<PAGE>
Registration No.
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
INSIGHT HEALTH SERVICES CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
33-0702770
(I.R.S. EMPLOYER IDENTIFICATION NO.)
4400 MACARTHUR BOULEVARD
NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
INSIGHT HEALTH SERVICES CORP. 1997 MANAGEMENT STOCK OPTION PLAN
INSIGHT HEALTH SERVICES CORP. 1998 EMPLOYEE STOCK OPTION PLAN
INSIGHT HEALTH SERVICES CORP. 1999 STOCK OPTION PLAN
(FULL TITLES OF THE PLANS)
STEVEN T. PLOCHOCKI
PRESIDENT AND CEO
INSIGHT HEALTH SERVICES CORP.
4400 MACARTHUR BOULEVARD, SUITE 800
NEWPORT BEACH, CALIFORNIA 92660
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(949) 476-0733
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
MARILYN U. MACNIVEN-YOUNG, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
INSIGHT HEALTH SERVICES CORP.
4400 MACARTHUR BOULEVARD, SUITE 800
NEWPORT BEACH, CALIFORNIA 92660
(949) 756-7222
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Offering Registration
to be Registered Registered (1) Per Share (2) Price Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value
500,000 $ 8.37 $ 4,187,500.00
250,000 $ 12.57 $ 3,142,500.00
125,000 $ 8.37 $ 1,046,250.00
375,000 $ 7.25 $ 2,718,750.00 $2,929.08
==================================================================================================================
</TABLE>
(1) Also covers any additional shares of the registrant's Common Stock as may be
required pursuant to the stock option plans by reason of any stock dividend,
stock split, recapitalization or other similar change in the Common Stock.
(2) Calculated pursuant to Rule 457(h)(1) based on the actual price at which the
options may be exercised or based on the price of the registrant's Common Stock,
as applicable.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance
with Rule 428 under the Securities Act of 1933 and the Note to Part I
of Form S-8.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the registrant with the Securities
and Exchange Commission are incorporated by reference in this Registration
Statement:
1. The registrant's annual report on Form 10-K for the year ended
June 30, 1999, filed with the Securities and Exchange
Commission on September 28, 1999, which contains audited
financial statements for the year ended June 30, 1999.
2. Description of the registrant's Common Stock contained in the
registrant's prospectus filed with the Securities and Exchange
Commission on May 13, 1996, pursuant to Rule 424(b)(3) under
the Securities Act of 1933.
3. The registrant's quarterly reports on Form 10-Q for the
quarters ended September 30, 1999 (filed with the Securities
and Exchange Commission on November 15, 1999) and December 31,
1999 (filed with the Securities and Exchange Commission on
February 12, 2000).
4. The registrant's current report on Form 8-K filed with the
Securities and Exchange Commission on February 8, 2000.
In addition, all documents subsequently filed by the registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law (the
"Delaware Law"), a corporation formed under Delaware law is permitted to
indemnify its directors, officers, and other corporate agents, against any
expenses (including reasonable attorneys' fees), judgments, fines, and
amounts paid in settlement of nonderivative lawsuits, actually and reasonably
incurred in connection with the defense of any action, suit, or proceeding in
which they or any of them were or are made parties or threatened to be made
parties by reason of their serving or having served in such capacity. The
Delaware Law provides, however, that such person must have acted in good
faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation and, in the case of a criminal
action, such person must have had no reasonable cause to believe his or her
conduct was unlawful. In addition, the Delaware Law does not permit
indemnification in an action or suit by or in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and
only to the extent that, a court determines that such person fairly and
reasonably is entitled to indemnity for expenses the court deems proper in
light of the liability adjudication. Indemnity is mandatory to the extent a
claim, issue or matter has been successfully defended.
-4-
<PAGE>
The registrant's bylaws provide that the registrant may indemnify
its directors, officers, and certain of its other corporate agents to the
fullest extent permitted under the Delaware Law for all expense, liability
and loss (including attorneys' fees actually and reasonably incurred by them)
in a proceeding by reason of such capacity.
