<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-12
</TABLE>
RADIOLOGIX, INC
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[RADIOLOGIX, INC. LETTERHEAD]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 2000
To the Stockholders of Radiologix, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Radiologix, Inc., a Delaware corporation (the "Company"), will be held at 2200
Ross Avenue, 39th Floor, Dallas, Texas 75201, on Wednesday, June 7, 2000, at
10:00 a.m., Dallas, Texas time, for the following purposes:
(1) To elect six (6) persons to serve as directors until the 2001 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified.
(2) To ratify the appointment of Arthur Andersen LLP as independent public
accountants of the Company for fiscal year 2000.
(3) To transact such other business as may properly come before the meeting or
any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 20,
2000 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the meeting or any adjournment(s) thereof. Only stockholders
of record at the close of business on April 20, 2000 are entitled to notice of,
and to vote at, such meeting or any adjournment(s) thereof. A complete list of
stockholders entitled to vote at the meeting will be available for examination
at the corporate office of the Company located at 3600 Chase Tower, 2200 Ross
Avenue, Dallas, Texas 75201, for ten days prior to and during the meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, TO ASSURE YOUR
REPRESENTATION AT THE MEETING, YOU ARE ENCOURAGED TO FILL OUT, SIGN, DATE AND
MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. PROXIES FORWARDED BY OR FOR BROKERS OR
FIDUCIARIES SHOULD BE RETURNED AS REQUESTED BY THEM.
BY ORDER OF THE BOARD OF DIRECTORS,
Paul M. Jolas
General Counsel, Senior Vice President and
Secretary
Dallas, Texas
April 28, 2000
<PAGE> 3
RADIOLOGIX, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 2000
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Radiologix, Inc. (the "Company") for use
at the Annual Meeting of Stockholders of the Company to be held on Wednesday,
June 7, 2000, at 10:00 a.m. (the "Annual Meeting") and at any and all
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at
2200 Ross Avenue, 39th Floor, Dallas, Texas 75201. The Company's phone number is
(214) 303-2776. The approximate date on which this Proxy Statement, the
accompanying proxy card and a copy of the Company's Annual Report to
Stockholders for the year ended December 31, 1999, including financial
statements, are first being sent or given to stockholders is May 3, 2000.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on April 20, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting and
any adjournment(s) thereof. At the Record Date, 19,430,978 shares of the
Company's Common Stock, par value $.0001 per share ("Common Stock") were issued
and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing a written notice of revocation bearing a later date than the proxy with
the Secretary of the Company (Paul M. Jolas) at or before the taking of the vote
at the Annual Meeting, (ii) duly executing a later dated proxy relating to the
same shares and delivering it to the Secretary of the Company at or before the
taking of the vote at the Annual Meeting or (iii) attending the Annual Meeting
and voting in person (although attendance at the Annual Meeting will not in and
of itself constitute a revocation of a proxy). Any written notice of revocation
or subsequent proxy should be delivered to the Secretary of the Company, or
hand-delivered to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting.
VOTING AND SOLICITATION
Each share of Common Stock is entitled to one vote for each director to
be elected and upon all other matters to be brought to a vote by the
stockholders at the Annual Meeting. Cumulative voting for the election of
directors is not permitted.
The cost of soliciting proxies will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Proxies may be solicited by
certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, telegraph or letter.
1
<PAGE> 4
QUORUM; ABSTENTIONS, BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting is a majority of the votes eligible to be cast by holders of shares of
Common Stock issued and outstanding on the Record Date. Shares that are voted
"FOR," "AGAINST" or "ABSTAIN" are treated as being present at the meeting for
purposes of establishing a quorum and are also treated as shares entitled to
vote at the Annual Meeting (the "Votes Cast") with respect to such matters.
While there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total number
of Votes Cast with respect to a proposal (other than the election of directors).
In the absence of a controlling precedent to the contrary, the Company intends
to treat abstentions in this manner. Accordingly, abstentions will have the same
effect as a vote against the proposal.
Brokers who hold shares in street name for customers generally may not
vote on certain matters unless they have received instructions from beneficial
owners. Brokers who do not receive instructions, however, may vote on the
election of directors and the proposal to ratify the appointment of the
independent public accountants. As used herein, "broker non-votes" means the
votes that could have been cast on other matters by brokers with respect to
uninstructed shares if the brokers had received their customers' instructions.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme Court
held that, while broker non-votes should be counted for purposes of determining
the presence or absence of a quorum for the transaction of business, broker
non-votes should not be counted for purposes of determining the number of Votes
Cast with respect to the particular proposal on which the broker has expressly
not voted. The Company intends to treat broker non-votes in this manner.
