, 1994. This
increase of approximately $412,000, or 12%, is due primarily to increases in
personnel, legal, and travel costs related to business development,
acquisitions and long-term debt restructure negotiations.

Interest expense was approximately $3,640,000 for the year ended December
31, 1995, compared to approximately $4,124,000 during the year ended December
31, 1994. This decrease of approximately $484,000, or 12%, was primarily
related to (i) reduced interest expense related to amortization of long-term
obligations and (ii) reduced interest as a result of the April 12, 1994
restructuring agreement discussed below, partially offset by long-term debt
related to the two new centers of AHS.

111
<PAGE>

For the year ended December 31, 1995, AHS reported a loss before
extraordinary item of approximately $1,138,000, compared to a loss before
extraordinary item of approximately $1,451,000 for the year ended December 31,
1994. This decrease in net loss of approximately $313,000 or 22% is the result
primarily of (i) increased income from center operations and (ii) decreased
interest expense, partially offset by increased corporate operating expenses.
As a result of the April 12, 1994 restructuring agreement discussed below, an
extraordinary gain on restructuring of long-term debt of approximately
$306,000 was recorded. In order to stimulate income growth and return to
profitability, AHS must expand by the development of new centers and/or the
acquisition of existing profitable centers and/or the development of
management services which are not capital intensive.

Loss per share before extraordinary item for the year ended December 31,
1995 was $0.12, compared to a loss per share before extraordinary item of
$0.15 in 1994. As discussed in "--Liquidity and Capital Resources," dividends
on the AHS Series B Preferred Stock are non-cumulative. Since the AHS Board
has not declared a dividend during the years ended December 31, 1995 and 1994,
respectively, no dividend has been subtracted from net loss to determine loss
per share for the years ended December 31, 1995 and 1994.

Year ended December 31, 1994 Compared to December 31, 1993. AHS reported
revenues from the operation of its centers for the year ended December 31,
1994 of approximately $36,046,000, compared to approximately $37,515,000 for
the year ended December 31, 1993, representing a decrease of approximately 4%.
This decrease of approximately $1,469,000 is due primarily to the sale or
closure of three centers and the expiration of operating agreements relating
to six centers subsequent to December 31, 1992 (approximately $3,401,000),
substantially offset by (i) revenues generated by two new centers
(approximately $1,306,000), one of which began operations in 1994, and one of
which began operations in the second half of 1993, and (ii) increased revenues
resulting from higher utilization at the majority of the remaining centers of
AHS (approximately $626,000).

Center expenses, including the provision for doubtful accounts, for the year
ended December 31, 1994 aggregated approximately $29,054,000, compared to
approximately $31,800,000 for the year ended December 31, 1993. This decrease
of approximately $2,746,000, or 9%, is due primarily to (i) the elimination of
expenses at the nine centers discussed above (approximately $3,167,000), (ii)
a reduction in equipment costs as a result of the buy-out of certain leases
and the purchase of the related equipment and the amendment of certain other
leases in 1993 (approximately $805,000) and (iii) a slight decrease in non-
equipment related costs at the majority of AHS' remaining centers
(approximately $156,000). This decrease was partially offset by increased
expenses related to the two new centers of AHS (approximately $1,382,000).

AHS has agreements with its partners at certain co-venture centers which
provide for contingent payments based on annual pretax profits, as defined, of
the individual center. These contingent payments, which are charged to
operations as they become accruable, are included in the provision for center
profit distributions. Provision for center profit distributions was
approximately $917,000 for the year ended December 31, 1994, compared to
approximately $781,000 for the year ended December 31, 1993. This increase of
approximately $136,000, or 17%, is due primarily to increased income at the
majority of AHS' cooperative venture centers.

AHS reported income from center operations of approximately $6,075,000 for
the year ended December 31, 1994, compared to approximately $4,935,000 for the
year ended December 31, 1993, representing an increase of approximately
$1,140,000, or 23%. This increase in income from center operations is due
primarily to increased income at AHS centers which existed at December 31,
1993 (approximately $1,586,000), partially offset by (i) the loss from center
operations at the two new centers of AHS (approximately $76,000), (ii) the
loss of income from center operations at the terminated centers discussed
above (approximately $234,000) and (iii) the increase in provision for center
profit distributions.

For the year ended December 31, 1994, AHS reported corporate operating
expenses of approximately $3,474,000, compared to corporate operating expenses
of approximately $3,452,000, for the year ended December 31, 1993. This
increase of approximately $22,000, or 1%, is due primarily to increases in
personnel and occupancy costs (approximately $85,000), partially offset by
decreased legal and consulting fees (approximately $48,000) related to long-
term debt restructuring negotiations in 1993.

112
<PAGE>

Interest expense was approximately $4,124,000 for the year ended December
31, 1994, compared to approximately $3,999,000 during the year ended December
31, 1993. This increase of approximately $125,000, or 3%, was primarily
related to (i) the buy-out of certain operating leases and the purchase of the
related equipment at eight of AHS' existing centers in 1993 and (ii) long-term
debt incurred at the new centers of AHS, offset by (i) reduced interest
expense related to amortization of long-term obligations and (ii) reduced
interest as a result of the April 12, 1994 restructuring agreement discussed
below.

For the year ended December 31, 1994, AHS reported a loss before
extraordinary item of approximately $1,451,000, compared to a loss before
extraordinary item of approximately $2,466,000 for the year ended December 31,
1993. This decrease in net loss of approximately $1,015,000 or 41% is the
result primarily of increased income from center operations, offset by (i)
increased corporate operating expenses and (ii) increased interest expense. As
a result of the April 12, 1994 restructuring agreement discussed below, an
extraordinary gain on restructuring of long-term debt of approximately
$306,000 was recorded.

Loss per share before extraordinary item for the year ended December 31,
1994 was $0.15, compared to a loss per share before extraordinary item of
$0.25 in 1993. As discussed in "Liquidity and Capital Resources", dividends on
the AHS Series B Preferred Stock are non-cumulative. Since the AHS Board has
not declared a dividend during the years ended December 31, 1994 and 1993,
respectively, no dividend has been subtracted from net loss to determine loss
per share for the years ended December 31, 1994 and 1993.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Working capital decreased to a deficit of approximately $11,194,000 at
December 31, 1995, from approximately $2,588,000 at December 31, 1994. This
decrease of $13,782,000 is primarily due to the reclassification of long-term
obligations to current liabilities as a result of scheduled debt maturities
and principal payments on long-term obligations. This decrease was partially
offset by net income before depreciation and amortization. During the past
three years, AHS has financed its operations primarily through internally
generated funds and the lease payment deferrals and credit arrangements
discussed below.

Cash increased to approximately $6,176,000 at December 31, 1995 from
approximately $3,664,000 at December 31, 1994, an increase of approximately
$2,512,000, or 69%. This increase resulted from (i) net income before
depreciation and amortization and deferred rent expense (approximately
$3,429,000) and (ii) a decrease in accounts receivable (approximately
$1,472,000), and (iii) an increase in accounts payable, accrued expenses and
professional fees payable (approximately $371,000). This increase was offset
by (i) net purchases of property and equipment (approximately $870,000), (ii)
the investment in a radiation oncology treatment center (approximately
$410,000) and (iii) a net decrease in long-term debt obligations net of the
deferred payment discussed below (approximately $714,000). AHS currently has
no lines of credit available to borrow against for working capital purposes.

The Company (i) reported losses from 1992 to 1995 (including a loss of
approximately $1,138,000 in 1995), (ii) expects to continue to experience cash
flow shortfalls and losses in 1996, (iii) has certain balloon payments of
approximately $12,252,000 and $1,500,000 pursuant to its long-term debt
obligations with its primary creditor maturing in June and August 1996,
respectively, and (iv) has a net capital deficiency of approximately
$12,102,000 at December 31, 1995. These factors, among others, raise
substantial doubt about the Company's ability to continue as a going concern.

On February 26, 1996, AHS entered into the Merger Agreement, pursuant to
which each Company, at the Effective Time, will become a wholly-owned
subsidiary of InSight. At the Effective Time, approximately one-half of the
issued and outstanding InSight Common Stock will be held by former
stockholders of AHS and approximately one-half will be held by former
stockholders of Maxum. The Companies also entered into the Stock Acquisition
Agreement pursuant to which GE Medical, in exchange for a comprehensive
program of debt and lease restructuring of existing obligations of AHS and
Maxum, will receive InSight Series A Preferred Stock, which will be
convertible into approximately 48% of InSight Common Stock outstanding at the
Effective Time,

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subject to certain adjustments. The terms and conditions of the restructuring
include, among other things (i) an extension of balloon payments of AHS
totaling approximately $11,619,000 in 1996 until December 2002, (ii) a
reduction of the long-term debt of AHS by approximately $10,685,000, (iii) a
restructure of certain operating lease arrangements, (iv) the surrender by GE
Medical of warrants to purchase 1,589,072 shares of AHS Common Stock and (v) a
similar restructuring for Maxum.

In addition, under the InSight Master Service Agreement Addendum, GE Medical
will have the right to receive for ten years the Supplemental Service Fee
equal to 14% of pre-tax income, subject to certain adjustments, of InSight,
and further subject to proportional reductions for certain post-Merger
acquisitions. InSight may terminate the Supplemental Service Fee at any time
during this ten-year period by making a payment to GE Medical equal to
$8,000,000 million less the discounted value of the Supplemental Service Fee
(calculated at a discount rate of 15% per annum) paid through the date of such
termination payment.

The Merger Agreement may be terminated by any of the parties, and the Merger
abandoned, if the Merger has not been consummated, or the approval of the
stockholders of AHS and Maxum has not been obtained, by September 30, 1996.
There can be no assurance that such transactions will be consummated in a
timely manner, if at all. If the GE Medical Financial Transactions are not
closed and the Merger is not consummated, there can be no assurance given as
to AHS ability to continue to operate as a going concern.

Pursuant to the terms of an April 12, 1994 agreement between AHS and the GE
Parties, the maturity of a balloon principal payment of approximately
$9,600,000 which was due in May 1994, was extended until January 1, 1996 and
the principal payment was reduced from $9,600,000 to $8,000,000. In addition,
the interest rate on the note related thereto was reduced from 12.75% per
annum to 9.25% per annum. As a result, AHS was required to make certain
balloon principal payments pursuant to its loan agreements with the GE Parties
as follows: $10,500,000 in January 1996 (which has been extended to June 30,
1996) and $1,500,000 in August 1996. The GE Parties also agreed to restructure
the monthly payments under a $15,200,000 equipment loan which resulted in
monthly cash savings of $75,000 in 1995. Finally, the GE Parties agreed to
provide three deferred payments to be used in 1995, under certain
circumstances. During 1995, AHS utilized all of its deferrals which totaled
approximately $2,133,000. Further, AHS is required to maintain, under the
terms of its loan agreements with the GE Parties, certain financial covenants
and ratios. AHS is in technical violation of several of these covenants and
ratios, but upon consummation of the restructuring of the GE Medical Financial
Transactions, the GE Parties will agree to eliminate these covenants and
ratios.

The health care industry is highly regulated and changes in laws and
regulations can be significant. AHS believes that the expanding managed care
environment accompanied by cost containment pressures may have a materially
adverse impact on the business of AHS, since they may directly affect the
utilization of AHS centers and reimbursement for those procedures performed at
AHS centers; however, AHS believes that as long as it is able to negotiate
provider agreements with the managed care companies and other payors to
provide productive and cost efficient services with measurable outcomes, the
business of AHS should not be negatively impacted.

In addition to the restructuring and merger arrangements discussed above,
AHS is also taking certain other actions to achieve profitability. First, if
utilization at certain underperforming centers continues to deteriorate, those
centers will be considered for closure and/or disposition. During 1995, AHS
sold or closed several underperforming centers. Second, AHS has sold or
negotiated the termination of leases of all its idle diagnostic imaging
equipment and has renegotiated its equipment maintenance contracts and
contracts with vendors of medical supplies and film. Third, AHS is continuing
to develop a long-term plan which includes (i) changes in its debt and capital
structure and (ii) raising additional working capital. In this regard, AHS has
engaged outside professional assistance and continues to explore raising new
capital for future operations.

AHS believes that it will be able to meet its long-term debt, operating
lease and other ongoing obligations until June 30, 1996; however, AHS believes
that its ability to meet its long-term debt obligations beyond June 30, 1996
is contingent upon the consummation of the long-term restructuring and merger
plans discussed above.

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However, there can be no assurances that any of these transactions will be
consummated in a timely manner, if at all.

In 1994, in connection with the operation of a Gamma Knife center in Miami,
Florida, RCI entered into an equipment loan agreement ($2,900,000) with a bank
which provided $500,000 of working capital for operations of the center and
which loan was guaranteed by Mr. Cal Kovens, then a director of AHS (deceased
February 6, 1995). In addition, RCI received a working capital loan for an
amount up to $500,000 from the GE Parties to fund the operations of the
center, which loan is secured by the accounts receivable of the center.

Effective March 1, 1996, RCI refinanced the remainder of the equipment loan
(approximately $2,075,000) with the GE Parties on terms substantially
equivalent to the original equipment loan. This loan is secured by all of the
assets of the Gamma Knife center, as well as by a letter of credit of $400,000
which is guaranteed by the estate of Cal Kovens.

In connection with its expansion plans, AHS has reviewed several diagnostic
imaging centers as acquisition candidates. In 1994, AHS purchased a majority
interest in a diagnostic imaging center in Monterey Park, California.
Additionally, in 1995, AHS purchased an interest in a radiation oncology
treatment facility in Valparaiso, Indiana. The cash needed to purchase these
centers was made available from long-term notes with the GE Parties in the
approximate amount of $1,359,000. AHS continues to review diagnostic imaging
centers as acquisition candidates but has not entered into any letters of
intent or definitive agreements. Approval by the GE Parties is required for
certain equipment purchase financings in connection with acquisitions by AHS.

The Omnibus Budget Reconciliation Act of 1993 prohibits referring physician
ownership of diagnostic imaging centers after December 31, 1994. In 1994, AHS
purchased or dissolved all the physician limited partnership interests in its
cooperative ventures. As a result, AHS no longer has any cooperative ventures
with referring physician ownership. The cash needed for these buyouts was made
available from internally generated funds.

Subject to the limitations described above, AHS expects to finance the
development and other start-up costs, and the costs of equipment and site
improvements at any new centers, through (i) financing arrangements with the
manufacturers of the equipment utilized at such centers and (ii) other
financing sources utilized by AHS. The ability of AHS to establish such
centers and to expand operations is dependent upon the availability of
financing on terms reasonably acceptable to AHS.

Dividends on the AHS Series B Preferred Stock are non-cumulative so long as
the holders of such stock control a majority of the AHS Board. In addition,
any dividends declared on the AHS Series B Preferred Stock may be paid in cash
or shares of AHS Common Stock at the discretion of the AHS Board. No dividend
was declared by the AHS Board for the year ended December 31, 1995.

AHS accounts for income taxes using the liability method in accordance with
Statement of Financial Accounting Standard No. 109, Accounting for Income
Taxes ("SFAS No. 109"), pursuant to which AHS recorded the benefit of its net
operating loss carry forwards and also recorded a valuation reserve for the
entire amount.

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of ("SFAS No. 121") in March
1995. SFAS No. 121 is effective for financial statements for fiscal years
beginning after December 15, 1995. SFAS No. 121 is not expected to have a
material effect on the AHS financial statements.

Inflation has not had a significant impact on the operations of AHS and, in
management's opinion based upon current trends, will not have an adverse
impact on operations in the near future.

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BUSINESS OF MAXUM

SERVICES

Maxum is a provider of diagnostic imaging and related management services in
24 states throughout the Central and Eastern United States. Maxum delivers its
services through a network of 48 Mobile MRI Facilities, six Fixed MRI
Facilities and five Imaging Centers. In its Imaging Centers, Maxum offers MRI,
diagnostic and fluoroscopic x-ray, ACR accredited mammography, diagnostic and
vascular ultrasound, nuclear medicine, nuclear cardiology, CT and
cardiovascular services. Maxum services approximately 145 customers (generally
hospitals in a fee-for-service contractual arrangement) through its Mobile MRI
Facilities and Fixed MRI Facilities. In the Imaging Centers, Maxum's customer
is primarily the patient, and reimbursement is received directly from the
patient or third-party payor. In addition, Maxum is the exclusive provider of
MRI and CT services to approximately 130,000 covered lives in the North Texas
area for a large managed care organization. Maxum also offers additional
services through a variety of arrangements including equipment rental,
technologist services and training/applications, marketing, management
services, patient scheduling, utilization review and billing and collection
services.

GENERAL DEVELOPMENT OF BUSINESS

Maxum was incorporated in 1989 for the purpose of acquiring Maxum Health
Services Corp. ("MHSC"), its principal operating subsidiary, from an affiliate
of Voluntary Hospitals of America, an association of non-profit hospitals. In
1991, Maxum completed its initial public offering.

Originally, MHSC primarily provided MRI and CT services through mobile
facilities; however, MHSC has owned a 43.75% interest in Central Maine
Magnetic Imaging Associates, an Imaging Center in Lewiston, Maine since 1988.

Since 1991, Maxum has continued to expand its Mobile MRI Facilities and
Fixed MRI Facilities, and has completed several acquisitions of Imaging
Centers. In 1991, MHSC acquired Maxum Diagnostic Center--Forest Lane ("MDC-F")
in Dallas, Texas, and in 1992, MHSC acquired a 60% interest in Maxum
Diagnostic Center--Eighth Avenue ("MDC-E") in Fort Worth, Texas. In 1994, MHSC
acquired the remaining 40% interest in MDC-E, and a 50% interest in Maxum
Diagnostic Center--Matlock Road ("MDC-M") in Arlington, Texas. In 1995, MHSC
acquired Maxum Diagnostic Center--Indianapolis ("MDC-I"), a Fixed MRI Facility
in Indianapolis, Indiana. Also in 1995, MHSC acquired MDC-P and MDC-H, two
additional Imaging Centers in Dallas, Texas. In December 1995, MDC-H was
consolidated into MDC-P and MDC-F. All three Imaging Centers were in close
proximity to one another and the consolidation of these businesses is expected
to maximize capacity utilization and enhance profit potential at MDC-P and
MDC-F.

In 1990 and 1991, MHSC acquired 20% interests in three lithotripsy
partnerships which operated mobile lithotripsy facilities. In 1994, Maxum sold
its interests in these three partnerships, and no longer operates lithotripsy
facilities.

OWNERSHIP STRUCTURE

Maxum's operations generally are of three types: (i) those in which the
customer contracts and equipment are held directly by Maxum or by an entity
which Maxum manages and has an ownership interest of more than 50% ("Owned
Operations"), (ii) those in which the customer contracts and equipment are
held by an entity which Maxum manages and has an ownership interest of 50% or
less ("Partnership Operations") and (iii) those in which the equipment is
owned or leased by an unrelated third party for which Maxum provides
management services ("Managed Operations").

In Owned Operations, equipment is either owned, debt-financed, or leased
under an operating or capital lease directly by Maxum. These operations
include three of Maxum's Imaging Centers, and fee-for-service agreements with
hospitals and managed care organizations which are primarily serviced by
Mobile MRI

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Facilities and Fixed MRI Facilities. Owned Operations also includes radiology
and management services Maxum provides for a hospital customer through a Fixed
MRI Facility.

In Partnership Operations, Maxum generally is a party to a partnership
agreement in which it is a general partner entitled to a specified share of
profits. Maxum also has a management agreement with each partnership pursuant
to which it manages operations on the partnership's behalf. Two of Maxum's
Imaging Centers are included in Partnership Operations.

In Managed Operations, equipment is owned by unaffiliated parties, and in
conjunction with its use, Maxum provides services to hospitals. Agreements
relating to these operations generally require Maxum to provide technical
staff and to manage the operations in exchange for a fixed fee. These
operations represent a limited capital commitment by Maxum.

CUSTOMERS AND FEES

Maxum's customers are primarily comprised of hospitals, managed care
companies and patients. Generally, Maxum enters into contracts with other
health services providers and earns a fee-for-service based either on a fixed
fee or on the number of procedures performed on services provided through
Mobile MRI Facilities and Fixed MRI Facilities. The majority of Maxum's fee-
for-service customers are small or mid-sized community hospitals, contracted
under this type of arrangement for a fixed-term, ranging from 12 to 60 months.

Each year a large percentage of Maxum's fee-for-service agreements with
hospitals for MRI services come up for renewal. Fee-for-service contracts,
included in Owned Operations, covering approximately 36%, 36%, and 28% of
annual fee-for-service revenues are subject to renewal during 1996, 1997, and
thereafter, respectively. It is expected that some high volume accounts will
elect not to renew their contracts. If such contracts are not replaced with
new accounts or with the expansion of services on existing accounts, Maxum's
revenues and profits would be adversely affected.

Maxum works closely with many of its hospital customers to secure managed
care contracts that will be beneficial to both parties. In the mobile MRI
business, Maxum has limited access to directly contract with managed care
organizations. Maxum is flexible in negotiating MRI services with its hospital
customers to accommodate their managed care contractual rate structures.

Maxum's Imaging Centers depend principally on their ability to attract
referrals from physicians and other health care professionals representing a
variety of primary care and other specialties. Managed care companies
generally contract directly with Maxum's Imaging Centers which provide a full
complement of radiology services. Managed care contracting has become very
competitive and reimbursement schedules are nearing Medicare reimbursement
levels. Future opportunities for growth of Maxum's diagnostic imaging services
other than through acquisitions are expected to exist primarily in this group
of customers.

During December 1994, Maxum's typical customer relationship and fee
structure further evolved with the award of its first exclusive capitated
managed care contract. Under this contract, Maxum is the provider of MRI and
CT services to a health maintenance organization covering approximately
130,000 insured lives. A capitated contract is an arrangement in which Maxum
is paid a fixed fee per covered life, on a monthly basis throughout the
contract period, without regard to utilization. This, in effect, shifts the
risk associated with potential increases in utilization, and benefit
associated with potential decreases in utilization, to Maxum. Maxum utilizes a
network of Imaging Centers, Mobile MRI Facilities and Fixed MRI Facilities
which it owns or operates, and contractual arrangements with other providers,
to service this contract.

REIMBURSEMENT

Most patients rely upon reimbursement by third parties, such as commercial
insurance carriers, government health care programs, and managed care
organizations, to pay for health care services. With increased national

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attention to health care costs, reimbursement by such third-party payors for
MRI and other diagnostic and treatment procedures has been declining.
Continued reduction in such third-party payments, which is expected, and
systematic restructuring of health services delivery and payment under new
federal health care policies will adversely affect Maxum's future revenues.

Generally, through Mobile MRI Facilities and certain Fixed MRI Facilities,
Maxum's revenues are generated pursuant to agreements with hospitals, where
the hospitals are responsible for billing charges and collecting payments from
patients and third-party payors. Under these agreements, payment by the
hospital of Maxum's charges is not conditioned on receipt by the hospital of
payment from these sources. Private insurance carriers generally reimburse
service providers the "reasonable and customary" amounts for medically
necessary services. Where Maxum bills directly for its procedures, such as in
its Imaging Centers and certain Fixed MRI Facilities, amounts reimbursed may
be less than the charges. Reimbursement to Maxum by health maintenance or
similar organizations generally is pursuant to a contractual arrangement
involving a substantial discount from Maxum's standard prices. Generally,
volume of work under such arrangements compensates for the discounted prices.

Medically necessary services provided to participants in the federal
Medicare program are reimbursed only: (i) if such services have been approved
for reimbursement by HCFA, and (ii) in the amount authorized on a geographical
basis by Medicare intermediaries (contracted insurance companies). The
services currently provided by Maxum have been approved for reimbursement by
HCFA. There are significant differences in Medicare reimbursement rates for
services in different locations. Generally, Medicare reimbursement rates are
lower than the reimbursement rates by third-party insurance carriers.

To the extent reimbursement by a third party is less than the standard price
for a given procedure (either because of a deductible, a co-insurance feature,
or otherwise), Maxum has generally been able to charge the patient for the
difference. However, such charges are not possible under most managed care
contractual arrangements and governmental programs, which increasingly
represents a more significant portion of Maxum's patient population.

STRATEGY AND MARKETING

Over the past two years, Maxum's strategy has continued to evolve in
connection with the Maxum Prior Restructure, in response to the continued
deterioration in the mobile MRI industry and further penetration of managed
care in the marketplace. See "Maxum's Management's Discussion and Analysis of
Financial Condition and Results of Operations." Maxum's strategy is primarily
focused on expanding its role as a manager of radiology services, expanding
the scope of services it provides and expanding its imaging network in key
markets.

Historically, Maxum's primary source of revenues has been its fee-for-
service revenues, derived generally from mobile MRI services provided to
hospitals and managed care organizations. Maxum's second largest source of
revenues is derived from patient services provided primarily through its
Imaging Centers and certain Fixed MRI Facilities. Revenues from patient
services increased 29% and 31% in 1995 and 1994, respectively. Patient
services as a percentage of total revenues were 21%, 18% and 14% in 1995, 1994
and 1993, respectively.

Maxum believes a consolidation in the diagnostic imaging industry is
occurring and will continue over the near term. In response to the excess
equipment capacity in the marketplace, and federal legislation which became
effective in December 1994, competing companies are expected to participate in
this consolidation in an effort to strengthen their presence in key market
areas. This consolidation of the infrastructures currently existing in
competing companies will provide an opportunity for greater operating and
administrative efficiencies and ultimately, significant reductions in overhead
in the larger surviving entities. Maxum believes this consolidation will
better position and provide greater leverage to the diagnostic imaging
industry for wider participation in managed care. In 1995, Maxum completed two
transactions in furtherance of its strategy to aggressively pursue

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consolidation opportunities, and is continuing to evaluate acquisition
candidates that meet its specific criteria in this area. Maxum routinely holds
discussions with potential acquisition candidates.

Management continues to focus on cost reduction and control at Maxum's
headquarters and in its field operations. In addition, in Maxum's mobile MRI
business, management continues the pursuit of new customers and renewal of
existing customer contracts and reconfiguring routes when possible in order to
maximize revenue per mobile asset. Maxum believes that larger growth potential
exists in the patient services market through services provided on a broader
scale in Maxum's Imaging Centers, rather than in the mobile MRI marketplace.
Maxum's participation in the expected industry consolidation will be a
significant determinant in the evolution of Maxum's business overall and the
change in mix of services provided.

Maxum continues to evaluate its mix of MRI equipment in response to changes
in technology and the surplus of capacity in the marketplace. The overall
technological competitiveness of Maxum's equipment continues to improve
through disposal and/or trade-in of older equipment and execution of leases
for new equipment. For purposes of managing its MRI equipment, Maxum divides
its equipment into three categories: Tier One (comprised of high-field magnets
with a field strength of 1.0 and greater tessla), Tier Two (primarily
comprised of newer mid-field magnets with a field strength of 0.5 and greater
tessla) and Tier Three (primarily comprised of older mid-field and low-field
magnets with a field strength of 0.5 and lower tessla). In general, customers
prefer first, equipment in Tier One, and second, equipment in Tier Two. There
is limited customer demand for equipment in Tier Three, and such demand is
rapidly declining. There is greater customer demand for Tier Two than Tier
Three and while the demand for Tier Two is declining, the decline is not as
rapid as the decline in demand for equipment in Tier Three. Maxum has
significantly improved the competitiveness of its equipment during the past
three years by (i) increasing the percentage of equipment in Tier One and Tier
Two from 12% and 12% of its total equipment mix to 39% and 29% of its total
equipment mix, respectively, and (ii) decreasing the percentage of equipment
in Tier Three from 76% to 32% of its total equipment mix. Substantially all of
Maxum's Tier One and Tier Two equipment is currently being utilized, while
approximately one-third of its Tier Three equipment is idle. Substantially all
idle equipment is under operating leases, and the carrying value of idle
equipment under capital leases is insignificant. No idle equipment is directly
owned or debt-financed.

Maxum continues its marketing activities primarily directed at hospitals,
physicians and managed care companies. Maxum generally markets its services as
providing radiology equipment and related management services on a fee-for-
service, rental, or capitated basis.

COMPETITION

The market for diagnostic imaging is highly competitive. The major direct
competitors with Maxum's Mobile MRI Facilities and Fixed MRI Facilities are
equipment manufacturers which sell or lease equipment directly to hospitals.
Maxum's ability to finance its operations is presently dependent upon these
manufacturers. In addition, other providers of mobile services are significant
competitors with Maxum's Mobile MRI Facilities, Fixed MRI Facilities and
Imaging Centers. Maxum and these competitors utilize similar equipment and
distribution channels. Maxum also competes with various hospitals, outpatient
centers, private clinics, and physician groups which operate their own
equipment.

The adverse market conditions that led to the Maxum Prior Restructure have
significantly impacted other providers of mobile services as well. See
"Maxum's Management's Discussion and Analysis of Financial Condition and
Results of Operations." Some of these providers, like Maxum, have incurred
significant charges in connection with a restructure of their operations
and/or financial obligations, have experienced operating losses, and have
experienced negative cash flow. However, some providers have greater financial
resources, which may give them the ability to withstand these market
conditions and to be more responsive to changes in the market.

Maxum's services generally do not require proprietary information, trade
secrets, or similar non-public intellectual property. The barriers to entry
are the costs of the equipment, hiring of qualified technologists and
experienced management personnel, and compliance with regulatory constraints.

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Maxum believes that the competitive factors which are important in the
mobile market are state-of-the-art technology, quality of service, competitive
prices, equipment and service reliability, quality of professional staff among
physicians and administration and flexibility in scheduling. In the Fixed MRI
Facilities and Imaging Centers, additional competitive factors include
reputation among referring physicians, convenience to referring physicians and
patients, and the ability to collect, analyze and report underlying
statistical data to hospital, physician and managed care organization
customers.

GOVERNMENT REGULATION

Maxum's operations are subject to various federal and state government
regulations. While Maxum believes that its operations currently comply with
such laws and will attempt to structure its future operations continually to
comply with such laws, there can be no assurances that subsequently adopted
laws or interpretations of existing laws will not adversely affect Maxum's
operations.

Many states have programs requiring approval prior to acquisition of medical
equipment and initiation of services of the types operated by Maxum. The
application and review processes required by various states in conjunction
with such reviews can be lengthy and costly. A significant increase in the
number of states requiring such approvals could impact Maxum's ability to
fully deploy its assets. In addition, broad repeal of such requirements could
impact its procedure volume by eliminating barriers to market entry for
additional providers.

Maxum's operations are subject to state laws prohibiting both practice of
medicine by non-physicians and rebate or division of fees between physicians
and non-physicians. Any determination that Maxum is engaged in the
unauthorized practice of medicine would have an adverse effect by prohibiting
the affected operations from continuing their current procedures for
conducting business. Maxum's management believes that its operations do not
involve the practice of medicine because all professional medical services
relating to its operations, such as the reading of scans and establishing
related diagnostic results, are provided separately by licensed physicians
through contractual relationships.

All of Maxum's operations are subject to the federal Medicare-Medicaid fraud
and abuse statute, which prohibits bribes, kickbacks, and rebates, and any
direct or indirect remuneration in connection with the furnishing or arranging
of services, items or equipment for which payment may be made in whole or in
part under Medicare or Medicaid. Violation of these provisions may result in
significant fines, criminal penalties and exclusion from participation in the
Medicare-Medicaid program both for the party paying the kickback or rebate
(and his or her employer) and the party receiving it. Increasing regulatory
attention is being directed toward referral activity to entities providing
health care services in which referring physicians have an ownership interest.
Currently, such provisions are primarily intended to preclude income
distribution arrangements based on referral activity. Referring physicians no
longer have equity participation in any of Maxum's Mobile MRI Facilities or
Fixed MRI Facilities or in its Imaging Centers.

Maxum will continue monitoring government activities affecting its business
to determine what, if any, action may be necessary to ensure compliance with
pending and modified legislation.

HUMAN RESOURCES

As of May 6, 1996, Maxum had approximately 325 full-time and 70 part-time
employees. None of Maxum's employees are represented by a labor union.
Management believes its employee relations to be satisfactory.

INSURANCE

Maxum carries workers' compensation insurance and maintains general premises
liability, fire and medical professional liability insurance with per claim
limits ranging from $0.5 million to $2.0 million and aggregate limits ranging
from $1.0 million to $8.0 million. While these amounts are deemed adequate by
management, there can be no assurance that potential claims will not exceed
coverage amounts. Under contract services

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arrangements, Maxum and its customers agree to each maintain appropriate
specified insurance coverage and to indemnify each other for acts or omissions
of their respective employees and agents.

PROPERTIES

The following table describes the primary properties utilized by Maxum as of
May 6, 1996.

<TABLE>
<CAPTION>
APPROXIMATE
TYPE SQUARE FEET LOCATION
------ ----------- --------
<S> <C> <C> <C>
OWNED OPERATIONS:
NSC(1)............................ Leased 10,300 Dallas, Texas
MDC-F............................. Leased 14,100 Dallas, Texas
MDC-E............................. Leased 10,000 Ft. Worth, Texas
MDC-P............................. Leased 5,800 Dallas/Plano, Texas
MDC-I............................. Owned 4,500 Indianapolis, Indiana
TSD(2)............................ Leased 20,000 Winston-Salem,
North Carolina
PARTNERSHIP OPERATIONS:
MDC-M............................. Leased 5,500 Arlington, Texas
CMMI(3)........................... Leased 7,250 Lewiston, Maine
</TABLE>
- --------
(1) NSC, or National Support Center, is Maxum's headquarters.
(2) Although Maxum sold its Technical Services Division in June 1994, Maxum
remains obligated under the terms of the facility lease through May 1996.
Maxum is presently using this facility to conduct training programs and
to store idle equipment; however, the majority of the facility is not
utilized.
(3) CMMI, or Central Maine Magnetic Imaging, is an Imaging Center owned by a
limited partnership in which Maxum is the managing general partner with a
43.75% interest.

LEGAL PROCEEDINGS

In May and June 1993, Maxum was named a defendant in two lawsuits filed on
behalf of a purported class of present and former stockholders in the United
States District Court for the Southern District of New York. Also named as
defendants were the underwriting firms that led Maxum's initial public
offering in September 1991, a former stockholder and senior creditor of Maxum,
and certain current or former members of Maxum's Board of Directors and/or
executives. These two actions have been consolidated into one action.

On February 22, 1994, the plaintiffs filed a second consolidated amended
complaint, which superseded the previously filed complaints. The plaintiffs,
who seek to represent a purported class of plaintiffs which acquired Maxum's
common stock, have alleged that misstatements and omissions were made by Maxum
and the other defendants in connection with Maxum's initial public offering
and in subsequent public disclosures from September 19, 1991 until March 1,
1993 when Maxum announced that it would write down assets and establish
reserves related to the restructuring of its mobile MRI business. The
plaintiffs seek monetary damages under various provisions of the federal
securities laws and state law in an unspecified amount, as well as other
relief.

In March 1994, Maxum and all other defendants moved to dismiss the second
amended complaint for, among other things, failure to state a claim. On
November 18, 1994, the United States District Court granted the motions to
dismiss and gave plaintiffs permission to file a third amended complaint.

On January 6, 1995, plaintiffs served their third consolidated amended
complaint. At approximately the same time, plaintiffs agreed to dismiss
without prejudice their claims against the two underwriter defendants. On June
2, 1995, Maxum and the other defendants moved to dismiss the third amended
complaint for failure to state a claim and failure to plead fraud with
particularity. At the conclusion of a hearing on October 20, 1995, the Court
reserved decision on the motions to dismiss the complaint. Although the
parties have substantially completed their production of documents as part of
pre-trial discovery in the action, no depositions have been taken.

121
<PAGE>

On February 23, 1996, while the motions to dismiss were still under
consideration by the Court, the defendants, plaintiffs and other interested
parties (acting through their respective counsel) entered into a Stipulation
of Settlement pursuant to which, subject to certain conditions, the foregoing
action will be settled and all claims dismissed on the merits. In anticipation
of this settlement, Maxum recorded a charge of $1.5 million in the fourth
quarter of 1995. Maxum has arranged to borrow approximately $1.9 million to
finance the litigation settlement.

On April 8, 1996, the Court entered an order that, among other things,
approved the proposed settlement on a preliminary basis, set May 27, 1996 as
the deadline for interested persons to object to the settlement and to opt-out
of the settlement, and scheduled a hearing on June 21, 1996 to determine,
among other things, whether to grant final approval to the settlement.

The Stipulation of Settlement will become effective when all the following
conditions have been satisfied or waived: (i) Maxum having available to it
financing for its contribution to the settlement, (ii) entry of a final
judgment of dismissal by the court and (iii) the final judgment of dismissal
becoming final.

The Stock Acquisition Agreement provides that GE Medical shall have no
obligations thereunder (or under related documents, including the
Restructuring Agreement) unless a final judgment of dismissal has been entered
with respect to the aforementioned stockholders litigation.

MANAGEMENT OF MAXUM

DIRECTORS AND EXECUTIVE OFFICERS

Maxum's Restated Certificate and Bylaws provide for the Maxum Board to be
divided into three classes, with each class to be as nearly equal in number of
directors as possible. At each annual meeting of stockholders, the successors
to the class of directors whose term expires at that time are elected to hold
office for a term of three years, and until their respective successors are
elected and qualified, so that the term of one class of directors expires at
each such annual meeting. The Maxum Board consists of five directors: Gaines
W. Hammond, Jr., M.D. (Chairman of the Board), Anthony J. LeVecchio, Leonard
H. Habas, Andrew J. Tofe, Ph.D. and Ronald G. Pantello. There are no family
relationships between the directors and executive officers of Maxum. Dr.
Hammond and Messrs. Habas and LeVecchio each serve on the Executive, Audit,
Compensation and Nominating Committees of the Maxum Board. Dr. Hammond is
Chairman of the Executive Committee, Mr. LeVecchio is Chairman of the Audit
Committee, and Mr. Habas is Chairman of the Compensation and Nominating
Committees.

The holders of a majority of the shares of Maxum Common Stock outstanding on
the applicable record date are entitled to elect the members of the Maxum
Board. Officers are elected by, and serve at the discretion of, the Maxum
Board.

BOARD OF DIRECTORS

The following table provides information with respect to each of Maxum's
directors.

<TABLE>
<CAPTION>
SERVED AS
NAME AGE DIRECTOR SINCE
---- --- --------------
<S> <C> <C>
CLASS I: (Terms expiring at the Annual Meeting of Stock-
holders succeeding the next Annual Meeting of Stock-
holders)
Anthony J. LeVecchio(1)............................... 49 1989
Andrew J. Tofe, Ph.D.(2).............................. 56 1993
CLASS II: (Terms expiring at the Annual Meeting of
Stockholders succeeding the next two Annual Meetings of
Stockholders)
Gaines W. Hammond, Jr., M.D.(3)....................... 47 1989
Leonard H. Habas(4)................................... 52 1989
CLASS III: (Term expiring at the next Annual Meeting of
Stockholders)
Ronald G. Pantello(5)................................. 52 1993
</TABLE>

122
<PAGE>

- --------
(1) Mr. LeVecchio has been the President of The James Group, a consulting and
development group, since 1989. From 1986 to 1988, he served as Senior
Vice President and Chief Financial Officer of VHA Southwest, Inc., a VHA
Regional Health Care System.
(2) Dr. Tofe has been the President and Chief Executive Officer of CeraMed
Corporation, a medical supply company, since 1988. From 1987 to 1988, he
served as the Director of Technology of Mallinckrodt Medical, Inc., and
from 1985 to 1987 he served as Vice President of Operations of Matrix
Medica, Inc. Dr. Tofe holds a Ph.D. in Inorganic/Nuclear Chemistry.
(3) Dr. Hammond has been a practicing urologist in Spartanburg, South
Carolina since 1980. In 1984, Dr. Hammond was one of the founders of
Medstone International, a manufacturer of lithotripsy units.
(4) Mr. Habas has been a director, Chairman of the Board and Chief Executive
Officer of Advance Publishers, L.C. since 1995. He established his own
financing and consulting firm in 1987, which he continues to own. Mr.
Habas has been a director of Dick Davis Digest since 1988 and a director
of CeraMed Corporation since 1990.
(5) Mr. Pantello is a founding partner of Lally, McFarland & Pantello, an
advertising agency specializing in the health care industry, and has been
its Chief Executive Officer since 1980.

Upon the Effective Time, InSight, as the sole stockholder of Maxum, will
have the sole authority to determine who will be the members of the Maxum
Board.

EXECUTIVE OFFICERS

Glenn P. Cato (age 43) is President, Chief Executive Officer, Chief
Financial Officer and Secretary of Maxum. Mr. Cato has served as President and
Chief Executive Officer since March 1994. From 1989 to 1994, he served as
Senior Vice President and Chief Financial Officer of Maxum. Mr. Cato was
elected as Secretary of Maxum in 1993.

Michael A. Boylan (age 40) has been Executive Vice President of Maxum since
March 1994. Since 1992, he served as a Regional Vice President of Maxum's
principal operating subsidiary, Maxum Health Services Corp. From 1991 to 1992,
he served as an Executive Director of certain of Maxum's operations. From 1986
to 1991, Mr. Boylan served in various capacities as an officer or employee,
including President and Chief Operating Officer, with American Medical Imaging
Corporation.

Robert N. LaDouceur, Jr. (age 51) has been Executive Vice President of Maxum
since March 1994. From 1992 to 1994, he served as a Regional Vice President of
Maxum's principal operating subsidiary, Maxum Health Services Corp. From 1991
to 1992, he served as an Executive Director of certain of Maxum's operations.
From 1984 to 1991, Mr. LaDouceur served in various capacities as an officer or
employee, including Vice President, with Glassrock Home Health Care.

Joseph F. Denninger (age 34) has been Maxum's Vice President since 1994 and
Treasurer since 1992. From 1990 to 1992, Mr. Denninger served as Maxum's
Director of Accounting. From 1986 through 1989, he served in various other
capacities as an employee of Maxum.

Don G. Hicks (age 34) is Chief Accounting Officer, Controller and Assistant
Secretary of Maxum. Mr. Hicks has been Maxum's Chief Accounting Officer since
March 1994, and Controller and Assistant Secretary since 1993. From 1992 to
1994, he served as Director of Accounting of Maxum. Prior to joining Maxum,
Mr. Hicks served as Supervisor of Forecast and Analysis at E-Systems, Inc.'s
Garland Division from 1991 to 1992. From 1988 to 1991, he was Assistant
Corporate Controller of Precision Aerotech, Inc.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee administers Maxum's Stock Option Plan and other
employee benefit plans and assists the Maxum Board in making executive
compensation decisions. The Compensation Committee is

123
<PAGE>

composed of Mr. Habas, Mr. LeVecchio and Dr. Hammond. The past and present
members of the Compensation Committee are not employees or officers of Maxum
or any of its subsidiaries, and have not served in such capacity in the past.
During 1995, no executive officer of Maxum served on the board of directors of
any other company whose executive officers served on Maxum's Board.

COMPENSATION OF DIRECTORS

The non-employee directors of Maxum each receive an annual fee of $10,000
for their services as directors. In addition, each non-employee director
receives $1,000 per day for meetings, and $500 per call for teleconferences.
Non-employee directors serving as committee chairmen are compensated as
follows: Executive Committee Chairman--$1,000 per quarter; Audit Committee
Chairman--$500 per quarter; Compensation Committee Chairman--$250 per quarter;
and Nominating Committee Chairman--$250 per quarter. Maxum also reimburses
non-employee directors for their expenses for each board and committee meeting
attended. During 1994 and 1995, Mr. LeVecchio was paid consultant fees of
$20,000 and $52,500, respectively, for his additional involvement in certain
restructuring/financing transactions.

CERTAIN TRANSACTIONS

Transactions with Former Executive Officers.

On June 30, 1989, Maxum sold 132,750 shares of Maxum Common Stock to William
L. MacKnight (President, Chief Executive Officer and Chairman of the Maxum
Board from 1989 to 1993), at a price of $.83 per share. Mr. MacKnight paid the
par value per share of the shares in cash and executed a promissory note for
the remainder of the purchase price in the original principal amount of
$110,625. The note carried interest at 10% per annum and matured in June 1994.
Mr. MacKnight pledged his shares to Maxum as security for the promissory note.

During 1994, Maxum and Mr. MacKnight reached a settlement agreement which
resulted in (i) the release of Maxum's liability under Mr. MacKnight's
employment contract (see "Executive Compensation--Employment Contracts and
Terminations of Employment and Change-in-Control Agreements"), and (ii) the
release of Mr. MacKnight's liability under the promissory note referenced
above. The 132,750 shares of Maxum Common Stock pledged as security for the
promissory note were transferred to Maxum and recorded as treasury stock in
full settlement of the outstanding principal and accrued interest. Total
payments made in 1994 to Mr. MacKnight under his employment contract,
including these settlements, were $148,113. In addition, a final payment of
$19,913 was paid in January 1995 in connection with this settlement.

In May 1993, Maxum entered into a management agreement (the "ADMC
Agreement") with ADMC. See "Maxum's Management's Discussion and Analysis of
Financial Condition and Results of Operation--Termination of Management
Contract." ADMC is in the business of managing and providing management
services to various businesses. Management of Maxum was specifically provided
by Douglas L. Drumwright and Charles S. Mack, Jr., two principals of ADMC.
Messrs. Drumwright and Mack served as executive officers of Maxum from August
1993 until March 1994. In lieu of executive compensation to these two
individuals, the ADMC Agreement provided for a management fee payable to ADMC.
The management fee was $30,000 per month plus reimbursement of expenses for
two years, the original term of the ADMC Agreement. Also, the ADMC Agreement
provided for additional compensation equal in amount to the management fee
based upon performance targets. Between May 27, 1993 and December 31, 1993,
Maxum paid ADMC $240,000 for management fees through January 1994. In
addition, in January 1994, Maxum paid $150,000 to ADMC for incentive
compensation earned through December 31, 1993. Maxum paid the $30,000 per
month management fee through March 1994. Maxum agreed to pay ADMC $100,000 as
additional compensation earned by ADMC during 1993, provided that Maxum has
not filed a petition for reorganization in the United States Bankruptcy Court
prior to January 1995. This $100,000 was paid by Maxum to ADMC with a
downpayment of $25,000 in January 1995, and the remaining $75,000 paid in ten
equal monthly installments which began in February 1995. The ADMC Agreement
was terminable by either party, upon notice as defined therein. Maxum has
indemnified ADMC and Messrs. Drumwright and Mack against any and all claims,
losses, expenses, costs or damages, arising out of the performance of duties
and obligations under the Agreement. ADMC and Messrs. Drumwright and

124
<PAGE>

Mack were subject to the ultimate control, policies, directives and bylaws
adopted by the Maxum Board. Effective March 31, 1994, Maxum terminated the
ADMC Agreement.

Transactions with Merrill Lynch Interfunding, Inc. and Highline Financial
Services.

During 1993, Maxum received $457,000 from Merrill Lynch Interfunding, Inc.
("MLIF"), a stockholder and senior creditor under a revolving credit agreement
at that time. This payment represented the amount owed to Maxum under Section
16(b) of the Exchange Act and related regulations as a result of market-making
activity by an affiliate of MLIF. These stock transactions and the
corresponding gain technically resulted in a violation of Section 16(b) of the
Exchange Act. The SEC requires that such gains be returned to the issuer of
the securities in question.