The registrant's certificate of incorporation states that, to the
fullest extent permitted by the Delaware Law, a director of the registrant
shall not be liable to the registrant or its stockholders for monetary
damages for a breach of fiduciary duty as the registrant's director.
The registrant has purchased and maintains liability insurance
against liabilities that may be asserted against such persons in connection
with the registrant, whether or not indemnification against such liabilities
would be permitted under the provisions of the registrant's certificate of
incorporation or bylaws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See Exhibit Index.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement;
PROVIDED, however, that the undertakings set forth in
paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
-5-
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
o o o
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Newport Beach, California on the 3rd day of March, 2000.
INSIGHT HEALTH SERVICES CORP.
By: /s/ Steven T. Plochocki
-------------------------------------
Steven T. Plochocki
President and Chief Executive Officer
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<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Steven T. Plochocki his true and lawful attorney-in-fact and agent, acting
alone, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------ ----------------------- ----------------
<S> <C> <C>
/s/ Steven T. Plochocki Director, President and March 3, 2000
- --------------------------------- Chief Executive Officer
Steven T. Plochocki (Principal Executive Officer)
/s/ Thomas V. Croal Executive Vice President and March 3, 2000
- --------------------------------- Chief Financial Officer
Thomas V. Croal (Principal Accounting Officer)
/s/ Michael E. Aspinwall Director March 3, 2000
- ---------------------------------
Michael E. Aspinwall
/s/ Grant R. Chamberlain Director March 3, 2000
- ---------------------------------
Grant R. Chamberlain
/s/ W. Robert Dahl Director March 3, 2000
- ---------------------------------
W. Robert Dahl
- --------------------------------- Director March _, 2000
Frank E. Egger
/s/ Leonard H. Habas Director March 3, 2000
- ---------------------------------
Leonard H. Habas
/s/ Ronald G. Pantello Director March 3, 2000
- ---------------------------------
Ronald G. Pantello
Director March _, 2000
- ---------------------------------
Glenn A. Youngkin
</TABLE>
-8-
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
- -------
4 Instruments Defining Rights of Security Holders
(a) InSight Health Services Corp. 1997 Management Stock Option Plan,
incorporated by reference to Exhibit 10.2 of the registrant's
Registration Statement on Form S-4 ("Form S-4"), filed with the
Securities and Exchange Commission on August 4, 1998.
(b) InSight Health Services Corp. 1998 Employee Stock Option Plan,
incorporated by reference to Exhibit 10.1 of the registrant's Form S-4.
(c) InSight Health Services Corp. 1999 Stock Option Plan, filed
herewith.
5 Opinion of Arent Fox Kintner Plotkin & Kahn, PLLC, filed herewith.
24 Consents
(a) Consent of Arent Fox Kintner Plotkin & Kahn, PLLC: included in
Exhibit 5.
(b) Consent of Arthur Andersen LLP, filed herewith.
25 Power of Attorney: included on signature page.
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<PAGE>
EXHIBIT 4(c)
INSIGHT HEALTH SERVICES CORP.
1999 STOCK OPTION PLAN
InSight Health Services Corp., a Delaware corporation ("Company")
sets forth herein the terms of the InSight Health Services Corp. 1999 Stock
Option Plan ("Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Company by
providing the officers, key employees and independent contractors of the
Company or its subsidiaries, which individuals will be the eligible
participants under the Plan, with an opportunity to develop a proprietary
interest in the Company. The Plan will thereby create strong performance
incentives for such individuals to maximize the growth and success of the
Company and its subsidiaries, and will encourage such individuals to remain
in the employ of the Company or any of its subsidiaries. Options granted
under the Plan ("Option") may be (i) "incentive stock options" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended from
time to time ("Code") or (ii) nonstatutory stock options.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors ("Board")
of the Company, except to the extent the Board determines to delegate the
administration of the Plan to the Compensation Committee ("Committee") of the
Board. Each member of the Compensation Committee shall qualify in all
respects as a "non-employee director" as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended ("1934 Act") and as an
"outside director" as used in section 162 (m) of the Code, unless the Board
determines otherwise. The Board 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 7 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, binding and conclusive.
