<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
InSight Health Services Corp.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[INSIGHT LOGO]
INSIGHT HEALTH SERVICES CORP.
4400 MacArthur Boulevard, Suite 800
Newport Beach, California 92660
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 5, 2000
The Fourth Annual Meeting of Stockholders of InSight Health Services Corp.
("Company") will be held at the Hyatt Regency Hotel, located at 17900 Jamboree
Road, Irvine, California 92614 on Tuesday, December 5, 2000, at 8:00 a.m.,
Pacific Standard Time, for the following purposes:
(1) to elect one of the Company's directors to serve a three-year term until
the 2003 Annual Meeting of Stockholders and until his successor is duly
elected and qualified; and
(2) to transact such other business as may properly come before the Annual
Meeting and any and all postponements or adjournments thereof.
The close of business on Tuesday, October 24, 2000 has been fixed as the record
date for the determination of stockholders entitled to receive notice of, and to
vote at, the Annual Meeting and any and all postponements or adjournments
thereof.
The presence, either in person or by proxy, of persons entitled to vote a
majority of the outstanding common stock is necessary to constitute a quorum for
the election of a director, and the presence, either in person or by proxy, of
persons entitled to vote a majority of the votes represented by the outstanding
common stock, Series B Senior Convertible Preferred Stock and Series C Senior
Convertible Preferred Stock is necessary to constitute a quorum for the
transaction of any other business as may properly come before the Annual
Meeting. To assure your representation at the Annual Meeting, please vote, sign
and mail the enclosed proxy for which a return envelope is provided.
By Order of the Board of Directors
Marilyn U. MacNiven-Young
Executive Vice President, General Counsel
and Secretary
Newport Beach, California
October 27, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON; HOWEVER,
TO ENSURE YOUR REPRESENTATION AT THE MEETING YOU ARE URGED TO VOTE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENVELOPE ENCLOSED FOR
THAT PURPOSE.
<PAGE>
INSIGHT HEALTH SERVICES CORP.
4400 MacArthur Boulevard
Suite 800
Newport Beach, California 92660
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
December 5, 2000
This Proxy Statement is being mailed in connection with the solicitation on
behalf of the Board of Directors ("Board") of InSight Health Services Corp., a
Delaware corporation ("Company"), of proxies for use at the Fourth Annual
Meeting of Stockholders of the Company to be held at the Hyatt Regency Hotel,
located at 17900 Jamboree Road, Irvine, California 92614 on Tuesday, December 5,
2000, at 8:00 a.m., Pacific Standard Time, and at any and all postponements or
adjournments thereof.
The entire cost of the solicitation of proxies will be borne by the Company,
including expenses in connection with preparing, assembling and mailing the
proxy solicitation materials and all papers accompanying them. The Company will
reimburse brokers or other persons holding stock in their name or in the names
of their nominees for the benefit of other beneficial owners for their expenses
in sending proxies and proxy materials to beneficial owners. In addition to
solicitation by mail, certain directors, officers and regular employees of the
Company, who will receive no special compensation for their services, may
solicit proxies personally or by telephone or facsimile.
The persons named in the accompanying proxy card will vote shares represented by
all valid proxies in accordance with the instructions contained thereon. In the
absence of such instructions, shares represented by properly executed proxies
will be voted in favor of the nominee for director. Any stockholder may revoke
his or her proxy at any time prior to its use by filing with the corporate
secretary, at 4400 MacArthur Boulevard, Suite 800, Newport Beach, California
92660, written notice of revocation or a duly executed proxy bearing a later
date. Execution of the enclosed proxy will not affect your right to vote in
person if you should later decide to attend the Annual Meeting.
This Proxy Statement and the accompanying proxy card are first being mailed to
holders of the Company's common stock, par value $0.001 per share ("Common
Stock"), on or about October 27, 2000.
RECORD DATE AND VOTING SECURITIES
The close of business on Tuesday, October 24, 2000, has been fixed as the record
date for determination of the holders of Common Stock entitled to notice of and
to vote at the Annual Meeting. On that date, there were outstanding and entitled
to vote 2,993,543 shares of Common Stock. Each share of Common Stock is entitled
to one vote with respect to the election of a director to be elected by the
holders of Common Stock ("Common Stock Director"). (See "ELECTION OF
DIRECTORS"). The presence, either in person or by proxy, of persons entitled to
cast a majority of such votes constitutes a quorum for the purpose of the
election of the Common Stock Director. A plurality of the votes cast is required
for the election of the Common Stock Director. Votes may be cast in favor of or
withheld from the Common Stock Director nominee. Votes that are withheld will be
excluded entirely from the vote and will have no effect. Certain of the
Company's directors ("Preferred Stock Directors") are elected, by written
consent, by the holders of the Company's Series B Senior Convertible Preferred
Stock ("Series B Preferred Stock") and Series C Senior Convertible Preferred
Stock ("Series C Preferred Stock" and, together with the Series B Preferred
Stock, "Preferred Stock") as separate classes. (See "ELECTION OF DIRECTORS".)
All matters, other than the election of directors and matters which are to be
voted on by the holders of Series B Preferred Stock and Series C Preferred Stock
as separate classes, are to be voted on by the holders of Common Stock and
Preferred Stock (voting on an as-if-converted basis) as a single class, provided
that the maximum aggregate voting percentage of the Preferred Stock in such
event may not exceed 37% of the shares eligible to vote. The Series B Preferred
Stock is currently convertible into 2,985,075 shares of Common Stock and the
Series C Preferred Stock is currently convertible into 3,337,581 shares of
Common Stock. The presence, either in person or by proxy, of persons entitled to
vote a majority of the votes represented by the outstanding Common Stock and
Preferred Stock (on an as-if-converted basis) is necessary to constitute a
quorum for the transaction of any other business which may properly come before
the Annual Meeting. The Company is not aware of any business to be presented for
consideration at the Annual Meeting other than the election of the Common Stock
Director identified herein. Abstentions are included in the determination of the
number of shares present and entitled to vote for
1
<PAGE>
purposes of determining the presence of a quorum and determining the approval of
any matter requiring the affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote. Broker non-votes are counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum, but not for purposes of determining the number of shares that are
present in person or by proxy and entitled to vote for approval of a matter
requiring the affirmative vote of a majority of the shares present in person or
by proxy and entitled to vote.
ELECTION OF DIRECTORS
Pursuant to the terms of a recapitalization consummated in October 1997
("Recapitalization"), the number of directors comprising the Board is fixed at
nine, consisting of six Common Stock Directors, one of whom ("Joint Director")
is to be proposed by the holders of a majority of each of the Series B Preferred
Stock and the Series C Preferred Stock and approved by a majority of the Board
in its sole discretion, and three Preferred Stock Directors, two of whom are to
be elected by the holders of the Series B Preferred Stock ("Series B Directors")
and one of whom is to be elected by the holders of the Series C Preferred Stock
("Series C Director"), acting by written consent and without a meeting of the
Common Stock holders. As long as the initial purchasers of the Series B
Preferred Stock and their affiliates ("Carlyle Stockholders") own at least 50%
of the Series B Preferred Stock, the holders of the Series B Preferred Stock
will have the right to elect two Preferred Stock Directors and as long as the
Carlyle Stockholders own at least 25% but less than 50% of such Stock, such
holders will have the right to elect one Preferred Stock Director. As long as
General Electric Company ("GE") owns at least 25% of the Series C Preferred
Stock, the holders of the Series C Preferred Stock will have the right to elect
one Preferred Stock Director. Except in the event of a conversion of all of the
Series B Preferred Stock and Series C Preferred Stock into Series D Senior
Convertible Preferred Stock (see "POSSIBLE FUTURE BOARD CHANGES"), if the
ownership percentage of the Carlyle Stockholders or GE falls below the
applicable threshold, the Preferred Stock Director(s) formerly entitled to be
elected by the Series B Preferred Stock holders or the Series C Preferred Stock
holders, as applicable, will automatically be removed and the Board will be able
to fill the resulting vacancies for the balance of the terms of such directors.
Thereafter, such directors will be elected by the Common Stock holders. Holders
of the Series B Preferred Stock and the Series C Preferred Stock are not
entitled to participate in the election of the Common Stock Directors.
Presently, the Board consists of eight directors, five of whom are Common Stock
Directors and three of whom are Preferred Stock Directors. On November 22, 1999,
Steven T. Plochocki, the Company's new president and chief executive officer,
was elected by the Board as a Common Stock Director to replace and serve the
balance of the three-year term of E. Larry Atkins who resigned on July 12, 1999
as the Company's president and chief executive officer and a Common Stock
Director. On May 31, 2000, Michael E. Aspinwall, the Series C Director, resigned
as a Preferred Stock Director and on June 30, 2000, Jerome C. Marcus was
appointed by GE as the Series C Director. In addition, the vacancy created for
the Joint Director has not yet been filled.
