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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
PRIMEDEX HEALTH SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
PRIMEDEX HEALTH SYSTEMS, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] 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>
PRIMEDEX HEALTH SYSTEMS, INC.
Los Angeles, California
May 9, 2000
Dear Fellow Stockholder:
You are cordially invited to attend Primedex Health Systems, Inc.'s
Annual Meeting of Stockholders to be held on Friday, June 23, 2000, beginning at
1:00 P.M. Pacific Daylight Time, at the Sheraton Hotel, 5990 Green Valley
Circle, Culver City, California.
This year you are being asked to elect three directors and to approve
and adopt the Primedex Health Systems, Inc. 2000 Long-Term Incentive Plan. Your
Board of Directors urges you to read the accompanying proxy statement and
recommends that you vote "FOR" each of the proposals.
At the meeting, management will also report on the Company's
performance and an opportunity will be provided for stockholders to ask
questions. The Board of Directors appreciates and encourages stockholder
participation in the Company's affairs. Whether or not you plan to attend the
meeting, it is important that your shares be represented. Accordingly, we
request that you sign, date and mail the enclosed proxy card in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/S/ Howard G. Berger
--------------------
HOWARD G. BERGER, M.D.
President
<PAGE>
PRIMEDEX HEALTH SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Los Angeles, California
May 9, 2000
The Annual Meeting of Stockholders of Primedex Health Systems, Inc. will be
held at the Sheraton Hotel, 5990 Green Valley Circle, Culver City, California,
on Friday, June 23, 2000, beginning at 1:00 P.M. Pacific Daylight Time, for the
following purposes:
1. To elect three directors;
2. To approve and adopt the Primedex Health Systems, Inc. 2000
Long-Term Incentive Plan; and
3. To transact such other business as may properly come before
the meeting or any adjournments or postponements of the
meeting.
Stockholders of record at the close of business on May 1, 2000 are
entitled to notice of and to vote at the meeting or any adjournments or
postponements of the meeting.
Stockholders are requested to complete, sign, date and mail the
enclosed proxy card in the envelope provided. No postage is required if mailed
in the United States.
By Order of the Board of Directors
/S/ Norman R. Hames
-------------------
NORMAN R. HAMES
Secretary
<PAGE>
PRIMEDEX
HEALTH
SYSTEMS, INC.
1516 Cotner Avenue
Los Angeles, California 90025
May 9, 2000
----------------------------------
PROXY STATEMENT
----------------------------------
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
THE ANNUAL MEETING
The Annual Meeting of Stockholders of Primedex Health Systems, Inc.
("Primedex" or the "Company") will be held on Friday, June 23, 2000, beginning
at 1:00 P.M. Pacific Daylight Time, at the Sheraton Hotel, 5990 Green Valley
Circle, Culver City, California. At this meeting, stockholders will be asked to
elect three directors and to approve and adopt the Primedex Health Systems, Inc.
2000 Long-Term Incentive Plan. Management of the Company will also report on the
Company's performance during fiscal 1999 and respond to questions from
stockholders.
WHO IS ENTITLED TO ATTEND AND VOTE AT THE ANNUAL MEETING?
Stockholders of record at the close of business on May 1, 2000, are
entitled to attend and vote at the Annual Meeting. Each share of common stock is
entitled to one vote other than in the election of directors. In the election of
directors each stockholder is entitled to cumulative voting rights, which means
that the total number of votes which the stockholder may cast for the election
of directors equals the number of directors to be elected multiplied by the
number of shares held, and the stockholder may cast all of such votes for one
candidate for director or may distribute the total votes among all or several
candidates, as the stockholder sees fit. A stockholder may not cumulate votes
for a candidate unless the candidate's name has been placed in nomination prior
to the voting and unless the stockholder gives notice at the Annual Meeting,
prior to the voting, of an intention to cumulate votes. If any stockholder
present at the Annual Meeting gives such notice, all stockholders may cumulate
their votes. In such event, the persons designated in the accompanying proxy
card will allocate votes among the candidates nominated as directed by the Board
of Directors. If cumulative voting is not invoked, the candidates receiving the
highest number of votes of the shares entitled to vote for them, up to the
number of directors to be elected, shall be elected. The proxy card provided
with this proxy statement indicates the number of shares of Primedex common
stock that you own and are entitled to vote.
WHAT CONSTITUTES A QUORUM AT THE MEETING?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on May 1, 2000, the record
date, will constitute a quorum for purposes of this meeting. As of the record
date, 38,932,760 shares of Primedex common stock were outstanding. For purposes
of determining whether a quorum exists, proxies received but marked "withhold"
or "abstain" and broker non-votes (described below) will be counted.
