<PAGE> 1
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
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
American 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
___________________________________________________________________
(5) Total fee paid:
___________________________________________________________________
/ / 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.:
___________________________________________________________________
(3) Filing Party:
___________________________________________________________________
(4) Date Filed:
___________________________________________________________________
<PAGE> 2
AMERICAN HEALTH SERVICES CORP.
4440 VON KARMAN AVENUE, SUITE 320
NEWPORT BEACH, CA 92660
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 12, 1995
The Annual Meeting of Stockholders of American Health Services Corp.
("Company") will be held at The Sutton Place Hotel, located at 4500 MacArthur
Boulevard, Newport Beach, California, on Tuesday, December 12, 1995, at 10:00
a.m., Pacific Standard Time, for the following purposes:
(1) to elect two of the Company's directors to serve three-year terms
until the 1998 Annual Meeting of Stockholders and until their successors are
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 Friday, October 27, 1995, 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 directors, and the presence, either in person or by proxy,
of persons entitled to vote a majority of the outstanding Common Stock and
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
/S/ THOMAS V. CROAL
----------------------------------
Thomas V. Croal
Secretary
Newport Beach, California
November 3, 1995
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> 3
AMERICAN HEALTH SERVICES CORP.
4440 VON KARMAN AVENUE
SUITE 320
NEWPORT BEACH, CALIFORNIA 92660
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1995
This Proxy Statement is being mailed on or about November 3, 1995, in
connection with the solicitation on behalf of the Board of Directors of
American Health Services Corp., a Delaware corporation (the "Company"), of
proxies for use at the Annual Meeting of Stockholders of the Company to be held
at The Sutton Place Hotel, located at 4500 MacArthur Boulevard, Newport Beach,
California, on Tuesday, December 12, 1995, at 10:00 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 person 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 instruc-tions, shares represented by properly
executed proxies will be voted in favor of the nominees for directors. Any
stockholder may revoke his or her proxy at any time prior to its use by filing
with the secretary of the Company, at 4440 Von Karman Avenue, Suite 320,
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.
RECORD DATE AND VOTING SECURITIES
The holders of the Company's common stock, par value $0.03 per share
("Common Stock"), and the holders of the Company's Series B Senior Convertible
Preferred Stock ("Preferred Stock") each share of which is convertible into one
hundred shares of common stock vote together as a class (Preferred Stock votes
on an as converted basis) on all matters except the election of directors
<PAGE> 4
of the Company and matters upon which the holders of Preferred Stock are
entitled to vote as a class. The holders of Preferred Stock are currently
entitled to elect two directors, voting separately as a class ("Preferred Stock
Directors"). In addition, under certain circumstances, the holders of
Preferred Stock may be entitled to elect, voting separately as a class, an
additional number of directors which, when added to Preferred Stock Directors,
will constitute a majority of the Board of Directors. See "Election of
Directors."
Only stockholders of record as of the close of business on Friday,
October 27, 1995, are entitled to receive notice of and to vote at the Annual
Meeting.
As of October 27, 1995, the Company had outstanding 9,683,647 shares of
Common Stock and 37,837.83 shares of Preferred Stock convertible into 3,783,783
shares of Common Stock, and there were approximately 485 holders of record of
Common Stock and eight holders of record of Preferred Stock. Each share of
Common Stock is entitled to one vote with respect to the election of a director
(other than Preferred Stock Directors). Each share of Preferred Stock is
entitled to one vote with respect to the election of Preferred Stock Directors.
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 (other than Preferred Stock Directors), and the
presence, either in person or by proxy, of persons entitled to vote a majority
of the outstanding Common Stock and Preferred Stock (on an as converted basis)
is necessary to constitute a quorum for the transaction of any other business
which may properly come before the Annual Meeting.
At the Company's 1994 Annual Meeting, approximately 78% of the
outstanding Common Stock was represented and participated in the election of a
single director. On December 12, 1995, two Preferred Stock Directors are
expected to be re-elected pursuant to a written consent of the holder of a
majority of Preferred Stock. See "Election of Directors."
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership, reported to the
Company as of October 27, 1995, of the 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 Securities Exchange Act of 1934, as
amended ("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) the chief executive officer, (iv) the three other most highly compensated
executive officers, and (v) all directors and executive officers, as a group.