The Company's Certificate of Incorporation provides that the Common Stock
Directors serve for three-year terms which are staggered to provide for the
election of approximately one-third of the Board members each year. The term of
the Class I director (which will include the Common Stock Director and Joint
Director when appointed) expires at this Annual Meeting, the term of the Class
II directors expires at the 2001 Annual Meeting and the term of the Class III
directors expires at the 2002 Annual Meeting. The terms of the two Series B
Directors coincide with the terms of the Class I and Class III directors,
respectively, and the term of the Series C Director coincides with the term of
the Class II directors. It is contemplated that the Carlyle Stockholders will
elect the Series B Director, whose term coincides with the term of the Class I
director, by written consent on December 5, 2000.
NOMINEE FOR ELECTION. The nominee for election as a Class I director is set
forth below, together with information regarding the nominee:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION TERM TO EXPIRE YEAR FIRST ELECTED TO SERVE
---- --- ---------------- -------------- ---------------------------
<S> <C> <C> <C> <C>
Steven T. Plochocki 49 Director, Class I, President 2000 1999
and Chief Executive Officer
</TABLE>
Steven T. Plochocki has been president and chief executive officer and a Common
Stock Director of the Company since November 22, 1999. From January 1998 through
November 19, 1999, Mr. Plochocki was president and chief executive officer of
Centratex Support Services, Inc., a support services company for the healthcare
industry. Mr. Plochocki was president and chief executive officer of Apria
Healthcare Group Inc. from July 1995 through October 1997, a home healthcare
company.
2
<PAGE>
BOARD OF DIRECTORS. Set forth below are the Class II and Class III directors of
the Company whose terms do not expire this year and the Preferred Stock
Directors who are elected by the holders of the Preferred Stock, together with
certain information about the Company's directors:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION TERM TO EXPIRE YEAR FIRST ELECTED TO SERVE
---- --- ---------------- -------------- ---------------------------
<S> <C> <C> <C> <C>
COMMON STOCK DIRECTORS:
Grant R. Chamberlain 35 Director, Class II 2001 1996
Frank E. Egger 56 Director, Class III 2002 1996
Leonard H. Habas 57 Director, Class III 2002 1996
Ronald G. Pantello 56 Director, Class II 2001 1996
PREFERRED STOCK DIRECTORS:
W. Robert Dahl 44 Series B Director 2000 1999
Jerome C. Marcus 39 Series C Director 2001 2000
Glenn A. Youngkin 33 Series B Director 2002 1997
</TABLE>
Grant R. Chamberlain has been a Common Stock Director of the Company since July
1996. Since January 1998, Mr. Chamberlain has been a managing director of
Shattuck Hammond Partners, an investment banking firm based in New York City,
which is a division of PriceWaterhouseCoopers Securities LLC. From April 1995 to
January 1998, Mr. Chamberlain was a vice president of Shattuck Hammond Partners.
From April 1991 to April 1995, he served as manager of strategic investments and
restructurings for GE.
W. Robert Dahl has been a Preferred Stock Director of the Company since December
6, 1999. Mr. Dahl has been a managing director of The Carlyle Group since April
1999. Prior to joining The Carlyle Group he was a managing director and co-head
of the U.S. Healthcare Group of Credit Suisse First Boston, a global investment
banking firm from January 1995 to April 1999. From 1986 to 1995 he served in
various capacities with Credit Suisse First Boston.
Frank E. Egger has been chairman of the board and a Common Stock Director of the
Company since February 1996. From July 12, 1999 to November 22, 1999. Mr. Egger
was acting president and chief executive officer of the Company. Mr. Egger was a
director of American Health Services Corp. ("AHS"), a predecessor of the
Company, from August 1991 until June 1996. He was appointed chairman of the
board of AHS in May 1995, and served as such until June 1996. From 1995 through
December 1996, Mr. Egger served 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
was a group of real estate development and investment companies based in Miami,
Florida. Since December 1996, Mr. Egger has been a consultant.
Leonard H. Habas has been a Common Stock Director of the Company since February
1996. From 1989 to June 1996, Mr. Habas was a director of Maxum Health Corp.
("MHC), a predecessor of the Company. Since 1995 he has been a director,
chairman of the board and chief executive officer of Advance Publishers, L.C., a
book publishing company based in Maitland, Florida.
Jerome C. Marcus has been a Preferred Stock Director of the Company since June
30, 2000. Mr. Marcus has been a managing director and co-head of the Financial
Services Group (since October 1999) and Healthcare Group (since August 2000) of
GE Equity. From January 1995 to October 1999, he was a senior vice president of
the Financial Services Group of GE Equity (formerly GE Capital Equity Capital
Group).
Ronald G. Pantello has been a Common Stock Director of the Company since
February 1996. From 1993 to June 1996, Mr. Pantello was a director of MHC. He is
a founding partner of Lally, McFarland & Pantello, an advertising agency
specializing in the healthcare industry, based in New York City, and has been
its chief executive officer since 1980.
3
<PAGE>
Glenn A. Youngkin has been a Preferred Stock Director of the Company since
October 1997. Mr. Youngkin is a managing director of The Carlyle Group,
effective January 1, 1999, where he has been employed since 1995. He was a vice
president of The Carlyle Group from 1996 through 1998. Mr. Youngkin was a
consultant with McKinsey & Company, a global management consulting firm from
1994 to 1995.
In fiscal 2000, the Board of Directors held ten meetings at which at least 75%
of the directors were present. In addition, the Board of Directors took action
by unanimous written consent nine times.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Compensation
Committee currently consists of three non-employee directors, Messrs. Habas
(chairman), Pantello and Youngkin. The Compensation Committee is responsible for
determining the specific forms and levels of compensation of the Company's
executive officers, and administering or assisting the Board in administering
the Company's 1999 Stock Option Plan, 1998 Employee Stock Option Plan, 1997
Management Stock Option Plan, 1996 Employee Stock Option Plan and 1996
Directors' Stock Option Plan, AHS' 1987 Stock Option Plan, AHS' 1992 Option and
Incentive Plan, and MHC's 1989 Stock Option Plan. The Compensation Committee did
not meet in fiscal 2000.
ACQUISITION COMMITTEE. The Acquisition Committee was created pursuant to the
Recapitalization. It currently consists of Messrs. Egger, Marcus and Youngkin.
Its principal functions are to consider certain transactions with respect to
which the aggregate consideration payable in connection therewith is less than
$15 million. The Acquisition Committee met six times in fiscal 2000.
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Chamberlain
(chairman) and Pantello. Its principal functions are to review the results of
the Company's annual audit with the Company's independent auditors and review
the performance of the Company's independent auditors. It is intended that
the Joint Director, when appointed and approved, will be a member of the
Audit Committee. The Audit Committee met once in fiscal 2000.
EXECUTIVE COMMITTEE. Following the Recapitalization, the Executive Committee
was created. The Executive Committee currently consists of Messrs. Dahl,
Egger and Marcus. It is authorized to exercise all the power and authority of
the Board in the management of the business of the Company but its authority
does not extend to certain fundamental corporate transactions. The Executive
Committee did not meet in fiscal 2000.
NOMINATING COMMITTEE. The Nominating Committee currently consists of Messrs.
Habas and Egger. Its principal function is to make recommendations relating
to the composition of the Board, including identifying potential candidates
as Board members. The Nominating Committee will consider nominees recommended
by a stockholder. See "OTHER BUSINESS" for the procedures to be followed. The
Nominating Committee did not meet in fiscal 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") requires
the Company's directors and officers and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC") and
the National Association of Securities Dealers, Inc. Directors and officers and
greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of the reports they file. Based solely on the review of the
copies of such reports and written representations from certain persons that
certain reports were not required to be filed by such persons, the Company
believes that all its directors, officers and greater than 10% beneficial owners
complied with all filing requirements applicable to them with respect to
transactions for the period July 1, 1999 through June 30, 2000, except that Ms.
Blank and Messrs. Dahl and Marcus failed to file timely an Initial Statement of
Beneficial Ownership of Securities on Form 3 (with regard to their becoming an
executive officer and directors of the Company, respectively); Ms.
MacNiven-Young (with regard to one stock option grant) and Mr. Egger (with
regard to the purchase of Common Stock) failed to file timely a Statement of
Changes in Beneficial Ownership on Form 4; and certain directors of the Company,
consisting of Messrs. Chamberlain, Egger, Habas and Pantello (with regard to one
stock option grant each), failed to file timely an Annual Statement of Changes
in Beneficial Ownership on Form 5. When it was brought to their attention, each
of the foregoing individuals promptly filed the appropriate ownership form,
disclosing these transactions and events.