During 1994, in connection with Maxum's restructuring of its operations and
financial obligations, Maxum reached final agreements with MLIF and Highline
Financial Services, Inc. ("HFS"). In February 1994, Maxum entered into a
formal agreement with MLIF, whereby, full satisfaction of $3.5 million in
outstanding debt including accrued interest, MLIF received $2.0 million in
cash and an indemnification of up to $0.5 million against any judgment or
settlement in connection with a stockholder action pending against Maxum and
other defendants. See "Business of Maxum--Legal Proceedings." Also, HFS was
paid $0.5 million in connection with a 1989 intercreditor agreement executed
between MLIF and HFS. In addition, MLIF surrendered its Maxum Common Stock
holdings which represented approximately 20% of the outstanding Maxum Common
Stock at the time. In June 1994, Maxum reached an agreement to pay $3.8
million in full satisfaction of approximately $8.3 million in debt and lease
obligations owed to HFS in consideration for the purchase of the related
diagnostic equipment valued at approximately $3.5 million. Substantially all
of the payment made by Maxum to HFS was financed by GE Medical through long-
term notes of approximately $1.4 million secured by certain equipment
purchased from HFS, and a sale-leaseback transaction of the remaining
equipment for approximately $2.1 million.

Transactions with GE Medical.

Pursuant to a February 1994 agreement with GE Medical, which was effective
June 1993, unpaid amounts past due under current lease agreements with GE
Medical were deferred and lease agreements were restructured to reduce the
overall lease obligations. In exchange for these concessions, Maxum agreed to
certain contingent lease rental adjustments and granted a Maxum Common Stock
warrant to GE Medical for 700,000 shares, or approximately 24% of Maxum's
outstanding Common Stock at the time, if exercised. In June 1994, Maxum sold
its internal maintenance division to GE Medical for $0.3 million in cash and
discounts totaling approximately $3.1 million on future maintenance expenses
from services to be provided to Maxum. See "Maxum's Management's Discussion
and Analysis of Financial Condition and Results of Operations--Prior
Restructure of Operations and Financial Obligations." Also in June 1994, GE
Medical financed the payment by Maxum to HFS of $3.8 million in full
satisfaction of $8.3 million in debt and lease obligations owed to HFS. See
"--Transactions with Merrill Lynch Interfunding, Inc. and Highline Financial
Services."

In October 1995, Maxum acquired two Imaging Centers in Dallas, Texas. The
net purchase price of $1.6 million and an additional $0.7 million for working
capital was financed by GE Medical. See "Maxum's Management's Discussion and
Analysis of Financial Condition and Results of Operations--Acquisitions."

In 1995, GE Medical agreed to the deferral, under certain circumstances, of
up to four aggregate monthly lease and debt payments due in 1995. Maxum
utilized two of these deferrals in 1995 which were equal in value to a total
of approximately $2.7 million. Scheduled principal payments on the resulting
notes began April 1, 1996.

In negotiating the Merger with AHS and the GE Medical Financial Transactions
with GE Medical and AHS, Maxum agreed to reimburse to GE Medical an amount
equal to 40% of the legal costs incurred by GE Medical in connection with such
transactions. The amounts reimbursed to GE Medical in 1995 totaled
approximately $46,000. See "The Merger--Sharing and Reimbursement of
Expenses," and "Debt Restructuring and Issuance of Preferred Stock to GE
Medical--Payment of GE Medical Legal Fees."

125
<PAGE>

EXECUTIVE COMPENSATION OF MAXUM

The following table is provided to set forth the cash compensation earned by
Maxum's Chief Executive Officer and each of the other most highly compensated
executive officers of Maxum whose salary and bonus earned during 1995 was
$100,000 or greater.

Douglas L. Drumwright, Maxum's former Chief Executive Officer, and Charles
S. Mack, Jr., Maxum's former Executive Vice President are principals of ADMC.
In May 1993, Maxum entered into a management agreement with ADMC and in August
1993, Messrs. Drumwright and Mack were elected to their respective officer
positions. Management fees pursuant to this agreement were paid directly to
ADMC. See "Management of Maxum--Certain Transactions." Maxum did not directly
compensate these two officers, and therefore they do not appear in the
following table.

William L. MacKnight, Maxum's President and Chief Executive Officer until
May 1993, had an employment agreement with Maxum. See "--Employment Contracts
and Terminations of Employment and Change-in-Control Arrangements."

The named executive officers ("Named Executive Officers") included in this
table and the other tables pertaining to executive compensation are Glenn P.
Cato, Maxum's current President, Chief Executive Officer, Chief Financial
Officer and Secretary, and Michael A. Boylan and Robert N. LaDouceur, Jr.,
Maxum's Executive Vice Presidents. No other executive officers of Maxum earned
salary and bonuses greater than $100,000 in 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- --------------------- -------
(3)
(2) RESTRICTED SECURITIES (4)
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
(1) COMPEN- AWARD(S) OPTIONS/ PAYOUTS COMPEN-
NAME YEAR SALARY ($) BONUS ($) SATION ($) ($) SARS (#) ($) SATION ($)
---- ---- ---------- --------- ------------ ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glenn P. Cato........... 1995 172,500 20,000 6,000 -- 30,000 -- 3,158
President, Chief Execu-
tive 1994 143,750 71,875 4,500 -- 57,500 -- 1,751
Officer, Chief Financial 1993 109,000 40,000 -- -- -- -- 612
Officer and Secretary
Michael A. Boylan....... 1995 165,000 20,000 6,400 -- 30,000 -- --
Executive Vice President 1994 165,000 82,500 5,400 -- 35,000 -- --
1993 111,729 10,000 170,789 -- 20,000 -- --
Robert N. LaDouceur,
Jr..................... 1995 165,000 20,000 6,400 -- 30,000 -- 3,072
Executive Vice President 1994 165,000 82,500 5,400 -- 35,000 -- 1,751
1993 96,158 10,000 141,878 -- 20,000 -- 1,010
</TABLE>
- --------
(1) Bonus amounts are reflected in the year earned.
(2) Amounts represent 1995 and 1994 auto allowances. Amounts in 1993 include
auto allowances and commissions for contract awards and renewals.
(3) Options to purchase shares of Maxum Common Stock granted pursuant to the
Maxum Plan.
(4) Contributions made by Maxum, on behalf of the Named Executive Officers,
to Maxum's 401(k) retirement savings plan.

126
<PAGE>

OPTION GRANTS IN THE LAST FISCAL YEAR

The following table summarizes certain information relative to options
granted to Named Executive Officers during 1995, and the potential realizable
value of such options at December 31, 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION
FOR OPTION TERM
--------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES EXERCISE OR
SARS IN FISCAL BASE PRICE
NAME GRANTED (#) YEAR ($/SH) EXPIRATION DATE 5% 10%
- ---- ----------- ---------- ----------- ----------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Glenn P. Cato........... 30,000 33% 0.50 February 15, 2005 $ 9,433 $ 23,906
Michael A. Boylan....... 30,000 33% 0.50 February 15, 2005 $ 9,433 $ 23,906
Robert N. LaDouceur,
Jr..................... 30,000 33% 0.50 February 15, 2005 $ 9,433 $ 23,906
</TABLE>

OPTION GRANTS IN THE LAST FISCAL YEAR

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table summarizes certain information concerning each exercise
of stock options held by the Named Executive Officers listed at the end of
1995 and the year-end value of their unexercised options. No options to
purchase Maxum Common Stock were exercised by the Named Executive Officers
during 1995.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT FY- OPTIONS/SARS AT
ON VALUE END (#) FY-END ($0.8125)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Glenn P. Cato........... -- -- 67,500 20,000 $38,281 $6,250
Michael A. Boylan....... -- -- 45,000 20,000 $25,625 $6,250
Robert N. LaDouceur,
Jr. ................... -- -- 45,000 20,000 $25,625 $6,250
</TABLE>

INDEMNIFICATION AGREEMENTS

Maxum has entered into separate indemnification agreements with each of its
directors and officers that could require Maxum, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors and officers and to advance expenses incurred
by them as a result of any proceeding against them as to which they could be
indemnified.

EMPLOYMENT CONTRACTS AND TERMINATIONS OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

William L. MacKnight, Maxum's President and Chief Executive Officer prior to
the retention of ADMC and appointment of Mr. Drumwright, had an employment
agreement with Maxum which was effective until June 1994. Under the agreement,
Mr. MacKnight's base compensation was set at $150,000, subject to appropriate
adjustments. Mr. MacKnight's salary at the time of his resignation in May 1993
was $165,000. Maxum agreed to continue to pay Mr. MacKnight's salary and
benefits for the 24 months following his resignation in May 1993, reduced by
any income derived by Mr. MacKnight for personal services rendered during that
period. See "Management of Maxum--Certain Transactions" for discussion of
payments made to Mr. MacKnight after his resignation and for a discussion of
the management agreement with ADMC and its termination in March 1994.

127
<PAGE>

Effective as of February 25, 1995, Messrs. Cato, Boylan and LaDouceur (each,
a "Maxum Executive") each entered into an employment agreement (the "Maxum
Employment Agreements") with MHSC, a wholly-owned subsidiary of Maxum, whereby
each Maxum Executive's term of employment is for 12 months on a continuing
basis.

If a Maxum Executive's employment is terminated by Maxum without Cause (as
defined in the Maxum Employment Agreements), or if a Maxum Executive resigns
for Good Reason (as defined in the Maxum Employment Agreements), the Maxum
Executive is entitled to receive, for a period of 12 months from the date of
such termination, his base salary, payable in accordance with Maxum's payroll
policy, plus the medical insurance benefits he otherwise would have received
as an employee. If (i) the Maxum Executive's employment is terminated for
Cause, (ii) the Maxum Executive resigns other than for Good Reason or (iii)
the Maxum Executive's termination of employment is due to death, permanent
disability or incapacity, he is only entitled to his base salary and other
employee benefits through the date of termination.

Under the Maxum Employment Agreements, Cause means (i) the commission of a
felony or a crime involving moral turpitude or the commission of any other act
or omission involving dishonesty, disloyalty (insofar as such disloyalty
results in material financial loss or other material damage to Maxum or any of
its subsidiaries, or any of their customers or suppliers, (ii) substantial and
repeated failure to perform duties as reasonably directed by the MHSC Board of
Directors or MHSC's Chief Executive Officer, (iii) gross negligence or willful
misconduct with respect to Maxum or any of its subsidiaries or (iv) any other
material breach of the Maxum Employment Agreement which is not cured within
fifteen days after written notice thereof to the Maxum Executive. Good Reason
under the Maxum Employment Agreements means (i) a change in the nature and
scope of the Maxum Executive's position not permitted by his Maxum Employment
Agreement, (ii) a change in the Maxum Executive's office location not
permitted by his Maxum Employment Agreement, (iii) a failure of MHSC to
provide the compensation or other benefits stipulated in the applicable Maxum
Employment Agreement or (iv) the occurrence of a Change in Control (as defined
in the Maxum Employment Agreements) of Maxum or MHSC. Good Reason exists only
for a period of 120 days after a Change in Control has occurred. A Change in
Control excludes the Merger.

Messrs. Cato, Boylan and LaDouceur have executed InSight Employment
Agreements, each of which as to employment becomes effective at the Effective
Time. Each InSight Employment Agreement expressly supersedes any employment
agreement between each of Messrs. Cato, Boylan and LaDouceur and Maxum. See
"The Merger--Interests of Certain Persons in the Merger."

128
<PAGE>

MAXUM PRINCIPAL STOCKHOLDERS

The following table sets forth certain information to the best knowledge of
management, regarding the beneficial ownership of Maxum's Common Stock as of
May 6, 1996, by (i) each person known to Maxum who beneficially owns more than
5% of the outstanding shares of Maxum Common Stock, (ii) each of Maxum's
current directors, (iii) each of Maxum's Named Executive Officers and (iv) all
of Maxum's current directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OUTSTANDING(2)
------------------------------------ ------------ --------------
<S> <C> <C>
FIVE PERCENT OWNERS:
VHA, Inc. ......................................... 166,500 7.3%
220 East Las Colinas Blvd.
Irving, Texas 75039
GE Medical Systems(3).............................. 700,000 23.5%
20825 Swenson Drive
Waukesha, Wisconsin 53186
Jayesh B. and Rupa Gosai(4) ....................... 140,300 6.2%
P. O. Box 470
Jefferson, Pennsylvania 15344
DIRECTORS AND EXECUTIVE OFFICERS:
DIRECTORS:
Gaines W. Hammond, Jr., M.D.(5)(7)................. 107,000 4.7%
Anthony J. LeVecchio(5)(6)......................... 48,405 2.1%
Leonard H. Habas(5)(6)............................. 22,500 1.0%
Andrew J. Tofe, Ph.D.(5)(7)........................ 15,000 *
Ronald G. Pantello(5)(7)........................... 15,000 *
NAMED EXECUTIVE OFFICERS:
Glenn P. Cato(8)................................... 77,500 3.3%
Michael A. Boylan(9)............................... 55,000 2.4%
Robert N. LaDouceur, Jr.(9)........................ 55,000 2.4%
All current directors and executive officers as a
group(5)(10)...................................... 417,905 16.2%
</TABLE>
- --------
(*) Less than 1% of shares outstanding.
(1) Unless otherwise noted and subject to community property laws, the
persons named in the table have sole voting and investment power with
respect to all shares of Maxum Common Stock shown as beneficially owned
by them, and such shares are nonderivative and directly held.
(2) Outstanding shares for the purpose of calculating these percentages do
not include shares held by or for the account of Maxum, but include
shares which can be acquired within 60 days by the exercise of options or
warrants by the particular beneficial owner.
(3) GE Medical holds warrants for 700,000 shares of Maxum Common Stock, which
are currently exercisable at any time on or after February 8, 1996 and
before February 8, 1999. See "Management of Maxum--Certain Transactions,"
and "Description of Capital Stock of Maxum--Warrant."
(4) Information derived solely from a filing on Form 13D made with the SEC on
May 4, 1995. Shares are held by Jayesh B. and Rupa Gosai as joint
tenants.
(5) Includes options to purchase 5,000 shares of Maxum Common Stock for each
of Drs. Hammond and Tofe, and Messrs. LeVecchio, Habas and Pantello
granted pursuant to the Maxum Plan which will vest on May 1, 1996, as
determined by the Maxum Board pursuant to the requirements of the
respective stock option agreements for such options. Does not include
options to purchase 15,000 shares of Maxum Common Stock for each of Drs.
Hammond and Tofe, and Messrs. LeVecchio, Habas and Pantello pursuant to
which stockholder ratification is required, as described under "Maxum
Proposal No. 3: Approval of Maxum Option Ratification Proposal."
(6) Includes options to purchase 17,500 shares granted pursuant to the Maxum
Plan that are currently exercisable.
(7) Includes options to purchase 10,000 shares granted pursuant to the Maxum
Plan that are currently exercisable.
(8) Includes options to purchase 77,500 shares granted pursuant to the Maxum
Plan that are currently exercisable.
(9) Includes options to purchase 55,000 shares granted pursuant to the Maxum
Plan that are currently exercisable.
(10) Includes five current directors, five current officers, and options to
purchase 275,000 shares granted pursuant to the Maxum Plan that are
currently exercisable.

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DESCRIPTION OF CAPITAL STOCK OF MAXUM

The authorized capital stock of Maxum consists of 10,000,000 shares of Maxum
Common Stock and 56,000 shares of preferred stock, par value $.01 per share.

COMMON STOCK

Holders of Maxum Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. In addition, holders of Maxum
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Maxum Board out of funds legally available
therefor, subject to the payment of any preferential dividends declared with
respect to any Maxum Preferred Stock that from time to time may be
outstanding. Dividends may not be paid or declared as long as any preferred
stock with rights to dividends that are senior to the Maxum Common Stock
remains outstanding. In the event of liquidation, dissolution or winding up of
Maxum, the holders of Maxum Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of preferred stock, if any, then outstanding. The Maxum Common Stock
has no preemptive or conversion rights or other subscription rights, and there
are no redemptive or sinking funds provisions applicable to the Maxum Common
Stock. All outstanding shares of Maxum Common Stock are fully paid and
nonassessable.

As of May 6, 1996, there were 2,273,555 shares of Maxum Common Stock
outstanding and held of record by 162 stockholders.

PREFERRED STOCK

The Maxum Board is authorized to issue up to 56,000 shares of preferred
stock, without any further vote or action by the stockholders, in one or more
series, and to fix the rights, preferences and privileges and qualifications
thereof (including, without limitation, voting rights and the limitation or
exclusion thereof). The issuance of preferred stock could decrease the amount
of earnings and assets available for distribution to holders of Maxum Common
Stock or adversely affect the rights and powers, including voting rights, of
the holders of Maxum Common Stock, and may have the effect of delaying,
deferring or preventing a change in control of Maxum.

PREFERRED STOCK CONTEMPLATED TO BE ISSUED TO GE MEDICAL

The terms of the Maxum Series B Preferred Stock to be issued to GE Medical
immediately prior to the Merger are substantially identical to that of the
InSight Series A Preferred Stock into which the shares of Maxum Series B
Preferred Stock will convert at the Effective Time of the Merger. See
"Operation, Management and Business of InSight After the Merger--InSight
Series A Preferred Stock."

WARRANT

In connection with the Maxum Prior Restructure, Maxum granted GE Medical a
warrant to purchase 700,000 shares of Maxum Common Stock, which represents
approximately 24% of the outstanding Maxum Common Stock, assuming exercise of
the warrant (the "GE Medical Maxum Warrant"). The GE Medical Maxum Warrant is
exercisable at a purchase price of $0.50 per share, and may be exercised at
any one time on or prior to February 8, 1999 (the "Expiration Date"). The
number of shares of Maxum Common Stock subject to the GE Medical Maxum Warrant
and the purchase price of the shares subject to the GE Medical Maxum Warrant
are subject to adjustment upon the occurrence of certain stock dividends,
subdivisions, combinations and reclassifications regarding the Maxum Common
Stock. Subject to certain conditions, including the exercise of all or part of
the GE Medical Maxum Warrant prior to the Expiration Date, GE Medical has the
right to demand one time that Maxum register the Maxum Common Stock issuable
upon the exercise of the GE Medical Maxum Warrant under the Securities Act. In
addition, during the period prior to the Expiration Date, subject to certain
conditions, if Maxum files a registration statement under the Securities Act
relating to Maxum Common Stock on behalf of any of its security holders on any
form other than Form S-4 or S-8 (or any other form

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generally relating to business combinations, employee benefit plans, or
exchange or rights offerings), GE Medical shall have "piggy back" rights to
register the Maxum Common Stock issuable upon exercise of the GE Medical Maxum
Warrant in such registration.

In connection with the consummation of the Merger and the GE Medical
Financial Transactions, the GE Medical Warrant will be canceled. See "Debt
Restructuring and Issuance of Preferred Stock to GE Medical--Warrants of GE
Medical."

ANTITAKEOVER PROVISIONS

Maxum's Restated Certificate and Bylaws provide for three classes of
directors, with directors in each class serving alternating three-year terms.
Directors may be elected only by the affirmative vote of holders or more than
50% of Maxum's outstanding shares. Vacancies on the Maxum Board may only be
filled by the vote of a majority of the members of the Maxum Board. Maxum's
Restated Certificate and Bylaws also prohibit the stockholders from taking
action by written consent, thus requiring the stockholders to take all actions
at a meeting. Further, the Restated Certificate and Bylaws require a vote of
holders of 80% or more of the outstanding shares before certain actions may be
effected, if two-thirds of the Maxum Board have not previously approved such
action. These actions include (i) mergers or consolidations of Maxum, (ii)
sales or leases of any substantial part of Maxum's assets, (iii) issuances of
securities to another corporation in exchange for cash, other stock or
securities, (iv) the dissolution or liquidation of Maxum or (v) the amendment
of certain provisions of Maxum's Restated Certificate and Bylaws.

The above provisions may have the effect of delaying or making it more
difficult for a stockholder or group of stockholders to take corporate actions
or gain control of Maxum.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for Maxum's Common Stock is KeyCorp.
Shareholder Services, Inc.

BUSINESS OF AHS

DESCRIPTION OF BUSINESS

AHS is engaged in the establishment and operation with health care providers
of outpatient diagnostic and treatment centers utilizing MRI systems, CT
systems, multi-modality radiologic imaging systems, medical linear
accelerators and Gamma Knife systems.

As of December 31, 1995, AHS operated 17 imaging centers, of which ten are
in California, three are in Illinois, and one is in each of Indiana, Utah, New
Jersey, and Washington; two Gamma Knife treatment centers, one in each of
Florida and Washington; and one radiation oncology center in Indiana. AHS also
operates a radiation oncology treatment facility as part of one of its imaging
centers in Indiana.

The primary business objective of AHS is to provide diagnostic and treatment
services using MRI, CT, Gamma Knife and other high capital cost equipment to
hospitals, physicians and their patients. AHS' outpatient centers provide
diagnostic services in the areas of MRI, CT, general radiology, cardiology,
ultrasound, mammography, nuclear medicine and neurosciences. AHS does not
engage in the practice of medicine.

Subject to its ability to obtain financing, AHS plans to expand its network
of imaging and treatment centers by acquiring existing profitable centers on
an ongoing basis over the coming years in markets in which AHS believes there
are opportunities for continued revenue enhancement. See "--Financing of
Diagnostic Imaging and Gamma Knife Systems." In limited circumstances, it may
develop an imaging or treatment center in cooperation with established health
care providers (hospitals and diagnostic radiologists) in the local area. In
connection with such development opportunities, its principal target market is
the health care provider network associated with the 200 to 500 bed community
hospital population. AHS believes these hospitals have sufficient

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need and medical resources to warrant the availability of an MRI, CT or other
imaging systems on or near the hospital premises but may not desire, or be
able, to commit the funds necessary to own and operate their own on-site
imaging system. AHS also targets communities where a consortium of hospitals
may cooperate to support a single center. The objective of AHS with respect to
the development of its two Gamma Knife centers was to establish centers in
regional locations in association with a major medical center or group of
prominent neurosurgeons who are experienced in and dedicated to the Gamma
Knife technology. In addition, AHS is seeking opportunities to expand its
business operations through noncapital intensive activities such as billing
and collection and outpatient management.

IMAGING AND TREATMENT CENTER PROFILE

The terms of participation by AHS in each of its diagnostic imaging and
treatment centers are individually tailored to fit the requirements of AHS and
its health care provider partners who, in some cases, include the diagnostic
radiologists who will perform the imaging procedures at the center. However,
each of its centers is based upon one of two types of ventures: cooperative
venture or fixed monthly rental.

At the centers operated as cooperative ventures, AHS generally will be
responsible for managing the design and construction of the center, acquiring
and installing the diagnostic imaging equipment and providing all technical
and administrative services on an ongoing basis. Co-venturers of AHS will
generally provide the physical premises or the land required for the center.
AHS and its co-venturers split the net proceeds from the operation of the
center in accordance with an agreed upon formula pursuant to contractual
arrangements between AHS and its co-venturers.

At the centers operated pursuant to a fixed monthly rental program, AHS
provides the diagnostic imaging equipment and the building or trailer housing
the equipment, and services the equipment on an ongoing basis. The health care
provider partner is responsible for all utilities, supplies and personnel
requirements for the center. At such centers, AHS receives a monthly rental
payment regardless of whether the equipment is used or the number of
procedures performed at the center.

The average MRI system utilized by AHS diagnostic imaging centers has the
capacity to image up to approximately 18 patients per day. Each CT system
utilized by AHS also has the capacity to image up to approximately 18 patients
per day. The diagnostic imaging and treatment centers of AHS are generally
operational five or six days per week. The MRI and CT systems currently
operate on average at approximately 64% and 66% of total capacity,
respectively. However, MRI systems alone, depending on individual location,
operate at between 27% and 100% of total capacity.

The total patient charge for an MRI imaging procedure at the AHS cooperative
venture centers at the present time is in the range of $650 to $1,200 with an
average charge of $900, depending upon the geographic location and other
circumstances. The total patient charge for a CT imaging procedure at AHS'
cooperative venture centers is in the range of $400 to $700 with an average
charge of $500, also depending upon location and circumstances. The total
patient charge for an imaging procedure utilizing an imaging system other than
MRI or CT at the AHS cooperative venture centers is in the range of $75 to
$350, depending upon the imaging system used and other circumstances. Each
Gamma Knife system has the capacity to perform up to two procedures per day
and the total patient charge for a Gamma Knife procedure is approximately
$25,000, although a significant portion, as high as approximately 45%,
represents professional fees which will not be retained by the Gamma Knife
centers. Total patient charges are reduced by professional fees and
contractural discounts to arrive at net revenues. From these net revenues,
each cooperative venture diagnostic imaging or Gamma Knife center must pay its
operating costs, principally rent, supplies, compensation of technical and
administrative personnel, as well as the payments required in connection with
the lease or acquisition financing of the MRI, CT or other imaging system and
equipment maintenance costs. AHS has received commitments of at least five
years in connection with the establishment of its cooperative venture centers.

At its cooperative venture diagnostic imaging centers, AHS has contracted
with radiologists to perform professional services at the centers. The fees
due to such physicians, which are generally 20% of the net revenues

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of the center, are paid from revenues generated by the center. At its other
centers, AHS health care provider partners are responsible for obtaining
radiologists for the centers.

The contracts governing each of the fixed monthly rental centers of AHS
generally provide for rental terms ranging from six to seven years. In the
past, AHS has leased the diagnostic imaging equipment utilized at these
centers for usual and customary terms from five to seven years and,
accordingly, must either renew the original fixed monthly rental contract or
relocate the diagnostic imaging equipment shortly following the termination of
the original contract in order to maintain its profit margin. As a result of
the increase in the availability of diagnostic imaging equipment throughout
the country, it has become and will continue to be difficult for AHS to keep
the diagnostic imaging equipment currently utilized at fixed monthly rental
centers fully utilized. Currently, AHS does not have any idle equipment.

Imaging procedures utilizing MRI accounted for approximately 73% of AHS
revenues in 1995. Revenues from Gamma Knife procedures account for
approximately 9% of AHS' total revenues. MRI is expected to remain the primary
imaging modality of AHS for the foreseeable future.

No single source accounts for more than 10% of the revenues of AHS. AHS has
six individual contracts with the County of Los Angeles covering six separate
sites. In the aggregate, these sites represent approximately 24% of the annual
revenue of AHS. From time to time, the County has experienced financial
difficulties. In the event that such difficulties should cause the County to
curtail or possibly even terminate the services of AHS, it may cause a
material adverse effect on the business, results of operations, liquidity and
financial condition of AHS.

CENTERS IN OPERATION

At December 31, 1995, AHS had 20 centers in operation, including one
radiation therapy center and two Gamma Knife centers. AHS' first center was
established in July 1985 and the most recent AHS center was established in
January 1995. Sixteen of AHS' centers are organized as cooperative ventures
and four are organized as fixed monthly rental centers. Eighteen of AHS'
centers are based on a fixed site MRI, CT or Gamma Knife system, and two are
based on MRI systems housed in mobile coaches. One of AHS centers which is
organized pursuant to various agreements will expire in accordance with its
terms during 1996, and one will expire in 1997. The loss of the center in 1996
will not have a material adverse effect on the business, results of
operations, liquidity and financial condition of AHS.

In 1996, subject to its ability to obtain financing (see "Financing of
Diagnostic Imaging and Gamma Knife Systems"), AHS intends to continue to
develop additional diagnostic imaging centers, primarily through the
acquisition of diagnostic imaging centers already established and currently in
operation, either on a center by center basis or by the acquisition of the
equity interests or assets associated with a group of centers, as such
opportunities materialize.

DIAGNOSTIC IMAGING TECHNOLOGY

During approximately the last 20 years, there has been a major effort
undertaken by the medical and scientific communities to develop cost-effective
diagnostic imaging technologies and to minimize the risks associated with the
application of such technologies.

The major categories of diagnostic imaging systems currently offered in the
medical marketplace are conventional x-ray, CT scanners, digital ultrasound
systems, computer-based nuclear gamma cameras, radiography/fluoroscopy systems
and MRI systems, each of which (other than conventional x-ray) represents the
marriage of computer technology and various medical imaging modalities.
Patients exposed to x-rays and to gamma rays employed in nuclear medicine
receive potentially harmful ionizing radiation. Much of the thrust of product
development during the period has been to reduce the hazards associated with
conventional x-ray and nuclear medicine techniques and to develop new,
virtually harmless imaging technologies such as ultrasound and MRI.

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X-Ray. X-ray is the most common energy source used in imaging the body and
is now employed in the three following imaging modalities:

(i) Conventional x-ray systems, the oldest method of imaging, are
typically used to image bones, teeth and contrast-enhanced vasculature and
organs and constitute the largest number of installed systems;

(ii) CT scanners utilize computers to produce cross-sectional images of
particular organs or areas of the body; and

(iii) Digital x-ray systems add computer image processing capability to
conventional x-ray systems.

Ultrasound. Ultrasound systems emit, detect and process high frequency sound
waves to generate images of soft tissues and internal body organs. The sound
waves used in ultrasound do not involve ionizing radiation and are not known
to cause any harmful effects to the patient.

Nuclear Medicine. Nuclear medicine gamma cameras, which are based upon the
detection of gamma radiation generated by radioactive pharmaceuticals injected
or inhaled into the body, are used to provide information about organ function
as opposed to anatomical size and shape.

MRI Technology. AHS believes that the introduction of MRI technology into
the health care marketplace marked a significant advance in diagnostic
medicine. MRI systems expose patients to a static magnetic field and to energy
in the radio frequency ("RF") range produced by a radio antenna coil which
surrounds the body part to be imaged. Nuclei in the portion of the body to be
scanned are stimulated from their state of equilibrium by the RF energy. When
the radio signal is switched off, the nuclei "relax" and return to their
original state, releasing energy that is directly related to their quantity
and environment. The energy given off by the nuclei is recorded, measured and
converted into a visual display by a digital computer. The nuclei of different
chemical elements composing human tissue, for example, hydrogen, sodium and
phosphorus, within the same magnetic field respond to different RFs and will
respond only if exposed to the RF energy of that specific frequency. The
digital data are then reconstructed by a computer system into a two
dimensional cross-sectional image of the particular plane of the anatomy of
interest similar to the computer image reconstruction process utilized in CT
scanning. A typical MRI examination takes from 30 to 90 minutes. MRI systems
are typically priced in the range of $900,000 to $2,000,000 each, depending
upon the system configuration, magnet design and field strength.

There are no known hazards to the general population from magnetic and RF
fields of the intensity to which a patient is exposed in a clinical MRI
system. Equipment literature nonetheless recommends that, until further
information is available, pregnant women and young children should be scanned
only under limited circumstances. Furthermore, MRI magnets may disrupt the
operation of cardiac pacemakers and may react with ferrous clips utilized in
various surgical procedures, so that individuals with such devices may be
excluded from examination with MRI systems, and access to the area surrounding
the MRI facility may also be controlled to avoid these possible hazards.
Additionally, some MRI examinations require injection of a paramagnetic
contrast material. Although it is extremely unusual, some patients may develop
a significant adverse reaction to this contrast material; however, chances of
fatalities as a result of such reaction are remote.

Because the signals used to produce magnetic resonance images contain both
chemical and structural information, AHS believes this technique has greater
potential for many important diagnostic applications than any other imaging
technology currently in use. While existing MRI systems demonstrate excellent
portrayals of anatomical structures within the human body, of even greater
significance is the fact that MRI is also sensitive to subtle differences
between tissues. Thus, MRI offers not only the opportunity for highly
effective classical diagnosis, but also the potential for future monitoring of
chemical processes within the body.

CT Technology. CT technology consists of a doughnut-shaped gantry structure
into which a patient, resting on a remotely controlled couch assembly, is
positioned to scan the anatomical region of interest. The scanning process is
performed by the rotation of a high output x-ray tube around the patient. The
x-ray tube emits a thin fan-shaped beam of x-rays that passes through the
patient and is absorbed by an array of x-ray detectors located on the opposite
side of the patient from the x-ray tube. The detected x-rays are then
converted

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into digital measurements of x-ray intensity directly proportional to the
density of the portion of the patient through which the beam passes. These
digital measurements of x-ray intensity are then processed by a specialized
image reconstruction computer system into a cross-sectional image of the
anatomical region of interest. The patient is then indexed on the couch and
another scan performed and then another, creating a "stack" of cross-sectional
images constituting the complete diagnostic imaging procedure.

Typical scanning times for a single cross-sectional image are in the one
second to six second range. A complete CT examination takes from 15 minutes to
45 minutes, depending on the complexity of the examination and number of
individual cross-sectional images required. The current selling prices of CT
systems fall in the range of $350,000 to $1,500,000, depending upon the
specific performance characteristics of the systems. Based on the fact that CT
systems have been commercially marketed for approximately twenty years, AHS
believes that CT is a relatively mature technology and, therefore, not subject
to significant risk of obsolescence.

Certain CT examinations require the injection of an iodine-based contrast
material, allowing for better visualization of the anatomy. Although it is
very unusual, some patients may develop a significant adverse reaction to this
contrast material. Fatalities as a result of such reaction have occurred but
are rare. In an effort to scan only appropriate patients, all patients are
required to answer a questionnaire which helps to identify those patients who
may suffer an adverse reaction to this contrast material.

Gamma Knife Technology. The Leksell Stereotactic Gamma Unit is a state-of-
the-art radiosurgical device used to treat intracranial neoplasma and vascular
anomalies which are inaccessible or unsuitable for conventional invasive
surgery. The Gamma Knife was designed to provide neurosurgeons and radiation
therapists with the ability to perform radiosurgery, using high energy gamma
rays, instead of conventional invasive techniques, thereby generally
eliminating the risk of infection and intracerebral bleeding.

The Gamma Knife delivers a single high dose of ionizing radiation emanating
from 201 Cobalt 60 sources positioned about a hemispherical, precision
machined cavity. Each individual beam is focused on a common target producing
an intense concentration of radiation at the target site, destroying the
lesion while spreading the entry radiation dose uniformly and harmlessly over
the patient's skull. The mechanical precision of the Gamma Knife at the target
site is 1/10 of one millimeter (0.1 mm), making the Gamma Knife an ideal
treatment device for treating small or medium-sized lesions in critical
locations within the brain. However, based upon the type, size and/or location
of such lesions, not all patients are candidates for radiosurgery. The
mechanical precision of the Gamma Knife is coupled with an extremely sharp
fall-off in the radiation intensity surrounding the target, resulting in a
highly localized treatment effect, sparing surrounding tissue.

The Gamma Knife treatment requires no open surgical intervention, no lengthy
hospital stay and no risk of post-surgical bleeding or infection. When
compared to the average length of stay and costs associated with conventional
surgery, the Gamma Knife greatly reduces the cost of neurosurgical treatment.
Typical treatment time is approximately 10 to 15 minutes per area of interest
("isocenter"). A key feature of the Gamma Knife is its ability to perform
treatments that require multiple isocenters. In addition, other applications
for the Gamma Knife are currently being developed. Investigative work is being
conducted to treat patients for chronic pain and motion disorders such as
Parkinson's disease, epilepsy and trigeminal neuralgia. These new applications
represent a significant new market for the Gamma Knife upon clinical
acceptance. The current selling price of a Gamma Knife system is approximately
$3,000,000.

GOVERNMENT REGULATION

The health care industry is highly regulated and changes in laws and
regulations can be significant. Changes in the law or new interpretation of
existing laws can have a material effect on permissible activities of AHS, the
relative costs associated with doing business and the amount of reimbursement
by government and other third-party payors. The federal government and all
states in which AHS currently operates regulate various aspects of AHS'
business. Failure of AHS to comply with these laws could adversely affect its
ability to provide or receive reimbursement for its services and subject AHS
and its officers to penalties.

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Some states require hospitals and certain other health care facilities to
obtain a CON prior to the acquisition of major medical equipment such as an
MRI or Gamma Knife system. AHS believes that it will not be required to obtain
CONs in most of the states in which it intends to operate since most states no
longer require non-hospital providers to obtain CONs and those states that do,
offer exemptions for which AHS may qualify; however, in those states where a
CON is required, AHS has or will comply with such requirements.

Beginning in late 1983, prospective payment regulations became effective
under the federal Medicare program. The Medicare program provides
reimbursement for hospitalization, physician, diagnostic and certain other
services to eligible persons 65 years of age and over and others considered
disabled. Providers of service are paid by the federal government in
accordance with regulations promulgated by the United States Department of
Health and Human Services and accept said payment, with nominal co-insurance
amounts required to be paid by the service recipient, as payment in full. In
general, these regulations provide for a specific overall fee which hospitals
may charge for inpatient treatment services based upon the diagnosis of the
patient. Because the diagnostic imaging centers of AHS mainly provide
diagnostic services to patients on an outpatient basis, the prospective
payment regulations do not materially affect the business of AHS. Although
outpatient services are presently exempt from prospective payment
reimbursement, Congress has instructed the Prospective Payment Assessment
Commission to study alternative methods for reimbursing hospitals for
outpatient services, including prospective payment methods and the Medicare
program has adopted fee scales for some diagnostic services. However, such
congressional activity reflects industry-wide cost containment pressures which
AHS believes will affect all health care providers for the foreseeable future.

Private health insurance programs generally have authorized the payment for
diagnostic imaging and Gamma Knife procedures on satisfactory terms and the
Health Care Financing Administration ("HCFA") has authorized reimbursement
under the federal Medicare program for all diagnostic imaging and Gamma Knife
services currently being provided by AHS. Approximately 15% of the revenue of
AHS is derived from the Medicare program. However, if Medicare reimbursement
is reduced, AHS believes that private health insurance programs will also
reduce reimbursement in response to reductions in government reimbursement
which could have an adverse impact on the business of AHS.

The Medicaid program is a combined federal and state program providing
coverage for low income persons. The specific services offered and
reimbursement methods vary from state to state. In many states, Medicaid
reimbursement is patterned after the Medicare program. Approximately 7% of
AHS' revenue is derived from the Medicaid program. Accordingly, changes in
Medicaid program reimbursement are not expected to have a material adverse
impact on the business of AHS.

AHS is subject to state and federal laws prohibiting payments for patient
referrals and regulating reimbursement procedures and practices under
Medicare, Medicaid and other governmental health care programs. The Medicare
and Medicaid Patient and Program Protection Act of 1987 (the "1987 Act")
prohibits financial arrangements designed to induce patient referrals to
providers of services which are paid for by Medicare or Medicaid. Courts have,
to date, interpreted these laws to apply to a broad range of financial
relationships. Several states also have statutes prohibiting arrangements with
health care providers which, while similar in many respects to the 1987 Act,
vary from state to state, are often vague and have infrequently been
interpreted by courts or regulatory agencies. Due to the potentially broad
proscriptions contained in these federal and state laws, there can be no
assurance that all of AHS' business practices would be construed to comply
with these laws in all respects. However, in the situations where AHS
contracts with health care providers who may be in a position to refer
patients to AHS' centers, AHS has always exercised care in an effort to
structure its activities and arrangements to comply with applicable federal
and state laws. AHS maintains an internal regulatory compliance review program
and retains special counsel, as necessary, to monitor compliance with such
laws and regulations.

The Omnibus Budget Reconciliation Act of 1993 included federal legislation
which prohibits, after December 31, 1994, physician referrals to diagnostic
imaging centers in which the physician has a financial interest. In 1994, AHS
purchased or dissolved all the physician limited partnership interests in its
cooperative ventures. AHS believes its operations are in full compliance with
this legislation.

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The FDA has issued the requisite premarket approval for all of the MRI, CT
and Gamma Knife systems utilized in the diagnostic imaging and treatment
centers of AHS. AHS does not believe that any further FDA approval is required
in connection with the diagnostic imaging and treatment centers of AHS
currently in operation or proposed to be operated.

The radiologists with whom AHS may enter into agreements to provide
professional services at its diagnostic imaging centers are subject to
licensing and related regulations by the states. As a result, AHS requires its
radiologists to have and maintain appropriate licensure. AHS does not believe
that such laws and regulations will either prohibit or require licensure
approval of business operations of AHS, although no assurances can be made
that such laws and regulations will not be interpreted to extend such
prohibitions or requirements to business operations of AHS.

MANAGED CARE

HMOs and PPOs attempt to control the cost of health care services. AHS
believes that the development and expansion of HMOs, PPOs and other managed
care organizations may have a negative impact on utilization of AHS centers in
certain markets and/or affect the revenue per procedure which AHS can collect,
since they will exert greater control over patients' access to diagnostic
imaging services, the selection of the provider of such services and the
reimbursement therefor. AHS also expects that the excess capacity of
diagnostic imaging equipment in the United States may negatively impact AHS'
centers because of the competition among providers of diagnostic imaging
services for contracts with all types of managed care organizations. As a
result of such competition, the length of term of any contracts which AHS may
obtain and the payment to AHS for such services may also be negatively
impacted. However, AHS believes that as long as AHS is able to negotiate
provider agreements with the managed care companies and other payors to
provide productive and cost-efficient services with measurable outcomes, the
business of AHS should not be negatively impacted. See "AHS Management's
Discussion and Analysis of Financial Condition and Operations--Liquidity and
Capital Resources."

LIABILITY INSURANCE

AHS does not provide medical services, although it has obtained professional
medical liability insurance as well as general liability insurance. In
addition, the radiologists or other health care professionals with whom AHS
contracts are required by such contracts to carry adequate medical malpractice
insurance. AHS believes that its insurance is adequate for its business of
providing diagnostic and treatment facilities and nonmedical services.

COMPETITION

The health care industry in general, and the market for diagnostic imaging
services in particular, are highly competitive. The imaging centers of AHS
must compete with groups of radiologists, established hospitals and certain
other independent organizations, including equipment manufacturers and leasing
companies, that own and operate imaging equipment. AHS also has and will
continue to encounter substantial competition from hospitals and independent
organizations in connection with the establishment of imaging and treatment
centers. Certain hospitals, particularly the larger hospitals, may be expected
to directly acquire and operate imaging and treatment systems on-site as part
of their overall inpatient servicing capability. In the past, however, the
reluctance of hospitals to purchase imaging and treatment systems encouraged
the entry of start-up ventures and more established business operations into
the diagnostic and treatment services business. As a result, there is
significant excess capacity in the diagnostic imaging business in the United
States which negatively affects utilization and reimbursement at some of the
centers of AHS. Many of these competitors have substantially greater resources
than AHS; however, AHS competes on the basis of its reputation for productive
and cost-effective services.

SUPPLY OF DIAGNOSTIC IMAGING AND GAMMA KNIFE SYSTEMS

Several substantial companies are presently engaged in the manufacture of
MRI, CT and other diagnostic imaging systems, including GE Medical, Hitachi
Medical Systems, Picker International, Philips Medical

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Systems, Siemens Medical Systems, Inc. and Toshiba Medical Systems. AHS has
maintained and intends to continue to maintain good working relationships with
many of the major manufacturers to better ensure an adequacy of supply as well
as access to those types of diagnostic imaging systems which appear most
appropriate for the specific diagnostic or treatment center to be established.
Currently only one company, Elekta Instruments, Inc., a subsidiary of AB
Elekta headquartered in Stockholm, Sweden ("Elekta"), is engaged in the
business of manufacturing the Gamma Knife.

FINANCING OF DIAGNOSTIC IMAGING AND GAMMA KNIFE SYSTEMS

The development by AHS of new centers for diagnostic imaging and Gamma Knife
systems, as well as upgrading existing equipment and systems, is dependent on
its ability to obtain financing through third parties. Such financing must be
approved by the GE Parties.

Pursuant to the terms of an April 12, 1994 agreement between AHS and the GE
Parties, the maturity of a balloon principal payment of approximately
$9,600,000, which was due in May 1994, was extended until January 1, 1996 and
the principal payment was reduced from $9,600,000 to $8,000,000. As a result,
AHS is required to make certain balloon principal payments pursuant to its
loan agreements with the GE Parties as follows: $10,119,000 in January 1996
(which has been extended to June 30, 1996), and $1,500,000 in August 1996.
Further, AHS is required to maintain, under the terms of its loan agreements
with the GE Parties, certain financial covenants and ratios. AHS is in
technical violation of several of these covenants and ratios, but upon
consummation of the restructuring of the GE Medical Financial Transactions,
the GE Parties will agree to eliminate these covenants and ratios. See "AHS
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

In May 1992, AHS entered into a definitive loan and security agreement with
GE Medical which, among other things, provided AHS with a nonrevolving line of
credit to finance corporate growth in connection with the acquisition,
development and improvement of the AHS imaging business and for other health
care-related acquisitions. The ability of AHS to borrow under this line of
credit terminated on March 31, 1995. AHS currently has borrowings under this
line in the approximate amount of $1,359,000. Historically, AHS has been able
to finance its development activities and to obtain the necessary approvals
from its primary lender. The future expansion of AHS is entirely dependent
upon its continuing ability to do so.

The total cost of establishing an AHS cooperative venture center is equal to
the cost of the diagnostic imaging equipment or the Gamma Knife plus
approximately $300,000 to $1,000,000 for the construction of the facility
(excluding the cost of the land), approximately $150,000 for furniture,
furnishings and ancillary equipment and approximately $200,000 to $500,000 for
working capital. AHS expects that it will finance most of these costs along
with financing the lease or purchase of the equipment for the center. AHS co-
venturers generally are responsible for the land costs, although the relative
responsibilities for these costs may vary from center to center. The cost of
establishing a cooperative venture center utilizing more than one imaging
and/or treatment modality will vary depending upon the number and types of
imaging and treatment systems utilized.

At present, each MRI or CT system that AHS may utilize can cost up to
approximately $2,000,000 and $1,500,000, respectively, and the cost of each
Gamma Knife is approximately $3,000,000. AHS either purchases or leases the
MRI or other imaging systems utilized at any AHS center; however, AHS has
purchased each of the Gamma Knife systems. An MRI or CT lease has an average
term of five to seven years. AHS has purchased, or assumed existing leases of,
certain imaging systems, including most of its CT imaging systems, in
connection with the acquisition of previously established operating centers.
Each Gamma Knife loan has an average term of five to seven years. Subject to
its ability to obtain financing, AHS intends to lease MRI, CT and other
diagnostic imaging systems for the centers it may develop in 1996, assuming
the lease terms remain attractive relative to other financing that may be
available for the acquisition of such systems. AHS has no current plans to
develop any further Gamma Knife centers.

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<PAGE>

NEW TECHNOLOGY AND POSSIBLE OBSOLESCENCE

MRI and CT systems, as well as Gamma Knife systems, may be subject to
technological change, in which case AHS may be required, from time to time, to
upgrade or replace equipment, which will require additional financing. See
"Financing of Diagnostic Imaging and Gamma Knife Systems."

EMPLOYEES

As of May 6, 1996, AHS had 272 employees, of whom five were corporate
officers. None of AHS' employees is covered by a collective bargaining
agreement. AHS believes relations with its employees are good.

PROPERTIES

The executive offices of AHS are located at 4440 Von Karman Avenue, Suite
320, Newport Beach, California. AHS occupies approximately 10,400 square feet
pursuant to a five-year lease ending in June 1996. The monthly rental is
approximately $16,000, and AHS is responsible for insurance, taxes and
maintenance. AHS has entered into a new five year lease commencing July 1,
1996 for approximately 12,800 square feet of executive office space located at
4400 MacArthur Boulevard, Suite 800, Newport Beach, California. The monthly
rental is approximately $18,000, and AHS is responsible for insurance, taxes
and maintenance.