- 2 -
<PAGE> 5
<TABLE>
<CAPTION>
Amount and Percentage Percentage
Nature of of of
Name and Address Beneficial Common Preferred
of Beneficial Owner Ownership (1) Stock Stock
- ------------------- ------------- ----------- ----------
<S> <C> <C> <C>
E. Larry Atkins 351,000(2) 3.5% N/A
4440 Von Karman
Suite 320
Newport Beach, CA
92660
Robert J. Armstrong 20,000(3) * N/A
4440 Von Karman
Suite 320
Newport Beach, CA
92660
Thomas V. Croal 125,000(4) 1.3% N/A
4440 Von Karman
Suite 320
Newport Beach, CA
92660
Deborah M. MacFarlane 50,000(5) * N/A
4440 Von Karman
Suite 320
Newport Beach, CA
92660
Frank E. Egger 256,687(6)(7) 2.6% 4.5%
12000 Biscayne Blvd.
Suite 803
Miami, FL 33181
Lloyd G. Glazer 113,562(7)(8) 1.2% 1.5%
One Federal St.
Boston, MA 02110
Philip D. Green 185,125(7)(9) 1.9% 3.0%
2600 Virginia Ave., NW
Suite 1111
Washington, D.C.
20037
Estate of Cal Kovens 4,908,535(7)(10) 38.3% 67.3%
12000 Biscayne Blvd.
Suite 803
Miami, FL 33181
Roz Kovens 5,708,987(7)(11) 42.4% 82.6%
12000 Biscayne Blvd.
Suite 803
Miami, FL 33181
</TABLE>
- 3 -
<PAGE> 6
<TABLE>
<CAPTION>
Amount and Percentage Percentage
Nature of of of
Name and Address Beneficial Common Preferred
of Beneficial Owner Ownership(1) Stock Stock
- ------------------- ------------ ---------- ----------
<S> <C> <C> <C>
Charles M. Spear 0(12) N/A N/A
51 Columbia
Aliso Viejo, CA 92656
David and Odette Rebibo 755,000(13) 7.8% N/A
202 East Berridge Lane
Phoenix, AZ 85012
General Electric 1,589,072(14) 14.1% N/A
Company
20825 Swenson Drive
Suite 100
Waukesha, WI 53186
All directors and 6,810,361(15) 47.1% 91.6%
executive officers,
as a group
(10 persons)
</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 22, 1995.
(2) Includes (i) options to purchase 180,000 shares of Common Stock at an
exercise price of $1.34 per share, and (ii) options to purchase 120,000
shares of Common Stock at an exercise price of $1.31 per share. Does not
include an option to purchase 175,000 shares of Common Stock at an
exercise price of $0.25 per share, which is not currently exercisable.
(3) Includes an option to purchase 20,000 shares of Common Stock at an
exercise price of $2.00 per share. Does not include an option to
purchase 10,000 shares of Common Stock at an exercise price of $2.00 per
share, which is not currently exercisable.
(4) Includes (i) options to purchase 75,000 shares of Common Stock at an
exercise price of $1.34 per share, and (ii) options to purchase 50,000
shares of Common Stock at an exercise price of $1.31 per share. Does not
include an option to purchase 125,000 shares of Common Stock at an
exercise price of $0.25 per share, which is not currently exercisable.
- 4 -
<PAGE> 7
(5) Includes an option to purchase 50,000 shares of Common Stock at an
exercise price of $1.50 per share. Does not include an option to
purchase 12,500 shares of Common Stock at an exercise price of $1.50 per
share.
(6) Includes (i) 1,716.31 shares of Preferred Stock (convertible into 171,631
shares of Common Stock), (ii) warrants to purchase 22,682 shares of
Common Stock at an exercise price of $1.00 per share, (iii) an option to
purchase 30,000 shares of Common Stock at an exercise price of $1.62 per
share, and (iv) an option to purchase 12,000 shares of Common Stock at an
exercise price of $0.25 per share. Does not include an option to
purchase 18,000 shares of Common Stock at an exercise price of $0.25 per
share, which is not currently exercisable. The Common Stock, Preferred
Stock and warrants held by Mr. Egger are pledged to the estate of Cal
Kovens as security for the repayment of a loan. If the loan is not
repaid when due, the estate of Mr. Kovens would have the right to sell
such of the pledged securities as are necessary to satisfy the
indebtedness.