4
<PAGE>
EXECUTIVE OFFICERS
The current executive officers of the Company, together with the year in which
they were appointed to their current positions, are set forth below:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER AGE POSITION YEAR
----------------- --- -------- ----
<S> <C> <C> <C>
Steven T. Plochocki 49 President and Chief Executive Officer 1999
Patricia R. Blank 50 Executive Vice President and Chief Information Officer 1999
Michael A. Boylan 44 Executive Vice President, Operations, Eastern Division 2000
Thomas V. Croal 41 Executive Vice President and Chief Financial Officer 1999
Brian G. Drazba 39 Senior Vice President, Finance and Corporate Controller 1997
Cecilia A. Guastaferro 40 Senior Vice President, Human Resources 2000
Marilyn U. MacNiven-Young 49 Executive Vice President, General Counsel and Secretary 1998
Michael S. Madler 42 Executive Vice President, Operations, Western Division 1999
</TABLE>
Information concerning Mr. Plochocki is set forth above under "ELECTION OF
DIRECTORS."
Patricia R. Blank has been executive vice president and chief information
officer of the Company since September 1, 1999. Prior to joining the Company,
Ms. Blank was the principal of Blank & Company, a consulting firm specializing
in healthcare consulting. From 1995 to 1998, Ms. Blank served as executive vice
president and chief operating officer of HealthHelp, Inc., a Houston, Texas
based radiology services organization managing radiology provider networks in
multiple states. From 1988 to 1995, she was corporate director of radiology of
FHP, a California insurance company.
Michael A. Boylan has been executive vice president, operations, eastern
division of the Company since July 1, 2000. From April 1998 to July 1, 2000, he
was executive vice president and chief development officer. From February 1996
to April 1998, he was senior vice president-operations of the Company. Mr.
Boylan has served as executive vice president of MHC since March 1994. From 1992
to 1994, he served as a regional vice president of MHC's principal operating
subsidiary, Maxum Health Services Corp. From 1991 to 1992, he served as an
executive director of certain of MHC'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.
Thomas V. Croal was executive vice president, chief financial officer and
secretary of the Company from February 1996 until July 1998 when he was
appointed senior executive vice president and chief operating officer. He is
currently executive vice president and chief financial officer of the Company
but effective June 8, 1999 is no longer senior executive vice president and
chief operating officer and effective August 1998 is no longer corporate
secretary. Mr. Croal served as a director of AHS from March 1991 until June
1996. He has served as vice president and chief financial officer of AHS since
April 1991. He was controller of AHS from 1989 until 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.
Brian G. Drazba has been senior vice president-finance of the Company since July
1997. From March 1996 to July 1997, he served as vice president-finance of the
Company. Since June 1995, he has served as vice president-finance of AHS. Mr.
Drazba served as corporate controller for AHS from 1992 to 1995. From 1985 to
1992, Mr. Drazba was employed by Arthur Andersen & Co.
Cecilia A. Guastaferro has been senior vice president - human resources of the
Company since July 1, 2000. From July 1997 to June 30, 2000, she was vice
president - human resources. Ms. Guastaferro served as director of human
resources of AHS from May 1994 through June 1996 when she became director of
human resources of the Company.
Marilyn U. MacNiven-Young has been executive vice president, general counsel and
corporate secretary of the Company since August 1998. From February 1996 through
July 1998, she was an independent consultant to the Company. From September 1994
through June 1995, she was senior vice president and general counsel of Abbey
Healthcare Group, Inc., a home healthcare company. From 1991 through 1994, Ms.
MacNiven-Young served as general counsel of AHS.
5
<PAGE>
Michael S. Madler joined the Company as a senior vice president in October 1998
and served as such until June 8, 1999 when he was appointed executive vice
president, operations, western division. From 1993 through October 1998, Mr.
Madler was chief operating officer of Prime Medical Services, Inc. an Austin,
Texas based lithotripsy services management company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth information
concerning the annual, long-term and all other compensation for services
rendered in all capacities to the Company and its subsidiaries for the years
ended June 30, 2000, 1999, and 1998 of (i) each of the persons who served as the
Company's chief executive officer during the year ended June 30, 2000, and (ii)
the four most highly compensated executive officers (other than the chief
executive officers) of the Company serving as executive officers at June 30,
2000 ("Other Executive Officers"), and whose aggregate cash compensation
exceeded $100,000 for the year ended June 30, 2000 (collectively, "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation LongTerm
------------------------------------- Compensation
Fiscal Awards
Year Stock Options All Other
Name and Principal Position Ended Salary Bonus(1) Other(2) (Shares) Comp(2)
--------------------------- ----- ------ -------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
E. Larry Atkins ................. 2000 $292,000 -- $ 750 -- --
former President and Chief ...... 1999 292,000 -- 9,000 - $ 18,092
Executive Officer(3) ............ 1998 287,000 $126,900 9,000 200,000 16,242
Frank E. Egger .................. 2000 87,143 -- -- -- --
former acting President and Chief 1999 -- -- -- -- --
Executive Officer(4) ............ 1998 -- -- -- -- --
Steven T. Plochocki ............. 2000 158,749 125,000 5,625 125,000 1,655
President and Chief ............. 1999 -- -- -- -- --
Executive Officer(5) ............ 1998 -- -- -- -- --
Thomas V. Croal ................. 2000 225,500 75,250 9,000 -- 8,319
Executive Vice President, and ... 1999 215,000 -- 9,000 -- 12,596
Chief Financial Officer ......... 1998 200,000 109,333 9,000 165,000 12,748
Marilyn U. MacNiven-Young ....... 2000 236,250 59,063 9,000 - 3,964
Executive Vice President, General 1999 206,250 -- 8,250 50,000 4,195
Counsel and Secretary(6) ........ 1998 -- -- -- -- --
Michael A. Boylan ............... 2000 195,000 68,250 14,000 -- 4,819
Executive Vice President, ....... 1999 195,000 -- 9,000 -- 7,277
Operations-Eastern Division(7) .. 1998 188,250 68,250 7,800 60,000 7,715
Michael A. Madler ............... 2000 175,000 61,250 16,341 -- 4,090
Executive Vice President, ....... 1999 106,450 25,000 4,000 30,000 3,437
Operations-Western Division(8) .. 1998 -- -- -- -- --
</TABLE>
(1) Annual bonuses are earned and accrued during the fiscal years indicated, and
paid subsequent to the end of each fiscal year.
(2) Amounts of Other Annual Compensation include perquisites (auto allowances
and commissions for contract awards and renewals) and amounts of All Other
Compensation include (i) amounts contributed to the Company's 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 Named Executive Officers of the Company.
(3) On July 12, 1999, Mr. Atkins resigned as president and chief executive
officer.
6
<PAGE>
(4) Reflects compensation received by Mr. Egger only in his capacity as acting
president and chief executive officer from July 12, 1999 through November
22, 1999. Compensation received by Mr. Egger in other capacities is
disclosed in "COMPENSATION OF DIRECTORS".
(5) On November 22, 1999, Mr. Plochocki joined the Company as president and
chief executive officer.
(6) On August 1, 1998, Ms. MacNiven-Young joined the Company as executive vice
president, general counsel and secretary.
(7) On July 1, 2000, Mr. Boylan became executive vice president, operations,
eastern division
(8) On October 30, 1998, Mr. Madler joined the Company as senior vice president.
COMPENSATION OF DIRECTORS. The members of the Board who are not employees of the
Company receive an annual director fee of $15,000 and options to purchase Common
Stock for their services as directors, as provided in the Company's 1996
Directors' Stock Option Plan ("Directors' Plan"). On March 28, 1996, the Company
entered into a consulting agreement with Mr. Egger pursuant to which Mr. Egger
receives $85,000 per year for services rendered to the Company in connection
with its acquisition and financing activities. In addition, on July 7, 1999, the
Company entered into an agreement with Mr. Egger, in connection with his
appointment as acting president and chief executive officer, pursuant to which
Mr. Egger received $15,000 per month and the Company issued to Mr. Egger a
warrant to purchase 15,000 shares of Common Stock at an exercise price of $6.00
per share, which was the fair market value (the closing price reported on The
Nasdaq SmallCap Market) of the Common Stock on such date. The warrant vests
cumulatively at the rate of 3,750 shares per month and is exercisable at any
time up to July 7, 2009. Mr. Egger was acting as president and chief executive
officer until November 22, 1999 when Mr. Plochocki was appointed president and
chief executive officer. (See "EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS"
and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".)
The Directors' Plan provided for the automatic grant at the effective time of
the merger of each of AHS and MHC into wholly owned subsidiaries of the Company
("Merger") to each non-employee director then serving on the Board of an option
to purchase 15,000 shares of Common Stock at an exercise price equal to the fair
market value of such stock on the date of the grant. In addition, each new
director of the Company who commences service after the effective time of the
Merger will be granted an option to purchase 15,000 shares of Common Stock. The
initial grants vest monthly on a pro rata basis over a three-year period, so
long as the individual remains a director of the Company or is an employee or
independent contractor of the Company or any of its subsidiaries. At the end of
such three-year period and annually thereafter during the term of the Directors'
Plan, so long as the individual remains a director, he or she will be granted an
option to purchase 5,000 shares of Common Stock. These additional grants vest
monthly over one year on the same terms as the initial grants. These options
expire ten years from the date of grant. In accordance with the Director's Plan
(i) on July 19, 1999, Mr. Chamberlain was granted an additional option to
purchase 5,000 shares of Common Stock at an exercise price of $5.75 per share,
and (ii) on June 26, 2000, each of Messrs. Egger, Habas and Pantello was granted
additional options to purchase 5,000 shares of Common Stock at an exercise price
of $6.50 per share.