Accordingly, a broker non-vote will not have any effect on the outcome of the
voting on proposals other than the proposal to ratify the appointment of the
independent public accountants.
The affirmative vote of (i) a plurality of the shares of Common Stock
present or represented at the Annual Meeting is required to elect the directors,
and (ii) the affirmative vote of a majority of the shares of Common Stock
present or represented at the Annual Meeting is required to ratify the
appointment of Arthur Andersen LLP. Uninstructed shares held by brokers are
entitled to vote on the appointment of Arthur Andersen LLP. Therefore, broker
non-votes will have the effect of negative votes on this matter.
With regard to the election of directors, votes may be cast in favor or
withheld; abstentions and broker non-votes will be excluded entirely from the
vote and will have no effect.
PROPOSAL I: ELECTION OF DIRECTORS
NOMINEES
The Company's Board of Directors (the "Board") currently consists of
six persons. All six positions on the Board are to be elected at this meeting.
Unless otherwise instructed, the proxyholders will vote the proxies received by
them for the Company's nominees named below. In the event that any nominee of
the Company is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board to fill the vacancy. In the event additional
persons are nominated for election as directors, the proxyholders intend to vote
all proxies received by them in favor of the nominees set forth below. The
Company is not aware of any nominee who will be unable or will decline to serve
as a director. The term of office of each person elected as a director will
continue until the next Annual Meeting of stockholders or until his successor
has been elected and qualified.
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<PAGE> 5
The names of the nominees and certain information about them, are set
forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE CURRENT POSITION SINCE
- ---- --- ---------------- --------
<S> <C> <C> <C>
Less T. Chafen, M.D. (2) ......................... 58 Director 1997
John W. Colloton (1)(2) .......................... 69 Director 1997
Paul D. Farrell .................................. 36 Nominee Nominee
Derace L. Schaffer, M.D. (1) ..................... 52 Director 1996
Michael L. Sherman, M.D. (1) ..................... 57 Director 1997
Mark L. Wagar .................................... 48 Chairman of the Board, Chief 1998
Executive Officer and Director
</TABLE>
(1) Member of the Compensation and Stock Plan Administration Committee of the
Board
(2) Member of the Audit Committee of the Board
Less T. Chafen, M.D. has been a director of the Company since the
consummation of the Company's initial public offering in November 1997 (the
"IPO"). Since 1978, Dr. Chafen has served as the Chairman of the Board and
currently serves as President of PIC Medical Group, Inc., one of the radiology
practices with which the Company has an affiliation. Dr. Chafen is a board
certified radiologist and nuclear medicine physician. Dr. Chafen received his
M.D. from Loma Linda University and his B.A. in zoology and chemistry from
Columbia Union College.
John W. Colloton has been a director of the Company since June 1997.
Mr. Colloton served as the chief executive officer of the University of Iowa
Hospitals and Clinics from 1971 to 1993, and since 1993, has been Vice President
for Statewide Health Services at the University of Iowa. He also serves as a
director of the following companies: Baxter International, Inc.; Wellmark, Inc.
(Blue Cross and Blue Shield of Iowa and South Dakota); and Iowa State Bank and
Trust Company. Mr. Colloton is also a trustee of the University of Pennsylvania
Medical Center. Mr. Colloton, who earned his M.A. in Hospital and Health
Administration from the University of Iowa, has been elected to the Institute of
Medicine of the National Academy of Sciences and has received Distinguished
Service Awards from both the American Hospital Association and the Association
of American Medical Colleges.
Paul D. Farrell (CFA) is a partner with WR Capital Partners, an
investment partnership focused on leveraged investments in private and public
small capitalization companies. Mr. Farrell joined WR Capital Partners in
February 2000. Prior to joining WR Capital Partners, Mr. Farrell was employed at
Goldman Sachs & Co. from August 1991 through February 2000, where he was a
Managing Director, global research coordinator and a senior portfolio manager on
the U.S. equity investment team. During this period at Goldman Sachs & Co., Mr.
Farrell also was Chief Investment Officer of the U.S. value investment team
where he guided portfolio construction and investment research for Goldman Sachs
Asset Management's institutional and mutual fund accounts. Prior to joining
Goldman Sachs & Co. in 1991, Mr. Farrell served as a Managing Director at Plaza
Investments, the investment subsidiary of GEICO Corp., a major insurance
company. From June 1986 through January 1991, Mr. Farrell was employed by
Goldman Sachs & Co. as a Vice President in the investment research department
and was responsible for the formation of the firm's Emerging Growth Research
Group. Mr. Farrell received his B.A. and M.A. in Economics from Yale University
in 1985.