1
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HOW DO I VOTE BY PROXY?
Your vote is very important. Whether or not you plan to attend the
meeting, we urge you to complete, sign and date the enclosed proxy card and
return it in the envelope provided. No postage is required if your proxy card is
mailed in the United States.
If you properly fill in your proxy card and our transfer agent receives
it in time to vote at the meeting, your "proxy" (one of the individuals named on
your proxy card) will vote your shares as you have directed. If you sign the
proxy card but do not make specific choices, your proxy will vote your shares as
recommended by the Board, as follows:
- FOR the election of all three nominees for director; and
- FOR the approval and adoption of the Primedex 2000 Long-Term
Incentive Plan.
If any other matter is presented, your proxy will vote your shares in
accordance with his or her best judgment. At present, the Board knows of no
other business which is intended to be acted on at the Annual Meeting.
HOW DO I VOTE IF MY SHARES ARE HELD BY MY BROKER?
If your shares are held by your broker in "street name", you will need
to instruct your broker how to vote your shares in the manner provided by your
broker. Your broker may also offer electronic or telephonic voting.
WHAT DISCRETION DOES MY BROKER HAVE TO VOTE MY SHARES HELD IN "STREET NAME"?
New York Stock Exchange rules allow your broker to vote your shares
with respect to the election of directors and the approval and adoption of the
Primedex Health Systems, Inc. 2000 Long-Term Incentive Plan even if it does not
receive instructions from you, so long as it holds your shares in its name.
There are, however, certain matters with respect to which brokers do not have
such discretionary authority. Should such a matter come to a vote at the Annual
Meeting, your shares will not be voted on that matter. Shares represented by
such "broker non-votes" will, however, be counted in determining whether there
is a quorum.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. You may change your vote at any time before the proxy is
exercised. To change your vote, you may:
- file with the Secretary of the Company a written notice
"revoking" your earlier vote;
- submit to our transfer agent a properly completed and signed
proxy card with a later date; or
- vote in person at the meeting.
The last dated vote or proxy cast will be counted.
HOW DO I VOTE IN PERSON?
If you plan to attend the Annual Meeting and vote in person, we will
give you a ballot or a new proxy card when you arrive. However, if your shares
are held in the name of your broker, bank or other nominee, you must bring an
account statement or letter from the nominee indicating that you were the
beneficial owner of the shares on May 1, 2000, the record date for voting.
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WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
- FOR THE ELECTION OF DIRECTORS. The three nominees for director
who receive the most votes from those shares present or
represented at the Annual Meeting will be elected. If you do
not vote for a particular nominee, or you withhold authority
for one or all nominees, your vote will not count either "for"
or "against" the nominee, although it will be counted for
purposes of determining whether there is a quorum.
- FOR THE APPROVAL AND ADOPTION OF THE PRIMEDEX HEALTH SYSTEMS,
INC. 2000 LONG-TERM INCENTIVE PLAN. The affirmative vote of a
majority of the shares represented and voting at the Annual
Meeting is required "for" the approval and adoption of the
Primedex Health Systems, Inc. 2000 Long-Term Incentive Plan.
- OTHER MATTERS. The affirmative vote of a majority of the
shares represented and voting at the Annual Meeting is
required for most other matters which may properly come before
the meeting. At present, the Board knows of no other matters
to be presented for stockholder action at the meeting.
IS VOTING CONFIDENTIAL?
Yes. Proxy cards, ballots and voting tabulations are treated as
confidential by the Company. Generally, only the inspectors of election and
certain employees associated with processing proxy cards and counting the vote
have access to these documents.
HOW IS THE COMPANY SOLICITING PROXIES?
Proxies will be solicited chiefly by mail, but additional solicitations
may be made by telephone or other media by the officers or employees of the
Company. The Company may enlist the assistance of brokerage houses, fiduciaries,
custodians and other third parties in soliciting proxies. All solicitation
expenses, including costs of preparing, assembling and mailing proxy material,
will be borne by the Company.
PROPOSALS TO BE VOTED UPON
PROPOSAL 1: ELECTION OF DIRECTORS.
You are being asked to vote for three directors at this Annual Meeting.
The Board is nominating Howard G. Berger, M.D., John V. Crues, III, and Norman
R. Hames for re-election. If elected, these Directors would serve as Directors
for a term of one year, expiring at the Company's 2001 Annual Meeting.