In lieu of an automatic grant, under the Directors' Plan, to each of the Series
B Directors and the Series C Director of an option to purchase 15,000 shares of
Common Stock, at the request of such Preferred Stock Directors, upon the date
each of them became a Preferred Stock Director, the Company issued to an
affiliate of the Carlyle Stockholders a warrant to purchase 30,000 shares of
Common Stock and GE a warrant to purchase 15,000 shares of Common Stock. The
warrants vest monthly on a pro rata basis over a three year period. At the end
of such three-year period and annually thereafter during the term of the
Directors' Plan, so long as the Carlyle Stockholders and GE have designees on
the Board, the Carlyle Stockholders and GE will be granted warrants to purchase
10,000 shares of Common Stock and 5,000 shares of Common Stock, respectively.
These additional warrants vest monthly over one year on the same terms as the
initial grants. These warrants expire ten years from the date of grant. No
warrants were issued to the Preferred Stock Directors or their affiliates during
the year ended June 30, 2000.
7
<PAGE>
OPTION GRANTS. For the year ended June 30, 2000, stock options were not granted
under any stock option plan of the Company, AHS or MHC, to the Named Executive
Officers of the Company, except as set forth below:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of Percent of
Securities Total Options Potential Realizable Value at
Underlying Granted to Exercise Assumed Annual Rates of Stock
Options Employees in Price Per Expiration Price Appreciation for OPTION
Name Granted Fiscal Year(1) Share Date Term(2)
---- ------- -------------- ----- ---- -------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Steven T. Plochocki 125,000 74% $8.37 11/21/09(3) $657,982 $1,007,456
</TABLE>
(1) The option was granted at fair market value (the closing price reported on
The Nasdaq SmallCap Market) for the Common Stock on the date of grant.
(2) Potential realizable value is determined by taking the exercise price per
share and applying the stated annual appreciation rate compounded annually
for the remaining term of the option (ten years), subtracting the exercise
price per share at the end of the period and multiplying the remaining
number by the number of options granted. Actual gains, if any, on stock
option exercises and the Company's Common Stock holdings are dependent on
the future performance of the Common Stock and overall stock market
conditions.
(3) 50% of the option is exercisable starting twelve months after the date of
grant, with 33% of the shares becoming exercisable at that time and with an
additional 33% of the shares becoming exercisable on each successive
anniversary date. The remaining 50% of the option is exercisable seven years
after the grant date, with 33% of the shares becoming exercisable at that
time and with an additional 33% of the shares becoming exercisable on each
successive anniversary date, with acceleration in certain circumstances. The
option was granted for a term of ten years, subject to earlier termination
in certain events related to termination of employment.
On July 7, 1999, in connection with his appointment as acting president and
chief executive officer, the Company issued to Mr. Egger a warrant to purchase
15,000 shares of Common Stock at an exercise price of $6.00 per share, which was
the fair market value (the closing price reported on The Nasdaq SmallCap Market)
of the Common Stock on such date.
OPTION EXERCISES AND FISCAL YEAR-END VALUES. During the year ended June 30,
2000, none of the Named Executive Officers of the Company (except Messrs.
Atkins, Croal and Egger) exercised any stock options. The following table sets
forth information with respect the stock options exercised by Messrs. Atkins,
Croal and Egger during fiscal 2000 and the unexercised options to purchase
Common Stock granted under (i) MHC's and AHS's stock option plans and assumed by
the Company pursuant to the Merger, (ii) the Company's 1996 Employee Stock
Option Plan, (iii) the Company's 1996 Directors Stock Option Plan, (iv) the
Company's 1997 Management Stock Option Plan, (v) the Company's 1998 Employee
Stock Option Plan, and (vi) the Company's 1999 Employee Stock Option Plan, to
the Named Executive Officers of the Company as of June 30, 2000:
<TABLE>
<CAPTION>
Number of
Shares Value of Unexercised
Acquired on Value Number of Unexercised Options In-The-Money Options
Exercise Realized Held At June 30, 2000 At June 30, 2000(1)
-------- -------- ----------------- --------------- --------------- ----------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
E. Larry Atkins 17,500 $59,063(2) 150,000 12,500 $67,250 $24,250
Frank E. Egger 3,000 10,125(2) 54,268(3) 5,000(3) 55,500(3) --
Steven T. Plochocki -- -- -- 125,000 -- --
Thomas V. Croal 12,500 43,750(2) 77,917 112,083 28,938 25,813
Marilyn U. MacNiven-Young -- -- 12,500 37,500 -- --
Michael A. Boylan -- -- 68,037 40,833 243,293 10,325
Michael A. Madler -- -- 7,500 22,500 -- --
</TABLE>
(1) Based on the closing price reported on The Nasdaq SmallCap Market for the
Common Stock on that date of $6.50 per share.
(2) The value realized is the fair market value of the shares on the date of
exercise less the exercise price.
(3) Includes warrants issued to Mr. Egger. (See"COMPENSATION OF DIRECTORS")
8
<PAGE>
INDEMNIFICATION AGREEMENTS. The Company has entered into separate
indemnification agreements with each of its directors and executive officers
that could require the Company, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as
directors and executive officers and to advance expenses incurred by them as a
result of any proceedings against them as to which they could be indemnified.
The Recapitalization agreements also contain provisions for the indemnification
of the Company's directors under certain circumstances. The agreements pursuant
to which the Carlyle Stockholders and GE acquired Series B Preferred Stock and
Series C Preferred Stock, respectively, provide that the Company will indemnify,
defend and hold harmless the Carlyle Stockholders and GE, as the case may be,
and their respective affiliates, directors, officers, advisors, employees and
agents to the fullest extent lawful from and against all demands, losses,
damages, penalties, claims, liabilities, obligations, actions, causes of action
and reasonable expenses ("Losses") arising out of the agreements or the related
transactions or arising by reason of or resulting from the breach of any
representation, warranty, covenant or agreement of the Company contained in such
agreements for the period for which such representation or warranty survives;
provided however, that the Company does not have any liability to indemnify the
Carlyle Stockholders or GE with respect to Losses arising from the bad faith or
gross negligence of the Carlyle Stockholders or GE indemnified party. The
Recapitalization agreements provide that no claim may be made by the Carlyle
Stockholders or GE against the Company for indemnification until the aggregate
dollar amount of all Losses incurred by the Carlyle Stockholders or GE, as
applicable, exceeds $250,000 and the indemnification obligations of the Company
shall be effective only until the dollar amount paid in respect of the Losses
incurred by the Carlyle Stockholders or GE, as applicable, and indemnified
against aggregates to an amount equal to $25 million, except with respect to
Losses resulting from the breaches of certain representations or covenants,
which are unlimited in amount.
EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS. Except as discussed above with
regard to Mr. Egger, the Company entered into executive employment agreements
with the Named Executive Officers which provide for rolling twelve month periods
of employment, and severance compensation equal to twelve months of compensation
at his or her annual salary rate then in effect (except for Mr. Plochocki who
will receive twenty-four months of compensation), in the event the executive's
employment is terminated (i) because of physical or mental disability, (ii)
because of discretionary action of the Board, or (iii) voluntarily by the
executive due to a "Change of Control" and in the case of Mr. Plochocki
voluntarily by him for "good reason" as defined in his employment agreement. For
the purposes of the employment agreements, a "Change of Control" will have
occurred if the Company 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 the Company
or (b) a portion of the outstanding Common Stock such that one person or "group"
(as defined by the SEC) owns, of record or beneficially, not less than 50% of
the outstanding Common Stock. In the event that the executive's employment is
terminated for cause, he or she has no right to receive any severance
compensation under his or her employment agreement. In consideration for such
severance compensation, each executive has agreed not to solicit, entice, divert
or otherwise contact any customer or employee of the Company for any provision
of services which constitute "Company Business" during the period that the
executive is receiving severance compensation or for a period of twelve months
after the executive's termination of employment, whichever is later. "Company
Business" means the development and operation, at times together with other
healthcare providers, of outpatient facilities which provide diagnostic services
in the areas of general radiology, magnetic resonance imaging, cardiology and
neurosciences utilizing the related equipment and computer programs and software
and various distribution methods and investment structures.
Pursuant to the terms of a separation agreement with the Company, Mr. Atkins
will receive severance equal to twenty-four months salary at his level of
compensation as of July 12, 1999. In addition, pursuant to amendments to his
stock option agreements, his unvested options covering 62,500 shares of Common
Stock with exercise prices ranging from $4.56 to $8.37 per share continued to
vest through July 31, 2000 and his options will remain exercisable until the
expiration dates of such options.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. The Compensation
Committee is responsible for determining the specific forms and levels of
compensation for executive officers (including the chief executive officer and
the Other Executive Officers) of the Company and administering or assisting the
Board in administering the Company's stock option plans. The Compensation
Committee also consults periodically with the Company's chief executive officer
concerning the compensation and benefits of the Other Executive Officers.