Derace L. Schaffer, M.D. has been a director of the Company since its
inception. Dr. Schaffer is President of Ide Imaging Group, P.C., one of the
radiology practices with which the Company has an affiliation, as well as the
Lan Group, a venture capital firm. He also serves as a director of the following
public companies: MOMSPharmacy.com; and Patient InfoSystems, Inc. He is also a
director of several private companies, including
3
<PAGE> 6
Logisticare, Inc.; Analytika, Inc.; Card Systems, Inc.; and MedEView, Inc. Dr.
Schaffer is a board certified radiologist. He received his postgraduate
radiology training at the Harvard Medical School and Massachusetts General
Hospital, where he served as Chief Resident. Dr. Schaffer is a member of Alpha
Omega Alpha, the national medical honor society, and is Clinical Professor of
Radiology at the University of Rochester School of Medicine.
Michael L. Sherman, M.D. has been a director of the Company since the
consummation of the IPO. Since 1995, Dr. Sherman has served as the President of
Advanced Radiology, P.A., one of the radiology practices with which the Company
has an affiliation. From 1986 to 1995, Dr. Sherman served as the Managing
Partner of Drs. Copeland, Hyman & Shackman. Dr. Sherman is a board certified
radiologist. Dr. Sherman received his M.D. from the University of Maryland
Medical School and his A.B. in history and pre-medicine from Duke University.
Mark L. Wagar is Chairman and Chief Executive Officer of the Company.
Mr. Wagar was appointed President and Chief Executive Officer of the Company in
May 1998 and served as President until February 2000 when Mr. Martin was
appointed President. He was appointed a director and Chairman of the Company in
June 1998. Previously, he served as President and Chief Operating Officer of
MedPartners, Inc., (now known as Caremark, Inc.), a publicly-traded health care
services company providing pharmacy, disease management services and practice
management services. Mr. Wagar joined MedPartners through its acquisition of
Mullikin Medical Enterprises in 1995 where he was Chief Operating Officer. Prior
to Mullikin, he was President of CIGNA HealthCare of California. With over 25
years of healthcare executive experience, Mr. Wagar has served in a variety of
public and private for-profit companies as well as in several not-for-profit
hospitals. He received his B.A. from The Ohio State University in 1973 and a
Masters of Science in healthcare administration in 1976 from The Ohio State
University.
There is no family relationship among any of the nominees or between
any director or executive officer of the Company.
Since July 1998, the Board has consisted of six directors. Although the
Company has not identified any candidate to serve as a director (other than
those nominated herein) and although the Company does not have any current
intention of expanding the Board, the Company may increase the size of the Board
from time to time. These actions likely would be accomplished through Board
action rather than through a special meeting of stockholders.
The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required to
elect the nominees for director named above.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES FOR
DIRECTOR NAMED ABOVE.
MEETINGS OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the
Board. The Board meets to review significant developments affecting the Company
and to act on matters requiring Board approval. It also holds special meetings
when an important matter requires Board action between scheduled meetings. The
Board met five times during fiscal year 1999. During fiscal year 1999, each
member of the Board participated in at least 75% of all Board and applicable
committee meetings held during the period, except John Colloton.
The Board has established Audit and Compensation and Stock Plan
Administration Committees to devote attention to specific subjects and to assist
it in the discharge of its responsibilities. The functions of those committees,
their current members and the number of meetings held during fiscal year 1999
are described below. The Board does not have a standing nominating committee.
4
<PAGE> 7
Audit Committee. The Board has a standing Audit Committee which
provides the opportunity for direct communications between the independent
public accountants and the Board. The Audit Committee meets with the certified
public accountants periodically to review their effectiveness during the annual
audit program and to discuss the Company's internal control policies and
procedures. The members of the Audit Committee are Messrs. Colloton and
Pappajohn and Dr. Chafen. The Audit Committee met four times during fiscal year
1999.
Compensation and Stock Plan Administration Committee. The Board also
has a standing Compensation and Stock Plan Administration Committee (the
"Compensation Committee") that provides recommendations to the Board regarding
salaries and other compensation of executive officers of the Company. The
members of the Compensation Committee are Mr. Colloton and Drs. Schaffer and
Sherman. The Compensation Committee met two times during fiscal year 1999.
PROPOSAL II: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board, upon the recommendation of the Audit Committee, has
appointed Arthur Andersen LLP as the independent public accountants of the
Company for fiscal year 2000, subject to stockholder ratification.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they so desire and to be
available to respond to appropriate questions.
The affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required to ratify the appointment of Arthur Andersen LLP.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT
OF ARTHUR ANDERSEN LLP.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 20, 2000, certain
information with regard to the beneficial ownership of the Common Stock by (i)
all persons known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) each director and nominee for director of the
Company, (iii) each executive officer of the Company, and (iv) all directors and
executive officers of the Company as a group. Unless otherwise indicated, all
shares shown in the table below are held with sole voting and investment power
by the person or entity indicated. See "Executive Compensation - Stock Option
Grants and Exercises" for disclosures regarding options that are not currently
exercisable.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF OUTSTANDING
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME OWNED (1) OWNED
- ---- ------------- -------------
<S> <C> <C>
Mark L. Wagar (2) (3) ................................................ 239,999 1.2
Mark S. Martin (2) (4) ............................................... 230,207 1.2
Paul M. Jolas (2) (5) ................................................ 170,978 *
David W. Young (2) (6) ............................................... 36,666 *
Derace L. Schaffer, M.D. (2) (7) ..................................... 667,308 3.4
John Pappajohn (2) (8) ............................................... 578,124 3.0
Paul D. Farrell (2) (9) .............................................. 58,000 *
Less T. Chafen, M.D. (2) (10) ........................................ 63,992 *
John W. Colloton (2) (11) ............................................ 31,666 *
Michael L. Sherman, M.D. (2) (12) .................................... 123,733 *
All directors and executive officers as a group (ten persons) (13) ... 2,200,673 10.9%
</TABLE>
5
<PAGE> 8
- ----------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and includes voting or investment power with respect to
securities. Shares of Common Stock issuable upon the exercise or conversion
of stock options or other securities currently exercisable or convertible,
or exercisable or convertible within 60 days, are deemed outstanding and to
be beneficially owned by the person holding such option or security for
purposes of computing such person's percentage ownership, but are not
deemed outstanding for the purpose of computing the percentage ownership of
any other person. Except for shares held jointly with a person's spouse or
subject to applicable community property laws, or as indicated in the
footnotes to this table, each stockholder identified in the table posses
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by such stockholder.
(2) The address of Messrs. Wagar, Martin, Jolas, Young, Pappajohn, Colloton and
Farrell and Drs. Schaffer, Chafen and Sherman is c/o Radiologix, Inc., 3600
Chase Tower, 2200 Ross Avenue, Dallas, Texas 75201.
(3) Includes 234,999 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(4) Includes 220,207 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(5) Includes 164,978 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(6) Includes 36,666 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(7) Includes exercisable options to purchase 11,666 shares of Common Stock in
connection with service as a director of the Company exercisable within 60
days.
(8) Includes exercisable options to purchase 11,666 shares of Common Stock in
connection with service as a director of the Company exercisable within 60
days. Also includes 100,000 shares held by Halkis Ltd., a sole
proprietorship owned by Mr. Pappajohn, 75,000 owned by Thebes Ltd., a sole
proprietorship owned by Mr. Pappajohn's spouse, Mary Pappajohn, and 75,000
shares owned directly by Mary Pappajohn. Mr. Pappajohn disclaims beneficial
ownership of the shares owned by Thebes Ltd. and by Mary Pappajohn.
(9) Includes 2,000 shares owned directly by Mr. Farrell's parents, Richard P.
and Helen L. Farrell with which Mr. Farrell has shared investment control.
Mr. Farrell disclaims beneficial ownership of the shares owned by Richard
P. and Helen L. Farrell.
(10) Includes exercisable options to purchase 26,666 share of Common Stock in
connection with service as a director of the Company exercisable within 60
days.
(11) Includes exercisable options to purchase 31,666 shares of Common Stock in
connection with service as a director of the Company exercisable within 60
days.
(12) Includes exercisable options to purchase 36,665 shares of Common Stock in
connection with service as a consultant to and a director of the Company.
(13) Includes 775,179 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
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<PAGE> 9
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Act"), requires the Company's directors, executive officers and beneficial
owners of more than 10% of the Common Stock to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Based solely upon its review of the copies of such forms received by
it, the Company believes that all such reports were submitted on a timely basis
during fiscal year 1999.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information with respect to each executive officer
of the Company including their respective ages as of April 20, 2000 and the
positions held with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- -----------------------------------------
<S> <C> <C>
Mark L. Wagar................ 48 Chairman of the Board, Chief Executive
Officer and Director
Mark S. Martin............... 40 President and Chief Operating Officer
Paul M. Jolas................ 36 Senior Vice President, General Counsel
and Secretary
David W. Young............... 35 Vice President - Finance, Controller and
Treasurer
</TABLE>
Messrs. Wagar, Martin and Jolas serve pursuant to employment
agreements. Set forth below is biographical information regarding each executive
officer who is not a nominee for election as a director.