(7) Roz Kovens and Messrs. Egger, Glazer, Green and the estate of Mr. Kovens,
along with the remaining Preferred Stockholders (Marc Kovens (Mr. Kovens'
son), Elizabeth Cobbs (Mr. Green's spouse) and Harvey Silets) may be
deemed to be a "group" under Section 13(d) of the Exchange Act. These
individuals beneficially own in the aggregate 6,788,955 shares, or 47.4%,
of the outstanding Common Stock on an as- if-converted basis, consisting
of (i) 2,137,172 shares of Common Stock, (ii) 37,837.83 shares (or 100%)
of Preferred Stock (convertible into 3,783,783 shares of Common Stock),
(iii) warrants to purchase 500,000 shares of Common Stock at an exercise
price of $1.00 per share, (iv) warrants to purchase 200,000 shares of
Common Stock at an exercise price of $0.25 per share, (v) options to
purchase 120,000 shares of Common Stock at an exercise price of $1.62 per
share, and (vi) options to purchase 48,000 shares of Common Stock at an
exercise price of $0.25 per share.
(8) Includes (i) 572.1 shares of Preferred Stock (convertible into 57,210
shares of Common Stock), (ii) warrants to purchase 7,561 shares of Common
Stock at an exercise price of $1.00 per share, (iii) an option to
purchase 30,000 shares of Common Stock at an exercise price of $1.62 per
share, and (iv) an option to purchase 12,000 shares of Common Stock at
$0.25 per share. Does not include an option to purchase 18,000 shares of
Common Stock at an exercise price of $0.25 per share, which is not
currently exercisable.
(9) Includes (i) 1,144.21 shares of Preferred Stock (convertible into 114,421
shares of Common Stock), (ii) warrants to purchase 15,121 shares of
Common Stock at an exercise price of $1.00 per share, (iii) an option to
purchase 30,000 shares of
- 5 -
<PAGE> 8
Common Stock at an exercise price of $1.62 per share, and (iv) an option
to purchase 12,000 shares of Common Stock at $0.25 per share. Does not
include an option to purchase 18,000 shares of Common Stock at an
exercise price of $0.25 per share, which is not currently exercisable.
Mr. Green owns the Common Stock, Preferred Stock and warrants with his
spouse, Elizabeth Cobbs, as tenants by the entirety, and shares with his
spouse the right to vote and dispose of such securities. In addition,
the Common Stock, Preferred Stock and warrants are pledged to the estate
of Cal Kovens as security for the repayment of a loan. If the loan is
not repaid when due, the estate of Mr. Kovens would have the right to
sell such of the pledged securities as are necessary to satisfy the
indebtedness.
(10) Includes (i) 19,250 shares of Common Stock held by each of the M.K. Boca
Trust, S.K. Boca Trust, K.K. Boca Trust and B.K. Boca Trust, over which
Mr. Kovens did not have or share voting and shared dispositive power,
(ii) 25,458.64 shares of Preferred Stock (convertible into 2,545,864
shares of Common Stock), (iii) warrants to purchase 336,452 shares of
Common Stock at an exercise price of $1.00 per share, (iv) warrants to
purchase 200,000 shares of Common Stock at an exercise price of $0.25 per
share, (v) an option to purchase 30,000 shares of Common Stock at an
exercise price of $1.62 per share, and (vi) an option to purchase 12,000
shares of Common Stock at $0.25 per share. Does not include (i) an
option to purchase 18,000 shares of Common Stock at an exercise price of
$0.25 per share, which is not currently exercisable, and (ii) 800,452 and
488,813 shares beneficially owned by Roz Kovens and Marc Kovens,
respectively.
(11) Includes (i) 5,800 shares of Preferred Stock (convertible into 580,000
shares of Common Stock) and (ii) warrants to purchase 76,600 shares of
Common Stock at an exercise price of $1.00 per share. Also includes the
4,908,535 shares beneficially owned by the estate of Cal Kovens with
respect to which Mrs. Kovens is the personal representative. Does not
include an option to purchase 30,000 shares of Common Stock at an
exercise price of $0.25 per share, which is not currently exercisable.
(12) Does not include an option to purchase 30,000 shares of Common Stock at
an exercise price of $0.25 per share, which is not currently exercisable.
(13) The information in the table is taken from information furnished by Mr.
and Mrs. Rebibo. The Company believes Mr. and Mrs. Rebibo own their
shares jointly and share voting and dispositive power over such shares.
(14) Consists of warrants to purchase 1,589,072 shares of Common Stock at an
exercise price of $0.10 per share.
- 6 -
<PAGE> 9
(15) Assumes the conversion of Preferred Stock held by directors and the
exercise in full of all currently exercisable options and warrants
described in footnotes (2), (3), (4), (5), (6), (8), (9), (10) and (11)
above.
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.