In accordance with the SEC's rules, this report shall not be incorporated by
reference into any of the Company's registration statements, reports or filings
under the Securities Act of 1933, as amended ("Securities Act"), or the Exchange
Act.
9
<PAGE>
The Board believes that the achievements of the Company result from the
coordinated efforts of all employees (including executive officers of the
Company) working toward the common goals of meeting the needs of the Company's
customers and enhancing stockholder value. The Company's compensation policies
are therefore strongly oriented toward providing compensation opportunities that
are competitive with those of comparable companies; establishing a link between
the chief executive officer's and the Other Executive Officers' compensation and
the Company's short-term and long-term goals and including elements of financial
risks and rewards. Specific corporate performance objectives are established
("budget") and the chief executive officer's and the Other Executive Officers'
contribution to the enhancement of stockholder value is derived from achieving
the Company's budget. The Compensation Committee, while intending to provide
compensation to the Company's executive officers at competitive levels in order
to attract and retain qualified individuals, believes that achieving budget and
other strategic and business plan objectives is critical to the long-term
success of the Company.
Compensation of the Company's chief executive officer and the Other Executive
Officers consists principally of base salary, a cash bonus, contribution to a
401(k) profit sharing plan and stock options.
First, the base salary component represents the base rate of pay provided to an
executive officer for carrying out the overall responsibilities of the position.
Base salary is determined using companies providing comparable services within
the healthcare industry and market dynamics. Comparable companies for executive
compensation purposes are the same as the peer group established to compare
stockholder return. Actual compensation levels may be greater or less than
average competitive levels in other companies, based on annual and long-term
company performance as well as individual experience and performance. In
addition, scope of responsibilities, experience and other factors may be
considered by the Compensation Committee in its discretion in the determination
of base salary for the chief executive officer and the Other Executive Officers.
The base salary of the chief executive officer and the Other Executive Officers
was determined pursuant to the terms of executive employment agreements between
each of the chief executive officers and the Other Executive Officers and the
Company dated between February 22, 1996 and November 17, 1999 and adjusted
upwards for fiscal 1999, as warranted.
Second, the Compensation Committee determines annually whether a cash bonus will
be paid to the chief executive officer and the Other Executive Officers. The
determination thereof is based almost entirely upon the achievement of the
Company's budget and strategic and business plan objectives. If these
established goals are met or exceeded, the chief executive officer and the Other
Executive Officers could receive bonuses up to an annually determined percentage
of their base salaries, the amounts of which are subjectively determined by the
Compensation Committee; however, in the determination of such percentage,
consideration is given to the achievement of the Company's budget and other
strategic and business plan objectives, particularly in the areas for which the
chief executive officer and the Other Executive Officers have responsibility,
and individual performance achievements, including contract awards and renewals.
The chief executive officer and the Other Executive Officers received bonuses
for fiscal 2000 based upon the Compensation Committee's recommendation.
Third, the Company has a 401(k) profit sharing plan ("401(k) Plan") in which all
eligible Company employees, including the chief executive officer and the Other
Executive Officers are permitted to participate. To the extent the chief
executive officer and the Other Executive Officers participate in the 401(k)
Plan, they may contribute up to 15% of their salaries on a pretax basis and,
effective July 1, 2000, the Company has the discretion to contribute at the end
of each fiscal year, on their behalf, an amount equal to 50% of the first 6% of
compensation contributed by the chief executive officer and the Other Executive
Officers.
Fourth, the Company has established various stock option plans in which the
chief executive officer and the Other Executive Officers may participate. The
Compensation Committee believes that stock option plans help to recruit, retain
and motivate executive personnel. The Compensation Committee further believes
that stock options and stock ownership by the chief executive officer and the
Other Executive Officers are an important component of performance-based
compensation, as the value of stock options directly relates to the price of the
Common Stock and provides the chief executive officer and the Other Executive
Officers with an incentive to enhance stockholder value. Stock options are
granted on a periodic basis, at the discretion of the Compensation Committee,
with interim awards being made in the case of new employee executive officers,
promotions or a significant increase in job responsibilities. The number of
shares granted under stock options is determined subjectively by the
Compensation Committee, but scope of responsibilities and individual performance
achievements or expectations related thereto are also considered. Stock options
were not granted in fiscal 2000 to the Other Executive Officers.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICERS. Pursuant to the terms of a
separation agreement with the Company, Mr. Atkins will receive severance equal
to twenty-four months salary at his level of compensation as of July 12, 1999.
In addition, pursuant to amendments to his stock option agreement, his unvested
options covering 62,500 shares of Common
10
<PAGE>
Stock with exercise prices ranging from $4.56 to $8.37 per share continued to
vest through July 31, 2000 and his options will remain exercisable until the
expiration dates of such options.
On July 7, 1999, the Company entered into an agreement with Mr. Egger, in
connection with his appointment as acting president and chief executive officer,
pursuant to which Mr. Egger received $15,000 per month (in addition to $85,000
per year under his consulting agreement with the Company) and the Company issued
Mr. Egger a warrant to purchase 15,000 shares on Common Stock at an exercise
price of $6.00 per share.
Mr. Plochocki's base salary was determined pursuant to the terms of his
executive employment agreement with the Company entered into on November 17,
1999. Mr. Plochocki received a bonus of $125,000 for fiscal 2000, in accordance
with the terms of his executive employment agreement and based upon the
Compensation Committee's recommendation. In addition, Mr. Plochocki was granted
a stock option for 125,000 shares at an exercise price of $8.37 per share in
connection with the commencement of his employment on November 22, 1999.
It is the Company's policy generally to qualify compensation paid to its chief
executive officer and the Other Executive Officers for deductibility under the
Internal Revenue Code of 1986, as amended ("Code") and regulations in order to
maximize the Company's income tax deductions; however, the Compensation
Committee believes that its primary responsibility is to provide compensation
programs that attract, retain and reward executive talent in a manner that is in
the best interests of both the Company and its stockholders. Accordingly, the
Compensation Committee will consider tax deductibility levels, but will not
necessarily be limited by this consideration as it determines the Company's
executive compensation strategy.
Compensation Committee
Leonard H. Habas, Chairman
Ronald G. Pantello
Glenn A. Youngkin
11
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH. The following graph compares the yearly
percentage change in the cumulative total stockholder return on the Common Stock
against the cumulative total return of the NASDAQ Stock Market (U.S.) index and
a peer group index for the period commencing July 1, 1996 and ending June 30,
2000. To comply with the SEC's requirements, the Company has developed a peer
group comprised of Diagnostic Health Services, Inc., Healthcare Imaging
Services, Inc., Medical Resources, Inc., U.S. Diagnostic Inc. and the Company.
The peer group index does not include Alliance Imaging, Inc. ("Alliance"), which
had been included in the index used by the Company for its fiscal year ended
June 30, 1999. Alliance is not included because it was acquired during the
Company's fiscal year ended June 30, 2000 and Alliance's total return for the
applicable period is not publicly available. The peer group index is weighted in
accordance with the SEC's requirements by market capitalization as of the
beginning of each measurement date. Also in accordance with the SEC's rules,
this graph is not intended to be incorporated by reference into any of the
Company's registration statements, reports or filings under the Securities Act
or the Exchange Act.
COMPARISON OF 48 MONTH CUMULATIVE TOTAL RETURN*
AMONG INSIGHT HEALTH SERVICES CORP.,
THE NASDAQ STOCK MARKET (U.S.) INDEX, AND A PEER GROUP
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
380 15.29% 58.102 205 31.3445 16.18% 475 76.855
65 0.89% 0.5785 85 0.7565
128 12.00% 15.36 135 16.2 12.00% 9.71 1.1652
51 1.10% 0.561 57 0.627 1.10% 48.54 0.53394
200 1.57% 3.14 79 1.2403 1.57% 118.5 1.86045
35 47.98% 16.793 186 89.2428 47.98% 18.65 8.94827
31 21.17% 6.5627 57 12.0669 21.17% 10.56 2.235552
101.0972 151.478 91.59841
Jun-98 Jun-97 Sep-99
Date InSight Peer Group NASDAQ Peer Group
6/30/1996 100 100 100 Alliance Imaging Inc Del
6/30/1997 79 82 122 Diagnostic Health Svcs Inc DHSMQ OTC BBN
6/30/1998 200 124 160 Healthcare Imaging Svcs Inc HISS NNM
6/30/1999 118 251 227 InSight Health Svcs Corp IHSC NASDAQ
6/30/2000 121 499 335 Medical Res Inc MRIIQ OTC BBN
U S Diagnostic Labs Inc USDL OTC BBN
SCOR NASDAQ
DHSMQ HISS MRIIQ USDL SCOR
6/30/1996 6.75 12.13 6.50
6/30/1997 9.13 6.88 5.25
6/30/1998 8.63 3.81 8.63
6/30/1999 0.66 1.66 1.28 18.00
6/30/2000 0.00 0.08 0.78 36.00
W/ SCOR 1% 2% 2% 5% 90%
6/30/1996 100 100 100 100 100 100
6/30/1997 135 57 186 57 81 82
6/30/1998 128 51 35 31 133 124
6/30/1999 10 49 19 11 277 251
6/30/2000 0.06 10 1 6 554 499
W/O SCOR 10% 10% 10% 70% Peer Group
6/30/1996 100 100 100 100 100
6/30/1997 135 57 186 57 78
6/30/1998 128 51 35 31 43
6/30/1999 10 49 19 11 15
6/30/2000 0.06 10 1 6 6
</TABLE>
*$100 invested on June 30, 1996 in stock or index, including reinvestment of
dividends. Fiscal year ending June 30.