Mark S. Martin was promoted to President from Senior Vice President in
February 2000 and has served as Chief Operating Officer of the Company since
June 1996. From January 1993 through June 1996, Mr. Martin served as Executive
Vice President of Practice Management Development and Support for Medaphis
Physician Services Corporation, a subsidiary of Medaphis Corporation, a
publicly-traded company which provides business and information services to
physicians, physician group practices and hospitals. From October 1987 through
December 1992, he served as Vice President of Financial Services for CompMed,
Inc., a company which provided comprehensive management and administrative
services to hospital-based physicians and physician groups, with a primary
emphasis on radiology. From 1982 through 1987, Mr. Martin was employed by KPMG
Peat Marwick as a tax manager. Mr. Martin was licensed as a Certified Public
Accountant in 1982. He received his B.A. in accounting from Capital University.
Paul M. Jolas has served as General Counsel and Senior Vice President
of the Company since August 1996 and as Secretary of the Company since October
1996. From September 1989 through July 1996, Mr. Jolas was an attorney with the
law firm of Haynes and Boone, LLP in Dallas, Texas, where he practiced in the
corporate finance section and was responsible for a broad range of corporate and
securities transactions, including numerous initial and secondary public
offerings of equity and debt securities, mergers and acquisitions and public
company reporting requirements. Mr. Jolas received his J.D. from Duke University
School of Law and his B.A. in economics from Northwestern University.
David W. Young has served as Vice President of Finance since December
8, 1999. He has served as Corporate Controller and Treasurer since March 1998.
Mr. Young served as Director of Mergers and Acquisitions of the Company from
April 1997 through February 1998. From May 1994 through March 1997, Mr. Young
served as Corporate Controller of OccuSystems, Inc., a physician practice manage
company focused on occupational medicine. His responsibilities included
integration of acquisition targets, financial reporting and investor relations.
Mr. Young was licensed as a Certified Public Accountant in 1990. He received
B.A. degrees in both accounting and finance from Texas A & M University.
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<PAGE> 10
EXECUTIVE COMPENSATION
The following table shows information concerning the annual and long-term
compensation for services in all capacities to the Company for fiscal years
1999, 1998 and 1997 with respect to those persons who were, during fiscal year
1999, (i) the Chief Executive Officer and (ii) the other four executive officers
of the Company (collectively, with the Chief Executive Officer, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS
------------------------- SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- -------------------------------------------------- ----- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Mark L. Wagar .................................... 1999 $ 398,269 $ -- 100,000 $ --
Chairman of the Board and ..................... 1998 212,131 106,800 500,000 --
Chief Executive Officer
Mark S. Martin ................................... 1999 233,442 -- 30,000 --
President and ................................. 1998 188,782 145,000 50,000 --
Chief Operating Officer ....................... 1997 162,500 111,250 90,000 1,404
Paul M. Jolas .................................... 1999 179,018 -- 20,000 --
Senior Vice President, ........................ 1998 149,038 110,000 35,000 --
General Counsel and Secretary ................. 1997 140,833 80,500 70,000 1,806
Sami S. Abbasi (3) ............................... 1999 233,442 -- 30,000 --
Senior Vice President and ..................... 1998 185,128 130,000 50,000 --
Chief Financial Officer ....................... 1997 162,500 111,250 90,000 4,244
David W. Young (4) ............................... 1999 135,538 -- 15,000 --
Vice President - Finance, Controller and ...... 1998 110,096 40,000 30,000 --
Treasurer ..................................... 1997 61,875 12,500 30,000 --
</TABLE>
- ----------
(1) Perquisites are not included since the aggregate amount is less than the
lesser of $50,000 or 10% of salary and bonus, in accordance with
regulations promulgated by the Commission; therefore, the Other Annual
Compensation Column has not been included in this table.
(2) Represents amount of health insurance premiums reimbursed by the Company.
(3) Mr. Abbasi resigned effective December 31, 1999.
(4) Mr. Young was appointed Vice President - Finance on December 8, 1999.
Stock Option Grants and Exercises
The following table sets forth certain information concerning options
granted in fiscal year 1999 to the Company's Named Executive Officers. The
Company had outstanding 2,204,525 options for the purchase of Common Stock as of
December 31, 1999. The Company has no outstanding stock appreciation rights and
granted no stock appreciation rights during fiscal year 1999.