AHS also leases facilities for several of its operating imaging centers for
terms ranging from five to twenty years, with annual rentals aggregating
approximately $1,200,000, including provisions for additional rent based upon
certain centers' operating profits.

In October 1995, AHS acquired the building housing the Berwyn Magnetic
Resonance Center, located in Berwyn, Illinois. In January 1995, AHS acquired
the land and building housing the Northern Indiana Oncology Center, located at
54 Roosevelt Road, Valparaiso, Indiana. In 1994, AHS acquired the building
housing Garfield Imaging Center, located at 555 North Garfield Avenue,
Monterey Park, California. The center is located on land leased from Garfield
Medical Center at an annual rent of $59,592.

AHS completed construction in 1989 of an 8,500 square foot building which
houses the LAC/USC Imaging Science Center, located in Los Angeles, California.
The center is located on land leased from the County of Los Angeles at a
nominal fee. In 1988, AHS also acquired the building housing the Diagnostic
Outpatient Center, located in Hobart, Indiana. The center is located on land
leased at an annual rent of $13,925. In 1987, AHS acquired the building
housing the Harbor/UCLA Diagnostic Imaging Center, located in Torrance,
California. The center is also located on land leased from the County of Los
Angeles at a nominal fee.

LEGAL PROCEEDINGS

San Juan Health Centre. In September 1992, a complaint was filed in the
United States District Court for the District of Puerto Rico by P.R.F., Inc.
d/b/a San Juan Health Centre, Inc., Drs. Pablo Rodriguez Millan and Rafael
Rodriguez Sepulveda and their spouses against Philips Credit Corporation
("PCC"), AHS, Clarke J. Underwood, Margaret van Gilse d/b/a Berkshire
Consulting Group, et al. (Case No. 92-2266). The complaint alleged against all
defendants violations of the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), mail fraud, wire fraud, misrepresentation and fraud, infliction
of emotional distress and tortious misconduct upon Drs. Millan and Sepulveda
and their spouses, and loss of consortium by Dr. Millan. The complaint alleged
against AHS breach of management agreement, breach of voting trust agreement
and breach of fiduciary duty, tortious interference with contractual
relations, and breach of fiduciary duty to Drs. Millan and Sepulveda and their
spouses. The complaint sought compensatory damages in excess of $400,000,000,
punitive damages, costs, injunctive relief and attorneys' fees. Mr. Underwood
and Ms. van Gilse are former officers/employees of AHS.

San Juan Health Centre ("SJHC"), a freestanding health care clinic, was
created by Drs. Millan and Sepulveda and Mr. Amezquita, who are the three
stockholders of P.R.F., Inc., the surviving entity of a merger of P.R.F., Inc.
and San Juan Health Centre, Inc. ("SJ Inc."). Prior to AHS' involvement with
SJHC, PCC was a large creditor of P.R.F., Inc., having made sizeable loans for
medical equipment purchases and operations. PCC

139
<PAGE>

was at the time and, until February 1993, continued to be AHS' primary lender.
In January 1990, in connection with PCC making another large loan to P.R.F.,
Inc. and SJ Inc., PCC requested AHS to manage SJHC, which it agreed to do. In
connection with the loan, P.R.F., Inc. and SJ Inc. entered into a management
agreement with AHS on January 12, 1990, with a two-year term, pursuant to
which AHS was to provide SJHC with general management services. In October
1991, P.R.F., Inc. notified AHS that it would not be extending the management
agreement beyond the initial two-year term. As of January 1992, AHS was no
longer the manager of SJHC. Berkshire Consulting Group became the manager of
SJHC. Also, in connection with the loan, on January 13, 1990, Drs. Millan and
Sepulveda placed their P.R.F., Inc. and SJ Inc. stock into a voting trust. In
the voting trust agreement, AHS was named the trustee of the voting trust with
broad powers with respect to the stock. AHS resigned as trustee on June 24,
1992.

In July 1993, one of the plaintiffs, P.R.F., Inc., filed a voluntary
petition under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court, District of Puerto Rico (Case No. 93-03880 SEK). In the context of this
proceeding, all of the claims of P.R.F., Inc. have been resolved. The
defendants subsequently moved to dismiss the individual and conjugal
partnership claims on the basis that they were derivative of the resolved
claims of P.R.F., Inc. On March 11, 1996, the District Court issued an Opinion
and Order and Partial Judgment dismissing with prejudice all claims brought by
the individual plaintiffs and conjugal partnership plaintiffs based on alleged
violations of the RICO statute, mail fraud, wire fraud, misrepresentation and
fraud, intentional infliction of emotional distress, tortious misconduct, and
loss of consortium. As a result of the entry of the Partial Judgment and
issuance of the Opinion and Order, only three counts remain--a claim against
AHS for alleged breach of a voting trust agreement, and breach of fiduciary
duty claims brought, as separate claims by the conjugal partnerships and the
husband and wife who make up each conjugal partnership. AHS has recently been
advised by its counsel that it believes a settlement of these remaining claims
has been reached which will require AHS to make a payment of approximately
$50,000.

In addition to the foregoing matters, AHS is engaged in the defense of
lawsuits arising out of the ordinary course and conduct of its business and
has insurance policies covering such potential insurable losses where such
coverage is cost-effective. AHS believes that the outcome of any such lawsuits
will not have a material adverse impact on AHS' business.

MANAGEMENT OF AHS

DIRECTORS AND EXECUTIVE OFFICERS

At the AHS 1988 Annual Meeting of Stockholders, the stockholders of AHS
adopted the AHS Restated Certificate which provides for a three-tiered
classified Board of Directors with staggered terms of office. Holders of the
AHS Series B Preferred Stock are entitled to elect two directors of AHS. The
AHS Board consists of three classes, designated as Class I, Class II and Class
III, and two directors elected by the holders of AHS Series B Preferred Stock.
In addition, pursuant to an agreement with AHS, the holders of AHS Series B
Preferred Stock are entitled to nominate a number of directors which, when
added to the number of directors elected by AHS Series B Preferred Stock,
equals: three, if the holders of AHS Series B Preferred Stock hold more than
20% of AHS Common Stock and AHS Series B Preferred Stock; two, if the holders
of AHS Series B Preferred Stock hold more than 10%, but less than 20%, of AHS
Common Stock and AHS Series B Preferred Stock; and one, if the holders of AHS
Series B Preferred Stock hold more than 5%, but less than 10%, of AHS Common
Stock and AHS Series B Preferred Stock. There are currently seven directors,
which is the authorized number of directors.

Pursuant to the AHS Restated Certificate, at each Annual Meeting only one
class of directors will be elected, and each class of directors will serve a
three-year term and until their successors are duly elected and qualified. The
term of the Class II director elected at the 1993 Annual Meeting will expire
at the 1996 Annual Meeting, the term of the Class III director elected at the
1994 Annual Meeting will expire at the 1997 Annual Meeting and the term of the
Class I directors elected at the 1995 Annual Meeting will expire at the 1998
Annual Meeting. Pursuant to the Certificate of Designation of the AHS Series B
Preferred Stock, the directors elected by the holders of the AHS Series B
Preferred Stock are elected annually.

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<PAGE>

At the Effective Time, InSight, as the sole stockholder of AHS, will have
the sole authority to determine who will be the members of the AHS Board.

BOARD OF DIRECTORS

Set forth below are the directors of AHS, including the directors who are
elected annually by the holders of the AHS Series B Preferred Stock.

<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME AGE POSITION TO SERVE
---- --- -------- ----------
<S> <C> <C> <C>
E. Larry Atkins........... 49 President and Chief Executive Officer and 1988
Director, Class I
Thomas V. Croal........... 36 Vice President, Chief Financial Officer, 1991
Corporate Secretary and Director, Class III
Lloyd G. Glazer........... 56 Director, Class II 1991
Philip D. Green........... 44 Director, Class I 1989
Frank E. Egger............ 51 Chairman of the Board and Director, Preferred 1991
Stock
Roz Kovens................ 62 Director, Preferred Stock 1995
Charles M. Spear.......... 52 Director, Class II 1995
</TABLE>
- --------
E. Larry Atkins joined AHS in 1986 and has served as the President and Chief
Executive Officer of AHS since August 1990, and Chairman of the Board from
December 1990 to June 1992. Mr. Atkins served as Executive Vice President and
Chief Operating Officer from 1986 to August 1990. Mr. Atkins became a director
of AHS in 1988. From 1979 to 1986, Mr. Atkins served as President and Chief
Executive Officer of AMI Diagnostic Services, a wholly-owned subsidiary of
American Medical International, Inc.

Thomas V. Croal was elected a director in March 1991 and appointed Vice
President and Chief Financial Officer of AHS in April 1991. In December 1990,
Mr. Croal was appointed Corporate Secretary. From 1981 to 1989, Mr. Croal was
employed by Arthur Andersen & Co., an independent public accounting firm.

Frank E. Egger has been a director of AHS since August 1991. He was
appointed Chairman of the Board in May 1995. Presently, Mr. Egger serves as
Vice President of Kovens & Associates, Inc. ("Kovens & Associates"), a
successor entity to Kovens Enterprises, where Mr. Egger served as Chief
Financial Officer from 1980 to 1995. Kovens & Associates is a group of real
estate development and investment companies based in Miami, Florida.

Lloyd G. Glazer has been a director of AHS since September 1991. Since
January 1994, he has been Managing Director of H.C. Wainwright & Co., Inc., a
securities brokerage firm. From 1976 to December 1993, he was an Associate
Director of Bear, Stearns & Co., Inc., an investment banking and securities
brokerage firm. He was formerly a Vice President and Regional Coordinator with
Bache & Company and has been a stock broker since 1969.

Philip D. Green has been a director of AHS since 1989. Mr. Green is a
founding partner of the Washington, D.C. based law firm of Green, Stewart &
Farber, P.C. From 1978 through 1989, Mr. Green was a partner in the
Washington, D.C. based law firm of Schwalb, Donnenfeld, Bray & Silbert, P.C.

Roz Kovens has been a director of AHS since May 1995. For the past five
years, she has been engaged in private real estate investments. She is
currently the President of Kovens & Associates. Ms. Kovens is a founder of
Mount Sinai Medical Center in Miami, Florida, and a member of the Board of
Governors of Tel Aviv University.

141
<PAGE>

Charles M. Spear has been a director since August 1995. From May 1993 to the
present, Mr. Spear has been the Chairman of Spear, Inc., a privately-held
financial services company. From April 1995 until February 1996, he was Chief
Financial Officer of Smith Micro Software, Inc. From April 1983 until December
1992, Mr. Spear was Chairman of the Board, President and Chief Executive
Officer of Spear Financial Services, Inc., a public company which he founded.
Prior thereto, he has been Chief Operating Officer of Trading Company of the
West, a partnership operating Pacific Stock Exchange specialist posts. From
June 1968 until May 1981, Mr. Spear was employed by The First National Bank of
Chicago, most recently as Vice President.

EXECUTIVE OFFICERS

The executive officers of AHS, together with the year in which they were
appointed to their current positions, are set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION YEAR
---- --- -------- ----
<S> <C> <C> <C>
E. Larry Atkins..................... 49 President and Chief Executive Officer 1990
Robert J. Armstrong................. 58 Vice President, Design and Construction 1985
Thomas V. Croal..................... 36 Vice President, Chief Financial Officer and 1991
Corporate Secretary 1990
Deborah M. MacFarlane............... 40 Vice President, Marketing 1991
Brian G. Drazba..................... 34 Vice President of Finance and Corporate Controller 1995
</TABLE>

Information concerning Messrs. Atkins and Croal is set forth above in "--
Board of Directors."

Robert J. Armstrong has been Vice President, Design and Construction of AHS
since 1985. Mr. Armstrong served as Director of Design and Construction for
AHS from 1983 to 1985.

Deborah M. MacFarlane has served as Vice President, Marketing of AHS since
July 1991. From 1987 until June 1991, Ms. MacFarlane served as Director of
Marketing for the Center Operating Group of Medical Imaging Centers of
America, Inc.

Brian G. Drazba has been Vice President of Finance of AHS since June 1995.
Mr. Drazba joined AHS as Controller in 1992. From 1985 to 1992, he was
employed by Arthur Andersen & Co.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

AHS has a Compensation and Stock Option Committee (the "Compensation
Committee") which consists of two non-employee directors, Messrs. Egger
(chairperson of the Compensation Committee and AHS' Chairman of the Board) and
Green. Mr. Egger performed certain consulting services for AHS during 1994 and
provided similar services in 1995. See "Management of AHS--Certain
Transactions." The Compensation Committee is responsible for determining the
specific forms and levels of compensation of AHS' executive officers and
administering AHS' Employee Stock Option Plan (1983), 1987 Stock Option Plan,
1989 Stock Incentive Plan, and the 1992 Option and Incentive Plan
(collectively, the "AHS Plans"). See "The Merger--Assumption of Existing Stock
Options and Warrants." During 1995, no executive officer of AHS served on the
board of directors of any other company whose executive officers served on the
AHS Board.

AUDIT COMMITTEE

The Audit Committee currently consists of Messrs. Egger (chairperson) and
Green. The Audit Committee's principal functions are to review the results of
AHS' annual audit with AHS' independent auditors and review the performance of
AHS' independent auditors.

AHS does not have an executive or nominating or similar committee. The AHS
Board generally acts in its entirety upon matters which might otherwise be the
responsibility of such committees.

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<PAGE>

COMPENSATION OF DIRECTORS

None of the members of the AHS Board received any cash compensation in
fiscal 1995 for their services as directors. None of the directors is expected
to receive any cash compensation during 1996 for such services. Mr. Egger
received $75,000 during fiscal 1995 for services rendered to AHS in connection
with AHS' acquisition and financing activities. See "Management of AHS--
Certain Transactions."

The AHS 1992 Plan provides for the automatic grant to each non-employee
director of AHS of options to purchase 30,000 shares of AHS Common Stock at an
exercise price equal to the fair market value of such stock on the date of
grant. Such options become exercisable 40% commencing on the first anniversary
of the grant date and 20% annually thereafter, expiring after five years.
Subject to availability, such options are to be granted at the commencement of
a directorship and each three years thereafter. In accordance with this
formula, on November 15, 1994 each of Messrs. Egger, Green, Glazer and Kovens
were granted options to purchase 30,000 shares of AHS Common Stock at a per
share exercise price of $0.25. In addition, each of Roz Kovens and Charles M.
Spear were granted options to purchase 30,000 shares on identical terms on May
25, 1995 and August 14, 1995, respectively. See "AHS Principal Stockholders."

CERTAIN TRANSACTIONS

Transactions with Cal Kovens.

In February 1992, AHS purchased a Gamma Knife from Elekta to be located in
California and made a deposit toward the purchase of another Gamma Knife. AHS
received nonrecourse interim financing of $2 million toward the acquisition of
the Gamma Knife and the deposit for the other Gamma Knife from Cal Kovens (a
director until his death on February 6, 1995). The interim financing was
borrowed from Mr. Kovens pursuant to the terms of a nonrecourse promissory
note secured by the second Gamma Knife and due August 24, 1992, at an interest
rate of 10.5% per annum. Mr. Kovens extended the term of the note while AHS
sought to obtain permanent financing.

In December 1992, RCI entered into a five-year loan of $2.75 million with
City National Bank of Florida ("City National Bank"), and the promissory note
in favor of Mr. Kovens was repaid from the proceeds of such loan in the first
quarter of 1993. The new loan was guaranteed by Mr. Kovens and his spouse, Roz
Kovens. During the second half of fiscal 1993, Mr. Kovens repurchased RCI's
promissory note from City National Bank. Pursuant thereto, Mr. Kovens was paid
approximately $195,000 in interest in fiscal 1993.

In early 1993, RCI, AHS and Elekta became involved in a dispute when RCI
advised Elekta that it intended to relocate the Gamma Knife Systems it
purchased for a location in California to Miami, Florida, since in December
1992, RCI had entered into an agreement with Public Health Trust, an agency
and instrumentality of Metropolitan Dade County, Florida, to establish and
operate a Gamma Knife center at Jackson Memorial Medical Center located in
Miami. The parties settled their claims and, pursuant to the terms thereof,
Mr. Kovens agreed to guarantee certain scheduled payments of $250,000 to be
made by RCI to Elekta in connection with the delivery of the Gamma Knife to
Miami, which payment has been made by RCI.

In February 1994, RCI entered into a new five-year loan of $2.9 million with
County National Bank of South Florida. Mr. Kovens was repaid from the proceeds
of such new bank loan in the first quarter of 1994. This loan was guaranteed
by Mr. Kovens and secured by certain real property owned by Mr. Kovens.
Effective March 1, 1996, RCI refinanced the remainder of the equipment loan
(approximately $2,075,000) with the GE Parties on terms substantially
equivalent to the original equipment loan. This loan is secured by all of the
assets of the Gamma Knife center, as well as by a letter of credit of $400,000
which is guaranteed by the estate of Cal Kovens.

In November 1994, AHS granted Mr. Kovens a warrant to purchase 200,000
shares of AHS Common Stock at $0.25 per share in consideration of the Gamma
Knife financing activities discussed above. See "Description of Capital Stock
of AHS--Warrants."

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<PAGE>

Transactions with Frank Egger.

Mr. Egger received $60,000 during fiscal 1994 and $75,000 for fiscal 1995
for consulting services rendered to AHS in connection with its acquisition and
financing activities. For fiscal 1996, he is being paid $100,000 for such
services. In the event AHS terminates this consulting relationship with Mr.
Egger, he is entitled to a severance fee of $100,000. See "Management of AHS--
Compensation of Directors."

Transactions with Green, Stewart & Farber.

Since September 1991, Green, Stewart & Farber, P.C., the law firm in which
Mr. Green is a partner, has represented AHS for most of its outside legal
activities, including general corporate, transactional, financing and health
care matters. During fiscal 1993, 1994 and 1995, AHS paid Green, Stewart &
Farber $329,418, $104,478 and $324,428, respectively, for those services. In
addition, Mr. Green was an advisor to Cal Kovens with respect to various
business matters.

Transactions with GE Medical.

GE Medical, as the primary creditor of AHS, has from time to time granted
AHS certain financial accommodations with respect to certain loans and leases.
In exchange for such accommodations, AHS has issued certain considerations to
GE Medical. See "AHS Management's Discussion and Analysis of Financial
Conditions and Results in Operations--Financial Condition, Liquidity and
Capital Resources." On the terms and conditions set forth in the Stock
Acquisition Agreement, in contemplation of the Merger, GE Medical has agreed
to grant additional financial accommodations to AHS in exchange for InSight
Series A Preferred Stock and certain other consideration. See "Debt
Restructuring and Issuance of Preferred Stock to GE Medical."

Pursuant to an agreement between AHS and GE Medical, the maturity of a
balloon principal payment of approximately $9.6 million which was due in May
1994 was extended until January 1, 1996 and the principal payment was reduced
by $1.6 million. The interest on the note was also reduced from 12.75% to
9.25% per annum. GE Medical also agreed to restructure the monthly payments
under a $15.2 million equipment loan and provided three deferred payments to
be used through December 31, 1995 under certain circumstances. During 1995,
AHS utilized its three deferrals, resulting in a total cash savings of
approximately $2.1 million. See "AHS Management's Discussion and Analysis of
Financial Conditions and Results of Operations--Liquidity and Capital
Resources."

In negotiating the Merger and the GE Medical Financial Transactions with GE
Medical and Maxum, AHS agreed to reimburse to GE Medical an amount equal to
40% of the legal costs incurred by GE Medical in connection with such
transactions. The amount reimbursed to GE Medical in 1995 was approximately
$46,000. See "The Merger--Sharing and Reimbursement of Expenses" and "Debt
Restructuring and Issuance of Preferred Stock to GE Medical--Payment of GE
Medical Legal Fees."

Transactions with Holders of AHS Series B Preferred Stock.

Pursuant to agreements to which AHS is a party, the holders of AHS Series B
Preferred Stock have each agreed to vote in favor of the Merger Proposal, the
InSight Option Plans Proposal and the AHS Plan Amendment Proposal at the AHS
Special Meeting, and have further agreed to waive any rights to dividends,
liquidation preferences, voting and redemption they may have in connection
with the Merger and certain other rights. In consideration therefor, InSight
will issue at the Effective Time to such holders warrants to purchase an
aggregate of 50,000 shares of InSight Common Stock upon the consummation of
the Merger. See "The Merger--Interests of Certain Persons in the Merger--
Issuance of Warrants to Holders of AHS Series B Preferred Stock."

144
<PAGE>

EXECUTIVE COMPENSATION OF AHS

The following table sets forth information concerning the annual and long-
term compensation for services rendered in all capacities to AHS for the years
ended December 31, 1995, 1994 and 1993, to (i) AHS' Chief Executive Officer
and (ii) other executive officers of AHS whose aggregate cash compensation
exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION(2)
----------------------- ----------------- ---------------
AWARDS
STOCK
OPTION
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OTHER(3) (SHARES)
- --------------------------- ---- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
E. Larry Atkins......... 1995 $246,400 $61,600 $ 4,680 175,000 $ 7,882
President & Chief Execu-
tive Officer 1994 220,000 54,000 3,798 -- 9,327
1993 200,000 -- 11,763 -- 10,245
Thomas V. Croal ........ 1995 175,000 43,808 4,742 125,000 5,252
Vice President, Chief
Financial Officer 1994 148,500 38,000 4,836 -- 3,519
and Corporate Secretary 1993 135,000 10,000 8,760 -- 1,950
Robert J. Armstrong .... 1995 100,000 -- 1,889 -- 11,739
Vice President, Design 1994 100,000 -- 2,264 -- 10,027
& Construction 1993 100,000 -- 7,590 -- 7,438
Brian G. Drazba ........ 1995 90,000 10,000 4,457 -- 4,015
Vice President, Finance
and Corporate Controller -- -- -- -- -- --
-- -- -- -- -- --
Deborah M. MacFarlane .. 1995 112,200 -- 4,206 -- 3,709
Vice President, Market-
ing 1994 102,000 -- 3,033 -- 3,782
1993 92,000 -- 5,220 -- 3,829
</TABLE>
- --------
(1) Includes amounts for periods during which executive officers served as
such.
(2) Annual bonuses are earned and accrued during the fiscal years indicated,
and paid subsequent to the end of each fiscal year.
(3) Amounts of Other Annual Compensation include perquisites and amounts of
All Other Compensation include (i) amounts contributed to AHS' 401(k)
profit sharing plan, (ii) specified premiums on executive split-dollar
insurance arrangements and (iii) specified premiums on executive health
insurance arrangements, for the Chief Executive Officer and other
executive officers of AHS.

OPTION GRANTS IN THE LAST FISCAL YEAR

In fiscal 1995, the following stock options were granted under the AHS Plans
to executive officers of AHS:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION
FOR OPTION TERM
---------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES EXERCISE OR
SARS IN FISCAL BASE PRICE
NAME GRANTED (#) YEAR ($/SH) EXPIRATION DATE 5% 10%
---- ----------- ---------- ----------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
E. Larry Atkins......... 175,000 58% 0.25 Jan-2000 12,087 26,710
Thomas V. Croal......... 125,000 42% 0.25 Jan-2000 8,634 19,078
</TABLE>

145
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

Neither the Chief Executive Officer nor the other executive officers of AHS
exercised any stock options during fiscal 1995. The following table sets forth
information with respect to the unexercised stock options to purchase AHS
Common Stock granted under the AHS Plans to the Chief Executive Officer and
the other executive officers as of December 31, 1995.

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1995 DECEMBER 31, 1995(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
E. Larry Atkins............ 300,000 175,000 0 0
Robert J. Armstrong........ -- -- -- --
Thomas V. Croal............ 125,000 125,000 0 0
Brian G. Drazba............ -- -- -- --
Deborah M. MacFarlane...... 50,000 -- 0 --
</TABLE>
- --------
(1) Based on the closing bid quotation reported on the OTC Bulletin Board for
AHS Common Stock on that date of $0.25 per share.

INDEMNIFICATION AGREEMENTS

AHS has entered into separate indemnification agreements with each of its
directors and officers that could require AHS, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors and officers and to advance expenses incurred
by them as a result of any proceeding against them as to which they could be
indemnified.

EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS

AHS has employment agreements with its executive officers which provide that
in the event the executive is terminated as a result of his becoming
physically or mentally disabled; or at the discretion of the AHS Board; or if
he terminates voluntarily in the event of a change in the location of the
corporate headquarters of AHS to a location outside the counties of Los
Angeles or Orange, California, which new location is at the time more than 35
miles from the location of the executive's principal residence; or AHS or its
stockholders enter into an agreement to dispose of, whether by sale, exchange,
merger, consolidation, reorganization, dissolution or liquidation of (i) not
less than 80% of the assets of AHS or (ii) a portion of the outstanding AHS
Common Stock such that one person or "group" (as defined by the SEC) owns, of
record or beneficially, not less than 25% of the outstanding AHS Common Stock;
or AHS issues and sells to one person or "group" (as defined by the SEC) such
number of shares of AHS Common Stock that said person or group owns, of record
or beneficially, not less than 25% of the AHS Common Stock outstanding after
such issuance; and as a result of which his ability to perform his
responsibilities or the nature of such responsibilities is substantially and
adversely altered, the employment agreements provide that the executive is
entitled to 12 months of compensation at his annual salary rate then in
effect. However, in the event that the executive's employment is terminated
for "cause" (as defined), he has no right to receive any monetary compensation
under his employment agreement.

In anticipation of the Effective Time, each executive officer of AHS who
will become an executive officer of InSight has entered into an InSight
Employment Agreement, each of which becomes effective as to employment at the
Effective Time. Each InSight Employment Agreement expressly supersedes any
employment agreement between the executive and AHS. In addition, each
executive has waived his rights to payments or other benefits which would
otherwise vest upon the Effective Time under any agreement with AHS. The AHS
executive officers who will not become InSight executive officers have also
waived any rights to payments or other benefits which would otherwise vest
upon the Effective Time under any agreement with AHS.

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<PAGE>

AHS PRINCIPAL STOCKHOLDERS

The following table shows the beneficial ownership, reported to AHS as of
May 6, 1996, of AHS Common Stock, including shares as to which a right to
acquire ownership exists (for example, through the exercise of stock options
and warrants and conversions of preferred stock) within the meaning of Rule
13d-3(d)(1) under the Exchange Act, of (i) each person known to AHS to own
beneficially 5% or more of the AHS Common Stock, (ii) each director of AHS,
(iii) the Chief Executive Officer of AHS, (iv) the other executive officers of
AHS and (v) all directors and executive officers, as a group.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENTAGE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL COMMON PREFERRED
OF BENEFICIAL OWNER OWNERSHIP(1) STOCK STOCK
------------------- ------------ ------------- -------------
<S> <C> <C> <C>
E. Larry Atkins ........................................ 421,000(2) 4.2% N/A
4440 Von Karman, Suite 320
Newport Beach, CA 92660
Robert J. Armstrong .................................... 0 0 N/A
4440 Von Karman, Suite 320
Newport Beach, CA 92660
Thomas V. Croal ........................................ 175,000(3) 1.8% N/A
4440 Von Karman, Suite 320
Newport Beach, CA 92660
Brian G. Drazba ........................................ -- * N/A
4440 Von Karman, Suite 320
Newport Beach, CA 92660
Deborah M. MacFarlane .................................. 50,000(4) * N/A
4440 Von Karman, Suite 320
Newport Beach, CA 92660
Frank E. Egger ......................................... 234,185(5)(6) 2.4% 4.5%
1200 Biscayne Blvd., Suite 803
Miami Beach, FL 33181
Lloyd G. Glazer ........................................ 106,001(6)(7) 1.1% 1.5%
One Boston Place
Boston, MA 02108
Philip D. Green ........................................ 170,004(6)(8) 1.7% 3.0%
2600 Virginia Ave., Suite 1111
Washington, D.C. 20037
Estate of Cal Kovens ................................... 4,560,083(6)(9) 36.6% 67.3%
1200 Biscayne Blvd., Suite 803
Miami Beach, FL 33181
Roz Kovens ............................................. 5,296,536(6)(10) 40.5% 82.6%
1200 Biscayne Blvd., Suite 803
Miami Beach, FL 33181
Charles M. Spear ....................................... 0(11) * N/A
51 Columbia
Aliso Viejo, CA 92656
</TABLE>

147
<PAGE>

<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE PERCENTAGE
NATURE OF OF OF
NAME AND ADDRESS BENEFICIAL COMMON PREFERRED
OF BENEFICIAL OWNER OWNERSHIP(1) STOCK STOCK
------------------- ------------ ---------- ----------
<S> <C> <C> <C>
David and Odette Rebibo ................................ 755,000(12) 7.8% N/A
202 E. Berridge Lane
Phoenix, AZ 85012
GE Medical Systems ..................................... 1,589,072(13) 14.1% N/A
20825 Swenson Drive, Suite 100
Waukesha, WI 53186
All directors and executive officers, as a group (10
persons) .............................................. 6,452,725(14) 45.7% 91.6%
</TABLE>
- --------
*Less than 1% of the outstanding AHS Common Stock.
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any security that such person has the right to acquire
within 60 days after May 6, 1996.
(2) Includes (i) options to purchase 180,000 shares of AHS Common Stock at an
exercise price of $1.34 per share, (ii) options to purchase 120,000 shares
of AHS Common Stock at an exercise price of $1.31 per share and (iii)
options to purchase 70,000 shares of AHS Common Stock at an exercise price
of $0.25 per share. Does not include an option to purchase 105,000 shares
of AHS Common Stock at an exercise price of $.025 per share, which is not
currently exercisable.
(3) Includes (i) options to purchase 75,000 shares of AHS Common Stock at an
exercise price of $1.34 per share, (ii) options to purchase 50,000 shares
of AHS Common Stock at an exercise price of $1.31 per share and (iii)
options to purchase 50,000 shares of AHS Common Stock at an exercise price
of $0.25 per share. Does not include an option to purchase 75,000 shares
of AHS Common Stock at an exercise price of $.025 per share, which is not
currently exercisable.
(4) Includes an option to purchase 50,000 shares of AHS Common Stock at an
exercise price of $1.50 per share.
(5) Includes (i) 1,716.31 shares of AHS Series B Preferred Stock (convertible
into 171,631 shares of AHS Common Stock), (ii) options to purchase 30,000
shares of AHS Common Stock at an exercise price of $1.62 per share and
(iii) options to purchase 12,000 shares of AHS Common Stock at an exercise
price of $0.25 per share. Does not include an option to purchase 18,000
shares of AHS Common Stock at an exercise price of $.025, which is not
currently exercisable. The AHS Common Stock, AHS Series B Preferred Stock
and warrants held by Mr. Egger are pledged to the estate of Cal Kovens as
security for the repayment of a loan. If the loan is not repaid when due,
the estate of Mr. Kovens would have the right to sell such of the pledged
securities as are necessary to satisfy the indebtedness.
(6) Roz Kovens and Messrs. Egger, Glazer and Green and the estate of Mr.
Kovens, along with the remaining AHS Preferred Stockholders, (Marc Kovens
(Mr. Kovens' son), Elizabeth Cobbs (Mr. Green's spouse) and Harvey Silets)
may be deemed to be a "group" under Section 13(d) of the Exchange Act.
These individuals beneficially own in the aggregate 6,288,955 shares, or
45.4% of the outstanding AHS Common Stock on an as-if-converted basis,
consisting of (i) 2,167,172 shares of AHS Common Stock, (ii) 37,837.83
shares (or 100%) of the AHS Series B Preferred Stock (convertible into
3,783,783 shares of AHS Common Stock), (iii) warrants to purchase 200,000
shares of AHS Common Stock at an exercise price of $0.25 per share, (iv)
options to purchase 90,000 shares of AHS Common Stock at an exercise price
of $1.62 per share and (v) options to purchase 48,000 shares of AHS Common
Stock at an exercise price of $0.25.
(7) Includes (i) 572.1 shares of AHS Series B Preferred Stock (convertible
into 57,210 shares of AHS Common Stock), (ii) an option to purchase 30,000
shares of AHS Common Stock at an exercise price of $1.62 per share and
(iii) an option to purchase 12,000 shares of AHS Common Stock at $0.25 per
share. Does not include an option to purchase 18,000 shares of AHS Common
Stock at an exercise price of $0.25, which is not currently exercisable.
(8) Includes (i) 1,144.21 shares of AHS Series B Preferred Stock (convertible
into 114,421 shares of AHS Common Stock), (ii) an option to purchase
30,000 shares of AHS Common Stock at an exercise price of $1.62 per share
and (iii) an option to purchase 12,000 shares of Common Stock at $0.25 per
share. Does not include an option to purchase 18,000 shares of AHS Common
Stock at an exercise price of $0.25, which

148
<PAGE>

is not currently exercisable. Mr. Green owns the AHS Common Stock and AHS
Series B Preferred Stock with his spouse, Elizabeth Cobbs, as tenants by
the entirety, and shares with his spouse the right to vote and dispose of
such securities. In addition, the AHS Common Stock and AHS Series B
Preferred Stock are pledged to the estate of Cal Kovens as security for the
repayment of a loan. If the loan is not repaid when due, the estate of Mr.
Kovens would have the right to sell such of the pledged securities as are
necessary to satisfy the indebtedness.
(9) Includes (i) 19,250 shares of AHS Common Stock held by each of the M.K.
Boca Trust, S.K. Boca Trust, K.K. Boca Trust and B.K. Boca Trust, over
which Mr. Kovens did not have or share voting or dispositive power, (ii)
25,458.64 shares of AHS Series B Preferred Stock (convertible into
2,545,864 shares of AHS Common Stock) and (iii) warrants to purchase
200,000 shares of AHS Common Stock at an exercise price of $0.25 per
share. Does not include 723,852 and 488,813 shares beneficially owned by
Roz Kovens and Marc Kovens, respectively.
(10) Includes (i) 5,800 shares of AHS Series B Preferred Stock (convertible
into 580,000 shares of AHS Common Stock) and (ii) 4,560,083 shares
beneficially owned by the estate of Cal Kovens with respect to which Mrs.
Kovens is the personal representative and (iii) an option to purchase
12,000 shares of AHS Common Stock at an exercise price of $0.25 per
share. Does not include an option to purchase 18,000 shares of AHS Common
Stock at an exercise price of $0.25 per share, which is not currently
exercisable.
(11) Does not include an option to purchase 30,000 shares of AHS Common Stock
at an exercise price of $0.25 per share, which is not currently
exercisable.
(12) The information in the table is taken from information furnished by Mr.
and Mrs. Rebibo. AHS believes Mr. and Mrs. Rebibo own their shares of AHS
Common Stock jointly and share voting and dispositive power over such
shares.
(13) Consists of warrants to purchase 1,589,072 shares of AHS Common Stock at
an exercise price of $0.10 per share.
(14) Assumes the conversion of AHS Series B Preferred Stock held by directors
and the exercise in full of all currently exercisable options described
in footnotes (2), (3), (4), (5), (7), (8), (10), and (11) above.

Except as otherwise noted, AHS believes that each of the stockholders listed
in the table above has sole voting and dispositive power over all shares
owned.

DESCRIPTION OF CAPITAL STOCK OF AHS

The authorized capital stock of AHS consists of 25,000,000 shares of AHS
Common Stock and 5,000,000 shares of preferred stock, par value $0.03 per
share.

COMMON STOCK

As of May 6, 1996, there were 9,713,647 shares of AHS Common Stock
outstanding held of record by 483 stockholders. The holders of AHS Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. The holds of AHS Common Stock have no
cumulative voting rights in the election of directors. Subject to the prior
rights of holders of preferred stock, the holders of AHS Common Stock are
entitled to dividends, when and if declared by the AHS Board, out of funds
legally available therefor. In the event of the liquidation, dissolution or
winding up of AHS, the holders of AHS Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock. Holders
of AHS Common Stock have no preemptive rights and have no right to convert AHS
Common Stock into any other securities. All outstanding shares of AHS Common
Stock are fully paid and nonassessable.

PREFERRED STOCK

As of May 6, 1996, there were 37,837.83 shares of AHS Series B Preferred
Stock outstanding, held of record by eight stockholders. These shares were
issued on January 1, 1992, in exchange for and upon cancellation of all the
then issued and outstanding shares (3,783,783) of AHS Series A Preferred
Stock. Each share of AHS

149
<PAGE>

Series B Preferred Stock is convertible into 100 shares of AHS Common Stock.
The holders of the AHS Series B Preferred Stock and the AHS Common Stock vote
together as a class on any transaction with respect to which the holders of
AHS Common Stock are entitled to vote, except with respect to the election of
directors and other transactions which might affect the AHS Series B Preferred
Stock, upon which the holders of the AHS Series B Preferred Stock vote
separately as a class. The AHS Series B Preferred Stock entitles the holders
thereof to elect two directors of AHS. The holders of AHS Series B Preferred
Stock are entitled to dividends, when and if declared by the AHS Board, out of
funds legally available therefor. Such dividends are noncumulative so long as
the holders of AHS Series B Preferred Stock control a majority of the AHS
Board. In the event of the liquidation, dissolution or winding up of AHS, the
holders of AHS Series B Preferred Stock are entitled to receive out of the
assets of AHS, $185.00 per share, plus an amount per share equal to the
declared but unpaid dividends.

WARRANTS

On May 19, 1992, AHS granted to GE Medical a warrant to purchase 1,678,946
shares of AHS Common Stock at a per share exercise price of $0.10 (the "AHS
1992 Warrant"). The AHS 1992 Warrant became exercisable on May 19, 1995 and
expires two years after payment in full of all amounts due under the Loan and
Security Agreement dated May 19, 1992 between AHS and GECC (the "First Loan
Agreement"). The number of shares and exercise price subject to the AHS 1992
Warrant are subject to adjustment upon (i) the occurrence of certain stock
dividends, subdivisions, combinations and reclassifications regarding the AHS
Common Stock, (ii) certain other distributions regarding the AHS Common Stock
and (iii) certain issuance of additional AHS Common Stock, warrants or
convertible securities. Subject to certain conditions, through the expiration
date of the AHS 1992 Warrant, GE Medical has (i) the right to demand two times
that AHS register the AHS Common Stock issuable upon the exercise of the AHS
1992 Warrant under the Securities Act and (ii) "piggy back" rights to register
such AHS Common Stock if AHS files a registration statement under the
Securities Act relating to AHS Common Stock on behalf of any of its security
holders on any form other than Form S-4 or S-8 (or any other form generally
relating to business combinations, employee benefit plans, or exchange of
rights offerings).

On July 9, 1993, AHS granted to GE Medical a warrant to purchase 377,075
shares of AHS Common Stock at a per share exercise price of $0.10 (the "AHS
1993 Warrant"). The AHS 1993 Warrant became exercisable on July 9, 1995 and
expires two years after payment in full of all amounts due under the First
Loan Agreement and the Loan and Security Agreement between AHS and GECC dated
as of June 1, 1993 (the "Second Loan Agreement"). The number of shares and
exercise price subject to the AHS 1993 Warrant are subject to adjustment upon
the occurrence of certain stock dividends, subdivisions, combinations and
reclassifications regarding the AHS Common Stock. Subject to certain
conditions, through the expiration date of the AHS 1993 Warrant, GE Medical
has (i) the right to demand one time that AHS register the AHS Common Stock
issuable upon the exercise of the AHS 1993 Warrant under the Securities Act
and (ii) the same "piggy back" registration rights as it has with respect to
the AHS 1992 Warrant.

On April 12, 1994, in connection with a debt restructuring agreement between
AHS and GECC on the same date, AHS and GE Medical agreed to reduce the number
of shares underlying the AHS 1992 Warrant from 1,678,946 to 839,478, and AHS
granted to GE Medical an additional warrant to purchase 372,524 shares of AHS
Common Stock at a per share exercise price of $0.10 (the "AHS 1994 Warrant").
The AHS 1994 Warrant became exercisable on May 19, 1995 and expires two years
after payment in full of all amounts due under both the First Loan Agreement
and the Second Loan Agreement. The adjustment provisions and registration
rights related to the AHS 1994 Warrant are the same as such rights under the
AHS 1993 Warrant.

At the Effective Time, the AHS 1992 Warrant, AHS 1993 Warrant and AHS 1994
Warrant, which collectively represent the right to purchase 1,589,077 shares
of AHS Common Stock or approximately 14.1% of the outstanding AHS Common Stock
(assuming the exercise of such warrants), will be canceled. See "Debt
Restructuring and Issuance of Preferred Stock to GE Medical--Warrants of GE
Medical."

150
<PAGE>

In November 1994, AHS granted to Cal Kovens a warrant to purchase 200,000
shares of AHS Common Stock at a per share exercise price of $0.25 in
consideration of certain financing activities (the "Kovens Warrant"). The
Kovens warrant is exercisable at any time for a period of five years from the
date of issuance. Subject to certain conditions, the holder of the Kovens
warrant has certain "piggy back" registration rights.

PREFERRED STOCK CONTEMPLATED TO BE ISSUED TO GE MEDICAL

The terms of the AHS Series C Preferred Stock contemplated to be issued to
GE Medical immediately prior to the Merger are substantially identical to that
of the InSight Series A Preferred Stock into which the shares of AHS Series C
Preferred Stock will convert at the Effective Time. See "Operations,
Management and Business of InSight After the Merger--InSight Series A
Preferred Stock."

PROPOSAL NO. 2
APPROVAL OF THE
INSIGHT OPTION PLANS PROPOSAL

The stockholders of each Company are each being asked to approve the InSight
Health Services Corp. 1996 Employee Stock Option Plan (the "Employee Plan")
and the InSight Health Services Corp. 1996 Directors' Stock Option Plan (the
"Directors' Plan"), pursuant to which an aggregate of up to 882,433 shares of
InSight Common Stock will be reserved for issuance. The AHS Board and the
Maxum Board has each authorized the implementation of the InSight Option Plans
to become effective at the Effective Time, provided stockholder approval of
each corporation is obtained.

The following are summaries of the principal features of the InSight Option
Plans. However, these summaries do not purport to be complete descriptions of
all of the provisions of the InSight Option Plans, and are qualified in their
entirety by the full text of such plans, which are attached as Appendices E
and F to this Joint Proxy Statement/Prospectus.

EMPLOYEE STOCK OPTION PLAN

Purpose

The Employee Plan is intended to advance the interests of InSight by
providing employees, including employees who are executive officers or
directors of InSight or its subsidiaries, with an opportunity to develop a
proprietary interest in InSight, and thereby create strong performance
incentives for such optionees to maximize the growth and success of InSight
and its subsidiaries, and to remain in the employ or service of InSight or its
subsidiaries. Awards may also be made to independent contractors, including
non-employee directors of an InSight subsidiary.

Administration

The Employee Plan shall be administered by the InSight Board, or if so
delegated, by a committee of the InSight Board appointed from time to time
consisting of not less than two members, none of whom shall be an officer or
employee of InSight (the "InSight Committee"). Accordingly, references in this
section to the "InSight Board" shall mean the InSight Board or the InSight
Committee. The requirements regarding the composition of the Committee exist
so that the administration of the Employee Plan is conducted by "disinterested
persons" as defined under Rule 16b-3 ("Rule 16b-3") promulgated under the
Exchange Act.

Stock Option Grants

The number of shares of InSight Common Stock that can be issued under the
Employee Plan shall not exceed an aggregate of 664,433 shares. If options
expire or are terminated for any reason prior to being exercised

151
<PAGE>

in full, the remaining shares shall be available for future grants. Grants may
be for "incentive stock options" pursuant to Section 422 of the Code, or
nonstatutory stock options. All stock options granted shall be evidenced by
written agreements between InSight and the optionee that are consistent with
the Employee Plan. The purchase or exercise price shall be determined by the
InSight Board. For incentive stock options, the exercise price shall not be
less than the fair market value of InSight Common Stock on the date of grant.
With respect to nonqualified options, the exercise price shall not be less
than 50% of the fair market value on the date of grant. The term of the option
granted shall be fixed by the InSight Board, provided that no option shall be
granted with a term more than ten years. Options may be exercised in whole or
in part. Options are granted in consideration for services rendered, or to be
rendered, by the optionee. The number of options to be granted to any person,
or group, such as the chief executive officer, or executive officers, cannot
be determined at the current time since awards are made at the discretion of
the InSight Board.

Payment

Payment of the exercise price may be made in cash, or with the consent of
the InSight Board, with shares of InSight Common Stock then valued at fair
market value, or a combination of cash and stock. InSight has the right to
withhold, or require an optionee to remit to it, amounts sufficient to satisfy
applicable federal, state, local or foreign withholding tax requirements.

Transferability of Options and Termination of Service

During the lifetime of an optionee, only that optionee, or the optionee's
guardian or legal representative, may exercise an option. Options shall not be
assigned or transferred other than by will, the laws of descent of
distribution, or pursuant to a qualified domestic relations order. The InSight
Board may provide in the stock option agreements a limitation period during
which options must be exercised in the event of termination of employment or
service with InSight. In the event of the death of an optionee, the legal
holders of such options shall have the right to exercise the option, subject
to the terms of the option agreement. In the event employment or service with
InSight is terminated by reason of permanent and total disability, the
optionee shall have the right to exercise the option, subject to other terms
of the option agreement, by the earlier of (i) one year after such termination
of employment or (ii) the expiration of the term.

Compliance with Rule 16b-3

The Employee Plan is intended to comply with Rule 16b-3, or its successor
rule, promulgated under the Exchange Act. Accordingly, executive officers of
InSight shall be subject to a holding period of at least six months after
grant before any disposition may be made of the option or its underlying
stock.

Amendment and Termination

The InSight Board may at any time amend the Employee Plan, suspend it, or
terminate it as to shares of InSight Common Stock that have not been granted;
provided that no amendment shall, without stockholder approval (i) materially
change the requirements as to eligibility, (ii) increase the maximum number of
shares that may be sold pursuant to options granted, (iii) change the minimum
exercise price, (iv) increase the maximum period during which options may be
exercised, (v) extend the term or (vi) materially increase the benefits
accruing to participants under the plan.

Changes in Capitalization

If the outstanding shares of InSight Common Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares of other
securities of InSight by reason of any recapitalization, reclassification,
stock split-up, combination of shares, exchange of shares, stock dividend or
other distribution payable in capital stock, the number of shares available
pursuant to the Employee Plan shall be adjusted proportionately by the InSight
Board, and the number of shares and exercise price for outstanding stock
options

152
<PAGE>

shall be proportionately adjusted so that the interest of the optionee
immediately following such event shall, to the extent practicable, be the same
as immediately before the occurrence of the event. If InSight is the surviving
corporation in any reorganization, merger, or consolidation with one or more
corporations, any option previously granted shall be subject to proportionate
adjustment of the exercise price and the number of underlying shares. In the
event of dissolution or liquidation of InSight, or upon a merger,
consolidation or reorganization of InSight with one or more other corporations
in which InSight is not the survivor, or the sale of substantially all of the
assets or other transaction which results in a person or entity owing 80% or
more of the combined voting power of all classes of stock of InSight, the
Employee Plan and all options outstanding thereunder shall terminate, except
to the extent that provision is made for the continuation of said plan and/or
the assumption of options previously granted, with appropriate adjustments as
to the number of shares and exercise price, in which event the Employee Plan
and outstanding options shall continue as so provided. In the event of the
termination of said plan, each optionee shall have the right prior to
termination to exercise all options held, whether or not such options had
previously vested.