12
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership, reported to the Company as
of September 30, 2000, of 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 the Company to
own beneficially 5% or more of the Common Stock, (ii) each director of the
Company, (iii) each of the Company's Named Executive Officers, and (iv) all
directors and executive officers, as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME AND ADDRESSES BENEFICIAL OWNERSHIP STOCK BENEFICIALLY
OF BENEFICIAL OWNERS OF COMMON STOCK(1) OWNED(1)
-------------------- ------------------ ---------
<S> <C> <C>
Carlyle Stockholders(2)
1001 Pennsylvania Avenue, N.W., Suite 220 South, Washington, D.C. 20004 3,265,075 52.2%
General Electric Company(3)
20825 Swenson Drive, Suite 100, Waukesha, WI 53186 3,602,164 54.6%
Grant R. Chamberlain(4)
200 East Randolph Drive, 74th Floor, Chicago, IL 60601 36,667 1.2%
W. Robert Dahl (5)
520 Madison Ave., 41st Floor, New York, NY 10022 8,500 *
Frank E. Egger(6)
10301 S.W. 13th Street, Pembroke Pines, FL 33025 118,569 3.8%
Leonard H. Habas(7)
2290 Lucien Way, Suite 280, Maitland, FL 32751 87,008 2.8%
Jerome C. Marcus (8)
120 Long Ridge Road, Stamford, CT 06927 0 0
Ronald G. Pantello(9)
200 Madison Avenue, 9th Floor, New York, NY 10016 55,023 1.8%
Steven T. Plochocki(10)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 25,833 *
Glenn A. Youngkin(11)
57 Berkeley Square, London, England W1X5DH 4,400 *
E. Larry Atkins(12)
1845 Port Tiffin Place, Newport Beach, CA 92660 192,100 6.0%
Patricia R. Blank(13)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 21,500 *
Michael A. Boylan(14)
110 Gibraltar Road, Horsham, PA 18901 81,370 2.6%
Thomas V. Croal(15)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 118,750 3.8%
Brian G. Drazba(16)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 30,500 1.0%
Cecilia A. Guastaferro(17)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 6,250 *
Marilyn U. MacNiven-Young(18) 25,000 *
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660
13
<PAGE>
Michael S. Madler(19)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 15,000 *
All directors and executive officers, as a group (16 persons)(20) 826,470 21.6%
</TABLE>
* Less than 1% of the outstanding 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 September 30, 2000.
(2) The information in the table is based upon the Schedule 13D filed with the
SEC by the Carlyle Stockholders on October 24, 1997, as amended on May 18,
1999 and June 3, 1999. Represents shares of Common Stock issuable upon
conversion of all 25,000 shares of Series B Preferred Stock (convertible
into 2,985,075 shares of Common Stock) and exercise of certain warrants
("Carlyle Warrants") (exercisable for 250,000 shares of Common Stock) held
by the Carlyle Stockholders, which Stockholders are comprised of the
entities listed in the following sentence. The cumulative Carlyle
Stockholders ownership figure represents (i) 3,235,075 shares beneficially
owned by Carlyle Partners II, L.P., including 8,208 shares of Series B
Preferred Stock (convertible into 980,027 shares of Common Stock) and
Carlyle Warrants to purchase 82,077 shares of Common Stock with respect to
which it has disposal power, and 3,235,075 shares with respect to which it
shares voting power; (ii) 3,235,075 shares beneficially owned by Carlyle
Partners III, L.P., including 375 shares of Series B Preferred Stock
(convertible into 44,732 shares of Common Stock) and Carlyle Warrants to
purchase 3,746 shares of Common Stock with respect to which it has disposal
power, and 3,235,075 shares with respect to which it shares voting power;
(iii) 896,526 shares beneficially owned by Carlyle International Partners
II, L.P., including 6,928 shares of Series B Preferred Stock (convertible
into 827,244 shares of Common Stock) and Carlyle Warrants to purchase
69,282 shares of Common Stock with respect to which it has disposal power
and shares voting power; (iv) 48,305 shares beneficially owned by Carlyle
International Partners III, L.P., including 373 shares of Series B
Preferred Stock (convertible into 44,572 shares of Common Stock) and
Carlyle Warrants to purchase 3,733 shares of Common Stock with respect to
which it has disposal power and shares voting power; (v) 201,858 shares
beneficially owned by C/S International Partners, including 1,560 shares of
Series B Preferred Stock (convertible into 186,258 shares of Common Stock)
and Carlyle Warrants to purchase 15,599 shares of Common Stock with respect
to which it has disposal power and shares voting power; (vi) 1,115 shares
beneficially owned by Carlyle Investment Group, L.P., including 9 shares of
Series B Preferred Stock (convertible into 1,029 shares of Common Stock)
and Carlyle Warrants to purchase 86 shares of Common Stock with respect to
which it has disposal power and shares voting power; (vii) 118,878 shares
beneficially owned by Carlyle-InSight International Partners, L.P.,
including 919 shares of Series B Preferred Stock (convertible into 109,691
shares of Common Stock) and Carlyle Warrants to purchase 9,187 shares of
Common Stock with respect to which it has disposal power and shares voting
power; (viii) 3,235,075 shares beneficially owned by Carlyle-InSight
Partners, L.P. including 3,181 shares of Series B Preferred Stock
(convertible into 379,863 shares of Common Stock) and Carlyle Warrants to
purchase 31,813 shares of Common Stock with respect to which it has
disposal power and 3,235,075 shares with respect to which it shares voting
power; (ix) 446,135 shares beneficially owned by Carlyle Investment
Management, L.L.C. acting as investment advisor and manager with
responsibility to invest certain assets of the State Board of
Administration of the State of Florida ("State Board"), including 3,448
shares of Series B Preferred Stock (convertible into 411,658 shares of
Common Stock) and Carlyle Warrants to purchase 34,476 shares of Common
Stock with respect to which it has disposal power and shares voting power;
and (x) warrants to purchase 30,000 shares of Common Stock at an exercise
price of $7.25 per share owned by TC Group Management, LLC, which are not
included in the 3,235,075 shares beneficially owned. TC Group, L.L.C. may
be deemed to share voting and disposal power with respect to, and therefore
be the beneficial owner of 3,235,075 shares of Common Stock as the general
partner of Carlyle Partners II, L.P., Carlyle Partners III, L.P., Carlyle
Investment Group, L.P., and Carlyle-InSight Partners, L.P., and as the
managing partner of Carlyle International Partners II, L.P., Carlyle
International Partners III, L.P., C/S International Partners, and
Carlyle-InSight Partners, L.P. TCG Holdings, L.L.C., as a member holding a
controlling interest in TC Group, L.L.C., may be deemed to share all rights
herein described belonging to TC Group, L.L.C. Furthermore, because certain
managing members of TCG Holdings, L.L.C, are also managing members of
Carlyle Investment Management, L.L.C., Carlyle Investment Management,
L.L.C. may be deemed to be part of the Carlyle Stockholders and
consequently, TCG Holdings, L.L.C. may be deemed the beneficial owner of
the shares of Common Stock controlled by Carlyle Investment Management,
L.L.C. The principal business address of TC Group, L.L.C. and TCG Holdings,
L.L.C. is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 220
South, Washington, D.C. 20004. The principal business address of Carlyle
Partners
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II, L.P., Carlyle Partners III, L.P., Carlyle Investment Group, L.P.,
Carlyle-InSight Partners, L.P., and Carlyle Investment Management, L.L.C.
is Delaware Trust Building, 900 Market Street, Suite 200, Wilmington,
Delaware 19801. The principal business address of Carlyle International
Partners II, L.P., Carlyle International Partners III, L.P., C/S
International Partners, and Carlyle-InSight International Partners, L.P.
is Coutts & Co., P.O. Box 707, Cayman Islands, British West Indies. The
Carlyle Stockholders own all of the outstanding shares of the Series B
Preferred Stock.