ELECTION OF DIRECTORS
At the Company's 1988 Annual Meeting, the stockholders of the Company
adopted its Restated Certificate of Incorporation ("Restated Certificate")
which provides for a three-tiered classified Board of Directors with staggered
terms of office. The terms of the Preferred Stock entitle the holders thereof
to elect two directors of the Company. Ordinarily, the Board of Directors
consists of three classes, designated as Class I, Class II and Class III, and
two directors elected by the holders of Preferred Stock. In addition, pursuant
to an agreement with the Company, the holders of Preferred Stock are entitled
to nominate a number of directors which, when added to the number of directors
elected by Preferred Stock, equals: three, if the holders of Preferred Stock
hold more than 20% of the Common Stock and Preferred Stock; two, if the holders
of Preferred Stock hold more than 10%, but less than 20%, of Common Stock and
Preferred Stock; and one, if the holders of Preferred Stock hold more than 5%,
but less than 10%, of Common Stock and Preferred Stock. There are currently
seven directors, which is the authorized number.
In April 1992, Lloyd G. Glazer, who was elected by the Board as a Class
II director in September 1991, became the nominee director of the holders of
Preferred Stock but remained a Class II director. On December 12, 1995, two
Preferred Stock Directors, Frank E. Egger and Roz Kovens, are expected to be
re-elected by written consent of the holder of a majority of the Preferred
Stock.
Pursuant to the Restated Certificate, at each Annual Meeting only one
class of directors will be elected, and each class of directors will serve a
three-year term and until their successors are duly elected and qualified. The
term of the Class II director elected at the 1993 Annual Meeting will expire at
the 1996 Annual Meeting, the term of the Class III director elected at the 1994
Annual Meeting will expire at the 1997 Annual Meeting, and the term of the
Class I directors to be elected at the 1995 Annual Meeting will expire at the
1998 Annual Meeting. Pursuant to the Certificate of Designation of Preferred
Stock, Preferred Stock Directors are elected annually.
Nominees for Election. The nominees for election as Class I directors
are set forth below, along with certain information regarding the nominees.
- 7 -
<PAGE> 10
<TABLE>
<CAPTION>
Year First
Elected
Name Age Position To Serve
- ---- --- -------- ----------
<S> <C> <C> <C>
E. Larry Atkins 48 President and 1988
Chief Executive
Officer and
Director, Class I
Philip D. Green 44 Director, Class I 1989(1)
</TABLE>
_______________________
(1) Mr. Green is a nominee of the estate of Cal Kovens pursuant to an
agreement with the Company which has been assigned to the estate.
E. Larry Atkins joined the Company in 1986 and has served as the
Company's president and chief executive officer since August 1990, and chairman
of the board from December 1990 to June 1992. Mr. Atkins served as executive
vice president and chief operating officer from 1986 to August 1990. Mr.
Atkins became a director of the Company in 1988. From 1979 to 1986, Mr. Atkins
served as president and chief executive officer of AMI Diagnostic Services, a
wholly-owned subsidiary of American Medical International, Inc.
Philip D. Green has been a director of the Company since 1989. Mr. Green
is a founding partner of the Washington, D.C. based law firm of Green, Stewart
& Farber, P.C. From 1978 through 1989, Mr. Green was a partner in the
Washington, D.C. based law firm of Schwalb, Donnenfeld, Bray & Silbert, P.C.
Mr. Green is also president and a director of Neuromedical Technologies, Inc.,
a former subsidiary of the Company.
The Board of Directors. Set forth below are the Class II and III
directors of the Company whose terms do not expire this year and Preferred
Stock Directors who are elected annually by the holders of Preferred Stock.
<TABLE>
<CAPTION>
Year First
Elected
Name Age Position To Serve
- ---- --- -------- ----------
<S> <C> <C> <C>
Thomas V. Croal 36 Vice President, 1991
Chief Financial
Officer, Corporate
Secretary and
Director, Class III
Lloyd G. Glazer 56 Director, Class II 1991
Frank E. Egger 51 Chairman of the 1991
Board and Director,
Preferred Stock
</TABLE>
- 8 -
<PAGE> 11
<TABLE>
<CAPTION>
Year First
Elected
Name Age Position To Serve
- ---- --- -------- ----------
<S> <C> <C> <C>
Roz Kovens 62 Director, 1995
Preferred Stock
Charles M. Spear 52 Director, Class II 1995
</TABLE>
Thomas V. Croal was elected a director in March 1991 and appointed vice
president and chief financial officer of the Company in April 1991. He was
controller of the Company 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.
Frank E. Egger has been a director of the Company since August 1991.