The Board may remove members, add members, and fill vacancies on the
Committee from time to time, all in accordance with the Company's Certificate
of Incorporation and Amended and Restated Bylaws, and with applicable law. 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.
3. COMMON 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
Company ("Common Stock"), which shares may be treasury shares or authorized
but unissued shares. The number of shares of Common Stock that may be issued
pursuant to Options granted under the Plan shall not exceed in the aggregate
500,000, which number of shares is subject to adjustment as hereinafter
provided in Section 16 below. If any Option expires, terminates, or is
terminated for any reason prior to exercise in full, the shares of Common
Stock that were subject to the unexercised portion of such Option shall be
available for future Options granted under the Plan.
1999 STOCK OPTION PLAN PAGE 1
<PAGE>
4. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall be effective as of the date the Board adopted the
Plan, subject to approval of the Plan by the stockholders of the Company and
shall continue in effect for a term of ten (10) years from the date the Board
adopted the Plan. Any Options outstanding under the Plan on such date shall
continue to be exercisable pursuant to their terms, except as otherwise
provided herein.
5. 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 Common 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.
6. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option may constitute an incentive stock option to the extent
that the aggregate Fair Market Value (as defined below) (as determined at the
time the Option is granted) of the Common 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 Company)
does not exceed $100,000.
7. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements ("Option Agreements"), to be executed by the Company and
the Optionee, in such form or forms and with such terms and conditions 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 the Plan.
8. OPTION PRICE
The purchase price of each share of Common Stock subject to an
Option ("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 100% of the Fair Market Value of a share of
Common 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 section 422(b)(6) of the Code
(relative to stock ownership of more than 10%), the Option Price of an Option
which is intended to be an incentive stock option shall not be less than the
greater of par value or 110% of the Fair Market Value of a share of Common
Stock at the time such Option is granted. 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) 50% of the Fair Market Value of the Common Stock
on the date of the grant, or (ii) its par value.
1999 STOCK OPTION PLAN PAGE 2
<PAGE>
9. 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 section 422 (b)(6) of the Code (relative to stock ownership of more than
10%), an Option granted to an Optionee which is intended to be an incentive
stock option shall in no event be exercisable after the expiration of five
(5) 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 Company on any business day, at
its principal office, addressed to the attention of the corporate secretary
of the Company, 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 Common
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 Common 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 Company of shares of
Common 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 on the date of exercise; (iii) by a combination of the methods
described in (i) and (ii); or (iv) by such other method or methods as the
Board may from time to time authorize. If shares of Common Stock are
surrendered by an officer of the Company (as the term "officer" is defined in
the rules promulgated under Section 16 of the 1934 Act) for payment and the
Common Stock surrendered was acquired pursuant to an Option of the Company,
then six (6) months must have elapsed since the date of exercise of such
Option. The payment in full of the Option Price need not accompany the
written notice of exercise provided the notice of exercise directs that the
Common Stock certificate or certificates for the shares for which the Option
is exercised be delivered to a licensed broker acceptable to the Company as
the agent for the individual exercising the Option and, at the time such
Common Stock certificate or certificates are delivered, the broker shall
tender to the Company cash (or cash equivalents acceptable to the Company)
equal to the Option Price for the shares of Common Stock purchased pursuant
to the exercise of the Option plus the amount (if any) of federal and/or
other taxes which the Company, may, in its judgment, be required to withhold
with respect to the exercise of the Option. Any 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 Common Stock covered
thereby, the individual exercising the Option shall be entitled to the
issuance of a Common Stock certificate or certificates evidencing the
Optionee's ownership of such shares. A separate Common Stock certificate or
certificates
1999 STOCK OPTION PLAN PAGE 3
<PAGE>
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 Common Stock covered thereby are fully paid and issued to the
Optionee, and except as provided in Section 16 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) FAIR MARKET VALUE. "Fair Market Value" means the value of each
share of Common Stock subject to the Plan determined as follows: If on the
date of grant or exercise the Common 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 Common Stock shall be the closing price of the
Common 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 date of grant
or exercise or on the trading day immediately preceding the date of grant or
exercise if the date of grant or exercise is not a trading day (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 Common Stock is
reported for such trading day, on the next preceding day on which any sale
shall have been reported. If the Common Stock is not listed on such an
exchange, quoted on such stock market or traded on such a market, Fair Market
Value shall be determined by the Board in good faith.