(3) The information in the table is based upon Amendment No. 1 to Schedule 13D
filed by GE with the SEC on October 23, 1997. Represents shares of Common
Stock issuable upon (i) conversion of all 27,953 shares of Series C
Preferred Stock (convertible into 3,337,581 shares of Common Stock) held by
GE, (ii) exercise of certain warrants ("GE Warrants") (exercisable for
250,000 shares of Common Stock), and (iii) warrants to purchase 14,583
shares of Common Stock at an exercise price of $10.00 per share. Does not
include warrants to purchase 417 shares of Common Stock at an exercise
price of $10.00 per share, which are not currently exercisable. GE owns all
of the outstanding shares of Series C Preferred Stock.
(4) Includes (i) options to purchase 15,000 shares of Common Stock at an
exercise price of $7.00 per share, (ii) options to purchase 5,000 shares of
Common Stock at an exercise price of $5.75 per share, (iii) options to
purchase 1,667 shares of Common Stock at an exercise price of $6.88 per
share, and (iv) warrants to purchase 15,000 shares of Common Stock at an
exercise price of $4.56 per share. Does not include options to purchase
3,333 shares of Common Stock at an exercise price of $6.88 per share, which
are not currently exercisable.
(5) Mr. Dahl is a managing member of TCG Holdings, L.L.C. Mr. Dahl's interest
in TCG Holdings, L.L.C. is not controlling and thus Mr. Dahl expressly
disclaims any beneficial ownership in the Common Stock beneficially owned
by TCG Holdings, L.L.C.
(6) Includes (i) options to purchase 15,000 shares of Common Stock at an
exercise price of $5.37 per share, (ii) options to purchase 2,000 shares of
Common Stock at an exercise price of $16.20 per share, (iii) options to
purchase 7,083 shares of Common Stock at an exercise price of $6.50 per
share, (iv) warrants to purchase 2,268 shares of Common Stock at an
exercise price of $5.64 per share, (v) warrants to purchase 15,000 shares
of Common Stock at an exercise price of $4.56 per share, and (vi) warrants
to purchase 15,000 shares of Common Stock at an exercise price of $6.00 per
share. Does not include options to purchase 2,917 shares of Common Stock at
an exercise price of $6.50 per share, which are not currently exercisable.
(7) Includes (i) options to purchase 15,000 shares of Common Stock at an
exercise price of $5.37 per share, (ii) options to purchase 4,485 shares of
Common Stock at an exercise price of $15.64 per share, (iii) options to
purchase 8,970 shares of Common Stock at an exercise price of $1.25 per
share, (iv) options to purchase 8,970 shares of Common Stock at an exercise
price of $0.10 per share, (v) options to purchase 7,083 shares of Common
Stock at an exercise price of $6.50 per share, and (vi) warrants to
purchase 15,000 shares of Common Stock at an exercise price of $4.56 per
share. Does not include options to purchase 2,917 shares of Common Stock at
an exercise price of $6.50 per share, which are not currently exercisable.
(8) Mr. Marcus is an employee of GE Equity and holds no economic interest in GE
Equity or GE and as such expressly disclaims any beneficial ownership in
the Common Stock beneficially owned by GE.
(9) Includes (i) options to purchase 15,000 shares of Common Stock at an
exercise price of $5.37 per share, (ii) options to purchase 8,970 shares of
Common Stock at an exercise price of $1.25 per share, (iii) options to
purchase 8,970 shares of Common Stock at an exercise price of $0.10 per
share, (iv) options to purchase 7,083 shares of Common Stock at an exercise
price of $6.50 per share, and (v) warrants to purchase 15,000 shares of
Common Stock at an exercise price of $4.56 per share. Does not include
options to purchase 2,917 shares of Common Stock at an exercise price of
$6.50 per share, which are not currently exercisable.
(10) Includes options to purchase 20,833 shares of Common Stock at an exercise
price of $8.37 per share. Does not include options to purchase 154,167
shares of Common Stock at an exercise price of $8.37 per share, which are
not currently exercisable.
(11) Mr. Youngkin is a managing member of TCG Holdings, L.L.C. Mr. Youngkin's
interest in TCG Holdings, L.L.C. is not controlling and thus Mr. Youngkin
expressly disclaims any beneficial ownership in the Common Stock
beneficially owned by TCG Holdings, L.L.C.
15
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(12) Includes (i) options to purchase 37,500 shares of Common Stock at an
exercise price of $4.56 per share, (ii) options to purchase 75,000 shares
of Common Stock at an exercise price of $6.25 per share, and (iii) options
to purchase 50,000 shares of Common stock at an exercise price of $8.37 per
share.
(13) Includes options to purchase 20,000 shares of Common Stock at an exercise
price of $8.37 per share. Does not include options to purchase 20,000
shares of Common Stock at an exercise price of $8.37 per share, which are
not currently exercisable.
(14) Includes (i) options to purchase 11,960 shares of Common Stock at an
exercise price of $0.42 per share, (ii) options to purchase 8,970 shares of
Common Stock at an exercise price of $0.10 per share, (iii) options to
purchase 17,940 shares of Common Stock at an exercise price of $0.84 per
share, (iv) options to purchase 10,000 shares of Common Stock at an
exercise price of $6.25 per share, (v) options to purchase 7,500 shares of
Common Stock at an exercise price of $4.56 per share, and (vi) options to
purchase 25,000 shares of Common Stock at an exercise price of $8.37 per
share. Does not include (i) options to purchase 2,500 shares of Common
Stock at an exercise price of $4.56 per share, and (ii) options to purchase
35,000 shares of Common Stock at an exercise price of $8.37 per share,
which are not currently exercisable.
(15) Includes (i) options to purchase 25,000 shares of Common Stock at an
exercise price of $6.25 per share, (ii) options to purchase 18,750 shares
of Common Stock at an exercise price of $4.56 per share, and (iii) options
to purchase 70,000 shares of Common Stock at an exercise price of $8.37 per
share. Does not include (i) options to purchase 6,250 shares of Common
Stock at an exercise price of $4.56 per share, and (ii) options to purchase
75,000 shares of Common Stock at an exercise price of $8.37 per share,
which are not currently exercisable.
(16) Includes (i) options to purchase 8,000 shares of Common Stock at an
exercise price of $6.25 per share, (ii) options to purchase 7,500 shares of
Common Stock at an exercise price of $4.56 per share, and (iii) options to
purchase 15,000 shares of Common Stock at an exercise price of $8.37 per
share. Does not include (i) options to purchase 2,500 shares of Common
Stock at an exercise price of $4.56 per share, and (ii) options to purchase
25,000 shares of Common Stock at an exercise price of $8.37 per share,
which are not currently exercisable.
(17) Includes (i) options to purchase 3,750 shares of Common Stock at an
exercise price of $4.56 per share, and (ii) options to purchase 2,500
shares of Common Stock at an exercise price of $8.37 per share. Does not
include (i) options to purchase 1,250 shares of Common Stock at an exercise
price of $4.56 per share, and (ii) options to purchase 17,500 shares of
Common Stock at an exercise price of $8.37 per share, which are not
currently exercisable.
(18) Includes options to purchase 25,000 shares of Common Stock at an exercise
price of $9.38 per share. Does not include (i) options to purchase 25,000
shares of Common Stock at an exercise price of $9.38 per share, and (ii)
options to purchase 10,000 shares of Common Stock at an exercise price of
$8.37 per share, which are not currently exercisable.
(19) Includes options to purchase 15,000 shares of Common Stock at an exercise
price of $8.37 per share. Does not include options to purchase 65,000
shares of Common Stock at an exercise price of $8.37 per share, which are
not currently exercisable.
(20) Assumes the exercise in full of options or warrants described in footnotes
(4), (6), (7) and (9) through (19) that are currently exercisable or that
will become exercisable within 60 days of September 30, 2000.
Except as otherwise noted, the Company believes that each of the stockholders
listed in the table above has sole voting and dispositive power over all shares
owned.
POSSIBLE FUTURE BOARD CHANGES. The Common Stock holders currently are
entitled to elect a majority of the Board. Under certain circumstances, all of
the Series B Preferred Stock and Series C Preferred Stock may be converted into
Series D Preferred Stock. The holders of the Series D Preferred Stock would be
entitled to elect a majority of the Board. If a majority of the holders of each
of the Series B Preferred Stock and the Series C Preferred Stock elect to
convert such Stock into Series D Preferred Stock, then all shares of Series B
Preferred Stock and Series C Preferred Stock will automatically be converted
into shares of Series D Preferred Stock on the date of such election
("Conversion Date"). Immediately following such conversion, the number of
members of the Board will be increased by an additional number of directors
("Conversion Directors") such that the percentage of the total Board represented
by the Conversion Directors and the Preferred Stock Directors ("Series D
Directors") would correspond to the percentage of Common Stock owned by the
Series D Preferred Stock holders on an as-if-converted basis, provided that the
Series D Directors shall constitute less than two-thirds of the Board. In such
event, the Preferred Stock Directors would remain on the Board and the vacancies
created for the Conversion Directors would be filled by the Series D Preferred
Stock holders. Assuming conversion of all of the outstanding Series B Preferred
Stock and Series C Preferred Stock, the percentage of the outstanding Common
Stock currently owned by the Series B Preferred Stock holders is
16
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approximately 33% and the percentage of Common Stock currently owned by the
Series C Preferred Stock holders is approximately 37%. If such Preferred Stock
were converted into Series D Preferred Stock, the aggregate percentage of Common
Stock owned by the Series D Preferred Stock holders would be approximately 70%.