8
<PAGE> 11
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS GRANTED EXERCISE OR PRICE APPRECIATION FOR
OPTIONS TO EMPLOYEES BASE PRICE OPTION TERM (2)
NAME GRANTED (1) IN FISCAL YEAR ($/SH)(1) EXPIRATION DATE 5% ($) 10% ($)
- ------------------------- ----------- -------------- ------------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Wagar ........... 100,000 25.6% $ 6.00 03/19/09 $ 377,337 $ 956,245
Mark S. Martin .......... 30,000 7.7 6.00 03/19/09 113,201 286,874
Paul M. Jolas ........... 20,000 5.1 6.00 03/19/09 75,467 191,249
Sami S. Abbasi .......... 30,000 7.7 6.00 03/19/09 113,201 286,874
David W. Young .......... 15,000 3.8 7.00 08/06/09 66,034 167,343
</TABLE>
(1) The option exercise price may be paid in shares of Common Stock owned by
the Named Executive Officer, in cash, or in any other form of valid
consideration as determined by the Compensation Committee in its
discretion.
(2) The dollar amounts in these columns represent the potential realizable
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming that the market price of Common
Stock appreciates in value from the date of grant at assumed annual rates
of 5% and 10% (compounded annually) until the end of the ten (10) year
term. These assumed rates of appreciation are prescribed by the rules and
regulations of the Commission and, therefore, are not intended to forecast
possible future appreciation, if any, of the price of the Common Stock.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability or vesting over periods.
The following table sets forth certain information concerning options
exercised in fiscal year 1999 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED FISCAL YEAR-END (#) FISCAL YEAR-END ($) (3)
ON VALUE ---------------------------- ---------------------------------
NAME EXERCISE (#)(1) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- --------------- ----------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Wagar ........... -- -- 173,333 426,667 $ -- $ --
Mark S. Martin .......... 8,000 29,000 188,862 106,138 411,162 120,088
Paul M. Jolas ........... 5,000 18,125 143,298 78,702 315,898 96,352
Sami S. Abbasi .......... 98,840 358,295 94,061 -- 13,430 --
David W. Young .......... -- -- 25,750 49,250 -- --
</TABLE>
- ----------
(1) Includes all exercises during calendar year 1999.
(2) The value realized equals the fair market value of the Common Stock
acquired on the date of exercise minus the exercise price.
(3) Based on the closing price of the Common Stock of $4.375 per share, as of
December 31, 1999, less the option exercise price. There is no guarantee
that if and when these options are exercised they will have this value.
Employment Contracts
The Company has employment agreements with Messrs. Wagar, Martin and
Jolas, each of whom receive annual salaries at the rate of $400,000, $275,000
and $180,000, respectively. Each employment agreement has a term of one year
with automatic successive one-year renewal periods. Each employment agreement
provides that in the event of a termination of employment by the Company (i)
other than for cause, (ii) upon disability or (iii) upon voluntary termination
by employee due to an adverse change in duties, such employee shall be entitled
to receive
9
<PAGE> 12
from the Company a payment equal to one-half of the amount of such employee's
then current annual base salary to be paid in one lump sum (plus up to an
additional six months of annual base salary to be paid on a monthly basis under
certain circumstances), plus a payment for all accrued but unpaid wages and
expense reimbursements. Such employment agreements provide that in the event
such employee's employment terminates following a change in control transaction
(as defined in such employment agreements) of the Company, the Company shall pay
such employee two times such employee's then current annual base salary. Each
such employment agreement contains a covenant-not-to-compete with the Company
for a period of one year following termination of employment.
Compensation of Directors
Pursuant to the Company's Amended and Restated Bylaws, the members of
the Board may be compensated in a manner and at a rate determined from time to
time by the Board. Directors who are employees of the Company do not receive
additional compensation for service as a director. Under the Company's 1996
Stock Option Plan, Directors who are not employees of the Company receive
options to purchase 10,000 shares of Common Stock per year of service and $1,000
for each Board meeting attended in person and $500 for attendance via telephone.
Directors are paid $500 for each committee meeting attended and $250 for
attendance via telephone, unless such committee meeting is held on the same day
as a Board meeting.
REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee is composed of independent directors who are
not employees of the Company and who qualify as disinterested persons for
purposes of Section 16(b) under the Act. The Compensation Committee is
responsible for reviewing all aspects of the Company's executive compensation
programs and administering the Company's 1996 Stock Option Plan. In addition,
the Compensation Committee is responsible for reviewing and recommending to the
Board policies and programs for the development of management personnel and
management structure and organization. In fiscal year 1999, the members of the
Compensation Committee were Mr. Colloton and Drs. Schaffer and Sherman. The
Compensation Committee meets during the first quarter of the fiscal year to
establish target base compensation levels for the Company's executive officers
for that year and to finalize bonuses for the previous fiscal year or make a
recommendation on such compensation issues to the Board.