DIRECTORS' STOCK OPTION PLAN

Purposes and Administration

The purposes of the Directors' Plan are to enhance the ability of InSight to
attract and retain highly qualified individuals to serve as members of the
InSight Board, and to provide additional incentives to such directors to
promote the success of InSight. The Directors' Plan is intended to be a
formula (or automatic) plan and the optionees thereunder are intended to
qualify as "disinterested administrators" of certain other plans of InSight
for the purposes of Rule 16b-3. To the extent that the Directors' Plan
requires administration, it shall be administered by the InSight Board, or a
committee to which such duties are delegated.

Shares Available for Grant

The maximum total number of shares of InSight Common Stock which may be
issued pursuant to the Directors' Plan shall not exceed 218,000. If an option
expires, terminates, or is canceled for any reason before it is exercised, the
unexercised portion of such option shall be available for future grants under
the Directors' Plan. Shares to be delivered may be issued from the authorized
but unissued InSight Common Stock, or from InSight's treasury stock. The
options are granted in consideration of services rendered, or to be rendered,
by the optionee.

Eligibility and Terms of the Grants

To be eligible for an option, the optionee must be a member of the InSight
Board who is not an officer or an employee of InSight, or any of its
subsidiaries. The exercise price for each option shall be the fair market
value of InSight Common Stock on the date of grant. At the Effective Time,
each director then serving on the InSight Board shall be granted an option to
purchase 15,000 shares of InSight Common Stock at an exercise price per share
equal to the fair market value of InSight Common Stock on the date of grant.
Thereafter, each director of InSight who commences service after the Effective
Time shall be granted an option to purchase 15,000 shares of InSight Common
Stock. These initial grants will vest monthly on a pro rata basis over a three
year period, so long as the optionee remains on the InSight Board, or is an
employee or independent contractor of InSight or one of its subsidiaries.
However, in the agreement evidencing such stock option, the InSight Board may
modify the vesting conditions in the event of the death or disability of the
optionee. At the end of such three year period, and annually thereafter during
the term of the Directors' Plan, so long as the optionee remains on the
InSight Board he will be granted an option to purchase 5,000 shares of InSight
Common Stock. These additional grants vest monthly over one year on the same
terms as the initial grants.

Exercise and Payment

An optionee may exercise all or any part of an option by giving specified
notice, and payment of the exercise price in cash, or in the InSight Board's
discretion, in InSight Common Stock valued at its fair market value at the
time of exercise, or any combination thereof.

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Withholding and Transferability

InSight shall have the right to withhold, or require an optionee to remit to
it, an amount needed to satisfy any applicable federal, state, local or
foreign withholding tax requirements. Options granted shall be exercisable
only by the optionee, and may not be transferred other than by will, the laws
of descent and distribution, or pursuant to a qualified domestic relations
order as defined in the Code.

Adjustments

If the outstanding shares of InSight Common Stock are increased or
decreased, or changed into or exchanged for a different number of shares or
securities by reason of recapitalization, reclassification, stock split-up,
combination of shares, exchange of shares, stock dividend or other
distributions payable in InSight capital stock, the number of shares that may
be granted under the Directors' Plan shall be adjusted proportionately by the
InSight Board. Also, the number of shares and exercise price for outstanding
options shall be adjusted proportionately so that the ownership interest of
the optionee immediately following the event, shall, to the extent
practicable, be the same as immediately prior to such event. If InSight is the
surviving corporation in any reorganization, merger, or consolidation with one
or more corporations, any option previously granted shall be proportionately
adjusted. Upon the dissolution or liquidation of InSight, or upon a merger,
consolidation or reorganization with one or more corporations in which InSight
is not the survivor, or upon the sale of substantially all of the assets of
InSight, or other transaction which results in a person or entity owning 80%
or more of the combined voting power of all classes of stock of InSight, the
Directors' Plan and all options outstanding thereunder shall terminate, except
to the extent that provision is made for the continuation of the plan and/or
the assumption of options previously granted, with appropriate adjustments as
to the number of shares and exercise price, in which event the Directors' Plan
and outstanding options thereunder shall continue as so provided. In the event
of termination of the Directors' Plan and the options granted thereunder, each
optionee shall have the right prior to such termination to exercise all
options held to the extent they were otherwise exercisable at the time of
termination. Such adjustments made shall be determined by the InSight Board,
whose determination shall be final and binding.

Adoption, Amendment, Suspension and Termination

The Directors' Plan shall be effective at the Effective Time providing that
it is approved by the stockholders of both AHS and Maxum. Subject to certain
limitations, the InSight Board may at any time suspend or terminate the
Directors' Plan, and may amend it from time to time provided that it shall not
be amended in the following events without the approval of the InSight
stockholders: (i) to materially increase the benefits accruing to
participants, such as increasing the number of options that may be granted to
an optionee, (ii) to increase the maximum number of shares that may be issued
under said plan or (iii) to materially modify the requirements as to
eligibility for participation.

In addition, the Directors' Plan may not be amended more than once in any
six month period other than to comply with changes in the Code, the Employee
Retirement Income Security Act of 1974, or the rules promulgated thereunder.
The Directors' Plan terminates ten years after the Effective Time.

FEDERAL INCOME TAX CONSEQUENCES

For information regarding the federal income tax consequences of the
issuance and exercise of stock options to InSight and the optionees under the
Employee Plan and the Directors' Plan, please refer to "The Merger--Federal
Income Tax Consequences with Respect to Stock Options." The InSight Option
Plans are designed to satisfy exemptions under Section 162(m) of the Code so
as not to limit the deductability of executive compensation.

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ACCOUNTING TREATMENT

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, entitled Accounting For Stock-based
Compensation ("SFAS 123"). SFAS 123 does not rescind or interpret the existing
accounting rules for employee stock-based compensation arrangements under
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees ("APB 25"), and companies may continue to follow those rules to
recognize and measure compensation. However, companies will now be required to
disclose pro forma amounts of net income and earnings per share that would
have been reported had the Company elected to follow the "fair value"
recognition provisions of SFAS 123. These disclosures are required with
financial statements for fiscal years beginning after December 15, 1995. A
company may adopt the provisions of SFAS 123 at any time, and once it applies
these new recognition provisions, it cannot revert to the old provisions.
Also, a company must apply the same recognition rules to all of its plans.

For stock-based compensation arrangements with non-employees, there is no
election available, and the fair value recognition and measurement provisions
of SFAS 123 must be applied to transactions entered into after December 15,
1995.

Under APB 25, compensation cost is measured based on the "intrinsic value"
of the equity instrument which is the excess of the market price of the stock
to be issued over the exercise price of the equity instrument. Regarding stock
options granted with fixed terms and an exercise price equal to the fair
market value of the stock on the date of grant, there is no measured
compensation cost for such stock options. For some grants, such as an award
based on future performance criteria, the exercise price or the number of
shares an employee is entitled to receive is not known on the grant date. For
such grants, APB 25 requires that the employer estimate compensation costs at
each reporting date based on the current market price of the stock, until the
terms become fixed and a measurement date occurs.

Under SFAS 123, the "fair value" of an equity instrument granted in exchange
for services is used to determine costs. The fair value of a stock option is
determined on the grant date, and is not subject to subsequent adjustment.
Because SFAS 123 requires employers to disclose compensation based on fair
value regardless of the method elected to recognize income, publicly-traded
companies will be using option-pricing models for this calculation. There are
currently two such models commonly used to calculate fair value.

STOCKHOLDER APPROVAL AND BOARD RECOMMENDATION

The stockholders of each Company must approve the InSight Option Plans. For
Maxum, the affirmative vote of a majority of the outstanding shares of Maxum
Common Stock present in person or by proxy at the Maxum Special Meeting is
required to approve the InSight Options Plans. For AHS, the affirmative vote
of a majority of the votes represented by the AHS Common Stock (entitled to
one vote per share) and AHS Series B Preferred Stock (entitled to 100 votes
per share), voting together as a class, present in person or represented by
proxy, at the AHS Special Meeting is required to approve the InSight Option
Plans. If such approvals are obtained, each InSight Option Plan will become
effective at the Effective Time. If, however, either or both of such
stockholder approvals are not obtained for this Proposal, neither InSight
Option Plan will become effective.

Each of the AHS Board and the Maxum Board believes that it is in the best
interests of their respective Companies to approve the InSight Option Plans,
which provide a meaningful opportunity for officers, employees, and non-
employee directors to acquire a substantial propriety interest in InSight and
to more closely align their interests to those of other stockholders.
ACCORDINGLY, THE AHS BOARD AND THE MAXUM BOARD UNANIMOUSLY RECOMMEND APPROVAL
OF THE INSIGHT OPTION PLANS PROPOSAL.

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MAXUM PROPOSAL NO. 3
APPROVAL OF MAXUM OPTION RATIFICATION PROPOSAL

BACKGROUND

On August 17, 1994, the Maxum Board authorized a one-time grant of
nonqualified stock options to each of its five directors, none of whom are
employees (the "Maxum Directors"). These grants of options (the "Options")
were for 15,000 shares of Maxum Common Stock, a term of ten years, an exercise
price of $.0625 per share (being the fair market value of the Maxum Common
Stock on the date of grant), and were fully vested, but conditioned on
stockholder approval. Each Maxum Director signed an identical stock option
agreement.

Maxum stockholders are being asked to ratify these stock option grants in
order to compensate Maxum Directors for their dedication and time expended in
the service of Maxum, and their efforts to enhance stockholder value and
realize opportunities. The ratification of these grants is necessary because
no further options can be granted to the Maxum Directors under the terms of
the Maxum Plan under which they have previously received options for 15,000
shares. In order to ensure the legal qualifications of Maxum Board members,
including the Maxum Compensation Committee, to serve as "disinterested"
administrators of Maxum's employee stock plans and thereby preserve the
qualifications of such plans under Rule 16b-3 of the Exchange Act, these stock
option grants were expressly conditioned on their ratification by the
stockholders.

PERSONS BENEFITING

By their terms, the benefits of the Options accrue only to Maxum Directors,
none of whom are employees. Consequently, no benefits by virtue of such grants
will be received by Maxum's Chief Executive Officer, any executive officers of
Maxum, any associates of such directors or executive officers, or any other
employees of Maxum.

OTHER TERMS OF THE OPTIONS

The Options cannot be pledged, and can be transferred only by will, the laws
of descent and distribution, or by a qualified domestic relations order. The
optionee's exercise rights are fully vested, and upon exercise, the exercise
price must be paid in lawful money of the United States, or at the sole
discretion of the Compensation Committee, may be paid by the surrender of
shares of Maxum Common Stock already owned, or by promissory note. The
agreements provide that if the optionee's service on the Maxum Board
terminates for any reason other than death or disability, the Options
terminate after three months. In the event of death or disability while
serving as a member of Maxum's Board, the Options terminate six months after
death, or 12 months after suffering disability, unless the Option terminates
sooner by the expiration of its term.

The Options provide that the number of the underlying shares and the
exercise price may be adjusted by the Compensation Committee in the event of a
stock dividend or stock split, recapitalization, merger, consolidation,
combination or exchange of shares. In the event of dissolution, merger, or
sale of substantially all the assets of Maxum, if provision is made in writing
in connection with such transaction for the assumption and continuance of the
Options, or for substitution of the Options with new options for shares of the
successor business entity, with appropriate adjustment as to the number and
kind of shares and prices, then the Options or new options shall continue in
the same manner and under the same terms. In the event provision is not made
for such continuance and assumption, the optionee shall be entitled within
reasonable period of time prior to the effective date of such transaction to
purchase the full number of underlying shares.

TAX AND ACCOUNTING FEATURES

With respect to a summary of federal income tax consequences pertaining to
nonqualified stock options, see "The Merger--Federal Income Tax Consequences
with Respect to Stock Options." With respect to a summary of accounting
treatment pertaining to nonqualified stock options, see "Proposal No. 2:
Approval of the InSight Option Plans Proposal--Accounting Treatment."

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BOARD RECOMMENDATION

Maxum believes that directors who have significant ownership in a public
corporation can better represent the viewpoint of the other stockholders they
are charged with representing. In addition, stock options as a form of
compensation are directly linked to the performance of the corporation, and
the optionees do not benefit unless all stockholders benefit. Also, no cash
outlay is required. The Maxum Board considers stock options to be an important
means of attracting and retaining well-qualified individuals to serve as Maxum
directors. Approval of this Proposal require the affirmative vote of a
majority of the Maxum Common Stock, present in person or by proxy at the
meeting. THE MAXUM BOARD UNANIMOUSLY RECOMMENDS APPROVAL OF THE MAXUM OPTION
RATIFICATION PROPOSAL.

AHS PROPOSAL NO. 3
APPROVAL OF AHS PLAN AMENDMENT PROPOSAL

The AHS Board has adopted, subject to approval by its stockholders, a
resolution amending the AHS Plans (the "AHS Plan Amendments"). See "The
Merger--Assumption of Existing Stock Options and Warrants--AHS Plans."

The purposes of the AHS Plan Amendments are (i) to clarify the impact of the
Merger on the options held by existing AHS executive officers and directors
who will serve as executive officers and directors of InSight after the Merger
and (ii) to enable the AHS Board to amend the terms of options held by AHS
non-employee directors who will, as a condition of the Merger, resign from the
AHS Board and not serve as directors of InSight after the Merger.
Specifically, if the AHS Plan Amendment Proposal is approved, options held by
three AHS executive officers (E. Larry Atkins, Thomas V. Croal and Deborah M.
MacFarlane) and one AHS director (Frank E. Egger) who will serve InSight in
similar capacities, and options held by the four AHS non-employee directors
who will resign from the AHS Board (Roz Kovens, Lloyd G. Glazer, Philip D.
Green and Charles M. Spear) at the Effective Time, will not terminate as a
result of any deemed or actual termination of employment or service in
connection with the Merger.

THE 1983 PLAN. Currently Section V.3.A. of the 1983 Plan contains a
provision that, in the event an optionee under the 1983 Plan ceases to be an
employee or director of AHS during the option term, the period for exercising
any option granted under the 1983 plan is reduced to a period of three months
following such cessation. The 1983 Plan contains no provision for continuation
of the option in the event that such cessation occurs solely because of a
merger transaction, even if the optionee becomes and remains an employee or
director of the surviving corporation under the merger (or its parent or
subsidiary) and such corporation, parent or subsidiary assumes the option in a
transaction, such as the contemplated Merger, to which Section 425(a) of the
Code applies (a "Section 425(a) Transaction").

The proposed amendment changes Section V.3.A. of the 1983 Plan to provide
that an optionee who has ceased to be an employee or director of AHS will not,
for purposes of such section, be treated as having ceased to be an employee or
director of AHS so long as such optionee is an employee of a corporation or a
parent or subsidiary of a corporation that issues or assumes the option in a
Section 425(a) Transaction. The complete amended text of Section V.3.A. of the
1983 Plan is set forth in Appendix G to this Joint Proxy Statement/Prospectus.

THE 1987 PLAN AND THE 1989 PLAN. Currently the 1987 Plan and the 1989 Plan
contain no provisions addressing whether, in the event an optionee ceases to
be an employee or director of AHS during the option term, the period for
exercising any option granted under the 1987 Plan or the 1989 Plan shall be
reduced or shall be continued. Accordingly, the 1987 Plan and the 1989 Plan do
not make clear whether the AHS Board may provide for continuation of the
option in the event that such cessation occurs solely because of a merger
transaction, regardless of whether the optionee becomes and remains an
employee or director of the surviving corporation under the merger (or its
parent or subsidiary) and such corporation, parent or subsidiary assumes the
option in a Section 425(a) Transaction.

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The proposed amendment changes the 1987 Plan and the 1989 Plan (i) to
provide that the term of options held by an optionee who has ceased to be an
employee or director of AHS by reason of a Section 425(a) Transaction shall
continue unreduced so long as such optionee is an employee or director of a
corporation or a parent or subsidiary of a corporation that issues or assumes
the option in a Section 425(a) Transaction and (ii) to give the AHS Board
discretion to allow the period for exercising an option under the 1987 Plan or
the 1989 Plan of a director of AHS who ceases to be a director of AHS by
reason of a Section 425(a) Transaction to continue unreduced, if the option is
issued or assumed in such a transaction. The complete text of the amendments
to the 1987 Plan and the 1989 plan are set forth in Appendix G to this Joint
Proxy Statement/Prospectus.

THE 1992 PLAN. Currently Section 8(f) of the 1992 Plan contains a provision
requiring that, in the event an optionee under the 1992 Plan ceases to be an
employee or director of AHS during the option term, the period for exercising
any option granted under the 1992 Plan is reduced to 90 days following such
cessation unless the optionee becomes and remains an employee or director of a
corporation (or its parent or subsidiary) and such corporation, parent, or
subsidiary assumes the option in a Section 425(a) Transaction.

The proposed amendment changes Section 8(f) of the 1992 Plan to give the AHS
Board discretion to allow the period for exercising an option under the 1992
Plan of an AHS director who ceases to be an AHS director by reason of a
Section 425(a) Transaction, to continue unreduced, provided that the option is
issued or assumed in a Section 425(a) Transaction. The complete amended text
of Section 8(f) of the 1992 Plan is set forth in Appendix G to this Joint
Proxy Statement/Prospectus.

FEDERAL INCOME TAX AND ACCOUNTING CONSEQUENCES. With respect to a summary of
the federal income tax consequences pertaining to stock option grants made
under the AHS Plans, see "The Merger--Federal Income Tax Consequences with
Respect to Stock Options." With respect to a summary of accounting treatment
pertaining to stock option grants made under the AHS Plans, see "Proposal No.
2: Approval of the InSight Stock Option Plans Proposal--Accounting Treatment."

APPROVAL. Approval of the AHS Plan Amendment Proposal requires the
affirmative vote of a majority of the votes represented by the AHS Common
Stock (entitled to one vote per share) and AHS Preferred Stock (entitled to
100 votes per share), voting together as a class, present in person or
represented by proxy at the AHS Special Meeting. Approval of the AHS Plan
Amendment Proposal is not a condition precedent to the consummation of the
Merger.

THE AHS BOARD UNANIMOUSLY RECOMMENDS APPROVAL OF THE AHS PLAN AMENDMENT
PROPOSAL.

FUTURE STOCKHOLDER PROPOSALS

If the Merger is consummated, the first annual meeting of the stockholders
of InSight after such consummation is expected to be held on or about May 10,
1997. If the Merger is not consummated, the 1996 Annual Meeting of
Stockholders of Maxum is expected to be held on or about October 30, 1996 and
the 1996 Annual Meeting of Stockholders of AHS is expected to be held on or
about November 29, 1996.

Subject to the foregoing, if any InSight stockholder intends to present a
proposal at the 1997 Annual Meeting of Stockholders of InSight and wishes to
have such proposal considered for inclusion in the proxy materials for such
meeting, such holder must submit the proposal to the Secretary of InSight in
writing so as to be received at the principal executive offices of InSight by
November 1, 1996. Such proposals must also meet the other requirements of the
rules of the SEC relating to stockholders' proposals. In the event the Merger
is not consummated, the only stockholder proposals eligible to be considered
for inclusion in the proxy materials for the 1996 Annual Meeting of
Stockholders of Maxum and AHS will be those which have been duly submitted to
the Secretary of Maxum by June 2, 1996 or the Secretary of AHS by July 6,
1996, as the case may be.

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EXPERTS

The consolidated financial statements of Maxum and subsidiaries included in
this Joint Proxy Statement/Prospectus and the related financial statement
schedule as of December 31, 1995 and 1994 and for each of the years in the
three-year period ended December 31, 1995 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing herein
(which report expresses an unqualified opinion and includes an explanatory
paragraph relating to the uncertainty regarding the ability of Maxum to
continue as a going concern), and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.

The statement of assets to be acquired and liabilities to be assumed as of
December 31, 1994, and the statement of operations related to contracts to be
acquired for the year ended December 31, 1994 for Dayton Medical Imaging
Radiologists, Inc. included in this Joint Proxy Statement/Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and have been so included in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.

The consolidated balance sheets of AHS and subsidiaries as of December 31,
1995 and December 31, 1994 and the related statements of operations,
stockholders' equity and cash flows for the three years ended December 31,
1995 included in this Joint Proxy Statement/Prospectus have been audited by
Arthur Andersen, LLP, independent public accountants, as stated in their
report (which report expresses an unqualified opinion and includes an
explanatory paragraph relating to the ability of AHS to continue as a going
concern), and have been included herein in reliance upon the authority of said
firm as experts in giving said reports.

The balance sheet of InSight Health Services Corp. as of May 7, 1996
included in this Joint Proxy Statement/Prospectus has been audited by Arthur
Andersen, LLP, independent public accountants, as stated in their report, and
has been included herein in reliance upon the authority of said firm as
experts in giving said report.

LEGAL MATTERS

The validity of the shares of InSight Common Stock to be issued in
connection with the Merger will be passed on for InSight by Storey Armstrong
Steger & Martin, P.C., Dallas, Texas. Storey Armstrong Steger & Martin, P.C.,
counsel to Maxum, also will issue a legal opinion to Maxum regarding certain
federal income tax consequences of the Merger. Arent Fox Kintner Plotkin &
Kahn, Washington, D.C., outside counsel to AHS, will issue a legal opinion to
AHS regarding certain federal income tax consequences of the Merger.

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APPENDIX A

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is dated as of February 26, 1996, by and
among INSIGHT HEALTH SERVICES CORP., a Delaware corporation ("InSight"),
AMERICAN HEALTH SERVICES CORP., a Delaware corporation ("AHSC"), AHSC
ACQUISITION COMPANY, a Delaware corporation and a wholly-owned subsidiary of
InSight ("AHSC Sub"), MAXUM HEALTH CORP., a Delaware corporation ("MHC"), and
MXHC ACQUISITION COMPANY, a Delaware corporation and a wholly-owned subsidiary
of InSight ("MHC Sub"). The parties hereto are sometimes hereinafter referred
to collectively as the "Companies" or the "Constituent Corporations," or
individually as a "Company" or a "Constituent Corporation."

WHEREAS, the respective Boards of Directors of the Companies deem it
advisable and in the best interests of their respective stockholders that each
of AHSC and MHC be acquired by and become wholly-owned subsidiaries of InSight
and, in furtherance thereof, the Boards of Directors of the Constituent
Corporations have approved, as applicable, the merger of (i) AHSC Sub with and
into AHSC, and (ii) MHC Sub with and into MHC, upon the terms and subject to
the conditions set forth herein (individually, "Merger" and collectively,
"Mergers"); and

WHEREAS, for federal income tax purposes, it is intended that the transfer
of stock of AHSC and MHC to InSight by the existing stockholders of AHSC and
MHC in exchange for stock of Insight pursuant to the Mergers shall qualify as
a transfer of property to a controlled corporation within the meaning of
Section 351 of the Internal Revenue Code of 1986, as amended ("Code");

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:

ARTICLE I

The Mergers

1(a). The Mergers. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2 hereof) of each respective
Merger, (a) AHSC Sub shall be merged with and into AHSC, and (b) MHC Sub shall
be merged with and into MHC, AHSC, and MHC being the surviving corporation in
each respective merger ("Surviving Corporation") and the separate existence of
each of AHSC Sub and MHC Sub shall thereupon cease. Each Merger shall have the
effects set forth in Section 259 of the Delaware General Corporation Law
("DGCL"). From and after the Effective Time of each respective Merger, each
Surviving Corporation shall be a wholly-owned subsidiary of InSight.

1.1. Effective Time of the Mergers. Each Merger shall become effective upon
the completion of the filing of properly executed Certificates of Merger with
the Secretary of State of the state of Delaware reflecting the respective
Mergers of AHSC and AHSC Sub, and of MHC and MHC Sub, which filings shall be
made at the Closing Date (as defined in Section 3.7 hereof) after satisfaction
of the conditions set forth in Article VIII hereof. Neither of the Mergers
shall be deemed effective until both of the Mergers shall have become
effective. When used in this Agreement, the term "Effective Time" with respect
to each such Merger shall mean the date and time at which both Certificates of
Merger are successfully filed.

ARTICLE II

Insight and the Surviving Corporations

2.1. Certificate of Incorporation of the Surviving Corporations. The
respective Certificates of Incorporation of each of AHSC and MHC shall be the
respective Certificate of Incorporation of the Surviving Corporation of each
Merger in which such Company is involved, except that such respective
Certificates of Incorporation shall be amended and restated at the Effective
Time to read in their entirety as the Certificates of

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<PAGE>

Incorporation of AHSC Sub and MHC Sub, respectively (with the names AHSC and
MHC being substituted for those of AHSC Sub and MHC Sub), copies of which are
attached hereto as Exhibit 2.1.

2.2. Bylaws of the Surviving Corporations. The respective Bylaws of each of
AHSC Sub and MHC Sub, as in effect at the Effective Time, shall be the Bylaws
of the Surviving Corporation of each Merger in which such Company is involved
until thereafter amended in accordance with applicable law.

2.3. Directors and Officers of the Surviving Corporations.

(a) The respective directors of AHSC Sub and MHC Sub at the Effective Time
shall be the initial directors of the Surviving Corporation of each Merger in
which such Company is involved, and shall hold office from the Effective Time
until their respective successors are duly elected or appointed and qualified
in the manner provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.

(b) The respective officers of AHSC Sub and MHC Sub at the Effective Time
shall be the initial officers of the Surviving Corporation of each Merger in
which such Company is involved, and shall hold office from the Effective Time
until their respective successors are duly elected or appointed and qualified
in the manner provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.

2.4. Directors and Officers of InSight.

(a) At or prior to the Effective Time, the Companies shall take or cause to
be taken all necessary action such that, at the Effective Time, the board of
directors of InSight shall be comprised of four (4) members. The first class
of directors shall serve until the annual meeting of stockholders held in 1997
and shall initially consist of E. Larry Atkins. The second class of directors
shall serve until the annual meeting of stockholders held in 1998 and shall
initially consist of Ronald G. Pantello. The third class of directors shall
serve until the annual meeting of stockholders held in 1999 and shall
initially consist of Leonard H. Habas and Frank E. Egger. All subsequent terms
of each class of directors after such class first stands for re-election shall
expire at the third succeeding annual meeting of stockholders after their
election. Immediately after the Effective Time, InSight shall extend an
invitation to Grant R. Chamberlain to join its Board of Directors. Should he
accept, he would become a member of the second class of directors.

(b) At or prior to the Effective Time, the Companies shall take or cause to
be taken all necessary action such that, at the Effective Time, InSight's
officers shall include the following:

<TABLE>
<S> <C>
Chairman............................................... Frank E. Egger
President & Chief Executive Officer.................... E. Larry Atkins
Senior Executive Vice President--Operations............ Glenn P. Cato
Executive Vice President--Finance and Secretary........ Thomas V. Croal
Senior Vice President--Operations...................... Michael A. Boylan
Senior Vice President--Operations...................... Robert N. LaDouceur
Senior Vice President--Operations...................... Michael D. Cragin
Vice President--Marketing.............................. Deborah M. MacFarlane
</TABLE>

2.5. Employment Agreements and Option Plans. InSight has entered into
employment agreements with Messrs. Atkins, Croal, Boylan, LaDouceur and Cragin
and Ms. MacFarlane, which shall take effect as of the Effective Time. Prior to
the Effective Time, InSight shall take or cause to be taken all necessary
action on its part to enter into an employment agreement with Glenn P. Cato,
and to adopt the InSight 1996 Employee Stock Option Plan and the 1996
Directors' Stock Option Plan in substantially the form of Exhibit 2.5A
attached hereto. Maxum Health Services Corp. and Mr. Cato currently are
parties to an Employment Agreement in substantially the form of Exhibit 2.5B
attached hereto.

2.6. Location. The location of InSight's principal corporate office shall be
Newport Beach, California.

A-2
<PAGE>

ARTICLE III

Conversion of Shares

3.1 Exchange Ratio. At the Effective Time, by virtue of the respective
Mergers and without any action on the part of the holder thereof:

(a) Shares of the capital stock of AHSC and MHC ("Shares") issued and
outstanding immediately prior to the Effective Time (other than the
Excluded Shares as defined in Section 3.6 below) shall be converted at the
Effective Time into the right to receive shares of the capital stock of
InSight ("InSight Shares"), in accordance with the following exchange
ratios ("Exchange Ratios"), as applicable:

(1) Each share of AHSC Common Stock, par value $0.03 per share, shall
be converted into the right to receive .100 Shares of InSight Common
Stock, par value $0.001 per share.

(2) Each Share of MHC Common Stock, par value $0.01 per share, shall
be converted into the right to receive .598 Shares of InSight Common
Stock, par value $0.001 per share.

(3) Each Share of AHSC Series B Senior Convertible Preferred Stock,
par value $0.03 per share, shall be converted into the right to receive
10 Shares of InSight Common Stock, par value $0.001 per share.

(4) Each Share of AHSC Series C Preferred Stock, par value $0.03 per
share, shall be converted into the right to receive 1.25088 Shares of
InSight Convertible Preferred Stock, par value $0.001 per share,
subject to adjustment in the event that AHSC warrant holders or option
holders exercise any of their respective rights to purchase AHSC Common
Stock prior to the Effective Time. In such event, this ratio shall be
increased so that the amount of InSight Convertible Preferred Stock to
be received shall equal, on an as-converted basis, twenty-four percent
(24%) of the issued and outstanding shares of InSight Common Stock
immediately after the Effective Time.

(5) Each Share of MHC Series B Preferred Stock, par value $0.01 per
share, shall be converted into the right to receive 83,392 Shares of
InSight Convertible Preferred Stock, par value $0.001 per share,
subject to adjustment in the event that MHC option holders exercise any
such rights to purchase MHC Common Stock prior to Effective Time. In
such event, this ratio shall be increased so that the amount of InSight
Convertible Preferred Stock to be received shall equal, on an as-
converted basis, twenty-four percent (24%) of the issued and
outstanding shares of InSight Common Stock immediately after the
Effective Time.

(b) At the Effective Time, all Shares of AHSC and MHC (other than the
Excluded Shares, which shall have only the rights set forth in Section 3.6
hereof) shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously
representing any such Shares of AHSC and MHC shall thereafter represent the
InSight Shares into which such Shares of AHSC and MHC have been converted.
Certificates representing Shares of AHSC and MHC shall be exchanged for
certificates representing whole InSight Shares issued in consideration
therefor upon the surrender of such certificate in accordance with the
provisions hereof.

(c) Each Share of AHSC or MHC held in the treasury of any such Company
(or a subsidiary of such Company) immediately prior to the Effective Time
shall be canceled and retired and cease to exist, and no InSight Shares
shall be issued in exchange therefor. All InSight shares owned by AHSC or
MHC, or any subsidiary thereof, shall become treasury stock of InSight.

(d) Each Share of common stock of AHSC Sub or MHC Sub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into the right to receive one (1) share of common stock of the
Surviving Corporation of the respective Merger in which such Company is
involved.

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3.2 Exchange of Shares.

(a) Prior to the Effective Time, InSight shall select and enter into an
agreement (in form and substance reasonable satisfactory to AHSC and MHC) with
a bank, transfer agent or trust company to act as exchange agent hereunder
("Exchange Agent"). No later than the Effective Time, InSight shall make
available, and each holder of Shares (other than Excluded Shares) will be
entitled to receive, upon surrender to the Exchange Agent of one or more
certificates representing such Shares for cancellation, certificates
representing the number of InSight Shares into which such Shares are converted
in the Merger. The InSight Shares into which the Shares shall be converted in
the Merger shall be deemed to have been issued at the Effective Time.

(b) As soon as reasonably practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding Shares
("Certificates") whose Shares were converted into InSight Shares pursuant to
Section 3.1 hereof, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
which shall be in such form and have such other provisions as InSight and the
other Companies may reasonably specify), and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing InSight Shares. Subject to Section 6.7 hereof, upon surrender of
a Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that
number of whole InSight Shares which such holder has the right to receive in
respect of the Certificates surrendered pursuant to the provisions of this
Article III.

(c) In the event that any Certificate shall have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, InSight will issue or cause
to be issued in exchanged for such lost, stolen or destroyed Certificate the
number of InSight Shares into which such Shares are converted in the Merger in
accordance with this Article III. When authorizing such issuance in exchange
therefor, the Board of Directors of InSight may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificate to give InSight a bond in such sum as it may
direct as indemnity, or such other form of indemnity as it shall direct,
against any claim that may be made against InSight with respect to the
Certificate alleged to have been lost, stolen, or destroyed.

3.3 Dividends: Transfer Taxes. No dividends that are declared on InSight
Shares will be paid to persons entitled to receive certificates representing
InSight Shares until such persons surrender their Certificates. Upon such
surrender, there shall be paid to the person in whose name the certificates
representing such InSight Shares shall be issued any dividends which shall
have become payable with respect to such InSight Shares between the Effective
Time and the time of such surrender. In no event shall the person entitled to
received such dividends be entitled to receive interest on such dividends. If
any certificates for any InSight Shares are to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required
by reason of the issuance of certificates for such InSight Shares in a name
other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of Shares for
any InSight Shares or dividends thereon or, in accordance with Section 3.4
hereof, the cash payment for fractional interests, delivered to a public
official pursuant to applicable escheat laws.

3.4 No Fractional Securities. No certificates or scrip representing
fractional InSight Shares shall be issued upon the surrender for exchange of
certificates representing Shares pursuant to this Article III, and no
dividend, stock split-up or other change in the capital structure of InSight
shall relate to any fractional security, and such fractional interests shall
not entitle the owner thereof to vote or to any rights of a security holder.
In lieu of any such fractional securities, each holder of Shares who would
otherwise have been entitled to a fraction of an InSight Share upon surrender
of stock certificates for exchange pursuant to this Article III shall be paid
an

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amount in cash (without interest), rounded to the nearest cent, equal to the
product of such fraction multiplied by the fair market value of an InSight
Share as determined by the InSight Board of Directors.

3.5 Closing of Transfer Books. At the Effective Time, the stock transfer
books of AHSC and MHC shall be closed and no transfer of Shares shall
thereafter be made. If, after the Effective Time, Certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for certificates representing InSight Shares in accordance with the
terms hereof. At and after the Effective Time, the holders of Shares to be
exchanged for InSight Shares pursuant to this Agreement shall cease to have
any rights as stockholders of AHSC and MHC except for the right to surrender
such Certificates in exchange for InSight Shares and cash consideration for
fractional interests as set forth in this Article III.

3.6 Dissenting Shares. If holders of Shares which are outstanding
immediately prior to the Effective Time are entitled to dissent from a Merger
and deliver a written demand for appraisal of any such Shares in accordance
with the provisions of Section 262 of the DGCL concerning the right of such
holders to dissent from a Merger and demand appraisal of their Shares
("Dissenting Holders"), any Shares held by a Dissenting Holder as to which
appraisal has been so demanded ("Excluded Shares") shall not be converted as
described in Section 3.1 hereof, but shall from and after the Effective Time
represent only the right to receive payment of the appraised value of such
Shares determined in accordance with the provisions of Section 262 of the
DGCL; provided, however, that Shares held by a Dissenting Holder who shall,
after the Effective Time, withdraw his or her demand for appraisal or lose his
or her right of appraisal with respect to such Shares, in either case pursuant
to Section 262 of the DGCL, shall not be deemed Excluded Shares but shall be
deem to be converted, as of the Effective Time, into the right to receive
InSight Shares in accordance with the applicable Exchange Ratio.

3.7 Closing. The closing of the transactions contemplated by this Agreement
("Closing") shall take place at the office of McDermott, Will & Emery, 2049
Century Park East, Suite 3400, Los Angeles, California 90067, at 10:00 a.m.
Pacific time, on the first business day ("Closing Date") after the later of
(a) the day on which the later to occur of the stockholders' meetings referred
to in Section 7.4 hereof shall have occurred or (b) the day on which all of
the conditions set forth in Article VIII hereof are satisfied or waived, or at
such other date, time and place as the Companies shall agree.

3.8 Supplementary Action. If at any time after the Effective Time any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm or record in the Surviving
Corporations the title to any property or rights of any Constituent
Corporation, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporations are hereby authorized and
empowered on behalf of the Constituent Corporations, in the name of and on
behalf of any Constituent Corporation as appropriate, to execute and deliver
any and all things necessary or proper to vest or to perfect or confirm title
to such property or rights in the Surviving Corporation, and otherwise to
carry out the purposes and provisions of this Agreement.

ARTICLE IV

Representations and Warranties of AHSC and MHC

As used in this Agreement, (i) the term "Material Adverse Effect" means,
with respect to AHSC or MHC, as the case may be, a material adverse effect on
the business, assets, results of operation or financial condition of such
party and its subsidiaries taken as a whole or in the ability of such party to
perform its obligations hereunder, and (ii) the word "subsidiary" when used
with respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party or any other subsidiary of
such party is a general partner (excluding partnerships the general
partnership interests of which held by such party or any subsidiary of such
party do not have a majority of the voting interests in such partnership) or
of which at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporations or other organizations is directly or indirectly owned or
controlled by such party and/or by any one or more of the subsidiaries.

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Each of AHSC and MHC represents and warrants, with respect to itself and its
subsidiaries, to the others and to InSight, except as disclosed to the others
and to InSight in writing prior to the execution of this Agreement, as
follows:

4.1 Organization. Each Company, and each subsidiary of such Company, (i) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (ii) has the power to carry on its business as
it is now being conducted or presently proposed to be conducted, and (iii) is
duly qualified to do business, and is in good standing (to the extent the
concept of good standing exists), in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified will
not have a Material Adverse Effect.

4.2. Capitalization. As of the date hereof, the authorized capital stock of
such Company is as set forth in Exhibit 4.2 hereto. As of the date hereof, the
number of Shares of such Company which are issued and outstanding is as set
forth in Exhibit 4.2 hereto. All of the issued and outstanding Shares of such
Company are validly issued, fully paid and nonassessable and free of
preemptive rights or similar rights created by statute, the Certificate of
Incorporation or Bylaws of such Company, or any agreement by which such
Company or any of its subsidiaries is a party or by which it is bound. Except
(a) as set forth above or (b) as disclosed in Exhibit 4.2 hereto, there are
not as of the date of this Agreement any Shares of capital stock of such
Company issued or outstanding or any options, warrants, subscriptions, calls,
rights, convertible securities or other agreements or commitments obligating
such Company to issue, transfer or sell any Shares of its capital stock. As of
the date hereof, no bonds, debentures, notes or other indebtedness having the
right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders of such Company may vote
("Voting Debt") were issued and outstanding with respect to such Company.

4.3. Authority Relative to this Agreement. Such Company has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by such Company and the
consummation by such Company of the transactions contemplated hereby have been
duly authorized by the Board of Directors of such Company, and, except for
approval by the requisite votes cast by such Company's stockholders at the
meeting provided for in Section 7.4 hereof, no other corporate proceedings on
the part of such Company are necessary to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Company and constitutes a valid and binding
agreement of such Company, enforceable against such Company in accordance with
its terms.

4.4 Consents and Approvals; No Violations. Except for applicable
requirements of the Securities Act of 1933, as amended ("Securities Act"), the
Securities Exchange Act of 1934, as amended ("Exchange Act"), state or foreign
laws relating to takeovers, if applicable, state securities or blue sky laws
and, as applicable, filing and recordation of a Certificate of Merger as
required by the DGCL, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation by
such Company of the transactions contemplated by this Agreement. Except as set
forth in Exhibit 4.4 hereto, neither the execution and delivery of this
Agreement by such Company, nor the consummation by such Company of the
transactions contemplated hereby, nor compliance by such Company with any of
the provisions hereof, will (a) result in any breach of the Certificate of
Incorporation or Bylaws of such Company, (b) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any rights of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which such Company or any of its subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to such Company, any of its subsidiaries or any of their properties
or assets, except in the case of clauses (b) and (c) for violations, breaches
or defaults that would not have a Material Adverse Effect.

4.5 Reports and Financial Statements. Such Company has filed all reports
required to be filed by it with the Securities and Exchange Commission ("SEC")
pursuant to the Exchange Act since January 1, 1992 (collectively, "SEC
Reports"), and has previously furnished or made available to the other
Companies true and

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complete copies of all such SEC Reports. None of such SEC Reports, as of their
respective dates (as amended through the date hereof), contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the balance
sheets (including the related notes) included in the SEC Reports fairly
presents in all material respects the consolidated financial position of such
Company and its subsidiaries as of the respective dates thereof, and the other
related statements (including the related notes) included therein fairly
present in all material respects the results of operations and cash flows of
such Company and its subsidiaries for the respective periods or as of the
respective dates set forth therein, all in conformity with generally accepted
accounting principles consistently applied during the periods involved, except
as otherwise noted therein and subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein and the absence of any notes thereto.

4.6. Absence of Certain Change or Events. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement, since December 31, 1994, or
in Exhibit 4.6 hereto, neither such Company nor any of its subsidiaries has:
(a) taken any of the actions set forth in Sections 6.1(b), 6.1(c) or 6.1(e)
hereof; (b) incurred any liability material to the Company and its
subsidiaries on a consolidated basis, except in the ordinary course of its
business, consistent with past practices; (c) suffered a change, or any event
involving a prospective change, in the business, assets, financial condition
or results of operation of such Company or any of its subsidiaries which has
had, or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect (other than as a result of changes or proposed changes
in federal or state health care (including health care reimbursement) laws or
regulations of general applicability or interpretations thereof, changes in
generally accepted accounting principles and changes that could, under the
circumstances, reasonably have been anticipated in light of disclosures made
in writing by such Company to the others pursuant hereto); or (d) subsequent
to the date hereof, except as permitted by Section 6.1 hereof, conducted its
business and operations other than in the ordinary course of business and
consistent with past practices.

4.7. Information in Disclosure Documents and Registration Statement. None of
the information to be supplied by such Company to be included in (a) the
Registration Statement on Form S-4 to be filed with the SEC by InSight under
the Securities Act for the purpose of registering the InSight Shares to be
issued in the Mergers or pursuant to this Agreement ("Registration Statement")
and (b) the joint proxy statement to be distributed in connection with the
meetings of stockholders of the Companies to vote upon this Agreement ("Proxy
Statement"), will, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time, or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto, and
at the time of each of the meetings of stockholders to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Registration Statement insofar as it pertains to
such Company will comply as to form in all material respects with the
provisions of the Securities Act, and the rules and regulations promulgated
thereunder. The Proxy Statement insofar as it pertains to such Company will
comply as to form in all material respects with the provisions of the Exchange
Act, and the rules and regulations promulgated thereunder.

4.8. Litigation. As of the date of this Agreement, except as disclosed in
the SEC Reports filed prior to the date of this Agreement and except to the
extent that individually and in the aggregate they would not reasonably be
expected to have a Material Adverse Effect: (i) there is no action, suit,
judicial or administrative proceeding, arbitration or investigation pending
or, to the best knowledge of such Company, threatened against or involving
such Company or any of its subsidiaries, or any of their properties or rights,
before any court, arbitrator or administrative or governmental body; (ii)
there is no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against such Company or any of its subsidiaries; and (iii) such
Company and its subsidiaries are not in violation of any term of any
judgments, decrees, injunctions or orders outstanding against them. Such
Company has furnished to the other Companies in writing a description of all
litigations, actions, suits, proceedings, arbitrations, investigations

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known to it, judgments, decrees, injunctions or orders pending, or to its best
knowledge, threatened against or involving such Company or any of its
subsidiaries, or any of their properties or rights as of the date hereof.

4.9. Contracts.

(a) Each of the material contracts, instruments, mortgages, notes, security
agreements, leases, agreements or understandings, whether written or oral, to
which such Company or any of its subsidiaries is a party that relates to or
affects the assets or operations of such Company or any of its subsidiaries or
to which such Company or any of its subsidiaries or their respective assets or
operations may be bound or subject is a valid and binding obligation of such
Company and in full force and effect (with respect to such Company or such
subsidiary), except for where the failure to be in full force and effect would
not, individually or in the aggregate, have a Material Adverse Effect. Except
to the extent that the consummation of the transactions contemplated by this
Agreement may require the consent of third parties, as disclosed in writing to
the other Companies pursuant hereto, there are no existing defaults by such
Company or any of its subsidiaries thereunder or, to the knowledge of such
Company, by any other party thereto, which defaults would, individually or in
the aggregate, have a Material Adverse Effect; and no event of default has
occurred, and no event, condition or occurrence exists, that (whether with or
without notice, lapse of time or the happening or occurrence of any other
event) would constitute a default by such Company or any of its subsidiaries
thereunder, which default would, individually or in the aggregate, have a
Material Adverse Effect.

(b) Except as set forth in such Company's SEC Reports (including the
exhibits thereto) filed prior to the date of this Agreement and the materials
made available pursuant to Section 4.16 hereof or as set forth in Exhibit 4.9
hereto, as of the date of this Agreement neither such Company nor any of its
subsidiaries is a party to any oral or written (i) consulting agreement not
terminable on sixty (60) days or less notice involving the payment of more
than fifty thousand dollars ($50,000) per annum, in the case of any such
agreement with an individual, (ii) joint venture agreement, (iii)
noncompetition or similar agreements that restrict such Company or its
subsidiaries from engaging in a line of business, (iv) agreement with any
executive officer or other employee of such Company or any subsidiary the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving such Company of the
nature contemplated by this Agreement and which provides for the payment of in
excess of ten thousand dollars ($10,000), (v) agreement with respect to any
executive officer of such Company or any subsidiary providing any term of
employment beyond one (1) year or compensation guaranty in excess of seventy-
five thousand dollars ($75,000) per annum, or (vi) agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.

4.10 Employee Benefit Plans.

(a) Such Company has previously delivered to the other Companies a true and
complete list of each written or formal employee benefit plan (including,
without limitation, any "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
policy or agreement that is maintained (all of the foregoing, "Benefit
Plans"), or is or was contributed to by such Company or pursuant to which such
Company or any trade or business, whether or not incorporated ("ERISA
Affiliate"), which together with such Company would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, is still potentially
liable for payments, benefits or claims. A copy of each Benefit Plan as
currently in effect and, if applicable, the most recent annual report,
actuarial report of valuation, summary plan description, trust agreement and a
determination letter issued by the IRS for each Benefit Plan have theretofore
been delivered to the other Companies. No Benefit Plan was or is subject to
Title IV of ERISA or Section 412 of the Code, including any "multi-employer
plan" as defined in Section 3(37) of ERISA.

(b) Each of the Benefit Plans that are subject to ERISA is in substantial
compliance with ERISA; each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified.

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No event has occurred, and to such Company's knowledge, there exists no
condition or set of circumstances, in connection with which such Company or
any ERISA Affiliate is or could be subject to liability (except liability for
benefit claims and funding obligations payable in the ordinary course) under
ERISA, the Code or any other applicable law with respect to any Benefit Plan.

(c) All contributions or other amounts payable by such Company or its
subsidiaries through December 31, 1994 with respect to each Benefit Plan in
respect of current or prior plan years have been either paid or accrued on the
most recent financial statements of such Company made available to the other
Companies. Any contributions or other amounts payable by such Company or its
subsidiaries for periods between December 31, 1994 and the Effective Time with
respect to each Benefit Plan in respect of current or prior plan years have
been or will be either paid or accrued in the normal course of business on the
books and records of such Company at or prior to the Effective Time. There are
no pending or, to the best knowledge of such Company, threatened or
anticipated claims (other than routine claims for benefits) by or on behalf of
or against any of the Benefit Plans or any trusts or other funding vehicles
related thereto.