Presently Mr. Egger serves as vice president of Kovens & Associates, Inc.
("Kovens & Associates"), a successor entity to Kovens Enterprises, where Mr.
Egger served as chief financial officer from 1980 to 1995. Kovens & Associates
is a group of real estate development and investment companies based in Miami,
Florida.
Lloyd G. Glazer has been a director of the Company since September
1991. Since January 1994, he has been managing director of H.C.
Wainwright & Co., Inc., a securities brokerage firm. From 1976 to December
1993, he was an associate director of Bear, Stearns & Co., Inc., an investment
banking and securities brokerage firm. He was formerly a vice president and
regional coordinator with Bache & Company and has been a stock broker since
1969.
Roz Kovens has been a director of the Company since May 1995. For the past
five years she has been engaged in private real estate investments. She is
currently the president of Kovens & Associates. Ms. Kovens is a founder of
Mount Sinai Medical Center in Miami, Florida, and a member of the Board of
Governors of Tel Aviv University.
Charles M. Spear has been a director since August 1995. Since April
1995, he has been chief financial officer of Smith Micro Software, a
manufacturer of communications software. In July 1995, he also became a senior
vice president and director of that company. From May 1993 until April 1995,
Mr. Spear was president of Spear, Inc., a privately held financial services
company. From April 1983 until Decemer 1992, Mr. Spear was chairman of the
board, president and chief financial officer of Spear Financial Services, Inc.,
a public company which Mr. Spear founded. Prior thereto he had been chief
operating officer of Trading Company of the West, a partnership operating
Pacific Stock Exchange specialist posts. From June 1968 until May 1981, Mr.
Spear was employed by The First National Bank of Chicago, most recently as vice
president.
- 9 -
<PAGE> 12
During fiscal 1994, the Board of Directors held four meetings, and the Audit
Committee and the Compensation Committee each met once. No director attended
fewer than 75% of the aggregate meetings of the Board of Directors or the
committee or committees on which he served during 1994. During 1994, action
was taken by written consent of the Board of Directors four times.
Compensation Committee Interlocks and Insider Participation. The
Company has a Compensation and Stock Option Committee ("Compensation
Committee") which consists of two non-employee directors, Messrs. Egger
(chairperson of the Compensation Committee and the Company's Chairman of the
Board) and Glazer. Mr. Egger performed certain consulting services for the
Company during 1994 and is providing similar services in 1995. See "Certain
Relationships and Related Transactions." The Compensation Committee is
responsible for determining the specific forms and levels of compensation of
the Company's executive officers and administering the Company's Employee Stock
Option Plan (1983), 1987 Stock Option Plan, 1989 Stock Incentive Plan, and the
1992 Option and Incentive Plan.
Audit Committee. The Audit Committee of the Company currently consists
of Messrs. Egger (chairperson) and Glazer. The Audit Committee's
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.
The Company does not have an executive or nominating or similar
committee. The Board of Directors generally acts in its entirety upon matters
which might otherwise be the responsibility of such committees.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 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"). Directors and
officers and greater than ten percent (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 ten percent (10%) stockholders complied with all filing requirements
applicable to them with respect to transactions during fiscal 1994.
EXECUTIVE OFFICERS
The executive officers of the Company, together with the year in which
they were appointed to their current positions, are set forth below.
- 10 -
<PAGE> 13
<TABLE>
<CAPTION>
Name Age Position Year
- ---- --- -------- ----
<S> <C> <C> <C>
E. Larry Atkins 48 President and Chief 1990
Executive Officer
Robert J. Armstrong 58 Vice President, Design 1985
and Construction
Thomas V. Croal 36 Vice President, Chief 1991
Financial Officer and
Corporate Secretary 1990
Brian G. Drazba 34 Vice President, Finance 1995
and Corporate Controller
Deborah M. MacFarlane 40 Vice President, Marketin 1991
</TABLE>
Information concerning Messrs. Atkins and Croal is set forth under
"Election of Directors."
Robert J. Armstrong has been vice president, design and construction of
the Company since 1985. Mr. Armstrong served as director of design and
construction for the Company from 1983 to 1985.
Brian G. Drazba has been vice president, finance of the Company since
June 1995. Mr. Drazba joined the Company as controller in 1992. From 1985 to
1992, he was employed by Arthur Andersen & Co.