(e) WITHHOLDING. The Company shall have the right to withhold, or
require an Optionee to remit to the Company, an amount sufficient to satisfy
any applicable federal, state, local or foreign withholding tax requirements
imposed with respect to the 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 Common Stock otherwise issuable to the
Optionee hereunder withheld, or (b) tender to the Company previously acquired
shares of Common 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 exercise of Options.
10. TRANSFERABILITY OF OPTIONS
(a) Except as provided in subparagraph (b) below, 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.
(b) During the lifetime of an Optionee to whom an Option is granted,
the Board may permit the transfer, assignment or other encumbrance of an
outstanding Option unless such Option is an incentive stock option and the
Board and the Optionee intend that it shall retain such status. Subject to
any conditions that the Board may prescribe, an Optionee may, upon providing
written notice to the corporate secretary, elect to transfer any or all
Options granted to such Optionee pursuant to the Plan to members of his or
her immediate family, including but not limited to, children, grandchildren
and spouse or to trusts for the benefit of such immediate family members or
to partnerships in which such family members are the only partners; provided
however, that no such transfer by any Optionee may be made in exchange for
consideration.
1999 STOCK OPTION PLAN PAGE 4
<PAGE>
11. TERMINATION OF EMPLOYMENT
Upon the termination of the employment of an Optionee with the
Company or a subsidiary of the Company, 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 ninety (90) days after the date of such termination of
employment, unless otherwise provided pursuant to the Option Agreement or
unless the Board determines in its sole discretion to extend the date the
Option may be exercised. A leave of absence or leave on military or
government service approved by the Board shall not constitute a termination
of employment for purposes of the Plan. For purposes of the Plan, a
termination of employment with the Company or a subsidiary of the Company
shall not be deemed to occur if the Optionee is immediately thereafter
employed with the Company or any subsidiary of the Company. Subject to the
termination date for the Options under Section 9(a) above, the Board may
extend the date the Option may be exercised beyond the ninety (90) day period
after the date of termination of employment or beyond the period provided in
the Option Agreement.
12. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) DEATH. If the Optionee dies while employed by the Company or a
subsidiary, except as is otherwise provided in the Option Agreement relating
to such Option, the executors or administrators or distributees of such
Optionee's estate shall have the right (subject to the general limitations on
exercise set forth in Section 9(b) above), within the earlier of (i) twelve
months after such Optionee's death or (ii) the termination of the Option as
provided in Section 9(a) above, to exercise, in whole or in part, any Option
held by such Optionee at the date of such Optionee's death, on such terms as
the Board may provide in the Option Agreement.
(b) DISABILITY. If the Optionee terminates employment with the
Company 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 9(b) above), within the earlier of (i) twelve
months after such termination, or (ii) the termination of the Option as
provided in Section 9(a) above, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of employment 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 9(b) above), in the event of the termination
of employment of the Optionee with the Company 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 9(a) above, either subject to or without regard
to any installment limitation on exercise imposed pursuant to Section 9(b)
above. Whether a termination of employment 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.
13. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock
pursuant to Options granted under the Plan shall constitute general funds of
the Company.
1999 STOCK OPTION PLAN PAGE 5
<PAGE>
14. REQUIREMENTS OF LAW
(a) VIOLATIONS OF LAW. The Company shall not be required to sell or
issue any shares of Common Stock under any Option if the sale or issuance of
such shares would constitute a violation by the individual exercising the
Option or the Company 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 amended ("1933 Act"), upon exercise of any Option,
unless a registration statement under the 1933 Act is in effect with respect
to the shares of Common Stock covered by such Option, the Company 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 the 1933 Act. Any
determination in this connection by the Board shall be final, binding and
conclusive. The Company shall not be obligated to take any affirmative action
in order to cause the exercise of an Option or the issuance of shares of
Common Stock pursuant thereto to comply with any law or regulation of any
governmental authority, except the Company shall timely file for
registration, on Form S-8 under the 1933 Act, of the shares of Common Stock
to be issued upon exercise of the Options granted under the Plan. As to any
jurisdiction that expressly imposes the requirement that an Option shall not
be exercisable unless and until the shares of Common 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 1934 Act. With
respect to persons subject to Section 16 of the 1934 Act, any provision of
the Plan or action of the Board that is inconsistent with such Rule shall be
deemed null and void to the extent permitted by law and deemed advisable by
the Board.