The Compensation Committee believes that compensation for the Company's
employees, including the Named Executive Officers, must be in amounts sufficient
to attract, retain and motivate employees, while at the same time maintaining a
reasonable relationship to the Company's financial performance. Moreover, the
Compensation Committee believes that compensation decisions should foster career
opportunities for, and aid the development of, employees and encourage and
reward employees who put the Company's interests ahead of their own.
The Company's compensation philosophy is based on the following general
principles:
o Achieve compensation levels for employees through base salaries
and bonuses (based on Company and individual performance) to be
able to attract and retain the most qualified executives.
o Align employees' and stockholders' interests in maximizing
stockholder value through the granting of options to purchase
Common Stock of the Company.
Compensation of the Chairman of the Board and Chief Executive Officer
and the Other Executive Officers
10
<PAGE> 13
The Company's employment agreements with Messrs. Martin and Jolas were
entered into in 1996 and were amended in 1999. These agreements establish the
base salaries and provide for bonuses determined by the Compensation Committee.
The Company entered into an employment agreement with Mr. Wagar in May 1998,
upon his appointment as President and Chief Executive Officer of the Company.
Mr. Wagar's employment agreement was amended in 1999 and establishes a base
salary and provides for bonuses determined by the Compensation Committee.
The Company has in place a bonus plan pursuant to which the executive
officers of the Company and certain key employees whose responsibilities and
activities are closely connected to the Company's overall performance will be
entitled to receive cash bonuses based on the overall performance of the Company
as well as the employee's individual responsibilities, performance and
contribution to the Company's overall performance. To date, cash bonuses are
calculated as a percentage of each eligible employee's base salary and are at
the discretion of the Compensation Committee or the Board.
In fiscal year 1999, the Board approved grants of stock options to
Messrs. Wagar, Martin, Abbasi, Jolas and Young. In determining the number of
shares to grant under these stock options, the Compensation Committee took into
account the Company's performance, individual job performance, employee morale,
physician satisfaction and the Company's desire to retain Messrs. Wagar, Martin,
Abbasi, Jolas and Young. No specific weights were assigned to any of these
factors. For fiscal year 1999, no cash bonuses were paid to Messrs. Wagar,
Martin, Abbasi, Jolas and Young. In arriving at this conclusion, the Board gave
significant weight to the CEO's recommendation that bonus consideration be
deferred until the Company achieves various internal goals established by the
CEO.
MEMBERS OF THE COMPENSATION COMMITTEE
John W. Colloton
Derace L. Schaffer, M.D.
Michael L. Sherman, M.D.
11
<PAGE> 14
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction of
a public company to $1,000,000 for compensation paid to its chief executive
officer or any of its four other highest paid officers. The Company has not
adopted a policy with respect to executive compensation in excess of $1,000,000
a year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Mr. Colloton and Drs. Schaffer and Sherman comprise the Compensation
Committee. None of the foregoing individuals serving on the Compensation
Committee are or have been officers or employees of any entity on which any
executive officer of the Company or its subsidiaries serves as a director or a
member of the compensation committee.
CERTAIN TRANSACTIONS
The Company and Michael L. Sherman, M.D., a director and a director
nominee of the Company, entered into a consulting agreement in August 1996. On
January 26, 1998, the Company granted Dr. Sherman 5,000 options with an exercise
price of $12.00 per share. Dr. Sherman receives annual compensation of $100,000
pursuant to the consulting agreement. The Company also agreed to nominate Dr.
Sherman for election to the Board at the 1998 and 1999 annual meetings of
stockholders.
During fiscal year 1999, Advanced Radiology, P.A. (the radiology group
for which Dr. Sherman serves as President), Ide Imaging Group, P.C. (the
radiology group for which Dr. Schaffer serves as President) and PIC Medical
Group, Inc. (the radiology group for which Dr. Chafen serves as President) paid
the Company $50,757,626, $25,666,232, and $11,317,925, respectively, in service
fees pursuant to the service agreements between the Company and each respective
practice.
STOCKHOLDER PROPOSALS
Pursuant to the rules of the Commission, in order for stockholder
proposals to receive consideration for inclusion in the Company's Proxy
Statement for the 2001 Annual Meeting of Stockholders, such proposals must be
received by the Company at its principal executive offices no later than January
4, 2001. Such proposals should be directed to Radiologix, Inc., 3600 Chase
Tower, 2200 Ross Avenue, Dallas, Texas 75201, Attention: Chief Executive
Officer. We will consider a stockholder proposal submitted outside Rule 14a-8
untimely if we receive the proposal after March 19, 2001.