Deborah M. MacFarlane has served as vice president, marketing of the
Company since July 1991. From 1987 until June 1991, Ms. MacFarlane served as
director of marketing for the Center Operating Group of Medical Imaging Centers
of America, Inc.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information
concerning the annual and long-term compensation for services rendered in all
capacities to the Company for the years ended December 31, 1994, 1993 and 1992,
to (i) the Company's chief executive officer and (ii) the three other most
highly compensated executive officers of the Company whose aggregate cash
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation(2)
----------------------------------------- ------------ ---------------
Awards
Stock
Name and Principal Options
Position Year Salary Bonus(1) Other(2) (Shares)
- ------------------ ---- -------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
E. Larry Atkins 1994 $220,000 -- $ 3,798 -- $ 9,327
President and Chief 1993 200,000 -- 11,763 -- 10,245
Executive Officer 1992 200,000 -- 7,198 -- 5,292
</TABLE>
- 11 -
<PAGE> 14
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation(2)
------------------------------------------- ------------ ---------------
Awards
Stock
Name and Principal Options
Position Year Salary Bonus(1) Other(2) (Shares)
- ------------------ ---- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas V. Croal 1994 148,500 -- 4,836 -- 3,519
Vice President, Chief 1993 135,000 10,000 8,760 -- 1,950
Financial Officer 1992 135,000 -- 4,431 -- 1,206
and Corporate Secretary
Robert J. Armstrong 1994 100,000 -- 2,264 -- 10,027
Vice President, 1993 100,000 -- 7,590 -- 7,438
Design & Construction 1992 100,000 -- 3,096 -- 4,502
Deborah M. MacFarlane 1994 $102,000 -- $ 3,033 -- $ 3,782
Vice President, 1993 92,000 -- 5,220 -- 3,829
Marketing 1992 83,000 -- 6,840 -- 820
</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 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 chief executive officer
and the three other most highly compensated executive officers.
Compensation of Directors. None of the members of the Board of
Directors received any cash compensation in fiscal 1994 for their services as
directors. None of the directors is expected to receive any cash compensation
during 1995 for such services. At the time of their initial election and every
three years thereafter, outside directors are granted an option to acquire
30,000 shares of the Company's Common Stock at the Fair Market Value thereof on
the date of grant. Such options are exercisable with respect to forty percent
(40%) of the shares covered at the end of the one year from the date of grant
and with respect to an additional twenty percent (20%) of the shares
covered at the end of each of the next three years. See "Certain Relationships
and Related Transactions - Transactions with Frank Egger."
Option Grants. No stock options were granted under the Company's stock
option plans during fiscal 1994 to the chief executive officer or the three
other most highly compensated executive officers.
Option Exercises and Fiscal Year-end Values. Neither the chief executive
officer nor the other executive officers exercised any stock options during
fiscal 1994. The following table sets forth information with respect to the
unexercised stock options to purchase the Common Stock granted in fiscal 1991
and 1990 under the stock option plans to the chief executive officer and the
other executive officers as of December 31, 1994.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held at In-the-Money Options at
December 31, 1994 December 31, 1994(1)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
E. Larry Atkins 240,000 60,000 -- --
Robert J. Armstrong 20,000 10,000 -- --
Thomas V. Croal 100,000 25,000 -- --
Brian G. Drazba -- -- -- --
Deborah M. MacFarlane 37,500 12,500 -- --
</TABLE>
__________________________
(1) Based on the closing price on the OTC Bulletin Board for the Common Stock
on that date ($0.13).
- 12 -
<PAGE> 15
Employment Agreements and Severance Arrangements. The Company has
entered into employment agreements with its executive officers which provide
that in the event the executive is terminated as a result of his becoming
physically or mentally disabled; or at the discretion of the Board; or if he
terminates voluntarily in the event of a change in the location of the
Company's corporate headquarters to a location outside the counties of Los
Angeles or Orange, California, which new location is at the time more than 35
miles from the location of the executive's principal residence; or the Company
or its stockholders enter into an agreement to dispose of, whether by sale,
exchange, merger, consolidation, reorganization, dissolution or liquidation of
(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 25% of the outstanding
Common Stock; or the Company issues and sells to one person or "group" (as
defined by the SEC) such number of shares of Common Stock that said person or
group owns, of record or beneficially, not less than 25% of the Common Stock
outstanding after such issuance; and as a result of which his ability to
perform his responsibilities or the nature of such responsibilities is
substantially and adversely altered, the employment agreements provide that the
executive is entitled to 12 months of compensation at his annual salary rate
then in effect. However, in the event that the executive's employment is
terminated for cause, he has no right to receive any monetary compensation
under his employment agreement.