15. 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 Common Stock as to which Options have
not been granted; provided however, that stockholder approval shall be
required if and to the extent the Board determines that such approval is
appropriate for purposes of satisfying section 162(m) or 422 of the Code or
is otherwise required by law or applicable stock exchange or stock market
requirements. Grants may be made under the Plan prior to the receipt of such
approval but each such grant shall be subject in its entirety to such
approval and no Option may be exercised or vested prior to the receipt of
such approval. Nothing herein shall restrict the Board's ability to exercise
its discretionary authority pursuant to Section 2, which discretion may be
exercised without amendment of the Plan. Except as permitted under Section 16
hereof, no amendment, suspension or termination of the Plan by the Board may,
without the consent of the holder of the Option, adversely affect any rights
or obligations under any Option theretofor granted under the Plan.
16. EFFECT OF CHANGES IN CAPITALIZATION
(a) CHANGES IN COMMON STOCK. If the outstanding shares of Common
Stock are increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company 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 Company,
occurring after the effective date of the Plan, the number and kind 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
1999 STOCK OPTION PLAN PAGE 6
<PAGE>
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 of the Company ("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 stockholder of the Company
who owned a number of shares of 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 COMPANY IS THE SURVIVING
CORPORATION. If the Company shall be the surviving corporation in any
reorganization, merger, or consolidation of the Company with one or more
other corporations, any Option theretofor granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of
shares of Common 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 COMPANY IS NOT THE SURVIVING
CORPORATION; SALE OF ASSETS OR STOCK. Upon the dissolution or liquidation of
the Company, or upon a merger, consolidation or reorganization of the Company
with one or more other corporations in which the Company is not the surviving
corporation, or upon a sale of substantially all of the assets of the Company
to another corporation, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
corporation) approved by the Board which results in any person or entity
owning 80% or more of the combined voting power of all classes of stock of
the Company, 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 theretofor 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 kind of
shares and exercise prices, to preserve the then excess, if any, of the
aggregate Fair Market Value of the shares subject to Options over the
purchase price for the shares under the Options, in which event the Plan and
Options theretofor 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, 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
the Option Agreement. 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 Company gives notice thereof to its
stockholders. Notwithstanding the foregoing, the occurrence of any event
described in this Section 16(c) which also constitutes a Change of Control
(as defined below) shall cause the exercisability in full of all Options
whether or not (i) all conditions to exercise have been satisfied and (ii)
the Plan is terminated pursuant to this Section 16(c).
(d) ADJUSTMENTS. Adjustments under this Section 16 related to stock
or securities of the Company shall be made by the Board, whose determination
in that respect shall be final, binding and
1999 STOCK OPTION PLAN PAGE 7
<PAGE>
conclusive. No fractional shares of Common 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 THE COMPANY. The grant of an Option pursuant
to the Plan shall not affect or limit in any way the right or power of the
Company 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.