(d) No Benefit Plan, other than policies or agreements, provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees for periods extending
beyond their retirement or other termination of service, other than (i)
coverage mandated by Part 6 of Subtitle B of Title I of ERISA, Section 4980B
of the Code or any comparable state law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of such Company or the ERISA Affiliates, or (iv) benefits the full
cost of which is borne by the current or former employee or his or her
beneficiary.

4.11 Taxes. For the purposes of this section, the term "tax" shall include
all taxes, charges, withholdings, fees, levies, penalties, additions, interest
or other assessments imposed by any United States federal, state or local
authority or any other taxing authority on such Company or any of its Tax
Affiliates (as defined below) as to their respective income, profit,
franchise, gross receipts, payroll, sales, employment, workers' compensation,
use, property, withholding, excise, occupancy, environmental and other taxes,
duties or assessments of any nature whatsoever. Such Company has filed or
caused to be filed timely all material federal, state, local and foreign tax
returns required to be filed by each of its and any member of its
consolidated, combined, unitary or similar group (each such member a "Tax
Affiliate"). Such returns, reports and other information are accurate and
complete in all material respects. Such Company has paid or caused to be paid
or has made adequate provision or set up an adequate accrual or reserve for
the payment of all taxes shown to be due in respect of the periods for which
returns are due, and has established (or will establish at least quarterly) an
adequate accrual or reserve for the payment of all taxes payable in respect of
the period subsequent to the last of said periods required to be so accrued or
reserved. Neither such Company nor any of its Tax Affiliates has any material
liability for taxes in excess of the amount so paid or accruals or reserves so
established. Neither such Company nor any of its Tax Affiliates is delinquent
in the payment of any tax in excess of the amount reserved or provided
therefor, and no deficiencies for any tax, assessment or governmental charge
in excess of the amount reserved or provided therefor have been threatened,
claimed, proposed or assessed. No waiver or extension of time to assess any
taxes has been given or requested. Such Company's federal state income tax
returns have never been audited by the Internal Revenue Service or comparable
state agencies.

4.12 Compliance with Applicable Law. Except as disclosed in the SEC Reports
filed prior to the date of this Agreement, such Company and each of its
subsidiaries holds all licenses, franchises, permits, variances, exemptions,
orders, approvals and authorizations necessary for the lawful conduct of its
business under and pursuant to, and the business of each of such Company and
its subsidiaries is not being conducted in violation of, any provision of any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to such Company or any
of its subsidiaries, except to the extent that the failure to hold any such
licenses, franchises, permits or authorizations, or any such violation, would
not, individually or in the aggregate, have a Material Adverse Effect.

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4.13 Subsidiaries. Exhibit 22.1 to the most recent Form 10-K included in the
SEC Reports of AHSC and MHC, as supplemented by Exhibit 4.13 hereto, lists all
the subsidiaries of such Company as of the date of this Agreement and
indicates for each subsidiary as of such date the jurisdiction of
incorporation or organization. All of the outstanding shares of capital stock
or other equity interests of each of the subsidiaries are (i) held by such
Company or one of such wholly-owned subsidiaries, (ii) fully paid and
nonassessable, and (iii) owned by such Company or one of such wholly-owned
subsidiaries free and clear of any claim, lien or encumbrance.

4.14 Labor and Employment Matters.

(a) Such Company and it subsidiaries are and have been in compliance in all
material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, the Immigration Reform Control Act, the Worker
Adjustment and Retraining Notification Act and such laws respecting employment
discrimination, equal opportunity, affirmative action, workers' compensation,
occupational safety and health requirements and unemployment insurance and
related matters, and are not engaged in and have not engaged in any unfair
labor practice.

(b) To the knowledge of such Company, no investigation or review by or
before any governmental entity concerning any violations of any such
applicable laws is pending, nor is any such investigation threatened or has
any such investigation occurred during the last three (3) years, and no
governmental entity has provided any notice to such Company or any of its
subsidiaries or otherwise asserted an intention to conduct any such
investigation.

(c) There is no labor strike, dispute, slowdown or stoppage actually pending
or threatened against such Company or any of its subsidiaries.

(d) No union representation question or union organizational activity exists
respecting the employees of such Company or any of its subsidiaries.

(e) No collective bargaining agreement exists which is binding on such
Company or any of it subsidiaries.

(f) Neither such Company nor any of its subsidiaries has experienced any
material work stoppage or other material labor difficulty.

(g) Except as set forth on Exhibit 4.14(g) hereto, in the event of
termination of the employment of any of the current officers, directors,
employees or agents of such Company or any of its subsidiaries, neither such
Company, any of it subsidiaries, any other Company, the Surviving Corporation
nor InSight nor any other subsidiaries of such Company, will, pursuant to any
agreement or by reason of anything done prior to the Effective Time by such
Company of any of its subsidiaries, be liable to any of said officers,
directors, employees or agents for so-called "severance pay" or any other
similar payments or benefits, including, without limitation, post-employment
health care (other than pursuant to COBRA) or insurance benefits.

4.15 Insurance. As of the date hereof, such Company and each of its
subsidiaries are insured by insurers reasonably believed by such Company to be
of recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged. All
material policies of insurance and fidelity or surety bonds insuring such
Company or any of its subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect, except as set
forth on Exhibit 4.15 hereto. As of the date hereof, there are no material
claims by such Company or any of it subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause.

4.16 Contracts with Physicians, Hospitals, HMOs and Third Party
Providers. Such Company has made available to representatives of the other
Companies copies (or in the case where no written documentation exists, a
summary) of all outstanding contracts, partnerships, joint ventures and other
arrangements or understandings (written or oral) between (a) such Company or
any of its subsidiaries and (b) any physician, hospital, HMO, other managed
care organization or other third-party provider relating to the provision of
medical or consulting services, treatments, patient referrals or similar
activities.

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ARTICLE V

Representations and Warranties of Insight

InSight represents and warrants to AHSC and MHC with respect to itself and
with respect to AHSC Sub and MHC Sub, as follows:

5.1. Organization. Such Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as it is
now being conducted or presently proposed to be conducted. Such Company has
delivered to the other Companies complete and correct copies of its
Certificate of Incorporation and Bylaws or other organizational documents.
Such Company has not engaged in any business since the date of its
incorporation other than as contemplated hereby.

5.2. Capitalization. The authorized capital stock of InSight consists of
twenty-five million (25,000,000) shares of common stock, par value $0.001 per
share, and three million five hundred thousand (3,500,000) shares of preferred
stock, par value $0.001 per share ("InSight Preferred Stock"). As of the date
hereof, one thousand (1,000) InSight Shares are issued and outstanding and
owned of record and beneficially only by AHSC and MHC in equal proportions.
There are no shares of InSight Preferred Stock outstanding. All of the issued
and outstanding InSight Shares are validly issued, fully paid, nonassessable
and free of preemptive rights or similar rights created by statute, the
Certificate of Incorporation or Bylaws of InSight or any agreement to which
InSight or any of its subsidiaries is a party or by which it is bound. There
are not now, and at the Effective Time there will not be, any other shares of
capital stock of InSight issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating InSight to issue, transfer or sell any shares of its
capital stock except pursuant to this Agreement, that certain Preferred Stock
Acquisition Agreement dated on or about the date hereof, by and among AHSC,
MHC, InSight and General Electric Company acting through GE Medical Systems
("Preferred Stock Acquisition Agreement") and those certain agreements dated
on or about the date hereof by and among each of the preferred stockholders of
AHSC and InSight, AHSC and Maxum ("Preferred Stockholders Agreements"). Except
as provided for in this Agreement, after the Effective Time, InSight will have
no obligation to issue, transfer or sell any shares of its capital stock
pursuant to any employee benefit plan or otherwise. Other than as contemplated
by this Section and Section 7.7 hereof, immediately after the Effective Time,
there will be no option, warrant, call, right or agreement obligating InSight
or any subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, any InSight Shares or obligating InSight or any subsidiary to grant,
extend or enter into any such option, warrant, call, right or agreement. All
of the issued and outstanding capital stock of AHSC Sub and MHC Sub is owned
beneficially and of record by InSight and, in each case, consists solely of
one thousand (1,000) shares of common stock, $0.001 par value per share.

5.3. Authority Relative to this Agreement. Such Company has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by such Company and the
consummation by such Company of the transactions contemplated hereby have been
duly authorized by the Board of Directors of such Company and by InSight, as
sole stockholder of such company, and no other corporate proceedings on the
part of such Company are necessary to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Company and constitutes a valid and binding
agreement of such Company, enforceable against such Company in accordance with
its terms.

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ARTICLE VI
Conduct of Business Pending the Mergers

6.1. Conduct of Business Pending the Mergers. Except as contemplated by this
Agreement, each Company agrees on its own behalf and on behalf of its
subsidiaries that, without the prior written consent of the other Companies,
during the period from the date of this Agreement and continuing until the
Effective Time:

(a) the respective businesses of each Company and its subsidiaries shall
be conducted only in the ordinary and usual course of business and
consistent with past practices;

(b) such Company and its subsidiaries shall not (i) sell or pledge or
agree to sell or pledge any stock owned by it in any of its subsidiaries;
(ii) amend its Certificate of Incorporation, as applicable, or Bylaws; or
(iii) split, combine or reclassify any shares of its outstanding capital
stock, or declare, set aside or pay any dividend or other distribution
payable in cash, stock or property in respect of its capital stock, or
directly or indirectly redeem, purchase or otherwise acquire any shares of
its capital stock or other securities or shares of the capital stock or
other securities of any of its subsidiaries;

(c) such Company and its subsidiaries shall not (i) authorize for
issuance, issue, sell, pledge, dispose of, encumber, deliver or agree to
commit to issue, sell, pledge or deliver any additional shares of, or
rights of any kind to acquire any shares of, its capital stock of any class
or exchangeable into shares of stock of any class or any Voting Debt
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except that
the Company may issue Shares required to be issued upon exercise of
existing stock options, warrants or similar plans, or under other
contractual commitments previously made, which options, warrants, plans or
commitments have been disclosed in writing to the other Companies pursuant
hereto, and except for Preferred Stock to be issued to General Electric
Company acting through GE Medical Systems pursuant to a Preferred Stock
Acquisition Agreement dated on or about the date hereof ("Preferred Stock
Acquisition Agreement"); (ii) acquire, dispose of, transfer, lease,
license, mortgage, pledge or encumber any fixed or other substantial assets
other than in the ordinary course of business and consistent with past
practices; (iii) incur, assume or prepay any material indebtedness,
liability or obligation or any other material liabilities or issue any debt
securities other than in the ordinary course of business and consistent
with past practices; (iv) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person (other than a subsidiary) in a material
amount other than in the ordinary course of business and consistent with
past practices; (v) make any material loans, advances or capital
contributions to, or investments in, any other person, other than to
subsidiaries, other than in the ordinary course of business and consistent
with past practices; (vi) fail to maintain adequate insurance consistent
with past practices for their businesses and properties; or (vii) enter
into any contract, agreement, commitment or arrangement with respect to any
of the foregoing;

(d) such Company shall use its best efforts to preserve intact the
business organization of the Company and its subsidiaries, to keep
available the services of its and their present officers and key employees,
and to preserve the goodwill of those having business relationships with it
and their respective subsidiaries; provided, however, that no breach of
this covenant shall be deemed to have occurred if a failure to comply with
this Section 6.1(d) occurs as a result of any matter arising out of the
transactions contemplated by this Agreement or any acquisition proposals
made to such Company or the public announcement thereof;

(e) such Company and its subsidiaries shall not knowingly take or allow
to be taken or fail to take any action which act or omission would
jeopardize the qualification of the transfer of ownership of the stock of
AHSC and MHC to InSight in exchange for InSight stock pursuant to the
Mergers as a transaction described in Section 351(a) of the Code; and

(f) such Company and its subsidiaries shall use all reasonable efforts to
prevent any representation or warranty of such Company herein from becoming
untrue or incorrect in any material respect.

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6.2. Conduct of Business of InSight, AHSC Sub and MHC Sub. During the period
from the date of this Agreement to the Effective Time, InSight, AHSC Sub and
MHC Sub shall not engage in any activities of any nature except as provided in
or contemplated by this Agreement.

6.3. Compensation Plans. During the period from the date of this Agreement
and continuing until the Effective Time, each Company agrees as to itself and
its subsidiaries that, other than the agreements referred to in Section 2.5
hereof or as set forth on Exhibit 6.3 hereto, it will not, without the prior
written consent of the other Companies (except as required by applicable law
or pursuant to existing contractual arrangements or other plans or commitments
as otherwise disclosed to the other Companies in writing pursuant hereto):

(a) enter into, adopt or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment,
severance or other employee benefit plan, agreement, trust, plan, fund or
other arrangement between such Company and one or more of its officers,
directors or employees, in each case so as to materially increase the
benefits thereunder (collectively, "Compensation Plans");

(b) grant or become obligated to grant any increase in the compensation
or fringe benefits of directors, officers or employees (including any such
increase pursuant to any Compensation Plan) or any increase in the
compensation payable or to become payable to any officer, except, with
respect to employees other than officers, for increases in compensation in
the ordinary course of business consistent with past practice, or enter
into any contract, commitment or arrangement to do any of the foregoing,
except for normal increases and non-stock benefit changes in the ordinary
course of business consistent with past practice;

(d) make any change in any Compensation Plan or other employee welfare or
benefit arrangement or enter into any employment or similar agreement or
arrangement with any employee; or

(e) enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee
of such Company of compensation or benefits contingent, or the terms of
which are materially altered in favor of such individual, upon the
occurrence of any of the transactions contemplated by this Agreement.

6.4. Current Information. From the date of this Agreement to the Effective
Time, each Company will cause one or more of its designated representatives to
confer on a regular and frequent basis (not less than semi-monthly) with
representatives of the other Companies and to report the general status of its
ongoing operations and to deliver to the other Companies (not less than
quarterly) unaudited consolidated balance sheets and related consolidated
statements of income, stockholders equity and cash flows for the period since
the last such report. Each Company will promptly notify the others of any
material change in the normal course of business or in its subsidiaries'
properties.

6.5. Letters of Companies' Accountants. Each of AHSC and MHC shall use all
reasonable efforts to cause to be delivered to itself, to InSight and to the
other Companies a so-called "comfort" letter of such Company's independent
auditors with respect to the financial statements and other financial
information of such Company included in the Registration Statement, each such
letter dated a date within two (2) business days before the date on which the
Registration Statement shall become effective and addressed to each of AHSC,
MHC and InSight, and in a form reasonably approved by the recipients prior to
delivery thereof.

6.6. Legal Conditions to Merger. Each Company shall, and shall cause its
subsidiaries to, use all reasonable efforts to (a) take, or cause to be taken,
all actions necessary to comply promptly with all legal requirements which may
be imposed on such party or its subsidiaries with respect to the Merger and to
consummate the transactions contemplated by this Agreement, subject to the
appropriate vote or consent of stockholders, and (b) obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any governmental entity and/or any other public or
private third party which is required to be obtained or made by such party or
any of its subsidiaries in connection with the Merger and the transactions
contemplated by this Agreement. Each Company will promptly cooperate with and
furnish

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information to the other in connection with any such burden suffered by, or
requirement imposed upon, any of them or any of their subsidiaries in
connection with the foregoing.

6.7. Affiliates. Prior to the mailing to the stockholders of each Company of
the Proxy Statement, each Company shall deliver to the other a letter
identifying all persons who are, at the time this Agreement is submitted for
approval to the stockholders of such Company, "affiliates" of such Company,
for purposes of Rule 145 under the Securities Act. Each Company shall use all
reasonable efforts to cause each person named in the letter delivered by it to
deliver to the other Companies at least ten (10) days prior to the Closing
Date a written "affiliates" agreement, in customary form, restricting the
disposition by such person of the InSight Shares to be received by such person
in the Mergers, as contemplated by Rule 145 under the Securities Act and as
required to cause such person to be an owner of the InSight stock immediately
after the Mergers for purposes of Section 351 of the Code. Certificates
surrendered for exchange by any person constituting an "affiliate" of a
Company within the meaning of Rule 145 under the Securities Act shall not be
exchanged by the Exchange Agent for InSight Shares pursuant to Section 3.2
hereof until InSight has received such agreement described in the preceding
sentence.

6.8. Advice of Changes; Government Filings. Each party shall confer on a
regular and frequent basis with the other, report on operational matters and
promptly advise the other orally and in writing of any change or event having,
or which, insofar as can reasonably be foreseen, could have, a Material
Adverse Effect on such party or which would cause or constitute a material
breach of any of the representations, warranties or covenants of such party
contained herein. Each Company shall file all reports required by regulation
to be filed by it with the SEC between the date of this Agreement and the
Effective Time and shall deliver to the other party copies of all such reports
promptly after the same are filed. Except where prohibited by applicable
statutes and regulations, each party shall promptly provide the other (or its
counsel) with copies of all other filings made by such party with any state or
federal government entity in connection with this Agreement or the
transactions contemplated hereby.

6.9. Accounting Methods. No Company shall change its methods of accounting
in effect at December 31, 1994, except as required by changes in generally
accepted accounting principles as concurred in by such party's independent
auditors.

ARTICLE VII

Additional Agreements

7.1. Access and Information.

(a) Each Company and their respective subsidiaries shall each afford to the
other and to the other's financial advisors, legal counsel, accountants,
consultants and other representatives access, during normal business hours
throughout the period from the date hereof to the Effective Time, to all of
its books, records, properties, facilities, personnel commitments and records
(including, but not limited to, any tax returns), and, during such period,
each shall furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request.
No investigation pursuant to this Section 7.1 shall affect any representations
or warranties made herein or the conditions to the obligations of the
respective parties to consummate the Mergers.

(b) All information furnished by any Company to another Company pursuant
hereto shall be treated as the sole property of the party furnishing the
information until consummation of the Merger contemplated hereby. The parties
will hold any such information that is nonpublic in confidence to the extent
required by, and in accordance with, the confidentiality agreements which they
have previously entered into.

7.2 Acquisition Proposals. Each Company and their respective subsidiaries
will not, and will use their best efforts to cause their respective directors,
officers, employees, financial advisors, legal counsel, accountants and other
agents and representatives (for purposes of this Section 7.2 only, being
referred to as "affiliates") not

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to, initiate, solicit, or encourage, directly or indirectly, or take any other
action to facilitate any inquiries or the making of any proposal with respect
to, or except to the extent required in the exercise of the fiduciary duties
of its Board of Directors under applicable law as advised by independent
counsel, engage or participate in negotiations concerning, provide any
nonpublic information or data to or have any discussions with any person other
than a party hereto or their affiliates relating to, any acquisition, tender
offer (including a self-tender offer), exchange offer, merger, consolidation,
acquisition of beneficial ownership of or the right to vote securities
representing ten percent (10%) or more of the total voting power of such
entity or any of its subsidiaries, dissolution, business combination, purchase
of all or any significant portion of the assets or any division of, or any
equity interest in, such entity or any subsidiary, or similar transaction
other than the Mergers (such proposals, announcements or transactions being
referred to as "Acquisition Proposals"). Each Company will promptly notify the
others orally and in writing if any such Acquisition Proposal (including the
terms thereof and identity of the persons making such proposals) is received
and furnish to the other parties hereto a copy of any written proposal.

7.3 Registration Statement. As promptly as practicable, the Companies shall
prepare and file with the SEC the Registration Statement with respect to the
InSight Shares to be issued in the Mergers hereunder and use their best
efforts to have the Registration Statement declared effective. The Companies
shall also use their best efforts to take any action required to be taken
under state securities or blue sky laws in connection with the issuance of
InSight Shares pursuant hereto. Each Company shall furnish all information
concerning such Company and the Holders of its capital stock and shall take
such other action as may be reasonably requested in connection with such
Registration Statement and issuance of InSight Shares.

7.4 Proxy Statements; Stockholder Approvals. AHSC and MHC, acting through
their respective Boards of Directors, shall, in accordance with applicable law
and their Certificate of Incorporation and Bylaws;

(a) promptly and duly call, give notice of, convene and hold as soon as
practicable following the date upon which the Registration Statement
becomes effective a meeting of their respective stockholders for the
purpose of voting to approve and adopt this Agreement and shall use their
respective best efforts, except to the extent the Board of Directors
reasonably believes is otherwise required by its fiduciary duty, to obtain
such stockholders' approval;

(b) except to the extent the Board of Directors reasonably believes is
otherwise required by its fiduciary duty, recommend approval and adoption
of this Agreement by the stockholders of such Company, and include in the
Proxy Statement such recommendations, and take all lawful action to solicit
such approvals; and

(c) as promptly as practicable, prepare and file with the SEC a
preliminary Proxy Statement and, after consultation with each other,
respond to any comments of the SEC with respect to the preliminary Proxy
Statement and cause the definitive Proxy Statement to be mailed to their
respective stockholders. Whenever any event occurs which should be set
forth in an amendment or a supplement to the Proxy Statement or any filing
required to be made with the SEC, each party will promptly inform the other
and will cooperate in filing with the SEC and/or mailing to stockholders
such amendment or supplement. The Proxy Statement, and all amendments and
supplements thereto, shall comply with applicable law and be in form and
substance reasonably satisfactory to each such Company.

7.5 Stock Listing. The Companies shall take such action as may be necessary
or desirable to apply for the listing of the InSight Shares to be issued
pursuant to the Merger on the NASDAQ Small Cap Market.

7.6. Employee Benefit Plans. It is the Companies' present intent to provide
after the Effective Time to continuing employees of each Company and their
subsidiaries employee benefit programs that in the aggregate are generally not
less favorable to such employees than those being provided to such employees
on the date of this Agreement.

7.7 Stock Options, Warrants, Debentures and Other Agreements. As of the
Effective Time, any stock options, warrants, convertible securities or other
contractual commitments to purchase or issue Shares of AHSC

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or MHC that are outstanding both as of the date hereof and at the Effective
Time (whether or not contingent or otherwise requiring further shareholder
approval) shall be assumed by InSight and converted into an option warrant,
convertible security or other contractual commitment, as the case may be, to
purchase or issue, on the same terms and conditions (including, without
limitation, the date and exercise provisions) as were applicable prior to the
Effective Time, the number of InSight Shares equal to the number of Shares
subject to such stock option, warrant, convertible security or other
contractual commitment multiplied by the applicable Exchange Ratio, at an
exercise price per InSight Share equal to the former exercise price per Share
under such stock option, warrant, convertible security or other contractual
commitment immediately prior to the Effective Time (without taking into
account any antidilution formula) divided by the applicable Exchange Ratio;
provided, however, that in the case of any employee stock option to which
Section 421 of the Code applies by reason of its qualification under Section
422 of the Code, the conversion formula shall be adjusted, if necessary, to
comply with Section 424(a) of the Code. No stock option or warrant shall be
converted into an option or warrant to purchase a partial InSight Share.
Except as provided in this section, the converted stock options, warrants,
convertible securities or other contractual commitments shall be assumed by
InSight under their same terms and conditions, but shall not be subject to
further stockholder approval. InSight agrees that, as soon as reasonably
practicable after the Effective Time, it will cause to be filed one or more
Registration Statements on Form S-8 under the Securities Act to register the
InSight Shares issuable upon exercise of the aforesaid converted options or
warrants, and, at or prior to the Effective Time, InSight shall take all
corporate action necessary to reserve for issuance a sufficient number of
InSight Shares for delivery upon exercise of the options and warrants,
conversion of convertible securities or otherwise pursuant to other
contractual commitments assumed pursuant to this Section 7.7. The consummation
of the Merger shall not be considered a termination of employment or service
pursuant to the AHSC or MHC option plans or outstanding stock options so long
as the optionee remains in the employment or service of InSight or one of its
direct or indirect subsidiaries. The Merger shall not cause any such stock
options to terminate or require any holder thereof to exercise a stock option
in order to prevent its termination, whether such termination would be in
whole or in part. With respect to stock options outstanding as of the date
hereof and at the Effective Time that were granted to non-employee directors
of AHSC or MHC who will not continue as directors of InSight or its
subsidiaries, such stock options shall be converted into InSight options that
do not terminate because of termination of service by the optionee. InSight
shall issue substitute option agreements consistent with this section after
the Effective Time.

7.8 Director and Officer Indemnification. All rights to indemnification and
advancement of expenses existing in favor of the directors, officers and
agents of any Company ("Indemnified Parties") under the provisions existing on
the date hereof of any Company's Certificate of Incorporation, Bylaws or
indemnification agreements shall survive the Effective Time for at least six
(6) years thereafter (including any directors' and officers' liability
insurance theretofore maintained, if such insurance remains available for such
period on commercially reasonable terms), and InSight agrees to indemnify and
advance expenses to the Indemnified Parties to the full extent required or
permitted by any Company under the provisions existing on the date hereof of
any Company's Certificate of Incorporation, Bylaws or indemnification
agreements. For purposes of the above sentence, commercially reasonable terms
shall mean $150,000 for the first year and reducing by a factor of twenty-five
percent (25%) for each of the next five (5) successive years. In the event the
payment of such amount for any year is insufficient to maintain such
insurance, or equivalent coverage cannot otherwise be obtained, InSight shall
purchase as much such insurance as may be purchased for the amount indicated.

7.9 Public Announcements. So long as this Agreement is in effect, each
Company agrees that it will obtain the approval of the other party prior to
issuing any press release and will use its best efforts to consult with the
others before otherwise making any public statement or responding to any press
inquiry with respect to this Agreement or the transactions contemplated
hereby, except as may be required by law or any governmental agency if
required by such agency or the rules of the National Association of Securities
Dealers, Inc.

7.10 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, except that if the Merger is not consummated, AHSC and MHC shall
share equally the expenses

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incurred in connection with printing and mailing the Proxy Statement and the
Registration Statement and all filing fees with the SEC, under state blue sky
laws and with NASDAQ; provided that if the Merger is not consummated because a
party is in breach of this Agreement or its stockholders fail to approve the
Merger, said party shall reimburse the other for its legal costs.

7.11. Additional Agreements.

(a) Subject to the terms and conditions herein provided, including, without
limitation, those set forth in the last sentence of Section 6.6 hereof, each
of the parties hereto agrees to use all reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including
using all reasonable efforts to obtain all necessary waivers, consents and
approvals, and to effect all necessary registrations and filings. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and/or
directors of the Companies shall take all such necessary action.

(b) Subject to the terms and conditions herein provided, each Company will
cooperate with the others and use all reasonable efforts to prepare all
necessary documentation to effect promptly all necessary filings and to obtain
all necessary permits, consents, approvals, orders and authorizations of or
any exemptions by all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement.

(c) Each party will keep the other party apprised of the status of any
inquiries made of such party by the SEC or any other governmental agency or
authority or members of their respective staffs with respect to this Agreement
or the transactions contemplated herein.

ARTICLE VIII

Conditions to Consummation of the Mergers

8.1. Conditions to All Companies' Obligation to Effect the Mergers. The
respective obligations of all Companies to effect the transactions
contemplated herein shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any one of which may be waived by
all, but not less than all, Companies:

(a) The execution, delivery and consummation of the Master Debt
Restructuring Agreement among General Electric Company, General Electric
Capital Corporation, InSight, AHSC and MHC, which is an exhibit to the
Preferred Stock Acquisition Agreement.

(b) The SEC shall have declared the Registration Statement effective. No
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose,
and no similar proceeding in respect of the Proxy Statement, shall have
been initiated or threatened in writing by the SEC.

(c) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the stockholders of each
Company in accordance with applicable law.

(d) No preliminary or permanent injunction or other order by any federal,
state or foreign court of competent jurisdiction which prohibits the
consummation of either Merger shall have been issued and remain in effect.
No statute, rule, regulation, executive order, stay, decree or judgment
shall have been enacted, entered, issued, promulgated or enforced by any
court or governmental authority which prohibits or restricts the
consummation of either Merger or related transactions. Other than the
filing of the Certificates of Merger with the Secretary of State of
Delaware, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods
imposed by, any governmental entity (all of the foregoing, "Consents")
which are necessary for the consummation of the Merger, other than Consents
which, if not obtained, would have no material adverse effect on the
consummation of the Mergers

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or on the Surviving Corporations and their subsidiaries, taken as a whole,
shall have been filed, occurred or been obtained (all such permits,
approvals, filings and consents and the lapse of all such waiting periods
being referred to as the "Requisite Regulatory Approvals") and all such
Requisite Regulatory Approvals shall be in full force and effect. All state
securities or blue sky permits and other authorizations necessary to issue
the InSight Shares in exchange for the Shares of AHSC and MHC and to
consummate the Merger shall have been received.

(e) There shall not be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to any Merger, by
any federal or state governmental entity which, in connection with the
grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon any Surviving Corporations or its subsidiaries (or, in the
case of any disposition of assets required in connection with such
Requisite Regulatory Approval, upon any Company or its subsidiaries),
including without limitation, requirements relating to the disposition of
assets, which in any such case would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement as to render inadvisable the consummation of the Merger.

(f) The aggregate amount of cash required to be paid on account of all
Excluded Shares, as provided for in Section 3.6 hereof, shall not exceed
ten percent (10%) of the value of the InSight Shares issuable in exchange
for Shares of AHSC and MHC at the Effective Time.

(g) InSight (or, as applicable, the respective Companies) shall have
taken all necessary action to adopt the option plan and shall have offered
to enter into the agreements referred to in Section 2.5 hereof.

8.2 Conditions to Obligation of Each Company to Effect the Merger. The
obligation of each Company to effect the Merger shall be further subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, which may be waived by such Company:

(a) Each of the other Companies shall have performed in all material
respects its obligations under this Agreement required to be performed by
it at or prior to the Effective Time and the representations and warranties
of the other Companies contained in this Agreement shall be true and
correct in all material respects at and as of the Effective Time as if made
at and as of such time, except as contemplated by this Agreement, and each
Company shall have received a certificate of the chairman of the Board, the
president or an executive vice president of each of the other Companies as
to the satisfaction of this condition.

(b) Each Company shall have received an opinion of its outside counsel
dated as of the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective
Time, the transfer of stock of AHSC and MHC to InSight by the existing
stockholders of AHSC and MHC in exchange for Insight stock pursuant to the
Mergers will be treated as a transfer of property to a controlled
corporation within the meaning of Section 351 of the Code. In addition,
each Company shall have received the opinion of its, and the other
Companies' respective, outside counsel dated the Closing Date and addressed
to itself and all other Companies covering the additional matters set forth
in Exhibit 8.2(b) hereto.

(c) Each Company shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument,
except those for which failure to obtain such consents and approval would
not, individually or in the aggregate, have a Material Adverse Effect on
the Surviving Corporation and its subsidiaries taken as a whole or upon the
consummation of the transactions contemplated hereby.

8.3 Conditions to Obligation of MHC to Effect the Merger. The obligation of
MHC to effect the Merger shall be further subject to the fulfillment of the
obligations of each of the record holders of the AHSC Series B Preferred Stock
as set forth in the Preferred Stockholders Agreements.

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ARTICLE IX

Termination, Amendment and Waiver

9.1. Termination. This Agreement may be terminated and the Mergers
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the stockholders of the Companies:

(a) by mutual written consent of all of the Companies;

(b) by any Company if the Mergers shall not have been consummated on or
before September 30, 1996;

(c) by any Company upon termination of the Preferred Stock Acquisition
Agreement by GE Medical Systems, provided that such company is not then in
breach of its obligations under this Agreement or the Preferred Stock
Acquisition Agreement;

(d) by any Company if there shall have been any material breach of a
material obligation of another Company hereunder and, if such breach is
curable, such default shall have not been remedied within ten (10) days
after receipt by the other Company, as the case may be, of notice in
writing from such Company specifying such breach and requesting that it be
remedied; provided that such ten (10) day period shall be extended for so
long as the other Company shall be making diligent attempts to cure such
default;

(e) by any Company if the Board of Directors of any other Company shall
have withdrawn or modified in a manner adverse to the others its approval
or recommendation of this Agreement or the Mergers, or shall have resolved
to do the same;

(f) by any Company if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting any Merger and such order, decree, ruling or any
other action shall have become final and non-appealable; or

(g) by any Company upon written notice to the others if any approval of
the stockholders of a Company required for the consummation of the Merger
submitted for their approval shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders
or at any adjournment thereof.

9.2. Effect of Termination. In the event of termination of this Agreement as
provided above, this Agreement shall forthwith become of no further effect
and, except for a termination resulting from a breach by a party of this
Agreement, there shall be no liability or obligation on the part of any
Company or their respective officers or directors (except as set forth in
Section 7.1(b) hereof and except for Sections 7.10, 10.2, 10.4, 10.5, 10.6 and
10.10 hereof which shall survive the termination). Nothing contained in this
Section 9.2 shall relieve any party from liability for willful breach of this
Agreement that results in termination of this Agreement. Upon request
therefor, each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
same.

9.3. Amendment. This Agreement may be amended by action taken at any time
before or after approval hereof by the stockholders of the Companies, but,
after any such approval, no amendment shall be made which alters the Exchange
Ratio or which in any way materially adversely affects the rights of such
stockholders, without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

9.4. Waiver. At any time prior to the Effective Time, the parties hereto may
(a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Such waiver shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.

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ARTICLE X

General Provisions

10.1. Survival of Representations, Warranties and Agreements. No
representations, warranties or agreements contained herein shall survive
beyond the Effective Time except that the agreements contained in Sections
2.3, 3.1, 3.2, 3.3, 3.4, 7.7, 7.9, 7.11(a), 10.1, 10.4, 10.5, 10.6, 10.7 and
10.10 hereof, and all other agreements of InSight, shall survive beyond the
Effective Time.

10.2. Brokers. AHSC represents and warrants to the other Companies that,
except for its financial advisors, Shattuck Hammond Partners, no broker,
finder or financial advisor is entitled to any brokerage, finder's or other
fee or commission in connection with the Mergers or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
AHSC, and that a true and complete copy of the engagement letter between AHSC
and Shattuck Hammond Partners dated May 3, 1995 has previously been delivered
to the other Companies. MHC represents and warrants to the other Companies
that, except for its financial advisors, Principal Financial Securities, Inc.,
no broker, finder or financial advisor is entitled to any brokerage, finder's
or other fee or commission in connection with the Mergers or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
MHC, and that a true and complete copy of the engagement letter between MHC
and Principal Financial Securities, Inc. dated May 16, 1995, as amended on
June 16, 1995, has previously been delivered to the other Companies.

10.3. Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally or by telex or telecopy or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or such other addresses for a party as shall be specified
by like notice):

(a) If to AHSC, Insight, AHSC Sub or MHC Sub, to:

American Health Services Corp.
4440 Von Karman Avenue, Suite 320
Newport Beach, CA 92660
Attention: Thomas V. Croal

With a copy to:

Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Gerald P. McCartin, Esq.

(b) If to MHC, InSight, AHSC Sub or MHC Sub, to:

Maxum Health Corp.
14850 Quorum Drive, Suite 400
Dallas, TX 75240
Attention: Chairman of the Board

With a copy to:

Storey Armstrong Steger & Martin, P.C.
4600 Fountain Place
1445 Ross Avenue
Dallas, TX 75202

Attention: Stephen C. Morton, Esq.

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<PAGE>

10.4. Descriptive Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

10.5. Entire Agreement; Assignment. This Agreement (including the Exhibits
and other documents and instruments referred to herein) and the
confidentiality agreement referenced in Section 7.1(b) hereof (a) constitute
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof; (b) are not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be assigned
by operation of law or otherwise. In this regard, each of AHSC and MHC
represent and warrant that such party has no arrangement or understanding with
any other party to this Agreement with respect to a merger or similar
transaction in the event this Agreement is terminated.

10.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware without giving effect to the
provisions thereof relating to conflicts of law.

10.7. Parties in Interest. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefit or
remedies of any nature whatsoever or by reason of this Agreement.

10.8. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

10.9 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

10.10 Jurisdiction and Venue. Each party hereto hereby agrees that any
proceeding relating to this Agreement and the Mergers shall be brought in a
state court of Delaware. Each party hereto hereby consents to personal
jurisdiction in any such action brought in any such Delaware court, consents
to service of process by registered mail made upon such party and such party's
agent, and waives any objection to venue in any such Delaware court or to any
claim that such Delaware court is an inconvenient forum.

10.11 Investigation. The respective representations and warranties of each
Company contained herein or in the certificates or other documents delivered
prior to the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party hereto.

10.12 Consents. For purposes of any provision of this Agreement requiring,
permitting or providing for the consent of any Company, the written consent of
the chairman of the Board or chief executive officer of a Company shall be
sufficient to constitute such consent.

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<PAGE>

IN WITNESS WHEREOF, each Company has caused this Agreement to be executed on
its behalf by its officers thereunto duly authorized, all as of the date first
above written.

AMERICAN HEALTH SERVICES CORP. MAXUM HEALTH CORP.

By: /s/ E. Larry Atkins By: /s/ Glenn P. Cato
Name: E. Larry Atkins Name: Glenn P. Cato
Title: President Title: President

AHSC ACQUISITION COMPANY MXHC ACQUISITION COMPANY

By: /s/ E. Larry Atkins By: /s/ Glenn P. Cato
Name: E. Larry Atkins Name: Glenn P. Cato
Title: President Senior Executive Vice President--
Operations
Title:

INSIGHT HEALTH SERVICES CORP.

By: /s/ E. Larry Atkins
Name: E. Larry Atkins
Title: President

A-22
<PAGE>

APPENDIX B

February 23, 1996

Board of Directors
Maxum Health Corp.
14850 Quorum Drive
Suite 400
Dallas, Texas 75240

Dear Board of Directors:

Principal Financial Securities, Inc. ("PFS") understands that Maxum Health
Corp. ("Maxum"), is contemplating entering into an Agreement and Plan of
Merger to be dated as of February 26, 1996 (the "Merger Agreement") among
American Health Services Corp. ("AHS"), Maxum, InSight Health Services Corp.,
a newly formed Delaware corporation ("InSight"), and two wholly owned
subsidiaries of InSight--AHSC Acquisition Company, a Delaware corporation
("AHSC Acquisition"), and MXHC Acquisition Company, a Delaware corporation
("MXHC Acquisition"). Pursuant to the Merger Agreement, (1) AHSC Acquisition
will merge into AHS and MXHC Acquisition will merge into Maxum (collectively,
the "Merger"), (2) each outstanding share of common stock, $.03 par value, of
AHS ("AHS Common Stock") will be converted into the right to receive .1 shares
of common stock, $.001 par value, of InSight ("InSight Common Stock"), (3)
each outstanding share of Series B Senior Convertible Preferred Stock, $.03
par value, of AHS ("AHS Preferred Stock"), which is convertible into 100
shares of AHS Common Stock, will be converted into the right to receive 10
shares of InSight Common Stock, (4) each outstanding share of common stock,
$.01 par value, of Maxum ("Maxum Common Stock") will be converted into the
right to receive .598 shares of InSight Common Stock, and (5) each outstanding
option, warrant or other right to purchase AHS Common Stock and Maxum Common
Stock will be converted into the right to acquire on the same terms and
conditions shares of InSight Common Stock, with the number and exercise price
adjusted based on the applicable exchange ratio for the underlying AHS and
Maxum Common Stock. In exchange for certain financial accommodations by
General Electric Medical Systems and an affiliate (collectively, "GEMS"), the
primary creditors/lessors of each of AHS and Maxum, and as a condition
precedent to the Merger, (i) AHS will issue to GEMS an aggregate of 1,000,000
shares of Series C Preferred Stock, par value $.03 per share, of AHS (the "AHS
Series C Preferred Stock") and (ii) Maxum will issue to GEMS an aggregate of
15,000 shares of Series B Preferred Stock, par value $.01 per share (the
"Maxum Series B Preferred Stock") pursuant to a Preferred Stock Acquisition
Agreement to be dated as of February 26, 1996. In accordance with the Merger
Agreement, at the effective date of the Merger, the AHS Series C Preferred
Stock and the Maxum Series B Preferred Stock held by GEMS will be converted
into the right to receive, in the aggregate, 2,501,760 shares of Series A
Convertible Preferred Stock, par value $.001 per share, of InSight (the
"InSight Series A Preferred Stock"), which at the closing, will be convertible
into a number of shares of InSight Common Stock such that it will constitute
approximately 48% of the outstanding InSight Common Stock at the effective
time of the Merger, and subject to adjustment upon issuance of stock pursuant
to the exercise of options and warrants outstanding at the effective time. In
addition, in connection with the consummation of the Merger, the warrants
previously issued to GEMS by AHS to acquire 1,589,072 shares of AHS Common
Stock and warrants previously issued to GEMS by Maxum to acquire 700,000
shares of Maxum Common Stock will be canceled. Furthermore, upon consummation
of the Merger, GEMS will receive an increase in its fees under maintenance
agreements with InSight and its subsidiaries as more fully provided in
exhibits to the Preferred Stock Acquisition Agreement (the "'Supplemental
Service Fee"). InSight may terminate the Supplemental Service Fee at any time
by making a payment to GEMS equal to $8,000,000 minus the discounted value
(calculated at a discount rate of 15% per annum) of Supplemental Service Fee
payments made to date at the time of the payment. You have asked us to advise
you as to the fairness of the Merger, from a financial point of view, to the
current stockholders of Maxum.

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<PAGE>

In arriving at our opinion, we have:

1. Reviewed the Merger Agreement, the Preferred Stock Acquisition
Agreement and certain related agreements;

2. Reviewed internal financial projections of Maxum prepared by the
management of Maxum for the twelve month periods ending December 31, 1995,
1996, 1997, 1998, 1999 and 2000;

3. Reviewed internal financial projections of InSight prepared by the
management of Maxum and AHS including statements of operations for the
twelve month periods ending December 31, 1996 and December 31, 1997, and
balance sheets as of June 30, 1996;

4. Reviewed the historical stock prices and trading volume of Maxum
Common Stock;

5. Reviewed the financial terms, to the extent publicly available, of
certain comparable transactions, which are similar in certain respects to
the Merger;

6. Discussed with the management of Maxum the operations of and business
prospects for Maxum assuming Maxum did not consummate the Merger;

7. Discussed with management of Maxum and AHS the operations of and
business prospects for InSight and the anticipated financial results of the
Merger, including the effect of the Supplemental Service Fee to be due to
GEMS upon the future anticipated financial results of InSight;

8. Compared the historical and projected financial results of Maxum to
comparable publicly traded companies which are similar in certain respects
to Maxum;

9. Compared the proforma historical and projected financial results of
InSight to comparable publicly traded companies which are similar in
certain respects to InSight;

10. Considered such other information, financial studies and analyses,
and financial, economic and market criteria as we deemed relevant.

In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy, completeness and fairness of all of
the financial and other information that was reviewed by us from public
sources, or provided to us by either Maxum or AHS or any of their
representatives. We have also relied, without independent investigation, upon
the estimates of the management of Maxum and AHS of the operating synergies
achievable as a result of the Merger. With respect to the financial
projections supplied to us for Maxum, AHS and InSight, we have assumed that
all such information has been reasonably derived on bases reflecting the best
currently available estimates and judgments of Maxum's management as to the
future operating and financial performance of Maxum, AHS's management as to
the future operating and financial performance of AHS, and the management of
Maxum and AHS as to the future operating and financial performance of InSight,
including the effect of the Supplemental Service Fee to be due to GEMS upon
the future anticipated financial results of InSight. In addition, we have not
made an independent evaluation or appraisal of the assets of Maxum, AHS or
InSight. We have assumed that the Merger will be, in all respects, in
compliance with all laws and regulations that are applicable to Maxum, InSight
or the proposed Merger.

Our opinion is based solely upon the information set forth herein as
reviewed by us and circumstances, including economic, market and financial
conditions, existing as to the date hereof. Events occurring after the date
hereof could materially affect the assumptions used both in preparing this
opinion and in the documents and projections reviewed by us. We have not
undertaken to reaffirm or revise this opinion or otherwise comment upon any
events occurring after the date hereof.

We are not opining, and were not requested by you to opine, as to the
fairness of any aspect of the Merger other than the financial terms of the
Merger applicable to the stockholders of Maxum. We are expressing no opinion
herein as to the prices at which the common stock of InSight will trade at any
time. Our opinion does not constitute a recommendation to any stockholder as
to how such stockholder should vote on the Merger.

We have acted as financial advisor to the Board of Directors in connection
with the Merger and will receive a fee for our services. It is understood that
this letter is for the information of the Board of Directors and, without

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<PAGE>

our prior written consent, other than as required by law or judicial process,
is not to be quoted or referred to, in whole or in part, in any registration
statement, prospectus or proxy statement, or in any other written document
used in connection with this offering or sale of securities, nor shall this
letter be used for any other purposes, except that this letter may be filed
with the Securities and Exchange Commission as an exhibit and included in the
Joint Proxy Statement of the Registration Statement on the Form S-4 in which
the Joint Proxy Statement, as hereafter modified, is included.

As a part of our investment banking business, we regularly issue fairness
opinions and are continually engaged in the valuation of companies and their
securities in connection with business reorganizations, private placements,
negotiated underwritings, mergers and acquisitions, and valuations for estate,
corporate and other purposes. In the ordinary course of business, Principal
Financial Securities, Inc. and its affiliates at any time may hold long or
short positions, and may trade or otherwise effect transactions as principal
or for the accounts of customers, in debt or equity securities or options on
securities of Maxum.

Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that on the date hereof,
the consideration to be received by the current stockholders of Maxum pursuant
to the Merger is fair, from a financial point of view, to the current
stockholders of Maxum.

Very truly yours,

PRINCIPAL FINANCIAL SECURITIES, INC.

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APPENDIX C

February 22, 1996

Board of Directors
American Health Services Corp.
4440 Von Karman Ave.
Newport Beach, CA 92660

Members of the Board of Directors:

Shattuck Hammond Partners, Inc. ("SHP") understands that American Health
Services Corp. ("AHS") is contemplating entering into an Agreement and Plan of
Merger, to be dated as of, February 23, 1996 (the "Merger Agreement"), among
AHS, Maxum Health Corp. ("Maxum"), InSight Health Services Corp., a newly
formed Delaware corporation ("InSight"), and two wholly owned subsidiaries of
InSight--AHSC Acquisition Company, a Delaware corporation ("AHSC
Acquisition"), and MXHC Acquisition Company, a Delaware corporation ("MXHC
Acquisition"). Pursuant to the Merger Agreement, (1) AHSC Acquisition will
merge into AHS and MXHC Acquisition will merge into Maxum (collectively, the
"Merger"), (2) each outstanding share of common stock, $.03 par value, of AHS
("AHS Common Stock") will be converted into the right to receive .1 shares of
common stock ("AHS Common Stock Exchange Ratio"), $.001 par value, of InSight
("InSight Common Stock"), (3) each outstanding share of Series B Senior
Convertible Preferred Stock, $.03 par value, of AHS ("AHS Preferred Stock"),
which is convertible into 100 shares of AHS Common Stock, will be converted
into the right to receive 10 shares of InSight Common Stock, (4) each
outstanding share of common stock, $.01 par value, of Maxum ("Maxum Common
Stock") will be converted into the right to receive .598 shares of InSight
Common Stock, and (5) each outstanding option, warrant or other right to
purchase AHS Common Stock or Maxum Common Stock, as the case may be, will be
converted into the right to acquire on the same terms and conditions shares of
InSight Common Stock, with the number and exercise price adjusted based on the
applicable exchange ratio for the underlying AHS or Maxum Common Stock.