Compensation Committee Report on Executive Compensation. The
Compensation Committee is responsible for determining the specific forms and
levels of compensation for executive officers of the Company and 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 of the Company.
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.
The Company's Board of Directors 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
incentives designed to encourage the chief executive officer and executive
officers to maximize the potential of the Company and its employees. Specific
corporate performance objectives are established ("budget") and the chief
executive officer's and 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
- 13 -
<PAGE> 16
Company's executive officers at competitive levels in order to attract and
retain qualified executive officers, 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 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 other
executive officers. In 1994, the base salary of the chief executive officer
was increased by $20,000 to $220,000 per annum. This increase was premised on
his productivity in spearheading the Company's financial restructuring
agreement with its primary lender, reorganizing the Company's management
structure, developing a comprehensive marketing program, and sustaining the
Company's operations in a difficult environment.
Second, the Compensation Committee determines annually whether a cash
bonus will be paid to the chief executive officer and 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 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 area for
which the chief executive officer and executive officers have responsibility,
and individual performance achievements. Neither the chief executive officer
nor the other executive officers received bonuses in 1994.
Third, the Company has a 401(k) profit sharing plan ("401(k) Plan") in
which all eligible employees, including the chief executive officer and other
executive officers, of the Company are permitted to participate. To the extent
the chief executive officer and other executive officers participate in the
401(k) Plan, they may contribute up to 15% of their salaries on a pre-tax
- 14 -
<PAGE> 17
basis and the Company will contribute on their behalf an amount equal to 50% of
the first 6% of compensation contributed by the chief executive officer and
other executive officers.
Fourth, the Company has established various stock option plans in which
the chief executive officer and 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 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 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.
Neither the chief executive officer nor the other executive officers were
awarded any stock options in 1994.
It is the Company's policy to qualify all compensation paid to its chief
executive officer and other executive officers for deductibility under the
Internal Revenue Code and regulations in order to maximize the Company's income
tax deductions.
Compensation and Stock Option Committee
Frank E. Egger (Chairman)
Lloyd G. Glazer
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 of five years
commencing December 31, 1989 and ending December 31, 1994. To comply with the
SEC's requirements, the Company has developed a peer group comprised of Medical
Imaging Centers of America, Inc., Health Images, Inc., Intermagnetics General
Corporation, Maxum Health Corp., American Shared Hospital Services, Alliance
Imaging, Inc. and the Company. 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 and the
Exchange Act.
- 15 -
<PAGE> 18
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AMERICAN HEALTH SERVICES CORP., THE NASDAQ STOCK MARKET-US INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AMERICAN HEALTH NASDAQ STOCK
(FISCAL YEAR COVERED) SERVICES CORP. PEER GROUP MARKET-US
<S> <C> <C> <C>
12/89 100 100 100
12/90 29 97 85
12/91 55 85 136
12/92 76 62 159
12/93 6 40 182
12/94 5 47 178
</TABLE>
- ---------------
* $100 invested on 12/31/89 in stock or index - including reinvestment of
dividends. Fiscal year ending December 31.
- 16 -
<PAGE> 19
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
Transactions with Cal Kovens. In February 1992, the Company purchased a
second Gamma Knife from Elekta Instruments, Inc. ("Elekta") to be located in
California and made a deposit toward the purchase of a third Gamma Knife. The
Company received non-recourse interim financing of $2,000,000 toward the
acquisition of the second Gamma Knife and the deposit for the third Gamma Knife
from Cal Kovens (a director until his death on February 6, 1995). The interim
financing was borrowed from Mr. Kovens pursuant to the terms of a non-recourse
promissory note secured by the second Gamma Knife and due August 24, 1992, at
an interest rate of 10.5% per annum. Mr. Kovens extended the term of the note
while the Company sought to obtain permanent financing.
In December 1992, Radiosurgery Centers, Inc. ("RCI"), a wholly-owned
subsidiary of the Company, entered into a five-year loan of $2,750,000 with
City National Bank of Florida ("Bank") and the promissory note in favor of Mr.
Kovens was repaid from the proceeds of such loan in the first quarter of 1993.
The new loan was guaranteed by Mr. Kovens and his spouse, Roz Kovens. During
the second half of fiscal 1993, Mr. Kovens repurchased RCI's promissory note
from the Bank.