12
<PAGE> 15
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common
Stock over the period commencing November 21, 1997 (the first day after the
effective date of the IPO) and ending December 31, 1999, with PPM Industry
Index, Single Specialty PPM Index and the S&P 500. Each index assumes $100
invested at the close of trading on November 21, 1997 and reinvestment of
dividends. The Company believes that the information provided has only limited
relevance due to the very short period of time during which the Company has been
public.
<TABLE>
<CAPTION>
AMERICAN
MEASUREMENT PERIOD PHYSICIAN PPM INDUSTRY SINGLE SPECIALTY
(FISCAL YEAR COVERED) PARTNERS, INC. INDEX PPM INDEX S&P 500
--------------------- -------------- ------------ ---------------- -------
<S> <C> <C> <C> <C>
11/21/97 100.0% 100.0% 100.0% 100.0%
12/31/97 95.6 95.5 100.4 106.4
12/31/98 59.4 24.6 61.8 128.6
12/31/99 39.3 8.9 22.9 163.6
</TABLE>
<TABLE>
<CAPTION>
11/21/97 12/31/97 12/31/98 12/31/99
-------- -------- --------- --------
<S> <C> <C> <C> <C>
RDLX................................... $ 100.00 $ 95.55 $ 56.74 $ 39.32
PPM Industry Index..................... 100.00 95.47 23.50 8.87
Single Specialty PPM Index............. 100.00 100.39 61.99 22.87
S & P 500.............................. 100.00 106.43 136.85 163.57
</TABLE>
[LINE GRAPH]
13
<PAGE> 16
GENERAL
The 1999 Annual Report to Stockholders, which includes the Company's
Report on Form 10-K, has been mailed to the stockholders with this mailing.
Copies of any exhibit(s) to the Form 10-K will be furnished on request and upon
the payment of the Company's expenses in furnishing such exhibit(s). Any request
for exhibits should be in writing addressed to Paul M. Jolas, General Counsel,
Senior Vice President and Secretary, Radiologix, Inc., 3600 Chase Tower, 2200
Ross Avenue, Dallas, Texas 75201. The Annual Report does not form any part of
the material for the solicitation of proxies.
The expense of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies personally or by telephone or telegram. The Company
may request brokers, dealers or other nominees to send proxy materials to and
obtain proxies from their principals and the Company may reimburse such persons
for their reasonable expenses.
OTHER BUSINESS
Management knows of no other matter that will come before the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the shares
they represent as the Company may recommend.
BY ORDER OF THE BOARD OF DIRECTORS,
Paul M. Jolas
General Counsel, Senior Vice President
and Secretary
April 28, 2000
14
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
Election of Directors
WITHHOLD NOMINEES: Less T. Chafen, M.D.; John W. Colloton; Paul D. Farrell;
FOR all nominees listed AUTHORITY Derace L. Schaffer, M.D.; Michael L. Sherman, M.D.; and
to the right (except to vote for all Mark L. Wagar
as indicated to the nominees listed
contrary) to the right INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
---------------------------------------------------------------------
Ratification of the appointment of Arthur Andersen LLP as independent In their discretion, such attorneys-in-fact and proxies
auditors of the Company for the fiscal year ending December 31, 2000. are authorized to vote upon such other business as
properly may come before the meeting.
FOR AGAINST ABSTAIN
I will [ ] will not [ ] be attending the meeting
[ ] [ ] [ ]
YOU ARE REQUESTED TO COMPLETE, DATE, SIGN,
AND RETURN THIS PROXY PROMPTLY. ALL JOINT
OWNERS MUST SIGN. PERSONS SIGNING AS
EXECUTORS, ADMINISTRATORS, TRUSTEES,
CORPORATE OFFICERS, OR IN OTHER REPRESENTATIVE
CAPACITIES SHOULD SO INDICATE.
Date: 2000
------------------------------------,
---------------------------------------------
Signature
---------------------------------------------
Signature
- ------------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
</TABLE>
<PAGE> 18
RADIOLOGIX, INC.
3600 CHASE TOWER
2200 ROSS AVENUE
DALLAS, TEXAS 75201
ANNUAL MEETING OF STOCKHOLDERS - JUNE 7, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned stockholder(s) of Radiologix, Inc., a Delaware
corporation (the "Company"), hereby appoints Mark L. Wagar and Paul M. Jolas,
and each of them, attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to represent and to vote all shares of common stock of
the Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at 2200 Ross Avenue, 39th Floor, Dallas, Texas 75201, at
10:00 A.M., local time, on Wednesday, June 7, 2000, and at any adjournment
thereof.
(continued on reverse side)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