In exchange for certain financial accommodations by General Electric Medical
Systems and an affiliate (collectively, "GE"), the primary creditors/lessors
of each of AHS and Maxum, and as a condition precedent to the Merger, (i) AHS
will issue to GE 1,000,000 shares of Series C Preferred Stock, par value $.03
per share, of AHS (the "AHS Series C Preferred Stock"), and (ii) Maxum will
issue to GE 15,000 shares of Series B Preferred Stock, par value $.01 per
share (the "Maxum Series B Preferred Stock") pursuant to a Preferred Stock
Acquisition Agreement to be dated as of February 23, 1996 ("Preferred Stock
Acquisition Agreement"). In accordance with the Merger Agreement, at the
effective date of the Merger, the AHS Series C Preferred Stock and the Maxum
Series B Preferred Stock held by GE will be converted into the right to
receive, in the aggregate, 2,501,760 shares of Series A Convertible Preferred
Stock, par value $.001 per share which is convertible into a number of shares
of InSight Common Stock representing 48% of the outstanding InSight Common
Stock at the effective time of the Merger, and subject to adjustment upon
issuance of stock pursuant to the exercise of options and warrants outstanding
at the effective time. In addition, in connection with the Merger, warrants
previously issued to GE by AHS to acquire 1,589,072 shares of AHS Common Stock
and warrants previously issued to GE by Maxum to acquire 700,000 shares of
Maxum Common Stock will be canceled. Furthermore, upon consummation of the
Merger, GE will receive an increase in its fees under maintenance agreements
with InSight and its subsidiaries as more fully provided in exhibits to the
Preferred Stock Acquisition Agreement (the "Supplemental Service Fee").
InSight may terminate the Supplemental Service Fee at any time by making a
payment to GE equal to $8,000,000 minus the discounted value (calculated at a
discount rate of 15% per annum) of Supplemental Service Fee payments made to
date at the time of the payment.

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You have asked for our opinion, as investment bankers, as to the fairness,
from a financial point of view, as of the date hereof, of the AHS Common Stock
Exchange Ratio to the holders of common stock of AHS. For the purposes of this
opinion, we have: (i) reviewed certain publicly available business and
historical financial information relating to each of AHS and Maxum; (ii)
reviewed certain financial information and other data provided to us by AHS
and Maxum that is not publicly available relating to the business and
prospects of each company and InSight; (iii) discussed the businesses,
operations and prospects of AHS, Maxum and InSight with the respective
managements of AHS and Maxum; (iv) reviewed the Merger Agreement and the
Preferred Stock Acquisition Agreement and certain related agreements; (v)
reviewed the historical market prices and trading values of AHS Common Stock
and Maxum Common Stock; (vi) reviewed publicly available financial and stock
market data with respect to other publicly traded companies in lines of
business we believe to be generally comparable to those of AHS and Maxum;
(vii) reviewed the exchange ratios implied by the historical stock prices of
AHS Common Stock and Maxum Common Stock; and (viii) conducted such other
studies, analyses, investigations and inquiries, and considered such other
information, as we deemed relevant.

In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to us by
AHS and Maxum or obtained by us from other sources, and we have relied upon
the assurances of AHS and Maxum's respective managements that they are unaware
of any information or facts that would make the information provided to us
incomplete or misleading. We have not independently verified such information,
undertaken an independent appraisal of the assets or liabilities (contingent
or otherwise) of AHS or Maxum or been furnished with any such appraisals. With
respect to financial forecasts furnished to us by AHS and Maxum with regard to
AHS, Maxum and InSight, we have been advised by the management of AHS and
Maxum, as the case may be, and we have assumed, that they have been reasonably
prepared and reflect the best currently available estimates and judgment of
the management of AHS and Maxum, as the case may be, as to the expected future
financial performance of AHS, Maxum and InSight, including the effect of the
Supplemental Service Fee payable to GE upon the future anticipated results of
InSight. We have also assumed, on the basis of advice from AHS's independent
public accountants and counsel, that the Merger will be treated as a purchase
transaction in accordance with generally accepted accounting principles and as
a tax free reorganization for Federal income tax purposes.

Our opinion is necessarily based upon market, economic and other conditions
that exist and can be evaluated as of the date of this letter, and on
information available to us as of the date hereof. We disclaim any undertaking
or obligation to advise any person of any change in any fact or matter
affecting the opinion expressed herein which may come or be brought to our
attention after the date hereof. In arriving at this opinion, we were not
authorized to solicit, and did not solicit, interest from any party with
respect to the acquisition of AHS or any of its assets. No other limitations
were imposed upon us by AHS with respect to the investigations to be made or
procedures to be followed by us in rendering our opinion.

As part of its investment banking business, Shattuck Hammond Partners Inc.
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of securities, private placements and other purposes. We have
acted as financial advisor to AHS in connection with the transactions
described in this letter, have received a retainer fee and will receive
additional fees for our services which are contingent upon the consummation of
the Merger. In addition, it is contemplated that an employee of SHP will
accept an appointment to the Board of Directors of InSight following the
consummation of the Merger.

The opinion expressed herein does not constitute a recommendation as to any
action the Board of Directors or any stockholder of AHS should take in
connection with the Merger. We have expressed no opinion as to the value of
the securities of InSight to be issued to holders of AHS Common Stock upon
consummation of the Merger, or the prices at which such securities may trade
at any time. Further, we express no opinion herein as to the structure, terms
or effect of any other aspect of the Merger, including, without limitation,
the tax consequences thereof.

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It is understood that this letter is for the information of the Board of
Directors of AHS in connection with its evaluation of the fairness, from a
financial point of view, as of the date hereof, of the AHS Common Stock
Exchange Ratio to the holders of common stock of AHS and for inclusion in the
Joint Proxy Statement of AHS and Maxum relating to the Merger. Without
limiting the foregoing, in rendering this opinion, we have not been engaged to
act as an agent or fiduciary for AHS's common stockholders or any other third
party.

Based upon and subject to the foregoing, it is our opinion, as investment
bankers, that, as of the date hereof, the AHS Common Stock Exchange Ratio is
fair to the holders of AHS common stock from a financial point of view.

Very truly yours,

Shattuck Hammond Partners Inc.

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APPENDIX D

DELAWARE GENERAL CORPORATION LAW, (S)262

262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S)251, 252, 254, 257, 258, 263 or 264 of this title:

(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in /1/subsections (f) or (g) of (S)251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

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(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation,
a written demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to (S)228 or 253
of this title, the surviving or resulting corporation, either before the
effective date of the merger or consolidation or within 10 days thereafter,
shall notify each of the stockholders entitled to appraisal rights of the
effective date of the merger or consolidation and that appraisal rights are
available for any or all of the shares of the constituent corporation, and
shall include in such notice a copy of this section. The notice shall be
sent by certified or registered mail, return receipt requested, addressed
to the stockholder at his address as it appears on the records of the
corporation. Any stockholder entitled to appraisal rights may, within 20
days after the date of mailing of the notice, demand in writing from the
surviving or resulting corporation the appraisal of his shares. Such demand
will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the
appraisal of his shares.

(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

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(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court and such approval may be conditioned upon
such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 79, L.
'95, eff. 7-1-95.)

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APPENDIX E

INSIGHT HEALTH SERVICES CORP.
1996 EMPLOYEE STOCK OPTION PLAN

InSight Health Services Corp., a Delaware corporation (the "Corporation")
sets forth herein the terms of this InSight Health Services Corp. 1996
Employee Stock Option Plan (the "Plan") as follows:

1. PURPOSE

The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 4 below)
with an opportunity to develop a proprietary interest in the Corporation,
which will thereby create strong performance incentives for such persons to
maximize the growth and success of the Corporation and its subsidiaries, and
will encourage such eligible individuals to remain in the employ or service of
the Corporation, or one or more of its subsidiaries. A stock option granted
under the Plan (an "Option") may be (i) an "incentive stock option" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), or (ii) an Option that is not an incentive stock
option.

2. ADMINISTRATION

(a) Board. The Plan shall be administered by the Board of Directors of the
Corporation (the "Board"), which shall have the full power and authority to
take all actions, and to make all determinations required or provided for
under the Plan or any Option granted or Option Agreement (as defined in
Section 8 below) entered into hereunder, and all such other actions and
determinations not inconsistent with the specific terms and provisions of the
Plan deemed by the Board to be necessary or appropriate to the administration
of the Plan or any Option granted or Option Agreement entered into hereunder.
The interpretation and construction by the Board of any provision of the Plan
or of any Option granted or Option Agreement entered into hereunder shall be
final and conclusive.

(b) Committee. The Board may from time to time appoint a committee (the
"Committee") consisting of not less than two members of the Board, none of
whom shall be an officer or other salaried employee of the Corporation or any
of its subsidiaries, and each of whom shall qualify in all respects as a
"disinterested person" as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934. The Board, in its sole discretion, may
provide that the role of the Committee shall be limited to making
recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or
the Board may delegate to the Committee such powers and authorities related to
the administration of the Plan, as set forth in Section 2(a) above, as the
Board shall determine, consistent with the Certificate of Incorporation and
By-Laws of the Corporation and applicable law. The Board may remove members,
add members, and fill vacancies on the Committee from time to time, all in
accordance with the Corporation's Certificate of Incorporation and By-Laws,
and with applicable law.

(c) No Liability. No member of the Board or of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option granted or Option Agreement entered into hereunder.

(d) Delegation to the Committee. In the event that the Plan or any Option
granted or Option Agreement entered into hereunder provides for any action to
be taken by or determination to be made by the Board, such action may be taken
by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as
provided for in Section 2(b) above. Unless otherwise expressly determined by
the Board, any such action or determination by the Committee shall be final
and conclusive.

(e) Action by the Board. The Board may act under the Plan other than by, or
in accordance with the recommendations of, the Committee, constituted as set
forth in Section 2(b) above, only if all of the members of

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the Board are "disinterested persons" as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934.

3. STOCK

The stock that may be issued pursuant to Options granted under the Plan
shall be shares of Common Stock, par value $0.001 per share, of the
Corporation (the "Stock"), which shares may be treasury shares or authorized
but unissued shares. The number of shares of Stock that may be issued pursuant
to Options granted under the Plan shall not exceed in the aggregate 664,433
shares, which number of shares is subject to adjustment as hereinafter
provided in Section 17 below. If any Option expires, terminates, or is
terminated for any reason prior to exercise in full, the shares of Stock that
were subject to the unexercised portion of such Option shall be available for
future Options granted under the Plan.

4. ELIGIBILITY

Options may be granted under the Plan to any full-time employee or
independent contractor of the Corporation or any "subsidiary corporation"
thereof within the meaning of Section 424(f) of the Code (a "Subsidiary")
(including any such employee who is an officer or director of the Corporation
or any Subsidiary) as the Committee shall determine and designate from time to
time prior to expiration or termination of the Plan. The term "independent
contractor" shall include a person who is not an employee of the Corporation
or a Subsidiary, and is not a director of the Corporation, but such person may
be a director of a Subsidiary.

5. EFFECTIVE DATE AND TERM OF THE PLAN

(a) Effective Date. The Plan shall be effective as of the date on which the
merger described in that certain Agreement and Plan of Merger dated as of
February 26, 1996, by and among the Corporation, American Health Services
Corp., AHSC Acquisition Company, Maxum Health Corp, and MXHC Acquisition
Company becomes effective.

(b) Term. No Options may be granted under the Plan on or after the date ten
years after the effective date.

6. GRANT OF OPTIONS

Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time, prior to the date of termination of the Plan, grant to
such eligible individuals as the Board may determine ("Optionees"), Options to
purchase such number of shares of the Stock on such terms and conditions as
the Board may determine, including any terms or conditions which may be
necessary and appropriate to qualify such Options as "incentive stock options"
under Section 422 of the Code. The date on which the Board approves the grant
of an Option shall be considered the date on which such Option is granted.

7. LIMITATION ON INCENTIVE STOCK OPTIONS

An Option may constitute an incentive stock option to the extent that the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which incentive stock options are exercisable for
the first time by any Optionee during any calendar year (under the Plan and
all other plans of the Optionee's employer corporation and its parent and
subsidiary corporations within the meaning of Section 422(d)(1) of the Code)
does not exceed $100,000.

8. OPTION AGREEMENTS

All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Corporation and by the
Optionee, in such form or forms and with such terms as the Board shall from
time to time determine. Option Agreements covering Options granted from time
to time or at the same time need not contain similar provisions; provided
however, that no Option Agreements shall be inconsistent with this Plan.

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9. OPTION PRICE

The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option
Agreement. For an incentive stock option, the Option Price shall be not less
than the greater of par value or one hundred percent of the fair market value
of a share of the Stock on the date the Option is granted; provided however,
that in the event the Optionee would otherwise be ineligible to receive an
incentive stock option by reason of the provisions of Sections 422(b)(6) of
the Code (relating to stock ownership of more than ten percent), the Option
Price of an Option which is intended to be an incentive stock option shall be
not less than the greater of par value or one hundred and ten percent of the
fair market value of a share of Stock at the time such Option is granted. In
the event that the Stock is listed on an established national or regional
stock exchange, is admitted to quotation on The Nasdaq Stock Market, or is
publicly traded in an established securities market, in determining the fair
market value of the Stock, the Board shall use: the closing price of the Stock
on such exchange or System or in such market (the highest such closing price
if there is more than one such exchange or market) on the trading date when
the Option is granted; or, if there is no such closing price, then the Board
shall use the mean between the highest bid and lowest asked prices or between
the high and low prices on such date; or, if no sale of the Stock has been
made on such day, on the next preceding day on which any such sale shall have
been made; or such other method as the Board may determine. With respect to
the grant of an Option that is not an incentive stock option, the Option Price
shall not be less than the greater of: (i) fifty percent of the fair market
value of the Stock on the date of grant, or (ii) its par value.

10. TERM AND EXERCISE OF OPTIONS

(a) Term. Each Option granted under the Plan shall terminate and all rights
to purchase shares thereunder shall cease upon the date as may be fixed by the
Board and stated in the Option Agreement relating to such Option; provided,
however, that in the event the Optionee would otherwise be ineligible to
receive an incentive stock option by reason of the provisions of Sections
422(b)(6) of the Code (relating to stock ownership of more than ten percent),
an Option granted to such Optionee which is intended to be an incentive stock
option shall in no event be exercisable after the expiration of five years
from the date it is granted. All options granted under the Plan shall
terminate no later than ten (10) years from the date of grant.

(b) Option Period and Limitations on Exercise. Each Option shall be
exercisable, in whole or in part, at any time and from time to time during the
term of the Option, at such times, and with such conditions, as the Board
shall determine and set forth in the Option Agreement relating to such Option.
Without limiting the foregoing, the Board, subject to the terms and conditions
of the Plan, may in its sole discretion provide that an Option may not be
exercised in whole or in part for any period or periods of time during which
such Option is outstanding; provided, however, that any such time limitation
on the exercise of an Option contained in any Option Agreement may be
rescinded, modified or waived by the Board, in its sole discretion, at any
time and from time to time after the date of grant of such Option, so as to
remove such time limitations.

(c) Method of Exercise and Payment. An Option that is exercisable hereunder
may be exercised by delivery to the Corporation on any business day, at its
principal office, addressed to the attention of the Corporate Secretary, of
written notice of exercise, which notice shall specify the number of shares
with respect to which the Option is being exercised, and shall be accompanied
by payment in full of the Option Price of the shares for which the Option is
being exercised. The minimum number of shares of Stock with respect to which
an Option may be exercised, in whole or in part, at any time shall be the
lesser of 100 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents; (ii) with the consent of the Board,
through the tender to the Corporation of shares of Stock, which shares shall
be valued, for purposes of determining the extent to which the Option Price
has been paid thereby, at their fair market value (determined in the manner
described in Section 9 above) on the date of exercise; or (iii) by a
combination of the methods described in (i) and (ii). If shares of Stock are
surrendered by an officer of the Corporation (as the term "officer" is defined
in Section 15(c) below) for payment and the Stock surrendered was acquired
pursuant to an option of the Corporation, then six (6) months must have
elapsed since the date of grant of such option. The

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payment in full of the Option Price need not accompany the written notice of
exercise provided the notice of exercise directs that the Stock certificate or
certificates for the shares for which the Option is exercised be delivered to
a licensed broker acceptable to the Corporation as the agent for the
individual exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker shall tender to the Corporation cash
(or cash equivalents acceptable to the Corporation) equal to the Option Price
for the shares of Stock purchased pursuant to the exercise of the Option plus
the amount (if any) of federal and/or other taxes which the Corporation, may,
in its judgment, be required to withhold with respect to the exercise of the
Option. An attempt to exercise any Option granted hereunder other than as set
forth above shall be invalid and of no force and effect. Promptly after the
exercise of an Option and the payment in full of the Option Price of the
shares of Stock covered thereby, the individual exercising the Option shall be
entitled to the issuance of a Stock certificate or certificates evidencing his
ownership of such shares. A separate Stock certificate or certificates shall
be issued for any shares purchased pursuant to the exercise of an Option which
is an incentive stock option, which certificate or certificates shall not
include any shares which were purchased pursuant to the exercise of an Option
which is not an incentive stock option. An individual holding or exercising an
Option shall have none of the rights of a stockholder until the shares of
Stock covered thereby are fully paid and issued to him, and except as provided
in Section 17 below, no adjustment shall be made for dividends or other rights
for which the record date is prior to the date of such issuance.

(d) Withholding. The Corporation shall have the right to withhold, or
require an Optionee to remit to the Corporation, an amount sufficient to
satisfy any applicable federal, state, local or foreign withholding tax
requirements imposed with respect to exercise of Options. Subject to the
consent of the Board which may be withheld in its sole and absolute
discretion, and to the extent permissible under applicable tax, securities,
and other laws, an Optionee may (a) have shares of Stock otherwise issuable to
the Optionee hereunder withheld, or (b) tender to the Corporation previously
acquired shares of Stock, having a fair market value sufficient to satisfy all
or part of the Optionee's federal, state and local tax obligations associated
with the transaction.

11. TRANSFERABILITY OF OPTIONS

During the lifetime of an Optionee to whom an Option is granted, only such
Optionee (or, in the event of legal incapacity or incompetency, the Optionee's
guardian or legal representative) may exercise the Option. No Option shall be
assignable or transferable by the Optionee to whom it is granted, other than
by will, the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined in Section 414 of the Code, and no Option
shall be pledged or hypothecated (by operation of law or otherwise), or
subject to execution, attachment or similar process.

12. TERMINATION OF SERVICE OR EMPLOYMENT

Upon the termination of the employment or service of an Optionee with the
Corporation or a Subsidiary, other than by reason of the death or "permanent
and total disability" (within the meaning of Section 22(e)(3) of the Code) of
such Optionee, any Option granted to an Optionee pursuant to the Plan shall
terminate three months after the date of such termination of employment or
service, unless earlier terminated pursuant to Section 10(a) above, and such
Optionee shall have no further right to purchase shares of Stock pursuant to
such Option; provided, however, that the Board may provide, by inclusion of
appropriate language in any Option Agreement, that an Optionee may (subject to
the general limitations on exercise set forth in Section 10(b)), in the event
of termination of employment or service of the Optionee with the Corporation
or a Subsidiary, exercise an Option, in whole or in part, at a time subsequent
to such termination of employment or service and prior to termination of the
Option as provided in Section 10(a) above, either subject to or without regard
to any installment limitation on exercise imposed pursuant to Section 10(b)
above. Whether a leave of absence or leave on military or government service
shall constitute a termination of employment or service for purposes of the
Plan shall be determined by the Board, which determination shall be final and
conclusive. For purposes of the Plan, a termination of employment or service
with the Corporation or a Subsidiary shall not be deemed to occur if the
Optionee is immediately thereafter employed with the Corporation or any
Subsidiary.

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13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

(a) Death. If the Optionee dies while employed by or in the service of the
Corporation or a Subsidiary, except as is otherwise provided in the Option
Agreement relating to such Option, the executors or administrators or legatees
or distributees of such Optionee's estate shall have the right (subject to the
general limitations on exercise set forth in Section 10(b) above) prior to
termination of the Option as provided in Section 10(a) above, to exercise any
Option held by such Optionee at the date of such Optionee's death, on such
terms as the Board may provide on the Option Agreement.

(b) Disability. If the Optionee terminates employment or service with the
Corporation or a Subsidiary by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Optionee, then
such Optionee shall have the right (subject to the general limitations on
exercise set forth in Section 10(b) above), within the earlier of (i) one year
after such termination, or (ii) the termination of the Option as provided in
Section 10(a) above, to exercise, in whole or in part, any Option held by such
Optionee at the date of such termination of employment or service on such
terms as the Board may provide in the Option Agreement, provided, however,
that the Board may provide, by inclusion of appropriate language in the Option
Agreement, that the Optionee may (subject to the general limitations on
exercise set forth in Section 10(b) above), in the event of the termination of
employment or service of the Optionee with the Corporation or a Subsidiary by
reason of the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Optionee, exercise an Option, in whole or in
part, at any time subsequent to such termination and prior to termination of
the Option as provided in Section 10(a) above, either subject to or without
regard to any installment limitation on exercise imposed pursuant to Section
10(b) above. Whether a termination of employment or service is to be
considered by reason of "permanent and total disability" for purposes of this
Plan shall be determined by the Board, which determination shall be final and
conclusive.

14. USE OF PROCEEDS

The proceeds received by the Corporation from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the
Corporation.

15. REQUIREMENTS OF LAW

(a) Violations of Law. The Corporation shall not be required to sell or
issue any shares of Stock under any Option if the sale or issuance of such
shares would constitute a violation by the individual exercising the Option or
the Corporation of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws
or regulations. Specifically in connection with the Securities Act of 1933 (as
now in effect or as hereafter amended), upon exercise of any Option, unless a
registration statement under such Act is in effect with respect to the shares
of Stock covered by such Option, the Corporation shall not be required to sell
or issue such Shares unless the Board has received evidence satisfactory to it
that the holder of such Option may acquire such shares pursuant to an
exemption from registration under such Act. Any determination in this
connection by the Board shall be final, binding, and conclusive. The
Corporation may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended). The Corporation shall not be obligated to
take any affirmative action in order to cause the exercise of an Option or the
issuance of shares pursuant thereto to comply with any law or regulation of
any governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the
shares of stock covered by such Option are registered or are subject to an
available exemption from registration the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

(b) Compliance with Rule 16b-3. The Plan is intended to comply with Rule
16b-3 or its successor rule, promulgated under the Securities Exchange Act of
1934. With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934, any provision of the Plan or action of the Plan administrators
that is inconsistent with such Rule shall be deemed null and void to the
extent permitted by law and deemed advisable by the Board.

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(c) Holding Period for Executives. With respect to Options granted to
officers of the Corporation (as the term "officer" is defined in the rules
promulgated under Section 16 of the Securities Exchange Act of 1934), at least
six (6) months must elapse from the date of grant of the Option and (i) any
disposition of the Option (not including its exercise), or (ii) any
disposition of the underlying Stock. This Section 15(c) is a requirement
pursuant to said Rule 16b-3 and it may be modified or eliminated by the Board
if it is no longer needed for compliance with said rule.

16. AMENDMENT AND TERMINATION OF THE PLAN

The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval of the stockholders (a) materially change the requirements as to
eligibility to receive Options; (b) increase the maximum number of shares of
Stock in the aggregate that may be sold pursuant to Options granted under the
Plan (except as permitted under Section 17 hereof); (c) change the minimum
Option Price set forth in Section 9 hereof (except as permitted under Section
17 hereof); (d) increase the maximum period during which Options may be
exercised; (e) extend the term of the Plan; or (f) materially increase the
benefits accruing to eligible individuals under the Plan. Except as permitted
under Section 17 hereof, no amendment, suspension or termination of the Plan
shall, without the consent of the holder of the Option, alter or impair rights
or obligations under any Option theretofore granted under the Plan.

17. EFFECT OF CHANGES IN CAPITALIZATION

(a) Changes in Stock. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Corporation by reason of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease affecting such outstanding shares
generally that is effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, the number and
kinds of shares for the purchase of which Options may be granted under the
Plan shall be adjusted proportionately and accordingly by the Board. In
addition, the number and kind of shares for which Options are outstanding
shall be adjusted proportionately and accordingly so that the proportionate
ownership interest of the holder of the Option immediately following such
event shall, to the extent practicable, be the same as immediately prior to
such event. Any such adjustment in outstanding Options shall not change the
aggregate Option Price payable with respect to shares subject to the
unexercised portion of the Option outstanding but shall include a
corresponding proportionate adjustment in the Option Price per share. If there
is a distribution payable in the capital stock of a subsidiary corporation of
the Corporation ("Spin-off Shares"), to the extent consistent with Treasury
Regulation Section 1.425-1(a)(6) or the corresponding provision of any
subsequent regulation, each outstanding Option shall thereafter additionally
pertain to the number of Spin-off Shares that would have been received in such
distribution by a shareholder of the Corporation who owned a number of shares
of Stock equal to the number of shares that are subject to the Option at the
time of such distribution, and the aggregate Option Price of the Option shall
be allocated between the Spin-off Shares and the Stock in proportion to the
relative fair market values of a Spin-off Share and a share of Stock
immediately after the distribution of Spin-off Shares.

(b) Reorganization in Which the Corporation Is the Surviving Corporation. If
the Corporation shall be the surviving corporation in any reorganization,
merger, or consolidation of the Corporation with one or more other
corporations, any Option theretofore granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of
shares of Stock subject to such Option would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price per share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option Price of the
shares remaining subject to the Option immediately prior to such
reorganization, merger, or consolidation.

(c) Reorganization in Which the Corporation Is Not the Surviving
Corporation; Sale of Assets or Stock. Upon the dissolution or liquidation of
the Corporation, or upon a merger, consolidation or reorganization of the

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Corporation with one or more other corporations in which the Corporation is
not the surviving corporation, or upon a sale of substantially all of the
assets of the Corporation to another corporation, or upon any transaction
(including, without limitation, a merger or reorganization in which the
Corporation is the surviving corporation) approved by the Board which results
in any person or entity owning eighty percent or more of the combined voting
power of all classes of stock of the Corporation, the Plan and all Options
outstanding hereunder shall terminate, except to the extent provision is made
in writing in connection with such transaction for the continuation of the
Plan and/or the assumption of the Options theretofore granted, or for the
substitution for such Options of new options covering the stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments
as to the number and kinds of shares and exercise prices, in which event the
Plan and Options theretofore granted shall continue in the manner and under
the terms so provided. In the event of any such termination of the Plan, each
individual holding an Option shall have the right (subject to the general
limitations on exercise set forth in Section 10(b) above), immediately prior
to the occurrence of such termination and during such period occurring prior
to such termination as the Board in its sole discretion shall determine and
designate, to exercise such Option in whole or in part, whether or not such
Option was otherwise exercisable at the time such termination occurs and
without regard to any installment limitation on exercise imposed pursuant to
Section 10(b) above. The Board shall send written notice of an event that will
result in such a termination to all individuals who hold Options not later
than the time at which the Corporation gives notice thereof to its
stockholders.

(d) Adjustments. Adjustments under this Section 17 related to stock or
securities of the Corporation shall be made by the Board, whose determination
in that respect shall be final, binding, and conclusive. No fractional shares
of Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or
unit.

(e) No Limitations on Corporation. The grant of an Option pursuant to the
Plan shall not affect or limit in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or assets.

18. DISCLAIMER OF RIGHTS

No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of the Corporation or
any Subsidiary, or to interfere in any way with the right and authority of the
Corporation or any Subsidiary either to increase or decrease the compensation
of any individual at any time, or to terminate any employment or other
relationship between any individual and the Corporation or any Subsidiary.

19. NONEXCLUSIVITY OF THE PLAN

Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating
any limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.

20. GOVERNING LAW.

THE VALIDITY, INTERPRETATION AND EFFECT OF THIS PLAN, AND THE RIGHTS OF ALL
PERSONS HEREUNDER, SHALL BE GOVERNED BY AND DETERMINED IN ACCORDANCE WITH THE
LAWS OF DELAWARE, OTHER THAN THE CHOICE OF LAW RULES THEREOF.

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21. GENDER AND NUMBER.

Except as otherwise indicated by the context, words in the masculine gender
when used in this Plan shall include the feminine gender, the singular shall
include the plural, and the plural shall include the singular.

22. HEADINGS.

The headings herein are for convenience only and shall not be used in
interpreting the Plan.

* * * * * * *

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APPENDIX F

INSIGHT HEALTH SERVICES CORP.
1996 DIRECTORS' STOCK OPTION PLAN

1. NAME AND PURPOSE.

1.1 This plan is the INSIGHT 1996 DIRECTORS' STOCK OPTION PLAN (the "Plan").

1.2 The purposes of the Plan are to enhance the Corporation's ability to
attract and retain highly qualified individuals to serve as members of the
Corporation's Board of Directors and to provide additional incentives to
Directors to promote the success of the Corporation. The Plan provides
Directors of the Corporation an opportunity to purchase shares of the Stock of
the Corporation pursuant to Options. Options granted under the Plan shall not
constitute "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.

1.3 This Plan is intended to constitute a "formula plan" and the Directors
are intended to be "disinterested administrators" of Other Plans for purposes
of Rule 16b-3 ("Rule 16b-3") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").

2. DEFINITIONS.

For purposes of interpreting the Plan and related documents (including Stock
Option Agreements), the following definitions shall apply:

2.1 "Additional Option" means any Option other than an Initial Option.

2.2 "Board" means the Board of Directors of the Corporation.

2.3 "Commencement of Service" means the date of election of the Director
to his or her first term as a Director.

2.4 "Corporation" means InSight Health Services Corp., a Delaware
corporation.

2.5 "Director" means a member of the Corporation's Board who is not an
officer or employee of the Corporation or any of its subsidiaries.

2.6 "Effective Date" means the date on which the merger described in that
certain Agreement and Plan of Merger dated as of February 26, 1996 by and
among the Corporation, American Health Services Corp. ("AHSC"), AHSC
Acquisition Company, Maxum Health Corp. ("MHC") and MXHC Acquisition
Company becomes effective, subject to approval of this Plan by the
stockholders of AHSC and MHC.

2.7 "Exercise Price" means the Option Price multiplied by the number of
shares of Stock purchased pursuant to exercise of an Option.

2.8 "Expiration Date" means the termination of the term of a Stock Option
Agreement, which term shall in no event exceed the tenth anniversary of the
Grant Date.

2.9 "Fair Market Value" means the value of each share of Stock subject to
this Plan determined as follows: If on the Grant Date or other
determination date the Stock is listed on an established national or
regional stock exchange, is admitted to quotation on The Nasdaq Stock
Market, or is publicly traded on an established securities market, the Fair
Market Value of the Stock shall be the closing price of the Stock on such
exchange or in such market (the highest such closing price if there is more
than one such exchange or market) on the trading day immediately preceding
the Grant Date or other determination date (or, if there is no such
reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices
on such trading day), or, if no sale of the Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the Stock is not listed on such an exchange, quoted on such
System or traded on such a market, Fair Market Value shall be determined by
the Board in good faith.

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2.10 "Grant Date" means the date on which an Option is granted pursuant
to Section 7 or Section 8 of this Plan.

2.11 "Initial Option" means an Option received by each Director serving
as of the Effective Date, and thereafter upon a Director's Commencement of
Service.

2.12 "Initial Option Shares" means shares of Stock covered by an Initial
Option.

2.13 "Option" means any option to purchase one or more shares of Stock
pursuant to this Plan including both Initial Options and Additional
Options.

2.14 "Optionee" means a person who holds an Option under this Plan.

2.15 "Option Period" means the period during which Options may be
exercised as defined in Section 9.

2.16 "Option Price" means the purchase price for each share of Stock
subject to an Option.

2.17 "Other Plan" means any other stock plan adopted by the Corporation
or any of its subsidiaries.

2.18 "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.

2.19 "Stock" means the Common Stock, par value $0.001 per share of the
Corporation.

2.20 "Stock Option Agreement" means the written agreement evidencing the
grant of an Option hereunder.

3. ADMINISTRATION OF THE PLAN.

The Plan shall be administered by the Board. The Board's responsibilities
under the Plan shall be limited to taking all legal actions necessary to
document the Options provided herein, to maintain appropriate records and
reports regarding those Options, and to take all actions authorized by this
Plan. This administration may be delegated to a committee of the Board.

4. STOCK SUBJECT TO THE PLAN.

4.1 Shares Available for Grant. Subject to adjustments made pursuant to
Section 4.2, the maximum number of shares of Stock which may be issued
pursuant to the Plan shall not exceed 218,000. If any Option expires,
terminates or is canceled for any reason before it is exercised in full, the
shares of Stock that were subject to the unexercised portion of the Option
shall be available for future Options granted under the Plan. Shares to be
delivered pursuant to this Plan may be issued, in whole or in part, from the
Corporation's authorized but unissued Stock, or from its treasury stock.

4.2 (a) Changes in Stock. If the outstanding shares of Stock are increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Corporation by reason of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease affecting such outstanding shares
generally that is effected without receipt of consideration by the
Corporation, occurring after the Effective Date, the number and kinds of
shares for the purchase of which Options may be granted under the Plan shall
be adjusted proportionately and accordingly by the Board. In addition, the
number and kind of shares for which Options are outstanding shall be adjusted
proportionately and accordingly so that the proportionate ownership interest
of the holder of the Option immediately following such event shall, to the
extent practicable, be the same as immediately prior to such event. Any such
adjustment in outstanding Options shall not change the aggregate Option Price
payable with respect to shares subject to the unexercised portion of the
Option outstanding but shall include a corresponding proportionate adjustment
in the Option Price per share. If there is a distribution payable in the
capital stock of a subsidiary corporation of the Corporation ("Spin-off
Shares"), to the extent consistent with Treasury Regulation Section 1.425-
1(a)(6) or the corresponding provision of any subsequent regulation, each
outstanding Option shall thereafter additionally pertain to the number of
Spin-off Shares that would have been received in such distribution by a
shareholder of the Corporation who owned a number of shares of

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Common Stock equal to the number of shares that are subject to the Option at
the time of such distribution, and the aggregate Option Price of the Option
shall be allocated between the Spin-off Shares and the Common Stock in
proportion to the relative fair market values of a Spin-off Share and a share
of Common Stock immediately after the distribution of Spin-off Shares.

(b) Reorganization in Which the Corporation Survives. If the Corporation
shall be the surviving corporation in any reorganization, merger or
consolidation of the Corporation with one or more other corporations, any
Option theretofore granted pursuant to the Plan shall pertain to and apply to
the securities to which a holder of the number of shares of Stock subject to
such Option would have been entitled immediately following such
reorganization, merger or consolidation, with a corresponding proportionate
adjustment of the Option Price per share so that the aggregate Option Price
thereafter shall be the same as the aggregate Option Price of the shares
remaining subject to the Option immediately prior to such reorganization,
merger or consolidation.

(c) Reorganization in Which the Corporation Does Not Survive; Sale of Stock
or Assets. Upon the dissolution or liquidation of the Corporation, or upon a
merger, consolidation or reorganization of the Corporation with one or more
other corporations in which the Corporation is not the surviving corporation,
or upon a sale of all or substantially all of the assets of the Corporation to
another corporation, or upon any transaction (including, without limitation, a
merger or reorganization in which the Corporation is the surviving
corporation) approved by the Board which results in any person or entity
owning 80 percent or more of the combined voting power of all classes of stock
of the Corporation, the Plan and all Options outstanding hereunder shall
terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan, the assumption of the
Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and exercise prices, in which event the Plan (if applicable) and
Options theretofore granted shall continue in the manner and under the terms
so provided. In the event of any such termination of the Plan and Options,
each individual holding an Option shall have the right immediately prior to
the occurrence of such termination and during such period occurring prior to
such termination as the Board in its sole discretion shall determine and
designate, to exercise such Option to the extent that such Option was
otherwise exercisable at the time such termination occurs. The Board shall
send written notice of an event that will result in such a termination to all
individuals who hold Options not later than the time at which the Corporation
gives notice thereof to its shareholders.

(d) Adjustments. Adjustments under this Section 4.2 related to stock or
securities of the Corporation shall be made by the Board, whose determination
in that respect shall be final, binding, and conclusive. No fractional shares
of Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or
unit.

(e) No limitations on Corporation. The grant of an Option pursuant to the
Plan shall not affect or limit in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or
liquidate, or to sell or transfer all of any part of its business or assets.

5. ELIGIBILITY.

Eligibility under this Plan is limited to Directors of the Corporation who
are not employees of the Corporation or any of its subsidiaries.

6. THE OPTION PRICE.

The Option Price of the Stock covered by each Option granted under this Plan
shall be the greater of the Fair Market Value or the par value of such Stock
on the Grant Date. The Option Price shall be subject to adjustment as provided
in Section 4.2 hereof.

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7. INITIAL OPTIONS.

(a) Number of Shares and Grant Dates.

On the Effective Date, each Director then serving on the Board shall be
granted an Initial Option to purchase 15,000 shares of Stock. Thereafter, each
Director whose Commencement of Service is after the Effective Date shall be
granted an Initial Option, as of the Director's Commencement of Service, to
purchase 15,000 shares of Stock.

(b) Vesting; Early Termination.

Initial Option Shares shall vest each month following the Grant Date on a
pro rata basis over a three (3) year period following the Grant Date, so long
as continuously during such time period the Optionee remains a Director; or is
an employee or independent contractor of the Corporation or one of its
subsidiaries; or is a director of one of the Corporation's subsidiaries.
Should such service of the Optionee terminate prior to the end of such three
(3) year period, then the vested Initial Options Shares shall be fixed at such
time, and should the calculation result in a fractional share, it shall be
rounded down to the nearest whole number of shares. The date of expiration of
the three (3) year period measured from the Grant Date when the Initial Option
Shares become fully vested is hereinafter referred to as the "Full Vesting
Date."

8. ADDITIONAL OPTIONS.

(a) Number of Shares and Grant Dates.

On the Full Vesting Date, each Optionee still serving as a Director shall be
granted an Additional Option to purchase 5,000 shares of Stock. Thereafter,
such Optionee, if still serving as a Director, shall be granted an Additional
Option to purchase 5,000 shares of Stock on each anniversary of the Full
Vesting Date.

(b) Vesting; Early Termination.

Additional Options shall vest each month following the Grant Date on a pro
rata basis over a period of one (1) year following the Grant Date, so long as
continuously during such time period the Optionee remains a Director; or is an
employee or independent contractor of the Corporation or one of its
subsidiaries; or is a director of one of the Corporation's subsidiaries.
Should such service of the Optionee terminate prior to the end of such one (1)
year period, then the vested shares pursuant to the Additional Option shall be
fixed at such time, and should the calculation result in a fractional share,
it shall be rounded down to the nearest whole number of shares.

9. OPTION PERIOD.

An Option shall be exercisable only during the Option Period. The Option
Period shall commence on the Grant Date and shall end at the close of business
on the Expiration Date. Termination of the Optionee's status as a Director for
any reason shall not cause an Option to terminate.

10. TIMING AND METHOD OF EXERCISE.

Subject to the limitations of Sections 7(b), 8(b) and 9, an Optionee may, at
any time, exercise an Option with respect to all or any part of the shares of
Stock then subject to such Option by giving the Corporation written notice of
exercise, specifying the number of shares as to which the Option is being
exercised. Such notice shall be addressed to the Secretary of the Corporation
at its principal office, and shall be effective when actually received (by
personal delivery, fax or other delivery) by the Secretary of the Corporation.
Such notice shall be accompanied by an amount equal to the Exercise Price of
such shares, in the form of any one or combination of the following: cash or
cash equivalents; or, in the Board's discretion, in Stock owned by the
Optionee valued at Fair Market Value on the date notice is received. If shares
of Stock that are acquired by the Optionee through exercise of an Option or an
option issued under an Other Plan are surrendered in payment of the Exercise
Price of Options, the Stock surrendered in payment must have been (i) held by
the Optionee for more than six months at the time of surrender, or (ii)
acquired under an Option granted not less than six months prior to the time of

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<PAGE>

surrender. However, payment in full of the Exercise Price need not accompany
the written notice of exercise provided the notice of exercise directs that
the Stock certificate or certificates for the shares for which the Option is
exercised be delivered to a licensed broker acceptable to the Corporation as
the agent for the individual exercising the Option and, at the time such Stock
certificate or certificates are delivered, the broker tenders to the
Corporation cash (or cash equivalents acceptable to the Corporation) equal to
the Exercise Price.

11. NO SHAREHOLDER RIGHTS UNDER OPTION.

No Optionee shall have any of the rights of a shareholder with respect to
the shares of Stock subject to an Option except to the extent the certificates
for such shares shall have been issued upon the exercise of the Option.

12. CONTINUATION OF SERVICE.

Nothing in the Plan shall confer upon any person any right to continue to
serve as a Director.

13. STOCK OPTION AGREEMENT; DEATH OR DISABILITY.

Each Option granted pursuant to the Plan shall be evidenced by a written
Stock Option Agreement notifying the Optionee of the grant and incorporating
the terms of this Plan. The Stock Option Agreement shall be executed by the
Corporation and the Optionee, and may have such terms as the Board may
determine that are not inconsistent with this Plan. Without limiting what
terms may be contained in a Stock Option Agreement, it may provide that in the
event of the death or disability of an Optionee (as disability is defined
therein), that the provisions in Sections 7(b) and 8(b) requiring an Optionee
to remain in the service of the Corporation or one of its subsidiaries in
order to vest, do not apply.

14. WITHHOLDING.

The Corporation shall have the right to withhold, or require an Optionee to
remit to the Corporation, an amount sufficient to satisfy any applicable
federal, state, local or foreign withholding tax requirements imposed with
respect to exercise of Options. Subject to the consent of the Board which may
be withheld in its sole and absolute discretion, and to the extent permissible
under applicable tax, securities, and other laws, an Optionee may (a) have
shares of Stock otherwise issuable to the Optionee hereunder withheld, or (b)
tender to the Corporation previously acquired shares of Stock, having a Fair
Market Value sufficient to satisfy all or part of the Optionee's federal,
state and local tax obligations associated with the transaction.

15. NON-TRANSFERABILITY OF OPTIONS.

Each Option granted pursuant to this Plan shall, during Optionee's lifetime,
be exercisable only by Optionee, and neither the Option nor any right
thereunder shall be transferable by the Optionee by operation of law or
otherwise other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined in Section
414(p)(1)(B) of the Internal Revenue Code of 1986, as amended, and shall not
be pledged or hypothecated (by operation of law or otherwise) or subject to
execution, attachment or similar processes.

16. USE OF PROCEEDS.

Cash proceeds realized from the sale of Stock pursuant to Options granted
under the Plan shall constitute general funds of the Corporation.

17. ADOPTION, AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN.

17.1 The Plan shall be effective as of the Effective Date.

17.2 Subject to the limitation of Section 17.4, the Board may at any time
suspend or terminate the Plan, and may amend it from time to time in such
respects as the Board may deem advisable; provided, however, the

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Board shall not amend the Plan in the following respects without the approval
of stockholders then sufficient to approve the Plan in the first instance:

(a) To materially increase the benefits accruing to participants under
the Plan (for example, to increase the number of Options that may be
granted to any Director).

(b) To increase the maximum number of shares of Stock that may be issued
under the Plan;

17.3 No Option may be granted during any suspension or after the termination
of the Plan, and no amendment, suspension or termination of the Plan shall,
without the Optionee's consent, alter or impair any rights or obligations
under any Stock Option Agreement previously entered into under the Plan. This
Plan shall terminate ten years after the Effective Date unless previously
terminated pursuant to Section 4, or by the Board pursuant to this Section 17,
or because no Stock remains available for issuance.

17.4 Notwithstanding the provisions of Section 17.2, provisions of Sections
7(a) and 8(a) shall not be amended more than once in any six-month period
other than to comport with changes in the Internal Revenue Code of 1986, the
Employee Retirement Income Security Act of 1974, or the rules promulgated
thereunder.

18. REQUIREMENTS OF LAW.

18.1 The Corporation shall not be required to sell or issue any shares of
Stock under any Option if the sale or issuance of such shares would constitute
a violation by the individual exercising the Option or the Corporation of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.
Specifically in connection with the 1933 Act, upon exercise of any Option,
unless a registration statement under such Act is in effect with respect to
the shares of Stock covered by such Option, the Corporation shall not be
required to sell or issue such shares unless the Board has received evidence
satisfactory to the Board that the holder of such Option may acquire such
shares pursuant to an exemption from registration under such Act. Any
determination in this connection by the Board shall be final, binding, and
conclusive. The Corporation may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the 1933 Act. The
Corporation shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option shall not
be exercisable unless and until the shares of Stock covered by such Option are
registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.

18.2 The intent of this Plan is to qualify for the exemption provided by
Rule 16b-3, or its successor rule or regulation under the Exchange Act. To the
extent any provision of the Plan or action by the Board does not comply with
the requirements of Rule 16b-3, it shall be deemed inoperative, to the extent
permitted by law and deemed advisable by the Board, and shall not affect the
validity of the Plan. In the event Rule 16b-3 is revised or replaced, the
Board may exercise its discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.

18.3 At least six (6) months must elapse from the Grant Date before (i) any
disposition of the Option (not including its exercise), or (ii) any
disposition of the underlying Stock, can be made. This Section 18.3 is a
requirement pursuant to Rule 16b-3 and it may be modified or eliminated by the
Board if it is no longer needed for such compliance.

19. GOVERNING LAW.

F-6
<PAGE>

20. GENDER AND NUMBER.

21. HEADINGS.

The headings herein are for convenience only and shall not be used in
interpreting the Plan.

* * * * * * *

F-7
<PAGE>

APPENDIX G

THE AHS PLAN AMENDMENTS

AMENDMENT TO 1983 PLAN.

Amend Section V.3.A to state:

A. Should an Optionee cease to be an employee of the Corporation or its
subsidiaries (or a corporation or a parent or subsidiary of such
corporation issuing or assuming any option granted to such Optionee under
the Plan in a transaction to which Section 425(a) of the Code applies)
(other than by reason of death) at any time during the option term, then
the period for exercising any option granted such Optionee under the Plan
shall be reduced to a period of three (3) months commencing with the date
of such cessation of employment, provided that in no event shall any such
option be exercisable at any time after the specified expiration date of
the option term. Unless otherwise expressly provided pursuant to the terms
of such Optionee's written employment agreement with the Corporation or any
of its subsidiaries, during such limited period of exercisability any such
option may not be exercised for more than the number of shares (if any) for
which it is exercisable on the date of the cessation of the employment of
such Optionee. Upon the expiration of said three-month period or the
expiration of the option term (whichever occurs first), any such option
shall terminate and cease to be exercisable. Notwithstanding the foregoing,
if an Optionee is "disabled" (as defined by Section 422A(c)(9) of the Code)
on the date of such Optionee's cessation of employment, the three-month
period of exercise provided herein shall be one (1) year, provided that in
no event shall any such option be exercisable at any time after the
expiration of the specified option term.

AMENDMENT TO 1987 PLAN.