In early 1993, RCI, the Company and Elekta became involved in a dispute
when RCI advised Elekta that it intended to relocate the Gamma Knife it
purchased for location in California to Miami, Florida, since in December 1992,
RCI had entered into an agreement with Public Health Trust, an agency and
instrumentality of Metropolitan Dade County, Florida, to establish and operate
a Gamma Knife center at Jackson Memorial Medical Center located in Miami. The
parties settled their claims and, pursuant to the terms thereof, Mr. Kovens
agreed to guarantee scheduled payments of $250,000 to be made by RCI to Elekta
in connection with the delivery of the Gamma Knife to Miami, which payment has
been made by RCI.
In February 1994, RCI entered into a new five-year loan of $2,900,000
with County National Bank of South Florida. Mr. Kovens was repaid from the
proceeds of such new bank loan in the first quarter of 1994. This loan was
guaranteed by Mr. Kovens and secured by certain real property owned by Mr.
Kovens.
In November 1994, the Company granted Mr. Kovens a warrant to purchase
200,000 shares of Common Stock at $0.25 per share in consideration of the Gamma
Knife financing activities discussed above.
- 17 -
<PAGE> 20
Transactions with Frank Egger. Mr. Egger received $60,000 during fiscal
1994 for consulting services rendered to the Company in connection with the
Company's acquisition and financing activities. For fiscal 1995, he is being
paid the rate of $75,000 for such services. In the event the Company
terminates this consulting relationship with Mr. Egger, he is entitled to a
severance fee of $75,000. See "Compensation of Directors."
Transactions with Green, Stewart & Farber. Since September 1991, Green,
Stewart & Farber, P.C., the law firm in which Mr. Green is a partner, has
represented the Company for most of its outside legal activities, including
general corporate, transactional, financing and healthcare matters. During
fiscal 1994, the Company paid Green, Stewart & Farber, P.C. $104,478 for those
services.
Transactions with Preferred Stockholders. The term of certain warrants
to purchase in the aggregate 500,000 shares of Common Stock at $1.00 per share
held by Roz Kovens and Messrs. Egger, Glazer and Green, along with the other
Preferred Stockholders (Marc Kovens, Elizabeth Cobbs and Harvey Silets), which
expired on February 15, 1995, was extended until February 15, 1996.
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 1982. A meeting of the Board of Directors 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 1995 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 Restated Certificate requires that all nominations for persons to be
elected directors, other than those made by the Board of Directors, be made
pursuant to written notice to the secretary of the Company. The notice must be
received not less than 60 nor more than 90 days prior to the meeting at which
the election will take place (or not later than 10 days after public disclosure
of such meeting date if such disclosure occurs less than 40 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.
- 18 -
<PAGE> 21
The management of the Company knows of no further or other matters which
are to be considered at the 1995 Annual Meeting. If any other business shall
properly come before the 1995 Annual Meeting, the person named in the
accompanying form of proxy will, as to such items, vote or refrain from voting
in accordance with his best judgment.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1994, including audited consolidated financial statements for the
fiscal year ended December 31, 1994, 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
1996 Annual Meeting must set forth such proposal in writing and file it with
the secretary of the Company on or before December 31, 1995. The Board of
Directors of the Company will review the proposals from eligible stockholders
which it receives by that date and will determine whether such proposals will
be included in its 1996 proxy solicitation materials.
By Order of the Board of Directors
/S/ THOMAS V. CROAL
----------------------------------
Thomas V. Croal
Secretary
Newport Beach, California
November 3, 1995
- 19 -
<PAGE> 22
AMERICAN HEALTH SERVICES CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMERICAN HEALTH
SERVICES CORP.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and the accompanying Proxy Statement for the 1995 Annual Meeting
and, revoking all prior proxies, hereby appoints E. Larry Atkins, with full
power of substitution, as proxy of the undersigned to attend and vote all shares
of Common Stock of American Health Services Corp. which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders to be held on December
12, 1995, 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.
1. The election of E. Larry Atkins as a director of the Company to hold office
for a three-year term and until his successor is duly elected and qualified.
FOR / / WITHHOLD VOTE / /
The election of Philip D. Green as a director of the Company to hold office
for a three-year term and until his successor is duly elected and qualified.
FOR / / WITHHOLD VOTE / /
2. To transact such other business as may properly come before the Annual
Meeting and any and all postponements or adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED;
HOWEVER, IF NO INSTRUCTIONS ARE GIVEN, THE PROXY WILL VOTE FOR THE NOMINEES FOR
DIRECTOR AND IN HIS DISCRETION ON ANY OTHER MATTERS THAT MAY COME BEFORE THE
ANNUAL MEETING.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 23
(CONTINUED FROM OTHER SIDE)
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.
DATED: , 1995
-----------------------
-----------------------------------
-----------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
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
12, 1995.