17. CHANGE OF CONTROL
If a "Change of Control" (as defined below) occurs, all Options
shall be exercisable in full whether or not all conditions of exercise have
been satisfied. A "Change of Control" shall be deemed to occur (i) at such
time as any person [as defined in Section 13(d)(3) of the 1934 Act, but
excluding General Electric Company ("GE") and the entities to whom shares of
the Company's Convertible Preferred Stock, Series B ("Series B Preferred Stock")
were initially issued ("Carlyle"), and successors and permitted assigns of GE
and Carlyle, individually and collectively] at any time shall directly or
indirectly acquire more than 40% of the voting power of the Common Stock, (ii)
at such time as during any one year period, individuals who at the beginning
of such period constitute the Board (together with any new directors (a) whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved or (b) elected
or appointed by Carlyle, GE or their successors and permitted assigns) cease
to constitute at least a majority of such Board (provided however, that a
change in directors upon a Type B Event Date [as defined in the Company's
Certificate of Designation, Preferences and Rights] of Convertible Preferred
Stock Series B ("Series B Certificate of Designation") shall not be deemed to
cause a Change of Control pursuant to this subparagraph (ii), (iii) upon
consummation of a merger or consolidation of the Company into or with another
Person (as defined below) in which the stockholders of the Company
immediately prior to the consummation of such transaction shall own 50% or
less of the voting securities of the surviving corporation (or the parent
corporation of the surviving corporation where the surviving corporation is
wholly owned by the parent corporation) immediately following the
consummation of such transaction, or (iv) the sale, transfer or lease of all
or substantially all of the assets of the Company, in any of cases (i), (ii),
(iii) or (iv) in a single transaction or series of related transactions;
provided, that no Change of Control hereunder with respect to the Company
shall be deemed to occur solely by reason of (x) the ownership of the
Company's capital stock by any of Carlyle, TC Group, L.L.C., any investor in
any entity comprising Carlyle or TC Group, L.L.C. as of October 14, 1997, GE
or its Affiliates (as defined in the Series B Certificate of Designation),
(y) the conversion of shares of Series B Preferred Stock into either the
Company's Convertible Preferred Stock, Series D ("Series D Preferred Stock")
(and any change in the Board incident thereto) or Common Stock, or (z) the
conversion of shares of Series D Preferred Stock into Common Stock. "Person"
means any corporation, partnership, limited partnership, limited liability
partnership, joint venture, association, limited liability company,
joint-stock company, trust or unincorporated organization.
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 of the Company or any
subsidiary of the Company, or to interfere in any way with the right and
authority of the Company or any subsidiary of the Company 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 Company
or any subsidiary of the Company.
1999 STOCK OPTION PLAN PAGE 8
<PAGE>
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to
the stockholders of the Company 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 THE 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.
21. HEADINGS
The headings herein are for convenience only and shall not be used in
interpreting the Plan.
1999 STOCK OPTION PLAN PAGE 9
<PAGE>
EXHIBIT 5
[LETTERHEAD]
March 1, 2000
InSight Health Services Corp.
4400 MacArthur Boulevard
Newport Beach, CA 92660
Ladies and Gentleman:
We have acted as counsel to InSight Health Services Corp. (the "Company") with
respect to the Company's Registration Statement on Form S-8 (the
"Registration Statement") filed with the Securities and Exchange Commission in
connection with the registration, under the Securities Act of 1933, as
amended, by the Company of an aggregate of 1,250,000 shares of its $0.001 par
value common stock (the "Shares") issuable upon exercise of stock options
granted under the InSight Health Services Corp. 1997 Management Stock Option
Plan, the InSight Health Services Corp. 1998 Employee Stock Option Plan and
the InSight Health Services Corp. 1999 Stock Option Plan (collectively, the
"Plans").
In connection with this opinion letter, we have examined the originals or
copies certified or otherwise identified to our satisfaction of the
Registration Statement and such other records, documents, certificates,
agreements, or other instruments and have made such other inquiries, all as
we deemed necessary to enable us to render the opinions expressed below.
Based on the foregoing, we are of the opinion that the Shares have been duly
and validly authorized for issuance and, when issued in accordance with the
terms of the Plans, will be validly issued, fully paid and non-assessable.
We consent to the inclusion of this opinion as part of the Registration
Statement and to the reference to our firm therein. In giving this consent,
we do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules
promulgated thereunder.
Very truly yours,
ARENT FOX KINTNER PLOTKIN & KAHN, PLLC
<PAGE>
EXHIBIT 24(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement (Form S-8) of our report dated
September 24, 1999 included in InSight Health Services Corp.'s Form 10-K for
the year ended June 30, 1999 and to all references to our Firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Orange County, California
February 24, 2000