Thus, as a result of such conversion, designees of the Series D Preferred Stock
holders would constitute a majority (but less than two-thirds) of the Board. The
less than two-thirds limitation would expire at the second annual stockholders
meeting after the Conversion Date.
The holders of Series D Preferred Stock will have the right to vote with the
holders of Common Stock with respect to all matters submitted to a
stockholder vote except, until the second annual meeting of stockholders
after the Conversion Date, for the election of directors. At and after the
second annual stockholders meeting, the positions of all directors whose
terms have expired will be subject to election by holders of Common Stock and
Series D Preferred Stock voting together as a class, with each share of
Series D Preferred Stock having the number of votes equal to the number of
shares of Common Stock into which such share is then convertible.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH FRANK E. EGGER. Since March 28, 1996, Mr. Egger, a director
and chairman of the board, has been and continues to be paid $85,000 per year
for acquisition and financing activities pursuant to a consulting agreement. In
the event the agreement is terminated as a result of (i) Mr. Egger becoming
physically or mentally disabled, (ii) discretionary action of the Board, or
(iii) a corporate reorganization that has the effect of diminishing or impairing
Mr. Egger's consulting responsibilities, he is entitled to severance
compensation equal to twelve months of compensation. In addition, on July 7,
1999, the Company entered into an agreement with Mr. Egger, in connection with
his appointment as acting president and chief executive officer, pursuant to
which Mr. Egger received $15,000 per month. At the same time, the Company issued
to Mr. Egger a warrant to purchase 15,000 shares of Common Stock at an exercise
price of $6.00 per share, which was the fair market value (the closing price
reported on The Nasdaq SmallCap Market) of the Common Stock on such date. The
warrant vests cumulatively at the rate of 3,750 shares per month and is
exercisable any time up to July 7, 2009. Mr. Egger was acting president and
chief executive officer until November 22, 1999 when Mr. Plochocki was appointed
president and chief executive officer.
TRANSACTIONS WITH GE. The Company has purchased a majority of its magnetic
resonance imaging systems from GE, through GEMS. The Company has capital lease
obligations to GEMS totaling $57,000,000 and leases thirty of its diagnostic
imaging and treatment systems from GEMS under a master operating lease
agreement, including eight systems within a variable lease pool. GEMS also
provides maintenance services with respect to the Company's diagnostic imaging
equipment.
TRANSACTIONS WITH SHATTUCK HAMMOND PARTNERS. In 1996, the Company entered into
an agreement with Shattuck Hammond Partners ("SHP"), an investment banking firm
based in New York City in which a director of the Company, Mr. Chamberlain, is a
managing director, pursuant to which SHP provides general strategic advisory and
investment banking services. The term of the agreement commenced July 1, 1996
and has been extended through December 31, 2000. The Company is obligated to pay
SHP $30,000 quarterly for such services. SHP also is entitled to separately
negotiated fees for certain mergers or acquisitions. The Company also issued SHP
a warrant to purchase 35,000 shares of Common Stock at an exercise price of
$5.50 per share, which vested cumulatively on a monthly basis over the eighteen
month term of the initial agreement. The warrant was exercised on June 21, 2000.
SHP has certain "piggy-back" registration rights to register the shares under
the Securities Act. On July 21, 1999, the Company entered into an agreement with
SHP pursuant to which SHP would provide financial advisory services in
connection with a potential acquisition by the Company. The Company paid SHP
$100,000 upon execution of the agreement. If the potential acquisition
proceeded, the Company agreed to pay SHP $250,000 upon execution of definitive
agreements and $1 million, less the $100,000 retainer, upon the closing of the
transaction and its reasonable out-of-pocket expenses. The acquisition was not
consummated and the Company made no further payments to SHP pursuant to this
agreement. On December 16, 1999, the Company also entered into an agreement with
SHP pursuant to which SHP would provide due diligence and valuation services in
connection with another potential acquisition by the Company. The Company paid
SHP $75,000 in connection with this agreement.
TRANSACTIONS WITH E. LARRY ATKINS. Pursuant to the terms of a separation
agreement with the Company, Mr. Atkins will receive severance equal to
twenty-four months salary at his level of compensation as of July 12, 1999. In
addition, pursuant to amendments to his stock option agreements, his unvested
options covering 62,500 shares of Common Stock with exercise prices ranging from
$4.56 to $8.37 per share continued to vest through July 31, 2000 and his options
will remain exercisable until the expiration dates of such options.
17
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SELECTION OF AUDITORS
Arthur Andersen LLP, independent public accountants, have been the auditors of
the consolidated financial statements of the Company and its subsidiaries since
1996. A meeting of the Board or the Audit Committee will be held in the near
future, at which time a recommendation will be made to confirm the selection of
the Company's auditors for the current fiscal year. Representatives of Arthur
Andersen LLP are expected to be present at the 2000 Annual Meeting. Such
representatives will be given an opportunity to make a statement if they desire
to do so and will be available to respond to any appropriate questions from the
stockholders.
OTHER BUSINESS
The Certificate of Incorporation requires that all nominations for persons to be
elected Common Stock Directors, other than those made by the Board, be made
pursuant to written notice to the corporate secretary of the Company. The notice
must be received not less than 50 nor more than 75 days prior to the meeting at
which the election will take place (or not later than fifteen days after public
disclosure of such meeting date if such disclosure occurs less than 65 days
prior to the date of such meeting). The notice must set forth all information
relating to each nominee that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, pursuant to the
Exchange Act (including the nominee's written consent to serve as a director).
The notice must also include the stockholder's name and address as they appear
on the Company's books and the class, series and number of shares beneficially
owned by the stockholder.
The management of the Company knows of no further or other matters which are to
be considered at this Annual Meeting. If any other business properly comes
before this Annual Meeting, the persons named in the accompanying form of proxy
will, as to such items, vote or refrain from voting in accordance with his or
her best judgment.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended June 30,
2000, including audited consolidated financial statements for the fiscal year
ended June 30, 2000, is being mailed to the stockholders concurrently with this
Proxy Statement.
STOCKHOLDER PROPOSALS
Any eligible stockholders of the Company wishing to have a proposal considered
for inclusion in the Company's proxy solicitation materials for the 2001 Annual
Meeting must set forth such proposal in writing and file it with the corporate
secretary on or before June 30, 2001. The Board will review the proposals from
eligible stockholders which it receives by that date and will determine whether
such proposals will be included in its 2001 proxy solicitation materials.
By Order of the Board of Directors
Marilyn U. MacNiven-Young
Executive Vice President, General Counsel and Secretary
Newport Beach, California
October 27, 2000
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INSIGHT HEALTH SERVICES CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 5, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INSIGHT HEALTH SERVICES CORP.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and the accompanying Proxy Statement for the 2000
Annual Meeting to be held on December 5, 2000 and, revoking all prior
proxies, hereby appoints Marilyn U. MacNiven-Young and/or Michael W. Brown,
with full power of substitution, as proxy of the undersigned to attend and
vote all shares of Common Stock of InSight Health Services Corp. which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to
be held on December 5, 2000, and any and all postponements or adjournments
thereof, upon the matter specified below and such other business as may
properly come before the Annual Meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE USING
DARK INK ONLY.
AUTHORITY AUTHORITY
GIVEN WITHHELD
1. The election of Steven T. Plochocki / / / /
as a director of the Company to hold
office for a three-year term and
until his successor is duly elected
and qualified.
2. To transact such other business as may properly come before the
Annual Meeting and any and all postponements or adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS INDICATED; HOWEVER, IF NO INSTRUCTIONS ARE GIVEN, THE PROXY WILL
VOTE FOR THE NOMINEE FOR DIRECTOR AND IN HIS/HER DISCRETION ON ANY OTHER
MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING.
NOTE: Please sign exactly as your name appears on your stock certificate(s).
If the stock is jointly held, each owner should sign. Executors, administrators,
trustees, guardians and attorneys should so indicate when signing. Attorneys
should submit powers of attorney.
INSTRUCTION: TO GRANT AUTHORITY FOR THE NOMINEE NAMED ABOVE CHECK THE
"AUTHORITY GIVEN" BOX; TO WITHHOLD AUTHORITY FOR THE NOMINEE CHECK THE
"AUTHORITY WITHHELD" BOX.
-------------------------------------- ----------------------------------
Signature(s) of stockholder(s)
Dated: , 2000
------------
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
SO THAT IT CAN BE COUNTED AT THE ANNUAL MEETING ON DECEMBER 5, 2000.