The Company knows of no reason why any of the nominees would be unable
to serve as a director. Should, however, such a situation arise, the Board may
designate a substitute nominee or, alternatively, reduce the number of directors
to be elected. If a substitute nominee is selected, the persons named as proxies
will vote for that substitute nominee. Any vacancies not filled at the Annual
Meeting may be filled by the Board.
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<PAGE>
<TABLE>
<CAPTION>
THE NOMINEES
- ------------
<S> <C>
Howard G. Berger, M.D. Dr. Berger is the president and chief executive officer of Primedex. He is
Age 54 also the 99% owner of Beverly Radiology Medical Group, the entity which
Director since 1992 supplies the professional medical services at most of the Company's
imaging centers. Dr. Berger has been similarly engaged for Primedex or
predecessor entities since 1987.
John v. Crues, III, M.D. Dr. Crues has been the medical director of the Company and of Beverly
Age 50 Radiology Medical Group since 1996 and has been a medical doctor since
Director since 2000 1982.
Norman R. Hames Mr. Hames was the founder of the Company's subsidiary, Diagnostic
Age 42 Imaging Services, Inc., in 1986, and has been the president of that entity
Director since 1996 since its formation.
</TABLE>
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF ALL THREE
NOMINEES FOR DIRECTOR.
PROPOSAL 2: APPROVAL OF THE PRIMEDEX HEALTH SYSTEMS, INC. 2000 LONG-TERM
INCENTIVE PLAN.
You are being asked to approve and adopt the Primedex Health Systems,
Inc. 2000 Long-Term Incentive Plan (the "Incentive Plan"). This plan, if
approved, will provide the basis for future long-term compensation awards at the
Company, such as stock options and awards of restricted stock. This type of
compensation forms an integral part of the compensation paid to many Company
employees, and to those entities with which it is closely involved, particularly
those in positions of key importance to the Company. The plan's approval and
adoption is critical to the Company's ability to continue to attract and retain
highly motivated and qualified employees, particularly in the competitive labor
market that exists today.
The Board of Directors of the Company has reviewed and approved the
Incentive Plan, and recommends that stockholders adopt the Incentive Plan.
The Incentive Plan provides for the grant or sale of restricted or
unrestricted common stock, options to acquire common stock, share appreciation
rights, performance awards and other stock and non-stock awards (collectively,
"Awards"). An aggregate of 2,000,000 shares of common stock have been reserved
for issuance under the Incentive Plan.
The Incentive Plan supplements the Company's 1992 Incentive Stock
Option Plan. Shares of common stock remaining available for grant under the
earlier plan are almost exhausted. The Incentive Plan is designed to increase
administrative and operational flexibility over that contained in the 1992
Incentive Stock Option Plan. The material features of the Incentive Plan are
summarized below.
ADMINISTRATION. The Incentive Plan will be administered by the Board of
Directors, or a committee appointed by the Board which, if appointed, will
consist of two or more non-employee Directors (the "Compensation Committee").
Subject to the terms of the Incentive Plan, the Board ( and the Committee, if
established) has full authority to administer the Incentive Plan in all
respects, including: (i) selecting the individuals who are to receive Awards
under the Incentive Plan; (ii) determining the specific form of any Award; and
(iii) setting the specific terms and conditions of each Award. The Company's
senior legal and human resources representatives are also authorized to take
ministerial actions as necessary to implement the Incentive Plan and Awards
issued under the Incentive Plan.
4
<PAGE>
ELIGIBILITY. Employees, directors and other individuals who provide
services to the Company, its affiliates and subsidiaries who, in the opinion of
the Board (or its appointed Committee), are in a position to make a significant
contribution to the success of the Company, its affiliates and subsidiaries are
eligible for Awards under the Incentive Plan.
AMOUNT OF AWARDS. The value of shares or other Awards to be granted to
any recipient under the Incentive Plan are not presently determinable. However,
the Incentive Plan restricts the number of shares and the value of Awards not
based on shares which may be granted to any individual during a calendar year or
performance period. In order to facilitate the Company's compliance with Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), which
deals with the deductibility of compensation for any of the chief executive
officer and the four other most highly-paid executive officers, the Incentive
Plan limits to 500,000 the number of shares for which options, stock
appreciation rights or other stock Awards may be granted to an individual in a
calendar year and limits to $1,000,000 the value of non-stock-based Awards that
may be paid to an individual with respect to a performance period. These
restrictions were adopted by the Board of Directors as a means of complying with
Code section 162(m) and are not indicative of historical or contemplated Awards
made or to be made to any individual under the Incentive Plan.