Add a new section (Section 15), which states:

15. Effect of Transaction Under Section 425(a) of the
Code. Notwithstanding any other provision of the Plan, the term of an
Option outstanding under the Plan and originally granted to a person who,
at the time of the grant, was a director or employee of the Company, shall
continue unreduced although the Option Holder has ceased to be a director
or employee of the Company, so long as the Option Holder remains a director
or employee of a corporation or parent or subsidiary of a corporation that
issues or assumes the Option in a transaction to which Section 425(a) of
the Code applies (a "Section 425(a) Transaction"). In addition, the Board
shall have the discretion to provide that the term of an Option outstanding
under the Plan and originally granted to a person who, at the time of the
grant, was a director of the Company, shall continue unreduced if: (a) the
Option Holder has ceased to be a director of the Company by reason of a
Section 425(a) Transaction; and (b) the Option is issued or assumed in such
transaction.

AMENDMENT TO 1989 PLAN.

Add a new section (Section 12), which states:

12. Effect of Transaction Under Section 425(a) of the
Code. Notwithstanding any other provision of the Plan, the term of an
option outstanding under the Plan and originally granted to a Participant
who, at the time of the grant, was a Director or employee of the Company,
shall continue unreduced although the Participant has ceased to be a
Director or employee of the Company, Participant has ceased to be a
Director or employee of the Company, so long as the Participant remains a
Director or employee of a corporation or parent or subsidiary of a
corporation that issues or assumed the option in a transaction to which
Section 425(a) of the Code applies (a "Section 425(a) Transaction"). In
addition, the Board shall have the discretion to provide that the term of
an option outstanding under the Plan and originally granted to a
Participant who, at the time of the grant, was a Director of the Company,
shall continue unreduced if: (i) the Participant has ceased to be a
Director of the Company by reason of a Section 425(a) Transaction; and (ii)
the option is issued or assumed in such transaction.

G-1
<PAGE>

AMENDMENT TO 1992 PLAN.

Amend Section 8(f) to state:

(f) Termination of Employment. Except as provided in this Section 8(f)
and Section 8(g) hereof, an Option originally granted to a person who, at
the time of the grant, was a director or employee of the Company, may not
be exercised unless the Optionee is then a director of or in the employ of
the Company or any Parent or Subsidiary of the Company (or a corporation or
a Parent or Subsidiary of such corporation issuing or assuming the Option
in a transaction to which Section 425(a) of the Code applies (a "Section
425(a) Transaction")), and unless the Optionee has remained continuously a
director or so employed since the date of grant of the Option. In the event
all association of an Optionee with the Company (as an employee, or
director or both) shall terminate (other than by reason of death or
Disability), all Options or unexercised portions thereof granted to such
Optionee which are then exercisable may, unless earlier terminated in
accordance with their terms, be exercised within ninety (90) days after
such termination; provided, however, that if the association of the
Optionee with the Company shall terminate for "cause" (as determined by the
Committee), all Options theretofore granted to such Optionee shall, to the
extent not theretofore exercised, terminate forthwith. A bona fide leave of
absence shall not be considered a termination or break in continuity of
employment for any purpose of the Plan so long as the period for such leave
does not exceed ninety (90) days or such longer period during which the
Optionee's right to reemployment is guaranteed by statute or by contract.
Where the period of such leave exceeds ninety (90) days and the Optionee's
right to reemployment is not guaranteed, the Optionee's employment will be
deemed to have terminated on the ninety-first (91st) day of such leave.
Nothing in the Plan or in any Option granted pursuant hereto shall confer
upon an employee any right to continue in the employ of the Company or any
of its divisions or Parent or Subsidiaries or interfere in any way with the
right of the Company or any such divisions or Parent or Subsidiary to
terminate such employment at any time. Optionees, who at the time of the
grant were neither directors nor employees of the Company, are not subject
to the provisions of this Section 8(f). Notwithstanding any other provision
of the Plan, the Board shall have the discretion to provide that the term
of an Option outstanding under the Plan and originally granted to an
Optionee who, at the time of the grant, was a director of the Company,
shall continue unreduced if: (i) the Optionee has ceased to be a director
of the Company by reason of a Section 425(a) Transaction; and (ii) the
option is issued or assumed in such transaction.

G-2
<PAGE>

APPENDIX H

MAXUM HEALTH CORP. AND SUBSIDIARIES
AND BUSINESS ACQUIRED

INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MAXUM HEALTH CORP. AND SUBSIDIARIES:
INDEPENDENT AUDITORS' REPORT.............................................. H-2
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES:
Consolidated Balance Sheets as of December 31, 1995 and 1994............ H-4
Consolidated Statements of Operations for the years ended December 31,
1995, 1994 and 1993.................................................... H-6
Consolidated Statements of Stockholders' Equity (Deficiency) for the
years ended
December 31, 1995, 1994 and 1993....................................... H-7
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993.................................................... H-8
Notes to Consolidated Financial Statements.............................. H-9
SCHEDULE FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED
DECEMBER 31, 1995:
II Valuation and qualifying accounts...................................... H-20

All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.

DAYTON MEDICAL IMAGING RADIOLOGISTS, INC.:
INDEPENDENT AUDITORS' REPORT.............................................. H-21
AUDITED FINANCIAL STATEMENTS AND NOTES:
Statement of Assets to be Acquired and Liabilities to be Assumed as of
December 31, 1994....................................................... H-22
Statement of Operations Related to Contracts to be Acquired
for the year ended December 31, 1994.................................... H-23
Notes to Financial Statements............................................ H-24
UNAUDITED FINANCIAL STATEMENTS AND NOTES:
Statement of Assets to be Acquired and Liabilities to be Assumed as of
March 31, 1995 (unaudited).............................................. H-25
Statement of Operations Related to Contracts to be Acquired
for the three months ended March 31, 1995 (unaudited)................... H-26
</TABLE>

H-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Maxum Health Corp.:

We have audited the accompanying consolidated balance sheets of Maxum Health
Corp. and Subsidiaries (the Company) as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity
(deficiency) and cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the financial statement schedule
listed in the index on page H-1. These financial statements and schedule are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at December 31,
1995 and 1994, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is experiencing difficulty in generating
sufficient cash flow to meet its obligations and sustain its operations. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are described in Notes
1 and 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP

Dallas, Texas
March 1, 1996

H-2
<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK)

H-3
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
ASSETS (Note 7)
CURRENT ASSETS:
Cash and cash equivalents................................... $ 1,870 $ 6,950
Trade accounts receivable, net (Note 5)..................... 6,916 5,639
Other receivables, net...................................... 490 1,138
Other current assets........................................ 1,704 1,035
------- -------
Total current assets...................................... 10,980 14,762
DIAGNOSTIC EQUIPMENT HELD FOR SALE............................ 172 575
PROPERTY AND EQUIPMENT (Note 8):
Vehicles.................................................... 967 1,030
Land, building and leasehold improvements................... 1,623 560
Computer and office equipment............................... 2,521 2,274
Diagnostic and related equipment............................ 6,577 4,110
Equipment and vehicles under capital leases................. 10,976 6,784
------- -------
Total property and equipment................................ 22,664 14,758
Less: accumulated depreciation.............................. 10,278 9,486
------- -------
Property and equipment, net............................... 12,386 5,272
INVESTMENTS IN PARTNERSHIPS (Note 12)......................... 442 357
NET INVESTMENT IN DIRECT-FINANCING LEASE-PARTNERSHIPS (Note
12).......................................................... 237 --
OTHER ASSETS.................................................. 662 890
INTANGIBLE ASSETS, Net (Notes 4 and 6)........................ 4,047 1,194
------- -------
TOTAL......................................................... $28,926 $23,050
======= =======
</TABLE>

See notes to consolidated financial statements.

H-4
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current portion of equipment and other notes (Note 7)...... $ 3.361 $ 2,441
Current portion of capital lease obligations (Note 8)...... 2,782 1,587
Accrued equipment related costs............................ 1,546 1,979
Accounts payable and other accrued expenses................ 5,519 7,168
------- -------
Total current liabilities................................ 13,208 13,175
LONG-TERM LIABILITIES:
Accrued securities litigation settlement (Note 14)......... 1,900 --
Equipment and other notes, less current portion (Note 7)... 13,156 7,395
Capital lease obligations, less current portion (Note 8)... 4,667 2,180
------- -------
Total long-term liabilities................................ 19,723 9,575
COMMITMENTS AND CONTINGENCIES
(Notes 8 and 14)
STOCKHOLDERS' EQUITY (DEFICIENCY) (Note 9):
Common stock: 10,000,000 shares of $.01 par value
authorized; 3,005,055 shares and 2,953,415 shares issued,
respectively.............................................. 30 29
Common stock warrant for 700,000 shares.................... 7 7
Additional paid-in capital................................. 19,693 19,680
Accumulated deficit........................................ (23,470) (19,151)
Treasury stock: 731,500 shares at cost..................... (265) (265)
------- -------
Total stockholders' equity (deficiency).................. (4,005) 300
------- -------
TOTAL........................................................ $28,926 $23,050
======= =======
</TABLE>

See notes to consolidated financial statements.

H-5
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
REVENUES: (Note 3)
Contract services:
Fee-for-service............................ $ 37,762 $ 32,834 $ 30,661
Equipment rental (Note 12)................. 1,003 2,775 5,396
Management fees (Note 12).................. 211 784 1,044
--------- --------- ---------
Total contract services.................. 38,976 36,393 37,101
Patient services........................... 10,605 8,228 6,291
Other...................................... 1,028 1,247 1,683
--------- --------- ---------
Total revenues........................... 50,609 45,868 45,075
COSTS OF OPERATIONS:
Cost of services............................ 28,772 26,067 26,629
Provision for bad debts..................... 1,669 1,124 1,621
Equipment leases............................ 14,464 14,581 13,932
Depreciation................................ 3,273 3,467 4,864
Credit adjustment to prior Restructure
provision (Note 2)......................... -- -- (490)
--------- --------- ---------
Total costs of operations................ 48,178 45,239 46,556
--------- --------- ---------
GROSS PROFIT (LOSS).......................... 2,431 629 (1,481)
CORPORATE OVERHEAD........................... 3,972 4,240 5,244
--------- --------- ---------
LOSS FROM COMPANY OPERATIONS................. (1,541) (3,611) (6,725)
EQUITY IN EARNINGS OF UNCONSOLIDATED
PARTNERSHIPS (Note 12)...................... 348 834 685
--------- --------- ---------
OPERATING LOSS............................... (1,193) (2,777) (6,040)
OTHER INCOME (EXPENSE):
Interest expense, net (Note 7).............. (1,626) (1,206) (1,773)
Provision for securities litigation
settlement (Note 14)....................... (1,500) -- --
Gain on sale of Partnership interests (Note
12)........................................ -- 4,957 --
--------- --------- ---------
(3,126) 3,751 (1,773)
--------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES............ (4,319) 974 (7,813)
INCOME TAX EXPENSE (Note 10)................. -- 160 --
--------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM...... (4,319) 814 (7,813)
EXTRAORDINARY ITEM--Net gain on debt
extinguishments (Note 2).................... -- 3,342 1,036
--------- --------- ---------
NET INCOME (LOSS)............................ $ (4,319) $ 4,156 $ (6,777)
========= ========= =========
PER SHARE DATA:
Income (loss) before extraordinary item..... $ (1.92) $ 0.35 $ (2.69)
========= ========= =========
Net income (loss)........................... $ (1.92) $ 1.77 $ (2.33)
========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING... 2,248,883 2,345,209 2,912,786
========= ========= =========
</TABLE>

See notes to consolidated financial statements.

H-6
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK COMMON ADDITIONAL STOCKHOLDER
---------------- STOCK PAID-IN ACCUMULATED NOTE TREASURY
SHARES AMOUNT WARRANT CAPITAL DEFICIT RECEIVABLE STOCK TOTAL
--------- ------ ------- ---------- ----------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
1993................... 2,906,762 $29 $-- $19,179 $(16,530) $(131) $ (45) $ 2,502
Stock issued under
employee purchase
plan.................. 42,726 43 43
Repayment of
stockholder note
receivable............ 21 21
Capital contributuion--
former stockholder and
creditor.............. 457 457
Issuance of common
stock warrants........ 7 7
Surrender of 588,750
shares of treasury
stocks in connection
with debt
extinguishment ....... (110) (110)
Net loss............... (6,777) (6,777)
--------- --- ---- ------- -------- ----- ----- -------
BALANCE AT DECEMBER 31,
1993................... 2,949,488 29 7 19,679 (23,307) (110) (155) (3,857)
Stock issued under
employee purchase
plan.................. 3,927 1 1
Surrender of 132,750
shares of treasury
stock in settlement of
stockholder note
receivable............ 110 (110) --
Net income............. 4,156 4,156
--------- --- ---- ------- -------- ----- ----- -------
BALANCE AT DECEMBER 31,
1994................... 2,953,415 29 7 19,680 (19,151) -- (265) 300
Stock issued under
employee purchase
plan.................. 51,640 1 13 14
Net loss............... (4,319) (4,319)
--------- --- ---- ------- -------- ----- ----- -------
BALANCE AT DECEMBER 31,
1995................... 3,005,055 $30 $ 7 $19,693 $(23,470) $ -- $(265) $(4,005)
========= === ==== ======= ======== ===== ===== =======
</TABLE>

See notes to consolidated financial statements.

H-7
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)................................. $(4,319) $ 4,156 $(6,777)
Noncash items in net income (loss):
Total depreciation and amortization............. 4,060 3,913 6,390
(Gain) loss on disposal of assets............... (35) (112) 293
Provision for securities litigation settlement
(Note 14)...................................... 1,500 -- --
Gain on sale of Partnership interests........... -- (4,957) --
Operating expenses financed by issuance of debt
(Note 2)....................................... 2,330 2,672 --
Credit adjustment to prior Restructure
provision...................................... -- -- (490)
Extraordinary gain on debt extinguishments...... -- (3,342) (1,036)
Cash provided (used) by changes in working
capital:
Payments for Restructure costs.................. -- (700) (1,502)
Receivables..................................... (524) (38) 1,171
Other current assets............................ (110) 782 694
Accounts payable and other current liabilities.. (1,089) 1,088 3,019
------- ------- -------
Net cash provided by operating activities..... 1,813 3,462 1,762
INVESTING ACTIVITIES:
Acquisition of imaging centers (Note 4)........... (1,855) (510) --
Acquisition of customer contracts and intangibles
(Note 4)......................................... (2,108) -- --
Proceeds from termination of partnership.......... -- -- 204
Proceeds from sales of assets..................... 745 1,358 --
Proceeds from sale of Partnership interests (Note
12).............................................. -- 5,007 --
Additions to property and equipment............... (548) (349) (715)
Decrease in other assets, net..................... 190 582 3,012
------- ------- -------
Net cash provided (used) by investing
activities................................... (3,576) 6,088 2,501
FINANCING ACTIVITIES:
Payments of debt and capital lease obligations.... (6,020) (4,752) (3,376)
Proceeds from issuance of debt.................... 2,689 268 1,648
Net repayments on revolving note payable.......... -- (250) (2,300)
Capital contribution--former stockholder and
creditor......................................... -- -- 457
Other, net........................................ 14 1 64
------- ------- -------
Net cash used by financing activities......... (3,317) (4,733) (3,507)
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.... (5,080) 4,817 756
CASH AND CASH EQUIVALENTS:
Beginning of year................................. 6,950 2,133 1,377
------- ------- -------
End of year....................................... $ 1,870 $ 6,950 $ 2,133
======= ======= =======
SUPPLEMENTAL INFORMATION (Note 13)
</TABLE>

See notes to consolidated financial statements.

H-8
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1995, 1994
AND 1993

1. PENDING MERGER

Maxum Health Corp. (Maxum or the Company) is a provider of diagnostic
imaging and related management services through its imaging network in the
Central and Eastern United States. The Company delivers its services through a
network of Mobile MRI Facilities, Fixed MRI Facilities and Imaging Centers.

On February 27, 1996, the Company announced that it has agreed to merge (the
Merger) with American Health Services Corp. (AHSC) to form a new medical
imaging management company called InSight Health Services Corp. (IHSC). AHSC
provides diagnostic imaging and treatment services including MRI, gamma knife
technology and other diagnostic equipment to hospitals, physicians and managed
care organizations, through the management and operation of hospital-based
centers.

A prerequisite to the consummation of the Merger is a restructuring with
General Electric Company, acting through GE Medical Systems (GE Medical), the
primary creditor of each of Maxum and AHSC, and its affiliate General Electric
Capital Corporation, which would result in the reduction of certain debt and
operating lease obligations and cancellation of certain stock warrants (see
Note 9) of Maxum and AHSC in exchange for, among other things, the issuance to
GE Medical immediately prior to the consummation of the Merger of Maxum Series
B Preferred Stock and AHSC Series C Preferred Stock. At the effective time of
the Merger, such preferred stock contemplated to be issued to GE Medical will
be converted into the right to receive such number of shares of IHSC Series A
Preferred Stock as will be convertible into IHSC Common Stock representing
approximately 48% of IHSC Common Stock outstanding at the effective time of
the Merger (after giving effect to such conversion). Under an amended
equipment maintenance service agreement, GE Medical will also be entitled to
receive certain supplemental service fee payments based on future pretax
income of IHSC.

Management believes that the Company will be able to meet its respective
long-term debt, operating lease and other ongoing obligations through the
second quarter of 1996. Without the consummation of the financial
accommodations contemplated to be provided by GE Medical sometime in the
second quarter of 1996, the Company may be unable to meet its financial
obligations and will require further modifications to its respective debt and
lease repayment schedules.

The Merger is subject to certain conditions, including approval by both the
Company's and AHSC's stockholders and the closing of the financial
accommodation transactions with GE Medical. The stockholders' meetings are
expected to be held in the second quarter of 1996, with the consummation of
the Merger to occur promptly thereafter.

In the event that the Merger does not occur by reason of AHSC's or the
Company's breach of its obligations under the merger agreement or the failure
of its stockholders to approve the Merger, such party who breaches or fails to
obtain stockholder approval shall reimburse the other for its legal costs
incurred in connection with the Merger. In connection with the Merger, the
Company has incurred approximately $0.5 million of legal and professional fees
which are included in other current assets at December 31, 1995.

2. RESTRUCTURE OF OPERATIONS AND FINANCIAL OBLIGATIONS

During recent years, the Company has experienced many adverse market
conditions and has been significantly impacted by continued deterioration and
uncertainties in the health care industry. In 1992, the Company recorded a
charge of $7.5 million in anticipation of a restructure of its operations and
financial obligations (the Restructure). The Company began executing the
Restructure in 1993 and completed it in 1994. In 1993, the Company recorded a
net credit adjustment of $0.5 million to the prior Restructure provision,
resulting in a net charge associated with the Restructure of $7.0 million.

H-9
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

The Restructure involved the reconfiguration, consolidation and wind-down of
certain Mobile MRI Facilities and partnerships in which the Company had
ownership interests. In addition, significant cost reductions at the Company's
headquarters were achieved and a broad restructuring and/or settlement of
obligations with all of the Company's significant creditors and certain
smaller creditors were completed. Extraordinary gains from extinguishment of
debt, associated with these restructured and settled obligations, of $1.0
million and $3.3 million were recorded in 1993 and 1994, respectively.

The Company's primary creditor provided financing for the settlement of
obligations with the Company's two other significant creditors. In return for
certain concessions made by the Company's primary creditor, the Company agreed
to certain contingent lease rental adjustments over the remaining lease terms
(see Note 8) and issued a common stock warrant to this creditor for 700,000
shares (see Note 9). In addition, the Company sold its internal maintenance
division to this creditor in 1994. Consideration for the sale included cash
and future discounts on maintenance services to be realized over approximately
five years.

By the end of 1994, the Company had completed the Restructure and had
achieved the objectives of reducing negative cash flow in the near-term,
improving current and near-term viability and enhancing the potential for
long-term viability. The favorable results of the Restructure, however, have
been diminished by continued deterioration in the industry. The Company has
continued to operate while experiencing negative cash flow by completing
transactions involving the financing of certain lease and other operating
expenses with its primary creditor, and the disposal of certain assets and
partnership interests. In its current financial condition, the Company does
not have the resources to support its existing debt service and lease
requirements and the obligation to settle pending securities litigation (see
Note 14).

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The factors noted above may
indicate that the Company will be unable to continue as a going concern for a
reasonable period of time unless the financial accommodation transactions with
the Company's primary creditor are closed and the Company's stockholders
approve the pending Merger (see Note 1). The financial statements do not
include any adjustments relating the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities should
the Company be unable to continue as a going concern.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidated Financial Statements include the accounts of Maxum Health
Corp., a Delaware corporation and its wholly owned subsidiaries, primarily
Maxum Health Services Corp. (MHSC). These entities are referred to
collectively as the Company. MHSC's investment interests in partnerships (the
Partnerships) are accounted for under the equity method for ownership of 50%
or less and under the consolidation method for ownership of more than 50%.
Significant intercompany transactions and balances have been eliminated.

Revenues from contract fee-for-service (primarily mobile diagnostic imaging
equipment) and from patient services (primarily fixed site centers) are
recognized when services are provided. Patient services revenues are presented
net of related contractual allowances. Equipment rental revenues, management
fees and maintenance services revenues are recognized over the applicable
contract period. Revenues collected in advance are recorded as unearned
revenue.

Cash Equivalents are generally composed of highly liquid investments with
original maturities of three months or less, such as certificates of deposit
and commercial paper.

H-10
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Diagnostic Equipment Held For Sale is stated at the lower of cost or the
estimated net realizable value and consists of older owned Mobile MRI
Facilities.

Property and Equipment are stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the following
estimated useful lives of the assets: vehicles, three to eight years;
leasehold improvements, three to six years; computer and office equipment,
three to five years; diagnostic imaging and related equipment, five to eight
years. Equipment and vehicles under capital leases are amortized over the
related lease terms, generally five years.

Intangible Assets are amortized on a straight-line basis over the following
periods: goodwill, 6 to 10 years; non-compete agreements, 5 years; customer
service contracts, 2 years; certificates of need, 6 years; and deferred
organization costs, 5 years.

Income (Loss) Per Common Share is computed by dividing income (loss) by the
weighted average number of common shares outstanding during the respective
period. Common shares issuable upon exercise of common stock options and the
warrant are not included as common stock equivalents. Options and the warrant
were antidilutive in 1994 since the market price of the common stock was less
than the exercise prices for substantially all of the year, and in 1995 and
1993 they would decrease the net loss per share.

Stock-Based Compensation to employees is and will be accounted for using the
intrinsic value based method. Such compensation was nominal in the years
presented.

Fair Value of Financial Instruments are estimated using available market
information and other valuation methodologies. The fair value of the Company's
financial instruments are estimated to approximate the related book value,
unless otherwise indicated.

Reclassifications have been made to certain 1994 and 1993 amounts to conform
to the 1995 presentation.

4. ACQUISITIONS

In March 1995, the Company entered into an agreement with a competitor in
Ohio and Indiana to purchase certain assets, primarily mobile diagnostic
equipment of $2.4 million and intangible assets of $2.0 million. The Company
paid approximately $2.1 million in cash and assumed certain equipment related
liabilities of approximately $2.3 million. In connection with this
transaction, the Company began providing services under the acquired customer
contracts on April 1, 1995.

In October 1995, the Company completed the acquisition of two Imaging
Centers (MDC-P and MDC-H) in Dallas, Texas. The transaction included the
purchase of certain assets, primarily diagnostic equipment of $1.1 million and
intangible assets of $1.0 million, and the assumption of $0.5 million of
equipment related liabilities. The net purchase price of $1.6 million and an
additional $0.7 million for working capital requirements was financed by the
Company's primary creditor. In connection with this transaction, the Company
began providing services at both Imaging Centers effective October 1, 1995
and, in December 1995 completed the planned consolidation of MDC-H into MDC-P
and MDC-F (an existing Imaging Center acquired in 1991), which resulted in
additional acquisition related costs of $0.2 million, in order to maximize
capacity utilization and enhance profit potential at MDC-P and MDC-F. The
Company also incurred acquisition related legal fees of approximately $0.2
million which are included in intangible assets at December 31, 1995.

These acquisitions were accounted for under the purchase method and the
related intangible assets recorded are discussed in Note 6. Accordingly, the
results of related operations have been included in the consolidated financial
statements since the applicable acquisition dates. The pro forma effects of
these acquisitions, as if they had occurred as of January 1, 1994, are
summarized as follows:

H-11
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
PRO FORMA FOR PRO FORMA FOR
THE YEAR ENDING THE YEAR ENDING
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Revenues............................... $55,508 $55,480
Expenses............................... 59,770 55,062
------- -------
Income (loss) before extraordinary
items................................. (4,262) 418
Extraordinary items.................... -- 3,342
------- -------
Net income (loss)...................... $(4,262) $ 3,760
======= =======
Per share data:
Income (loss) before extraordinary
items................................. $ (1.90) $ 0.18
======= =======
Net income (loss)...................... $ (1.90) $ 1.60
======= =======
</TABLE>

The pro forma results for 1995 and 1994 include $0.6 million and $0.6
million of amortization of intangibles and $0.5 million and $0.6 million,
respectively, of interest expense related to the these acquisitions.

5. TRADE RECEIVABLES

Trade receivables at December 31 are comprised of the following (amounts in
thousands):

<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Trade receivables.............................................. $10,199 $8,532
Less: Allowances for doubtful accounts and contractual
adjustments................................................... 3,283 2,893
------- ------
Net trade receivables.......................................... $ 6,916 $5,639
======= ======
</TABLE>
The above net receivables arise from revenues generated by:
<TABLE>
<S> <C> <C>
Fee-for-services................................................. $ 3,643 $3,184
Patient services................................................. 3,098 2,288
Other............................................................ 175 167
------- ------
Net trade receivables............................................ $ 6,916 $5,639
======= ======
</TABLE>

Receivables arising from fee-for-service revenues are due primarily from
hospitals. Receivables related to patient services revenues are due primarily
from managed care organizations, patients' private insurance companies and
government payors. Management makes significant estimates and judgments
regarding the collectibility of its receivables that affect the reported
amounts of valuation allowances for doubtful accounts and contractual
adjustments for the periods presented. Actual collections could differ from
the amounts estimated by Management.

H-12
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

6. INTANGIBLE ASSETS

Intangible assets at December 31 consist of the following (amounts in
thousands):

<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Total intangible assets.......................................... $4,822 $1,447
Less: accumulated amortization................................... 775 253
------ ------
Net intangible assets............................................ $4,047 $1,194
====== ======
Goodwill......................................................... $3,338 $1,182
Non-compete agreement............................................ 191 --
Customer service contracts....................................... 188 --
Certificate of need.............................................. 175 --
Deferred organization costs...................................... 155 12
------ ------
Net intangible assets............................................ $4,047 $1,194
====== ======
</TABLE>

In connection with the Company's acquisitions in 1995 (discussed in Note 4),
the Company recorded $3.4 million of intangible assets. On December 31, 1994,
MHSC acquired the remaining 40% interest in MDC-E, 60% of which was acquired in
1992, and recorded goodwill of $0.5 million. Amortization of intangible assets
of $0.6 million, $0.2 million and $0.9 million for the years ending December
31, 1995, 1994, and 1993, respectively, is included in Corporate Overhead.

Management evaluates the recoverability of intangible assets by estimating
the future cash flows expected to result from the businesses acquired and by
comparing such cash flows with the related carrying amount of the assets of the
businesses acquired. A material adverse change in any such operation could
result in a decrease in the valuation of the corresponding intangible assets.

7. EQUIPMENT AND OTHER NOTES PAYABLE

Equipment and other notes at December 31 consist of the following (amounts in
thousands):

<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
NOTES PAYABLE TO PRIMARY CREDITOR/WARRANTHOLDER:
Due in monthly installments from February 1996 through February
2001, including interest at an effective rate of 9.21%......... $ 6,277 $7,527
Due in monthly installments through February 1998, including
interest at an effective rate of 8%............................ 447 633
Due in monthly installments through September 2000, including
interest at 10.62%............................................. 2,298 --
Due in monthly installments through January 2001, including
interest at 11.0% to 11.5%..................................... 2,743 --
Due in monthly installments through February 2005, including
interest at 9.0% to 11.18%..................................... 3,609 1,156
------- ------
15,374 9,316
OTHER NOTES PAYABLE:
Due in monthly installments through May 2000, including interest
at 5.6% to 11.0%............................................... 1,143 520
------- ------
Total equipment and other notes................................. 16,517 9,836
Less: current portion........................................... 3,361 2,441
------- ------
Long term equipment and other notes............................. $13,156 $7,395
======= ======
</TABLE>

H-13
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Scheduled maturities of long-term debt at December 31, 1995, are as follows
(amounts in thousands):

<TABLE>
<S> <C>
1996............................. $ 3,361
1997............................. 3,441
1998............................. 3,316
1999............................. 3,257
2000............................. 2,872
Thereafter....................... 270
-------
Total.......................... $16,517
=======
</TABLE>

The Company's debt with its primary creditor/warrantholder is collateralized
by substantially all of the assets of the Company. Interest expense on debt
related to the warrantholder and a former stockholder during the years ended
December 31, 1995, 1994 and 1993, was $1.0 million, $0.6 million, and $0.3
million, respectively. In connection with the restructuring arrangement
associated with the pending Merger discussed in Note 1, the Company's primary
creditor would reduce the Company's long-term debt obligations by
approximately $9.0 million.

8. LEASE OBLIGATIONS AND COMMITMENTS

The Company is leasing mobile diagnostic equipment, certain other equipment
and its office facilities under various capital and operating leases. Future
minimum scheduled rental payments required under these noncancelable leases at
December 31, 1995, are as follows (amounts in thousands):

<TABLE>
<CAPTION>
CAPITAL OPERATING
------- ---------
<S> <C> <C>
1996....................................................... $3,373 $14,572
1997....................................................... 2,622 12,813
1998....................................................... 1,665 8,781
1999....................................................... 862 4,269
2000 and thereafter........................................ 93 1,023
------ -------
Total minimum lease payments............................... 8,615 $41,458
=======
Less: amounts representing interest........................ 1,166
------
Present value of capital lease obligations................. 7,449
Less: current portion...................................... 2,782
------
Long-term capital lease obligations........................ $4,667
======
</TABLE>

As of December 31, 1995, a substantial amount of equipment leased by the
Company is subject to contingent rental adjustments dependent on certain
operations factors through 1999. As of December 31, 1995, the Company's future
operating and capital lease obligations to its primary creditor were
approximately $32.3 million and $4.7 million, respectively. In connection with
the restructuring arrangement associated with the pending Merger discussed in
Note 1, the Company's primary creditor would restructure certain lease
arrangements.

Rental expense for mobile diagnostic equipment and other equipment for the
years ended December 31, 1995, 1994 and 1993, was $14.5 million, $14.6
million, and $13.9 million, respectively. These amounts include contingent
rental expense of $0.5 million, $0.8 million and $0.5 million for 1995, 1994
and 1993, respectively.

H-14
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

The Company occupies office facilities under lease agreements expiring
through August 2000. Rental expense for these facilities for the years ended
December 31, 1995, 1994 and 1993, was $0.6 million, $0.6 million, and $0.8
million, respectively.

9. CAPITAL STOCK

Warrant--In connection with the agreement discussed in Note 2, the Company
issued a warrant for 700,000 shares of its common stock to its primary
creditor. The warrant became exercisable on February 8, 1996 at $0.50 per
share and may be exercised in whole or in part through February 8, 1999. This
warrant would be cancelled in connection with the pending Merger (see Note 1).

Dividend Restrictions--Certain note payable and lease agreements prohibit the
Company from paying dividends on its common stock.

Stock Options--The Company has a Stock Option Plan which provides for the
granting of incentive or nonqualified stock options to key employees or non-
employee directors. Incentive stock options must have an exercise price of at
least the fair market value on the date of grant. Options may be exercised in
whole or in installments over ten years after the grant. All options granted
prior to January 1, 1991 became exercisable upon the public offering in that
year. As of December 31, 1995, options to purchase 31,200 shares of the
Company's common stock had been exercised and 290,050 shares are available for
future grants. Activity under this plan is summarized as follows:

<TABLE>
<CAPTION>
EXERCISE PRICE
PER SHARE RANGE
NUMBER OF ----------------
SHARES FROM TO
--------- ----------------
<S> <C> <C> <C>
Outstanding at January 1, 1993................... 404,800 $0.83 $11.79
Granted........................................ 75,000 0.75 0.75
Forfeited...................................... (170,750) 4.69 11.79
--------
Outstanding at December 31, 1993................. 309,050 0.75 10.13
Granted ....................................... 152,500 0.06 0.25
Canceled....................................... (92,500) 0.83 11.79
Forfeited...................................... (92,800) 0.83 4.94
--------
Outstanding at December 31, 1994................. 276,250 0.06 10.13
Granted........................................ 90,000 0.50 0.50
Canceled....................................... (25,000) 0.09 10.13
--------
Outstanding at December 31, 1995................. 341,250 0.06 9.35
========
Exercisable at December 31, 1995................. 256,250 0.06 9.35
========
</TABLE>

H-15
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Stock Purchase Plan--The Company also has an Employee Stock Purchase Plan
which provides for the sale of up to 375,000 shares of common stock. Eligible
employees, as defined by the Plan, may purchase shares at a price equal to 85%
of the fair market value at the time of purchase or at the time of annual
enrollment; accordingly, no compensation expense has been recorded with
respect to the sale of these shares under this plan. The following summarizes
the number of shares issued pursuant to this plan and the aggregate purchase
price of the shares for the periods indicated.

<TABLE>
<CAPTION>
NUMBER AGGREGATE
OF SHARES PURCHASE PRICE
--------- --------------
<S> <C> <C>
1995................................................ 51,640 $11,400
1994................................................ 3,927 $ 700
1993................................................ 42,726 $37,000
Prior to 1993....................................... 14,046 $79,000
-------
112,339
=======
</TABLE>

The Company's board of directors has the right to terminate the Plan at any
time, and plans to exercise such right prior to the effective time of the
pending Merger. Accordingly, there will be no additional shares issued
pursuant to the Plan after December 31, 1995.

Preferred Stock--The Company has authorized 15,000 shares of $.01 par value
series preferred stock, with no shares outstanding.

10. INCOME TAXES

Income tax expense of $160,000 in 1994 represents primarily state and
federal tax expense, under alternative minimum tax computations. Deferred
income tax assets and liabilities, which arise from temporary differences
between the financial statement and tax bases of assets and liabilities, are
as follows at December 31, 1995 (amounts in thousands):

<TABLE>
<S> <C>
Accrued expenses, not currently deductible........................... $1,560
Receivable valuation allowances...................................... 620
Other................................................................ --
------
Total current assets............................................... 2,180
Operating loss carryforwards......................................... 5,597
Deferred depreciation and amortization for tax purposes.............. (289)
Other................................................................ (166)
------
Total noncurrent assets............................................ 5,142
------
Total deferred tax asset............................................. 7,322
Deferred tax valuation allowance..................................... (7,322)
------
Total................................................................ $ --
======
</TABLE>

As of December 31, 1995, the Company's potential tax benefits of $5.6
million from federal income tax loss carryforwards will expire during 2004
through 2010. A valuation allowance has been provided for the full amount of
the $7.3 million net deferred tax asset because realization of this benefit is
uncertain.

H-16
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

11. RETIREMENT SAVINGS PLAN

Under its 401(k) profit sharing plan (the Plan) for all employees, the
Company may match a percentage of employee contributions to the Plan and make
additional contributions on behalf of the employees at the discretion of its
Board of Directors. Contributions of $100,000, $62,000 and $40,000 were made
during the years ended December 31, 1995, 1994 and 1993, respectively.
Contributions of $12,000 in 1994 and the full amount in 1993 were funded with
forfeitures.

12. INVESTMENTS IN AND TRANSACTIONS WITH PARTNERSHIPS

Maxum, through MHSC, has direct ownership in two Partnerships at December
31, 1995, both of which operate Imaging Centers. Maxum owns 43.75% and 50% of
these Partnerships, serves as the managing general partner and provides
certain management services under agreements expiring in 2007 and 2004,
respectively.

In December 1994, the Company sold the common stock of three wholly-owned
subsidiaries, whose primary operations were equity interests of approximately
20% in each of three partnerships that provided lithotripsy services, for
approximately $5.0 million in cash. The Company's investment in and share of
earnings of these partnerships had been reported in the Company's financial
statements using the equity method of accounting. This transaction resulted in
a pretax gain of approximately $5.0 million in 1994. In addition, two other
Partnerships which provided services through mobile MRI and CT facilities were
terminated in 1994.

Maxum leased equipment to certain Partnerships under direct financing leases
and operating leases, and arranged for equipment maintenance services. In
connection with providing these and other services, Maxum received management
fees related to certain Partnerships. Revenues related to these Partnership
activities included in Maxum's financial statements for the years ending
December 31, 1994 and 1993 were $1.3 million and $3.5 million, respectively.
Substantially all of these revenues relate to Partnerships that were sold or
terminated in 1994 or 1993.

At December 31, 1995, Maxum has a receivable of $0.5 million related to
certain lease and operating expenses of the existing Partnerships.

Set forth below are the combined financial position of the Partnerships, and
the Company's investment in the Partnerships at December 31 (amounts in
thousands):

<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
COMBINED FINANCIAL POSITION:
Current assets:
Cash........................................................... $ 582 $ 93
Due from Maxum................................................. -- 42
Trade receivables, less allowances............................. 675 624
Other.......................................................... 24 24
Property and equipment, net...................................... 566 309
------ -----
Total assets..................................................... 1,847 1,092
Current liabilities.............................................. (238) (256)
Due to Maxum..................................................... (499) --
Long-term liabilities............................................ (82) (20)
------ -----
Net assets....................................................... $1,028 $ 816
====== =====
</TABLE>

H-17
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Set forth below are the combined operating results of the Partnerships, and
the Company's equity in earnings of the Partnerships for the years ended
December 31 (amounts in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
------ ------- -------
<S> <C> <C> <C>
OPERATING RESULTS:
Net revenues...................................... $4,455 $13,456 $16,162
Expenses ($203,000, $995,000, and $1,180,000, of
depreciation and amortization)................... 3,636 9,217 12,223
------ ------- -------
Net income........................................ $ 819 $ 4,239 $ 3,939
====== ======= =======
EQUITY IN EARNINGS:
Share of net income of Partnerships............... $ 348 $ 876 $ 650
Minority interest................................. -- (42) (15)
Amortization of deferred gain..................... -- -- 50
------ ------- -------
Maxum's equity in earnings of Partnerships........ $ 348 $ 834 $ 685
====== ======= =======
</TABLE>

Revenues of the Partnerships are recognized when services are provided to
patients at established billing rates or at the amount realizable under
agreements with third party payors, with the provision for contractual
adjustments deducted to report net patient services revenues. The
Partnerships' patient receivables are generally reimbursed by private
insurance companies, with the remainder of the patient receivables reimbursed
by health care plans and government payors.

Lease Commitments of the Partnerships exist under various operating leases
for equipment and office space. Future minimum lease payments for the
Partnerships' noncancelable leases at December 31, 1995, are as follows
(amounts in thousands):

<TABLE>
<CAPTION>
CAPITAL OPERATING
------- ---------
<S> <C> <C>
1996....................................................... $122 $764
1997....................................................... 102 764
1998....................................................... 73 497
1999....................................................... 43 --
2000....................................................... 14 --
---- ------
Total.................................................... $354 $2,025
==== ======
</TABLE>

13. SUPPLEMENTAL CASH FLOW INFORMATION

The following is provided as supplemental information to the consolidated
statements of cash flow for the year ended December 31 (amounts in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
------ ----- ----
<S> <C> <C> <C>
Cash paid for interest.................................... $1,411 $ 879 $897
Noncash investing and financing activities:
Equipment purchased with debt........................... 2,133 1,385 107
Equipment additions under capital leases................ 8,117 2,779 475
Prepaid insurance premiums financed..................... 555 430 717
</TABLE>

H-18
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

14. PENDING SECURITIES LITIGATION SETTLEMENT

In May and June 1993, the Company was named a defendant in two lawsuits
filed on behalf of a purported class of present and former stockholders in the
U.S. District Court for the Southern District of New York (the Court). Also
named as defendants were the underwriting firms that led the Company's initial
public offering in September, 1991, a former stockholder and senior creditor
of the Company, and certain current or former members of the Company's Board
of Directors and/or executives. These two actions have been consolidated into
one action.

On February 22, 1994, the plaintiffs filed a second consolidated amended
complaint, which superseded the previously filed complaints. The plaintiffs,
who seek to represent a purported class of plaintiffs which acquired the
Company's common stock, have alleged that misstatements and omissions were
made by the Company and the other defendants in connection with the Company's
initial public offering and in subsequent public disclosures from September
19, 1991 until March 1, 1993 when the Company announced that it would write
down assets and establish reserves related to the restructuring of its mobile
MRI business. The plaintiffs seek monetary damages under various provisions of
the federal securities laws and state law in an unspecified amount, as well as
other relief.

In March 1994, the Company and all other defendants moved to dismiss the
second amended complaint for, among other things, failure to state a claim. On
November 18, 1994, the Court granted the motions to dismiss and gave
plaintiffs permission to file a third amended complaint.

On January 6, 1995, plaintiffs served their third consolidated amended
complaint. At approximately the same time, plaintiffs agreed to dismiss
without prejudice their claims against the two underwriter defendants. On June
2, 1995, Maxum and the other defendants moved to dismiss the third amended
complaint for failure to state a claim and failure to plead fraud with
particularity. At the conclusion of a hearing on October 20, 1995, the Court
reserved decision on the motions to dismiss the complaint. Although the
parties have substantially completed their production of documents as a part
of pretrial discovery in the action, no depositions have been taken.

On February 23, 1996, while the motions to dismiss were still under
consideration by the Court, the defendants, plaintiffs and other interested
parties (acting through their respective counsel) entered into a Stipulation
of Settlement pursuant to which, subject to certain conditions, the foregoing
action will be settled and all claims dismissed on the merits. In anticipation
of this settlement, the Company recorded a charge of $1.5 million in the
fourth quarter of 1995. As a part of the pending Merger discussed in Note 1,
the Company has arranged to borrow approximately $1.9 million to finance the
litigation settlement. This borrowing will be payable over a five year period
beginning in late 1996.

The Stipulation of Settlement will become effective when all the following
conditions have been satisfied or waived: (a) the Company having available to
it financing for its contribution to the settlement, (b) entry of a Final
Judgment of Dismissal by the Court, and (c) the Final Judgment of Dismissal
becoming final.

In connection with the pending Merger, the Stock Acquisition Agreement
provides that GE Medical shall have no obligations thereunder (or under
related documents, including the Restructuring Agreement) unless a final
judgment of dismissal has been entered with respect to the aforementioned
stockholders litigation.

H-19
<PAGE>

MAXUM HEALTH CORP. AND SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT CHARGES TO BALANCE AT
BEGINNING COST AND WRITE- END OF
OF PERIOD EXPENSES OFFS PERIOD
---------- ---------- ------ ----------
<S> <C> <C> <C> <C>
December 31, 1993:
Allowance for bad debts........... $ 466 $1,621 $ 423 $1,664
Allowance for contractual
arrangement...................... 250 2,504 1,724 1,030
Inventory reserve................. 81 749 -- 830
------ ------ ------ ------
Total........................... $ 797 $4,874 $2,147 $3,524
====== ====== ====== ======
December 31, 1994:
Allowance for bad debts........... $1,664 $1,124 $1,233 $1,555
Allowance for contractual
arrangement...................... 1,030 2,692 2,384 1,338
Inventory reserve................. 830 -- 830(A) --
------ ------ ------ ------
Total........................... $3,524 $3,816 $4,447 $2,893
====== ====== ====== ======
December 31, 1995:
Allowance for bad debts........... $1,555 $1,669 $1,489 $1,735
Allowance for contractual
arrangement...................... 1,338 4,512 4,302 1,548
------ ------ ------ ------
Total........................... $2,893 $6,181 $5,791 $3,283
====== ====== ====== ======
</TABLE>
- --------
(A) The Company sold all inventory on hand in 1994.

H-20
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Maxum Health Corp.:

We have audited the accompanying statement of assets to be acquired and
liabilities to be assumed as of December 31, 1994, and the statement of
operations related to contracts to be acquired for the year then ended of
Dayton Medical Imaging Radiologists, Inc., (the "Company"), as described in
Note 1 to the financial statements. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets to be
acquired and liabilities to be assumed and the statement of operations related
to contracts to be acquired are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the statement of assets to be acquired
and liabilities to be assumed and the statement of operations related to
contracts to be acquired. We believe that our audit provides a reasonable
basis for our opinion.

The accompanying statements were prepared to present the net assets of the
Company as of December 31, 1994, to be acquired by Maxum Health Corp. and the
direct income related to contracts to be acquired for the year then ended
pursuant to the Asset Purchase Agreement between the Company and Maxum Health
Corp., as described in Note 1. These statements are not intended to be a
complete presentation of the Company's financial position and results of
operations.

In our opinion, the statements referred to above present fairly, in all
material respects, the assets to be acquired and liabilities to be assumed of
the Company as of December 31, 1994, and the results of the operations related
to contracts to be acquired for the year then ended pursuant to the Asset
Purchase Agreement referred to in Note 1, in conformity with generally
accepted accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP

Dallas, Texas
June 8, 1995

H-21
<PAGE>

DAYTON MEDICAL IMAGING RADIOLOGISTS, INC.

STATEMENT OF ASSETS TO BE ACQUIRED AND LIABILITIES TO BE ASSUMED (NOTE 1)

DECEMBER 31, 1994

<TABLE>
<S> <C>
ASSETS TO BE ACQUIRED
MOBILE DIAGNOSTIC EQUIPMENT--Net of accumulated depreciation
of $185,984........................................................ $2,449,446
LIABILITIES TO BE ASSUMED
CURRENT PORTION OF LONG-TERM DEBT .................................. 385,882
LONG-TERM DEBT...................................................... 2,029,297
----------
Total............................................................. 2,415,179
----------
NET ASSETS ACQUIRED................................................. $ 34,267
==========
</TABLE>

See notes to financial statements.

H-22
<PAGE>

DAYTON MEDICAL IMAGING RADIOLOGISTS, INC.

STATEMENT OF OPERATIONS RELATED TO CONTRACTS TO BE ACQUIRED
YEAR ENDED DECEMBER 31, 1994

<TABLE>
<S> <C>
REVENUES............................................................ $4,182,746
DIRECT COSTS AND EXPENSES:
Vehicle operations, maintenance and supplies expense............... 1,150,532
Salaries and related expenses...................................... 974,336
Lease expense...................................................... 527,100
Depreciation....................................................... 934,676
Other operating expenses........................................... 185,114
----------
Total............................................................ 3,771,758
----------
DIRECT OPERATING INCOME............................................. 410,988
INTEREST EXPENSE.................................................... 244,454
----------
DIRECT INCOME....................................................... $ 166,534
==========
</TABLE>

See notes to financial statements.

H-23
<PAGE>

DAYTON MEDICAL IMAGING RADIOLOGISTS, INC.

NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation--On March 31, 1995, Maxum Health Corp., through its
two wholly owned subsidiaries, Maxum Health Services Corp. and MTS
Enterprises, Inc. ("Maxum"), entered into an Asset Purchase Agreement (the
"Agreement") with Dayton Medical Imaging Radiologists, Inc. (the "Company"),
MidStates Regional Imaging and Dayton Medical Imaging II to purchase certain
assets, primarily two mobile medical imaging equipment and 30 customer
contracts from the Company. Maxum paid approximately $2.1 million in cash and
assumed specified long-term debt obligations of approximately $2.3 million. In
connection with this transaction, Maxum began providing services under the
acquired customer contracts on April 1, 1995.

The accompanying financial statements were prepared to present the
historical cost basis of the assets to be acquired and liabilities assumed of
the Company as of December 31, 1994 (the Company's most recent year-end), and
the historical revenues and direct operating expenses related to the contracts
to be acquired pursuant to the Agreement, for the year then ended. These
statements are not a complete presentation of the Company's financial position
and results of operations. The statement of operations related to the
contracts to be acquired presents the revenues generated under the 30 customer
contracts to be transferred to Maxum pursuant to the Agreement less the
related operating expenses. This statement does not include general and
administrative expenses of the Company as these are not readily identifiable
to the contracts to be acquired nor does it include any provision for income
taxes. These customer contracts were being serviced by the Company by six
mobile diagnostic units.

Mobile Diagnostic Equipment is stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets of five years.

Revenues are recognized when patient services are provided under contracts
with health care institutions, which are billed for these services.

2. LONG-TERM DEBT

Long-term debt at December 31, 1994, consists of the following:

<TABLE>
<S> <C>
Note payable due in monthly installments of $18,855 through May
1999, including interest at 10.2%, collateralized by the
related equipment.............................................. $ 789,792
Note payable due in monthly installments of $5,732 through May
1999, including interest at 10.5%, collateralized by the
related equipment.............................................. 238,639
Note payable due in monthly installments of $25,270 through
September 1999, including interest at 9.6%, collateralized by
the related equipment.......................................... 1,126,901
Note payable due in monthly installments of $5,732 through
October 1999, including interest at 10.5%, collateralized by
the related equipment.......................................... 259,847
----------
Total........................................................... 2,415,179
Less current portion............................................ 385,882
----------
Long-term debt, less current portion............................ $2,029,297
==========
</TABLE>

Maturities of long-term debt are as follows:

<TABLE>
<S> <C>
1995............................................................. $ 385,882
1996............................................................. 488,579
1997............................................................. 537,351
1998............................................................. 590,994
1999............................................................. 412,373
----------
Total............................................................ $2,415,179
==========
</TABLE>

H-24
<PAGE>

DAYTON MEDICAL IMAGING RADIOLOGISTS, INC.

STATEMENT OF ASSETS TO BE AQUIRED AND LIABILITIES TO BE ASSUMED
MARCH 31, 1995 (UNAUDITED)

<TABLE>
<S> <C>
ASSETS TO BE ACQUIRED
MOBILE DIAGNOSTIC EQUIPMENT, net of accumulated depreciation of
$317,756......................................................... $2,317,674
LIABILITIES TO BE ASSUMED
CURRENT LIABILITIES:
Current portion of long-term debt................................ 337,108
----------
Total current liabilities....................................... 337,108
LONG-TERM DEBT.................................................... 2,029,297
----------
Total........................................................... 2,366,405
----------
NET ASSETS (LIABILITIES) ACQUIRED................................. $ (48,731)
==========
</TABLE>

H-25
<PAGE>

DAYTON MEDICAL IMAGING RADIOLOGISTS, INC.

STATEMENT OF OPERATIONS RELATED TO CONTRACTS TO BE ACQUIRED
THREE MONTHS ENDED MARCH 31, 1995 (UNAUDITED)

<TABLE>
<S> <C>
REVENUES............................................................ $1,027,558
DIRECT COSTS AND EXPENSES:
Vehicle operations, maintenance and supplies expense............... 218,574
Salaries and related expenses...................................... 242,516
Lease expense...................................................... 131,775
Depreciation....................................................... 211,022
Other operating expenses........................................... 124,166
----------
Total............................................................. 928,053
----------
DIRECT OPERATING INCOME............................................. 99,505
----------
INTEREST EXPENSE.................................................... 58,023
----------
DIRECT NET INCOME................................................... $ 41,482
==========
</TABLE>

H-26
<PAGE>

APPENDIX I

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.......................... I-2
CONSOLIDATED BALANCE SHEETS, December 31, 1995 and 1994........... I-3
CONSOLIDATED STATEMENTS OF OPERATIONS, for the years ended
December 31, 1995, 1994 and 1993................................. I-4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT), for the
years ended December 31, 1995, 1994 and 1993..................... I-5
CONSOLIDATED STATEMENTS OF CASH FLOWS, for the years ended
December 31, 1995, 1994 and 1993................................. I-6 - I-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, December 31, 1995,
1994
and 1993......................................................... I-8 - I-17
</TABLE>

I-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To American Health Services Corp.:

We have audited the accompanying consolidated balance sheets of AMERICAN
HEALTH SERVICES CORP. (a Delaware corporation) and subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Health Services
Corp. and subsidiaries as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 2 and 5 to the
consolidated financial statements, the Company has certain balloon payments on
its long-term obligation maturing in June 1996, and has a net capital
deficiency. These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are described in Notes 2, 5 and 12. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP

Orange County, California
February 26, 1996

I-2
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................. $ 6,175,842 $ 3,663,795
Accounts receivable, net of an allowance for
doubtful accounts and contractual discounts of
$3,793,780 and $3,691,466 at December 31, 1995
and 1994, respectively, and an allowance for
professional fees of $1,567,308 and $1,862,399
at December 31, 1995 and 1994, respectively..... 6,892,436 8,587,288
Prepaid expenses and other....................... 447,726 345,040
------------ ------------
Total current assets........................... 13,516,004 12,596,123
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation and amortization of $13,513,147 and
$12,348,486 at December 31, 1995 and 1994,
respectively...................................... 20,169,446 25,521,012
OTHER ASSETS....................................... 2,754,904 2,105,802
------------ ------------
$ 36,440,354 $ 40,222,937
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses............ $ 2,917,800 $ 3,319,079
Accrued payroll and related costs................ 924,986 700,916
Professional fees payable........................ 544,705 306,446
Current portion of deferred rent expense......... 485,740 665,343
Current portion of reserve for center
terminations.................................... 630,000 690,000
Current portion of long-term debt................ 19,207,076 4,326,816
------------ ------------
Total current liabilities...................... 24,710,307 10,008,600
------------ ------------
DEFERRED RENT EXPENSE.............................. 286,928 443,513
------------ ------------
RESERVE FOR CENTER TERMINATIONS.................... 635,078 1,253,130
------------ ------------
LONG-TERM DEBT..................................... 21,307,834 39,400,171
------------ ------------
CONTINGENCIES AND COMMITMENTS......................
MINORITY INTEREST.................................. 1,602,240 81,145
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT):
10 percent convertible Series B preferred stock
with a liquidation preference of $185 per share
plus declared and unpaid dividends
Authorized--5,000,000 shares
Outstanding--37,837.83 at December 31, 1995 and
1994
stated at..................................... 6,075,107 6,075,107
Common Stock, $.03 par value--
Authorized--25,000,000 shares
Outstanding--9,683,647 at December 31, 1995 and
1994.......................................... 290,509 290,509
Common stock warrants............................ 1,115,569 1,115,569
Additional paid-in capital....................... 9,343,665 9,343,665
Accumulated deficit.............................. (28,926,883) (27,788,472)
------------ ------------
(12,102,033) (10,963,622)
------------ ------------
$ 36,440,354 $ 40,222,937
============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

I-3
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Center revenues....................... $36,999,312 $36,046,164 $37,515,358
EXPENSES:
Center expenses....................... 29,109,192 28,098,851 30,591,541
Provision for doubtful accounts....... 853,828 954,806 1,208,111
Provision for center profit
distributions........................ 766,388 917,339 780,740
----------- ----------- -----------
Income from center operations....... 6,269,904 6,075,168 4,934,966
CORPORATE OPERATING EXPENSES............ 3,885,534 3,473,730 3,451,716
----------- ----------- -----------
Income from operations before
interest........................... 2,384,370 2,601,438 1,483,250
INTEREST INCOME AND OTHER............... 147,701 108,923 76,633
INTEREST EXPENSE........................ (3,640,482) (4,124,011) (3,998,619)
----------- ----------- -----------
Loss before provision for income
taxes and extraordinary item....... (1,108,411) (1,413,650) (2,438,736)
PROVISION FOR INCOME TAXES.............. 30,000 37,000 27,000
----------- ----------- -----------
Loss before extraordinary item...... (1,138,411) (1,450,650) (2,465,736)
EXTRAORDINARY ITEM:
Gain on restructuring of long-term
debt................................. -- 305,985 --
----------- ----------- -----------
Net loss............................ $(1,138,411) $(1,144,665) $(2,465,736)
=========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE:
Loss before extraordinary item........ $ (0.12) $ (0.15) $ (0.25)
Extraordinary item.................... -- .03 --
----------- ----------- -----------
$ (0.12) $ (0.12) $ (0.25)
=========== =========== ===========
Weighted average number of common shares
outstanding............................ 9,683,647 9,683,647 9,683,647
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

I-4
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
-------------------- ----------------------------- ADDITIONAL
NUMBER OF NUMBER OF PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT WARRANTS CAPITAL DEFICIT TOTAL
--------- ---------- --------- -------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1992...... 37,837.83 $6,075,107 9,683,647 $290,509 $ 991,498 $9,343,665 $(24,178,071) $ (7,477,292)
Issuance of common
stock warrants........ -- -- -- -- 94,269 -- -- 94,269
Net loss............... -- -- -- -- -- -- (2,465,736) (2,465,736)
--------- ---------- --------- -------- ---------- ---------- ------------ ------------
BALANCE,
December 31, 1993...... 37,837.83 6,075,107 9,683,647 290,509 1,085,767 9,343,665 (26,643,807) (9,848,759)
Issuance of common
stock warrants........ -- -- -- -- 29,802 -- -- 29,802
Net loss............... -- -- -- -- -- -- (1,144,665) (1,144,665)
--------- ---------- --------- -------- ---------- ---------- ------------ ------------
BALANCE,
December 31, 1994...... 37,837.83 6,075,107 9,683,647 290,509 1,115,569 9,343,665 (27,788,472) (10,963,622)
Net loss............... -- -- -- -- -- -- (1,138,411) (1,138,411)
--------- ---------- --------- -------- ---------- ---------- ------------ ------------
BALANCE,
December 31, 1995...... 37,837.83 $6,075,107 9,683,647 $290,509 $1,115,569 $9,343,665 $(28,926,883) $(12,102,033)
========= ========== ========= ======== ========== ========== ============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

I-5
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................. $(1,138,411) $(1,144,665) $(2,465,736)
Adjustments to reconcile net loss to
net cash provided by operating
activities--
Depreciation and amortization....... 4,903,913 5,005,062 3,531,139
Deferred lease payments............. (336,188) (116,488) 245,431
Gain on restructuring of long-term
debt............................... -- (305,985) --
Changes in operating assets and
liabilities--
(Increase) decrease in accounts
receivable, net.................. 1,472,210 (64,381) (53,146)
(Increase) decrease in prepaid
expenses and other............... (93,936) 489,969 685,387
Increase in other assets.......... (387,667) (705,100) (242,254)
Increase in accounts payable and
accrued expenses................. 132,433 377,501 97,289
Increase (decrease) in
professional fees payable........ 238,259 (91,216) 152,065
Increase (decrease) in reserve for
center terminations.............. (453,733) (1,171,073) 120,013
----------- ----------- -----------
Net cash provided by operating
activities....................... 4,336,880 2,273,624 2,070,188
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment... (1,728,346) (1,140,950) (19,871,816)
Proceeds from the sale of property and
equipment............................ 857,900 42,000 42,500
Investments in centers, net of cash
acquired............................. (409,678) (671,016) --
----------- ----------- -----------
Net cash used in investing
activities......................... (1,280,124) (1,769,966) (19,829,316)
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

I-6
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
debt.................................. $ 4,276,152 $ 3,333,481 $21,403,374
Payments of long-term debt............. (4,990,397) (3,786,673) (2,770,876)
Increase (decrease) in minority
interest.............................. 169,536 (726,116) (693,288)
----------- ----------- -----------
Net cash provided by (used in)
financing activities................ (544,709) (1,179,308) 17,939,210
----------- ----------- -----------
INCREASE (DECREASE) IN CASH.............. 2,512,047 (675,650) 180,082
CASH, beginning of year.................. 3,663,795 4,339,445 4,159,363
----------- ----------- -----------
CASH, end of year........................ $ 6,175,842 $ 3,663,795 $ 4,339,445
=========== =========== ===========
</TABLE>

Interest payments: During 1995, 1994 and 1993, the Company made interest
payments of $3,585,628, $4,352,978 and $3,751,845, respectively.

During 1994 and 1993 the Company issued warrants to purchase 372,524 and
377,075 shares of the Company's common stock which was valued at $29,802 and
$94,269, respectively.

In connection with the termination of a center in 1995, certain assets and
liabilities were sold as follows:

<TABLE>
<S> <C>
Book value of assets sold..................................... $2,721,065
Long-term and other liabilities assumed by buyer.............. 2,496,746
----------
Amount applied against reserve for center terminations........ $ 224,319
==========

In conjunction with the acquisition of the net assets of an imaging center
in 1994, liabilities assumed were as follows:

Fair value of assets acquired................................. $1,257,319
Cash paid..................................................... 900,000
----------
Liabilities assumed........................................... $ 357,319
==========
</TABLE>

During 1993, the Company purchased certain imaging equipment which was
previously leased to the Company. In connection with the purchase, the Company
reclassified $3,883,947 in deferred rent expense against the cost of the
imaging equipment.

The accompanying notes are an integral part of these consolidated statements.

I-7
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization and Nature of Business

American Health Services Corp. (the Company) was incorporated on November
12, 1982, in the state of Delaware. The Company was formed to develop and
operate facilities in which high capital cost, technologically advanced
equipment is used for the diagnostic imaging and treatment of patients. As of
December 31, 1995, the Company operates twenty centers located throughout the
United States.

The accompanying consolidated financial statements include the Company's two
majority-owned general partnerships, the Company's majority-owned limited
liability company and the Company's wholly-owned subsidiary. The accompanying
consolidated financial statements also include the Company's two 50 percent
owned partnerships and the Company's less than 50 percent owned limited
liability company. Because the Company controls the operations of these 50
percent or less owned entities and is primarily responsible for the associated
long-term debt, the Company believes that consolidation is the most meaningful
financial statement presentation. Summarized financial data of these three
controlled entities is presented in Note 11. All significant intercompany
accounts and transactions have been eliminated.

b. Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

c. Allowance for Doubtful Accounts and Contractual Discounts

The allowance for doubtful accounts and contractual discounts include
management's estimate of the amounts expected to be written-off on specific
accounts and for write-offs on other as yet unidentified accounts included in
accounts receivable at December 31, 1995. In estimating the write-offs and
discounts on specific accounts, management relies on a combination of in-house
analysis and a review of contractual payment rates from private health
insurance programs or under the federal Medicare program. In estimating the
allowance for unidentified write-offs and discounts, management relies on
historical experience. The amounts the Company will ultimately realize could
differ materially in the near term from the amounts assumed in arriving at the
allowance for doubtful accounts and contractual discounts in the financial
statements at December 31, 1995.

d. Allowance for Professional Fees

The Company reserves a contractually agreed upon percentage at several of
its centers, averaging 20 percent of the accounts receivable balance from
patients, for payments to radiologists for interpreting the results of the
diagnostic imaging procedures. Payments to radiologists are only due when
amounts are received from patients. At that time, the balance is transferred
from the allowance account to the professional fees payable account.

e. Property and Equipment

Property and equipment are depreciated and amortized on the straight-line
method using the following estimated useful lives:

<TABLE>
<S> <C>
Building.................................................. 17 to 19 years
Leasehold improvements.................................... Term of lease
Medical equipment......................................... 3 to 8 years
Furniture and fixtures.................................... 3 to 8 years
</TABLE>

I-8
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The Company capitalizes expenditures for betterments and major renewals.
Maintenance, repairs and minor replacements are charged to operations as
incurred. When assets are sold or otherwise disposed of, the cost and related
reserves are removed from the accounts and any resulting gain or loss is
included in the results of operations.

f. Preopening Costs

The Company capitalizes certain costs incurred prior to the opening of
centers, including legal, consulting and payroll costs. These costs are being
amortized over three to five years. Net preopening costs of approximately
$207,000 and $685,000 are included in other assets in the accompanying
consolidated balance sheets at December 31, 1995 and 1994, respectively.
Amortization expense of preopening costs totaled $196,236, $185,756 and
$136,959 in 1995, 1994 and 1993, respectively.

g. Goodwill

The Company has classified as goodwill the cost in excess of fair value of
the net assets of companies or partnership interests in purchase transactions.
Goodwill is being amortized over six to fifteen years. Net goodwill of
approximately $1,801,000 and $740,000 is included in other assets in the
accompanying consolidated balance sheets at December 31, 1995 and 1994,
respectively. Amortization expense of goodwill totaled $171,370 in 1995 and $0
in 1994 and 1993, respectively.

The Company assesses the recoverability of its intangible assets (including
goodwill) on a center by center basis by determining whether the amortization
of the intangible asset balance over its remaining life can be recovered
through projected nondiscounted future cash flows over the remaining
amortization period. If projected future cash flows indicate that the
unamortized intangible asset balances will not be recovered, an adjustment is
made to reduce the net intangible asset to an amount consistent with projected
future cash flows discounted at the Company's incremental borrowing rate. Cash
flow projections, although subject to a degree of uncertainty, are based on
trends of historical performance and management's estimate of future
performance, giving consideration to existing and anticipated competitive and
economic conditions.

h. Reserve for Center Terminations

The Company has established reserves related to future cash outlays on
centers the Company has closed or is in the process of closing. As of December
31, 1995, the reserve for center terminations consisted of the following:

<TABLE>
<S> <C>
Lease termination and equipment deinstallation costs.......... $ 915,000
Employee severances........................................... 350,078
----------
$1,265,078
==========
</TABLE>
i. Revenue Recognition

The Company recognizes revenue when services are provided. A substantial
portion of the Company's revenues and related accounts receivable are derived
from healthcare providers.

No single contract accounts for more than 10 percent of the Company's
revenues; however, one customer has six individual contracts covering separate
centers. In the aggregate, revenues from these contracts represent
approximately 24 percent, 27 percent and 28 percent of revenues in 1995, 1994
and 1993, respectively.

j. Income Taxes

The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109). The Company adopted

I-9
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
SFAS No. 109 in 1993, whereby the Company recorded the benefit of its net
operating loss carryforwards and also recorded a valuation reserve for the
entire amount. The impact on the Company's financial statements was not
material.

k. Earnings (Loss) Per Common Share

The number of shares used in computing earnings (loss) per common share is
equal to the totals of the weighted average number of common and common
equivalent shares outstanding during the period. Common stock equivalents
relating to options, warrants and convertible preferred stock have not been
included in the computation of earnings (loss) per common share in 1995, 1994,
and 1993 due to their antidilutive effect. Preferred stock dividends have not
been considered in the calculation of earnings (loss) per common share since
the shares are non-cumulative and no dividends have been declared. The number
of shares used in the computation of earnings (loss) per common share in 1995,
1994 and 1993 was 9,683,647.

l. Post-Employment and Post-Retirement Benefits

The Company does not provide post-employment or post-retirement benefits to
employees. Accordingly, Statement of Financial Accounting Standards No. 112,
Employers Accounting for Post-Employment Benefits, and Statement of Financial
Accounting Standards No. 106, Employers Accounting for Post-Retirement
Benefits have no impact on the Company's financial statements.

m. Impact of Recently Issued Accounting Standards

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of (SFAS No. 121) in March
1995. SFAS No. 121 is effective for financial statements for fiscal years
beginning after December 15, 1995. SFAS No. 121 is not expected to have a
material effect on the Company's financial statements.

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS
No. 123) in October 1995. SFAS No. 123 requires the Company to change how it
accounts for employee stock-based compensation plans or to provide specific
disclosures for financial statements for fiscal years beginning after December
15, 1995. The Company plans to adopt the disclosure requirements during 1996.

2. OPERATING LOSSES AND LIQUIDITY

The Company has experienced reduced revenue per procedure and reduced
procedure volumes while equipment costs have remained fixed. The Company has
(i) reported losses from 1992 to 1995 including a loss of approximately
$1,138,000 in 1995, (ii) expects to continue to experience cashflow shortfalls
and losses in 1996, (iii) has certain balloon payments of approximately
$12,252,000 and $1,500,000 pursuant to its long-term debt obligations with its
primary lender maturing in June and August 1996, respectively, and (iv) has a
net capital deficiency of approximately $12,102,000 at December 31, 1995.
These factors, among others, raise substantial doubt about the Company's
ability to continue as a going concern. In response thereto, the Company has
undertaken the following actions:

First, in connection with a comprehensive restructuring plan which includes
a merger and debt restructuring (see Note 12), the Company has reached an
agreement with its primary lender, subject to shareholder approval, to
significantly restructure its long-term debt. In connection with the
restructuring arrangement, the Company's primary lender will, among other
things, extend the maturity of the balloon payments until December 2002,
reduce the Company's long-term debt by approximately $10,685,000,
restructure certain lease arrangements and surrender warrants to purchase
1,589,072 shares of the Company's Common Stock.

I-10
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Second, in connection with the comprehensive restructuring plan, the
Company has reached an agreement to merge with Maxum Health Corp.

Third, the Company is attempting to reduce costs by renegotiating equipment
maintenance contracts, contracts with vendors of medical supplies and film
and certain consulting arrangements. The Company has sold or negotiated the
termination of leases of all its idle diagnostic imaging equipment.

The ability of the Company to meet its long-term debt, operating lease and
other ongoing obligations is contingent upon the consummation of the
restructuring plan as discussed above. In the event that the negotiations are
not successful, or shareholder approval is not obtained, the Company will have
to seek alternate sources of repayment and funding. However, there can be no
assurances that any of these transactions may be consummated in a timely
manner on terms reasonably acceptable to the Company.

The healthcare industry is highly regulated and changes in laws and
regulations can be significant. The Company believes that the expanding
managed competition environment accompanied by cost containment pressures may
have a materially adverse effect on the Company's business, since they may
directly affect the utilization of the Company's centers and reimbursement for
those procedures performed at the Company's centers.

3. TRANSACTIONS WITH RELATED PARTIES

The Company compensates a director for consulting fees and related expenses
in connection with the Company's financing and acquisition activities. In
addition, the Company paid legal fees to a law firm affiliated with another
director. These amounts totaled approximately $424,000, $164,000 and $389,000
in 1995, 1994 and 1993, respectively. Additionally, the Company borrowed
approximately $2,123,000 from a stockholder/director during 1993 pursuant to
the terms of a non-recourse promissory note. The note was repaid in 1994.
Total interest paid on the note was approximately $195,000 in 1993.

4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 1995 and
1994:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Building and improvements............................... $11,012,023 $10,738,434
Medical equipment....................................... 21,213,922 25,823,292
Furniture and fixtures.................................. 1,456,648 1,307,772
----------- -----------
33,682,593 37,869,498
Less: Accumulated depreciation and amortization......... 13,513,147 12,348,486
----------- -----------
$20,169,446 $25,521,012
=========== ===========
</TABLE>

I-11
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

5. LONG-TERM DEBT

Long-term debt consisted of the following at December 31, 1995 and 1994:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Notes payable to a third party bearing interest at
rates which range from 8.00 to 12.5 percent, maturing
at various dates through 2001. These notes are secured
by substantially all of the Company's assets. ........ $36,397,147 $38,346,229
Note payable to a third party, principal repaid in June
1995 ................................................. -- 928,863
Note payable to a bank, bearing interest at 10 percent,
principal and interest payments due monthly, maturing
in March 1999. The note is secured by certain of the
Company's equipment. ................................. 2,171,313 2,714,293
Note payable to a bank, bearing interest at 8.13
percent, principal and interest payments due monthly,
maturing in September 2000. The note is secured by
certain of the Company's building and improvements. .. 145,783 --
Note payable to a bank, bearing interest at 8.45
percent, principal and interest payments due monthly,
maturing in December 1996. The note is secured by
certain of the Company's building and improvements. .. 52,609 --
Unsecured non-interest bearing notes payable to third
parties, payable in annual installments of $190,000,
maturing in 1999...................................... 760,000 600,000
Unsecured notes payable to a third party with interest
accruing monthly at prime. ........................... 430,171 430,171
Obligations under capital leases....................... 557,887 707,431
----------- -----------
40,514,910 43,726,987
Less--Current portion.................................. 19,207,076 4,326,816
----------- -----------
$21,307,834 $39,400,171
=========== ===========
</TABLE>

In 1989, the Company entered into a note payable with a financial
institution for $14,280,000. This note is secured by substantially all assets
of the Company not secured by other notes payable. During April 1994, the
Company and its primary lender entered into a debt restructuring arrangement
pursuant to which (i) the maturity of a balloon payment due was extended until
January 1996, (ii) the principal amount of the balloon payment was reduced
from approximately $9,582,000 to $8,000,000, (iii) the interest rate on the
note relative to the balloon payment was reduced from 12.75 percent per annum
to 9.25 percent per annum, (iv) payments on the $15,200,000 equipment loan
discussed below were restructured, (v) the Company could defer three monthly
payments pursuant to the equipment loan mentioned above through December 31,
1995, under certain circumstances, (vi) the shares issuable under the warrant
issued in connection with the May 1992 non-revolving line of credit discussed
below were reduced to 839,478 shares, and (vii) a $500,000 working capital
loan was advanced for a Gamma Knife center. As a result of items 1 through 4,
the Company realized monthly savings of approximately $215,000. As a result of
this restructuring, a gain on restructuring of long-term debt of $305,985 has
been recorded and is accounted for as an extraordinary item in the
accompanying consolidated statement of operations. During 1995, the Company
utilized its three deferrals described above. The terms of this note agreement
include certain restrictive covenants which, among others, require the
maintenance of specified financial ratios, limit capital expenditures and
restrict the payment of dividends. As of December 31, 1995, the Company was in
technical violation of certain of these restrictive covenants but upon
consummation of the restructuring plan discussed below, the primary lender has
agreed to eliminate these financial covenants.

In 1993, the Company entered into a definitive loan and security agreement
with its primary lender, pursuant to which the Company restructured all of its
imaging equipment leases held by the third party. Under the terms

I-12
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
of the restructuring arrangement, the Company bought out the leases and
purchased the related imaging equipment at eight centers and restructured the
leases at the remaining nine centers. The purchase was financed by a
$15,200,000 loan which is due in March 2000.

In 1994, in consideration of the restructuring arrangement discussed above,
the Company issued a warrant to it primary lender to purchase up to an
aggregate of 372,524 shares of the Company's outstanding common stock for
$0.10 per share, subject to adjustment in certain circumstances. The warrant
became exercisable in 1995. In 1993, in consideration of the restructuring
arrangement discussed above, the Company issued another warrant to purchase up
to an aggregate of 377,075 shares of the Company's outstanding common stock at
$0.10 per share, subject to adjustment in certain circumstances. The warrant
became exercisable in 1995. Also, in 1992, in consideration of the extension
of the non-revolving line of credit and the lease amendment, the Company
issued a warrant to the lender to purchase up to an aggregate of 1,678,946
shares of the Company's outstanding common stock for $0.10 per share, subject
to adjustment in certain circumstances. Pursuant to the April 1994 debt
restructuring discussed above, the warrant was reduced to 839,478 shares. The
warrant became exercisable in 1995. The warrants were valued at their
estimated fair market value at the date of issuance and recorded in other
assets at December 31, 1995 and 1994, respectively. Amortization related to
these assets totaled $202,718, $197,042 and $163,548 in 1995, 1994 and 1993,
respectively and is included in interest expense in the accompanying
consolidated statements of operations. In connection with the issuance of the
warrants, the holders of the Series B Preferred Stock waived their
antidilutive rights with respect to both the issuance and exercise of the
warrants.

Subsequent to December 31, 1995 (see Note 12), in connection with a
comprehensive restructuring plan which includes a merger and debt
restructuring, the Company has reached an agreement with its primary lender,
subject to shareholder approval, to significantly restructure its long-term
debt. In connection with this restructuring arrangement, the Company's primary
lender will, among other things, extend the maturity of approximately
$11,619,000 in balloon payments from 1996 until December 2002, reduce the
Company's long-term debt by approximately $10,685,000, restructure certain
operating lease arrangements and surrender the warrants described above.

The equipment related to the capital leases has an original cost of
approximately $682,000 and accumulated depreciation of approximately $227,000
at December 31, 1995.

Principal payments on long-term debt at December 31, 1995, are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31:
------------
<S> <C>
1996........................ $19,207,076
1997........................ 5,614,373
1998........................ 6,163,085
1999........................ 5,933,792
2000........................ 3,064,095
Thereafter.................. 532,489
-----------
$40,514,910
===========
</TABLE>

6. COMMITMENTS AND CONTINGENCIES

The Company is committed under noncancelable operating leases for its
corporate offices, and certain centers and imaging equipment. Rent expense was
$7,682,650, $7,752,546 and $13,030,706 in 1995, 1994 and 1993, respectively.
Minimum annual rental payments under noncancelable operating leases are as
follows as of December 31, 1995:

I-13
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31:
------------
<S> <C>
1996........................ $ 5,516,678
1997........................ 5,291,614
1998........................ 4,718,273
1999........................ 4,562,629
2000........................ 2,482,209
Thereafter.................. 898,546
-----------
$23,469,949
===========
</TABLE>

The Company's agreements at its co-venture centers and with its partners in
the six limited liability companies and partnerships provide for contingent
payments based on annual pretax profits, as defined, of the individual center.
These contingent payments, which are charged to operations as they become
accruable, are included in "Provision for Center Profit Distributions" in the
accompanying consolidated statements of operations. During the years ended
December 31, 1995, 1994 and 1993 the Company incurred contingent rent expense
and minority interest in income from operations of $766,388, $917,339, and
$780,740, respectively.

In September 1992, a complaint was filed against the Company, its primary
lender and certain individuals alleging, among other things, violations of the
Racketeer Influenced and Corrupt Organizations Act, breach of management
agreement, breach of voting trust agreement and breach of fiduciary duty.
Pursuant to Judicial orders, most of the claims against the Company have been
dismissed. The Company has been advised by its counsel that it believes a
settlement has been reached as to all remaining claims which will require the
Company to make a payment of approximately $50,000 which has been accrued and
is included in accounts payable and accrued expenses in the accompanying
consolidated balance sheets at December 31, 1995 and 1994.

7. STOCK OPTION PLANS

The Company has four stock option plans under which officers, key employees
and directors have been or may be granted options to purchase up to 2,300,000
shares of the Company's common stock. The plans provide for incentive and
nonqualified stock options. The options become exercisable cumulatively over
various periods up to four years from the grant date and expire five years
after the grant date. In addition, the Company has issued an option to
purchase 20,000 shares to a non-employee director. This option is not covered
by an existing plan but was issued on terms comparable to options issued to
other directors.

The following table summarizes stock option activity for the years ended
December 31, 1995 and 1994:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
OPTION SHARES PRICE RANGE
------------- --------------
<S> <C> <C>
Balance, December 31, 1993...................... 605,000 $1.31 to $2.00
Granted....................................... 120,000 $0.25 to $0.25
Canceled...................................... -- --
Exercised..................................... -- --
--------- --------------
Balance, December 31, 1994...................... 725,000 $0.25 to $2.00
Granted....................................... 360,000 $0.25 to $0.38
Canceled...................................... (30,000) $2.00 to $2.00
Exercised..................................... -- --
--------- --------------
Balance, December 31, 1995...................... 1,055,000 $0.25 to $1.62
========= ==============
</TABLE>

At December 31, 1995, options to acquire 639,000 shares were exercisable and
20,000 shares were available for grants of options.

I-14
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

8. INCOME TAXES

The provision for income taxes for the years ended December 31, 1995, 1994
and 1993 consists entirely of state taxes.

The components of deferred income taxes (assuming a federal tax rate of 34
percent and a combined state tax rate of three percent) recognized in the
consolidated balance sheet at December 31, 1995 are as follows:

<TABLE>
<S> <C>
Depreciation................................................... $ 223,000
Allowance for doubtful accounts................................ 1,404,000
Capitalized financing costs.................................... 22,000
Reserve for center terminations................................ 602,000
Net operating loss carryforwards............................... 11,920,000
------------
14,171,000
Valuation allowance as required by FAS 109..................... (14,171,000)
------------
Net deferred tax asset....................................... $ --
============
</TABLE>

As of December 31, 1995, the Company has approximately $32,216,000 of net
operating loss carryforwards for federal and state income tax purposes which
expire at various dates from 1997 through 2009.

9. CANADIAN ACCOUNTING PRINCIPLES

The Company's common stock is listed with the Ontario Securities Commission
(OSC) and the Company is required to file its financial statements with OSC.
Although the accompanying financial statements and notes thereto have been
prepared in accordance with generally accepted accounting principles
applicable in the United States, the primary difference between these
accounting principles and those applicable in Canada is as follows:

Currency Translation

The accompanying consolidated financial statements are stated in United
States dollars. Translation of the financial statements into Canadian
dollars would be performed using the historical rates in effect on the
dates transactions occurred. No translation gains or losses would result
from the translation. The rate of exchange in effect at the end of each of
the last five years and the average exchange rate for those years are as
follows:

<TABLE>
<CAPTION>
EXCHANGE RATES
(CANADIAN DOLLARS
PER U.S. DOLLAR)
--------------------
AVERAGE
YEAR DECEMBER 31 FOR YEAR
---- ----------- --------
<S> <C> <C>
1991............................................... 1.146 1.156
1992............................................... 1.271 1.209
1993............................................... 1.324 1.290
1994............................................... 1.403 1.366
1995............................................... 1.364 1.372
</TABLE>

10. PREFERRED STOCK

Each share of Series B Preferred Stock is convertible into one hundred
shares of common stock. In addition, the preferred stockholders can elect up
to two directors of the Company and have the right to nominate an additional
board member, based on continuing ownership percentages. The Company must also
obtain approval

I-15
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
from the preferred stockholders for certain transactions which might affect
the preferred stock and if the Company is materially delinquent for sixty days
with its creditors or is delinquent in paying preferred stock dividends for
six quarters, the preferred stockholders have certain rights which include
majority representation on the Company's Board of Directors. In addition, the
Company has issued warrants to purchase up to 700,000 shares of the Company's
common stock to the preferred stockholders. The warrants to purchase 500,000
shares of common stock had exercise prices of $1.00 and expired in February
1996. The warrant to purchase 200,000 shares has an exercise price of $0.25
and expires in November 1997.

The Company may pay, at its option, future dividends on the Series B
Preferred Stock in shares of common stock or cash. Dividends on the Series B
Preferred Stock are non-cumulative so long as the preferred stockholders
control a majority of the Board of Directors.

11. SUMMARIZED COMBINED FINANCIAL DATA OF CONTROLLED ENTITIES

The summarized combined financial data of the Company's three 50 percent or
less owned and controlled entities for the year ended December 31, 1995, 1994,
and 1993 are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Condensed Combined Statement of Operations
Data:
Center revenues............................. $6,622,477 $5,581,922 $5,634,555
Center expenses............................. 5,086,092 4,343,471 4,303,445
Provision for doubtful accounts............. 156,754 135,421 89,430
Provision for center profit distribution.... 680,564 636,214 724,233
---------- ---------- ----------
Income from center operations............... $ 699,067 $ 466,816 $ 517,447
Condensed Combined Balance Sheet Data:
Current assets.............................. $1,944,849 $1,440,135
Total assets................................ 3,701,452 1,930,263
Current liabilities......................... 683,383 672,006
Long-term debt.............................. 480,016 576,637
Minority interest equity.................... 1,432,721 341,570
</TABLE>

The provision for center profit distribution shown above represents the
minority interest in the income of these combined entities.

12. SUBSEQUENT EVENT

On February 26, 1996, the Company entered into an Agreement and Plan of
Merger (the Merger Agreement) with Maxum Health Corp., a Delaware corporation
(Maxum). In anticipation of the Merger Agreement, the Company and Maxum
jointly formed InSight Health Services Corp. (InSight). The Merger Agreement
provides for the Company and Maxum to merge with newly-formed acquisition
subsidiaries of InSight. As a result, the Company and Maxum will each become
wholly-owned subsidiaries of InSight.

Under the terms of a Preferred Stock Acquisition Agreement, dated as of
February 26, 1996, by and among the Company, Maxum, InSight and General
Electric Company, a New York corporation acting through GE Medical Systems
(GE), GE, in exchange for a comprehensive program of debt and lease
restructuring of the existing obligations of the Company and Maxum, will
receive non-voting preferred stock of the Company and Maxum, convertible into
approximately forty-eight percent (48%) of the common stock of InSight on a
fully-diluted basis. The terms and conditions of the debt and lease
restructuring are set forth in the Master Debt

I-16
<PAGE>

AMERICAN HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Restructuring Agreement among GE, the Company and Maxum, which is an exhibit to
the Preferred Stock Acquisition Agreement and include, among other things, (i)
an extension of the Company's balloon payments totaling approximately
$11,619,000 in 1996 until December 2002, (ii) a reduction of the Company's
long-term debt by approximately $10,685,000, (iii) a restructure of certain
operating lease arrangements, (iv) the surrender by GE of warrants to purchase
1,589,072 shares of the Company's common stock at $0.10 per share and (v)
similar restructuring for Maxum.

In addition, in connection with the restructure of the Company's and Maxum's
master equipment service contracts, GE will be entitled to receive an amount
equal to approximately 14 percent of income before provision for taxes, as
defined in the agreement, of the Company, Maxum and InSight.

The Boards of Directors and management of the Company and Maxum, having
received fairness opinions from their respective investment banking
consultants, have agreed to recommend approval of the merger to their
respective stockholders, subject to their fiduciary obligations. The
obligations of the Company and Maxum to consummate the merger are subject to
the satisfaction of certain conditions set forth in the Merger Agreement,
including the approval of the merger by the stockholders of the Company and
Maxum and consummation of the debt and lease restructuring.

Under the Merger Agreement, each share of the Company's common stock will be
converted into the right to receive approximately .100 shares of InSight common
stock, and each share of the Company's Series B Convertible Preferred Stock
shall be converted into the right to receive approximately ten (10) shares of
InSight common stock. Each share of Maxum common stock shall be converted into
the right to receive approximately .598 shares of InSight common stock.
Immediately upon consummation of the merger, approximately one-half of the
issued and outstanding common stock of InSight will be held by former
stockholders of the Company and approximately one-half will be held by former
Maxum stockholders.

The Merger Agreement may be terminated if the merger has not been
consummated, or the approval of the Company's and Maxum's stockholder has not
been obtained, by September 30, 1996. There can be no assurance that these
transactions may be consummated in a timely manner.

I-17
<PAGE>

APPENDIX J

INSIGHT HEALTH SERVICES CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS................................... J-2
CONSOLIDATED BALANCE SHEET AT MAY 7, 1996.................................. J-3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................. J-4
</TABLE>

J-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To InSight Health Services Corp.:

We have audited the accompanying consolidated balance sheet of InSight
Health Services Corp. (a Delaware corporation) and subsidiaries as of May 7,
1996. This balance sheet is the responsibility of the Company's management.
Our responsibility is to express an opinion on this balance sheet based on our
audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of InSight Health Services Corp. and
subsidiaries as of May 7, 1996, in conformity with generally accepted
accounting principles.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP

Orange County, California
May 7, 1996

J-2
<PAGE>

INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
MAY 7, 1996

<TABLE>
<S> <C>
Cash........................................................... $1,000
======
Convertible Series A preferred stock, $.001 par value,
3,500,000 shares authorized, no shares outstanding............ $ --
Common stock, $.001 par value, 25,000,000 shares authorized,
1,000 shares outstanding stated at ......................... 1,000
------
$1,000
======
</TABLE>

The accompanying notes to consolidated financial statements are
an integral part of this consolidated balance sheet.

J-3
<PAGE>

INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 7, 1996

1. ORGANIZATION AND NATURE OF BUSINESS

InSight Health Services Corp. (InSight) was incorporated on February 23,
1996, in the state of Delaware. The Company and its subsidiaries (MXHC
Acquisition Company and AHSC Acquisition Company) were formed in connection
with the Agreement and Plan of Merger (the Merger Agreement) among InSight,
American Health Services Corp. (AHS), AHSC Acquisition Company (AHSC
Acquisition), Maxum Health Corp. (Maxum) and MXHC Acquisition Company (MXHC
Acquisition). At the effective time of the Merger, Maxum and AHS will become
wholly-owned subsidiaries of InSight.

Maxum and AHS were formed to develop and operate facilities in which high
capital cost, technologically advanced equipment is used for the diagnostic
imaging and treatment of patients. Presently, Maxum and AHS operate 79
diagnostic facilities throughout the United States.

InSight has no material assets or liabilities other than under the Merger
Agreement.

2. TERMS OF THE MERGER

At the effective time of the Merger (i) MXHC Acquisition will merge with and
into Maxum and AHSC Acquisition will merge with and into AHS, (ii) each
outstanding share of common stock of Maxum will be converted into the right to
receive .598 of a share of InSight Common Stock, (iii) each outstanding share
of Series B Preferred Stock of Maxum will be converted into the right to
receive 83.392 shares of Series A Preferred Stock of InSight, (iv) each
outstanding share of common stock of AHS will be converted into the right to
receive one-tenth of a share of InSight Common Stock, (v) each outstanding
share of Series B Senior Convertible Preferred Stock of AHS, which is
currently convertible into 100 shares of AHS Common Stock, will be converted
into the right to receive 10 shares of InSight Common Stock, (vi) each
outstanding share of Series C Preferred Stock of AHS will be converted into
the right to receive 1.25088 shares of InSight Series A Preferred Stock and
(vii) each outstanding option, warrant or other right to purchase Maxum Common
Stock or AHS Common Stock will be converted into the right to acquire, on the
same terms and conditions, shares of InSight Common Stock, with the number of
shares and exercise price applicable to such options, warrants or other rights
adjusted based on the applicable exchange ratio for the underlying Maxum
Common Stock or AHS Common Stock, as the case may be.

The percentage interests of InSight Common Stock to be held by former Maxum
Stockholders and former AHS stockholders at the effective time, assuming no
conversion by GE Medical of its InSight Series A Preferred Stock into InSight
Common Stock, will be 50.2% and 49.8%, respectively. The percentage interests
of InSight Common Stock to be held by former Maxum stockholders, former AHS
stockholders and GE Medical as of the effective time, assuming the conversion
by GE Medical of its InSight Series A Preferred Stock into InSight Common
Stock, will be 26.1%, 25.9%, and 48%, respectively.

In addition, at the effective time, GE Medical (the primary creditor of
Maxum and AHS) will have the right to receive for ten years annual payments
(the "Supplemental Service Fee") under its maintenance agreements with
InSight, Maxum and AHS equal to 14% of pre-tax income, subject to certain
adjustments. InSight may terminate the Supplemental Service Fee at any time
during the ten-year period by making a payment to GE Medical equal to $8
million minus the discounted value (calculated at a discount rate of 15% per
annum) of Supplemental Service Fee payments made through the date of such
termination payment.

3. STOCK OPTION PLANS

The InSight board of directors has authorized an aggregate of 882,433 shares
of InSight Common Stock be reserved for issuance under the InSight Health
Services Corp. 1996 Employee Stock Option Plan and the InSight Health Services
Corp. 1996 Directors' Stock Option Plan (the Plans). The Plans will become
effective at the effective time, provided stockholder approval is obtained.

J-4
<PAGE>

P R O X Y
P R O X Y
SPECIAL MEETING OF STOCKHOLDERS,
MAXUM HEALTH CORP. JUNE 25, 1996

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby (1) acknowledges receipt of the Notice dated May 9,
1996, of the Special Meeting of Stockholders of Maxum Health Corp. (the
"Company") to be held on June 25, 1996, and the Joint Proxy Statement dated May
9, 1996, in connection therewith (herein called the "Proxy Statement") and (2)
constitutes and appoints Glenn P. Cato and Don G. Hicks and each of them, as
his or her attorneys and proxies, with full power of substitution and
revocation to each, for and in the name, place and stead of the undersigned, to
vote and act as designated below with respect to all of the shares of Common
Stock of the Company standing in name of the undersigned, or with respect to
which the undersigned is entitled to vote and act, at said meeting and any
adjournment(s) thereof.

1. APPROVAL OF THE MERGER PROPOSAL AS SET FORTH IN THE PROXY STATEMENT.

FOR [_]AGAINST [_]ABSTAIN [_]

2. APPROVAL OF THE INSIGHT OPTION PLANS PROPOSAL AS SET FORTH IN THE PROXY
STATEMENT.

FOR [_]AGAINST [_]ABSTAIN [_]

3. APPROVAL OF THE MAXUM OPTION RATIFICATION PROPOSAL AS SET FORTH IN THE PROXY
STATEMENT.

FOR [_]AGAINST [_]ABSTAIN [_]

4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL PROPOSALS

(Continued and to be Signed on the Reverse Side)
(Continued from Other Side)
PROXY NO. ________________

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3 ABOVE.

Dated: _____________________, 1996

__________________________________

__________________________________
PLEASE SIGN HERE
Please date this proxy and sign
your name exactly as it appears
hereon.
If there is more than one owner,
each should sign. When signing as
an agent, attorney, administra-
tor, executor, guardian, or
trustee, please add your title as
such. If executed by a corpora-
tion, the proxy should be signed
by a duly authorized officer who
should indicate his/her title.
Please date, sign and mail this
proxy card in the enclosed
envelope. No postage is required
if mailed in the United States.
<PAGE>

PROXY

AMERICAN HEALTH SERVICES CORP.

SPECIAL MEETING OF STOCKHOLDERS, JUNE 25, 1996

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby (1) acknowledges receipt of the Notice dated May 9,
1996, of the Special Meeting of Stockholders of American Health Services Corp.
(the "Company") to be held on June 25, 1996, and the Joint Proxy Statement
dated May 9, 1996, in connection therewith (herein called the "Proxy
Statement") and (2) constitutes and appoints E. Larry Atkins and Thomas V.
Croal and each of them, as his or her attorneys and proxies, with full power of
substitution and revocation to each, for and in the name, place and stead of
the undersigned, to vote and act as designated below with respect to all of the
shares of Common Stock of the Company standing in the name of the undersigned,
or with respect to which the undersigned is entitled to vote and act, at said
meeting and any adjournment(s) thereof.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE""FOR'' ALL PROPOSALS

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE
SIDE

PLEASE MARK
X YOURVOTES
AS IN
THISEXAMPLE.

1. APPROVAL OF
THE MERGER
PROPOSAL AS
SET FORTH IN
THE PROXY
STATEMENT.

2. APPROVAL OF
THE INSIGHT
OPTION PLANS
PROPOSAL as
set forth in
the Proxy
Statement.

3. APPROVAL OF
THE AHS PLAN
AMENDMENT
PROPOSAL as
set forth in
the Proxy
Statement.

4. In their discretion, the
proxies are authorized to
vote upon such other
business as may properly
come before the meeting.

THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1,
2 AND 3.
Please date, sign and mail this
proxy card in the enclosed
envelope. No postage is
required if mailed in the
United States.
If there is more than one
owner, each should sign. When
signing as an agent, attorney,
administrator, executor,
guardian, or trustee, please
add your title as such. If
executed by a corporation, the
proxy should be signed by a
duly authorized officer who
should indicate his/her title.

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

FOR

AGAINST

ABSTAIN

SIGNATURE(S) ______________________________________________________ DATE , 1996

NOTE: Please date this proxy and sign your name exactly as it appears hereon.