STOCK OPTIONS. The Incentive Plan authorizes the grant of options to
purchase shares of common stock, including options to employees intended to
qualify as incentive stock options within the meaning of Section 422 of the
Code, as well as non-statutory options. The term of each option will not exceed
ten years and each option will be exercisable at a price per share not less than
100% of the fair market value of a share of common stock on the date of the
grant. Generally, optionees will pay the exercise price of an option in cash or
by check, although the Board (and the Committee, if established) may permit
other forms of payment including payment through the delivery of shares of
common stock. Options granted under the Incentive Plan are generally not
transferable (except at death or as gifts to certain Family Members (as defined
in the Incentive Plan)). At the time of grant or thereafter, the Board (and the
Committee, if established) may determine the conditions under which stock
options vest and remain exercisable.
Unless otherwise determined by the Board (and the Committee, if
established), unexercised options will terminate if the holder ceases for any
reason to be associated with the Company, its affiliates and subsidiaries.
Options generally remain exercisable for a specified period following
termination for reasons other than for Cause (as defined in the Incentive Plan),
particularly in circumstances of death, Disability and Retirement (as defined in
the Incentive Plan). In the event of a Change in Control or Covered Transaction
(as defined in the Incentive Plan) of the Company, options become immediately
exercisable and/or are converted into options for securities of the surviving
party as determined by the Board (and the Committee, if established).
OTHER AWARDS. The Board (and the Committee, if established) may grant
stock appreciation rights which pay, in cash or common stock, an amount
generally equal to the difference between the fair market values of the common
stock at the time of exercise of the right and at the time of grant of the
right. In addition, the Board (and the Committee, if established) may grant
Awards of shares of common stock at a purchase price less than fair market value
at the date of issuance, including zero. A recipient's right to retain these
shares may be subject to conditions established by the Board (and the Committee,
if established), if any, such as the performance of services for a specified
period or the achievement of individual or Company performance targets. The
Board (and the Committee, if established) may also issue shares of common stock
or authorize cash or other payments under the Incentive Plan in recognition of
the achievement of certain performance objectives or in connection with annual
bonus arrangements.
PERFORMANCE CRITERIA. The Board (and the Committee, if established) may
condition the exercisability, vesting or full enjoyment of an Award on specified
Performance Criteria. For purposes of Performance Awards (as defined in the
Incentive Plan) that are intended to qualify for the performance-based
compensation exception under Code Section 162(m), Performance Criteria means an
objectively determinable measure of performance relating to any of the following
as specified by the Board (and the Committee, if established) (determined either
on a consolidated basis or, as the context permits, on a divisional, subsidiary,
line of business, project or geographical basis or in combinations thereof): (i)
sales; revenues; assets; liabilities; costs; expenses; earnings before or after
deduction for all or any portion of interest, taxes, depreciation, amortization
or other items, whether or not on a continuing operations or an aggregate or per
share basis; return on equity, investment, capital or assets; one or more
operating ratios; borrowing levels, leverage ratios or credit rating; market
share; capital expenditures; cash flow; working capital requirements; stock
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price; stockholder return; sales, contribution or gross margin, of particular
products or services; particular operating or financial ratios; customer
acquisition, expansion and retention; or any combination of the foregoing; or
(ii) acquisitions and divestitures (in whole or in part); joint ventures and
strategic alliances; spin-offs, split-ups and the like; reorganizations;
recapitalizations, restructurings, financings (issuance of debt or equity) and
refinancings; transactions that would constitute a change of control; or any
combination of the foregoing. Performance Criteria measures and targets
determined by the Board (and the Committee, if established) need not be based
upon an increase, a positive or improved result or avoidance of loss.
AMENDMENTS. The Board (and the Committee, if established) may amend the
Incentive Plan or any outstanding Award for any purpose permitted by law, or may
at any time terminate the Incentive Plan as to future grants of Awards. The
Board (and the Committee, if established) may not, however, increase the maximum
number of shares of common stock issuable under the Incentive Plan or change the
description of the individuals eligible to receive Awards. In addition, no
termination of or amendment to the Incentive Plan may adversely affect the
rights of a Participant with respect to any Award previously granted under the
Incentive Plan without the Participant's consent, unless the Compensation
Committee expressly reserves the right to do so in writing at the time the Award
is made. To the extent the Board (and the Committee, if established) desires the
Incentive Plan to qualify under the Code, certain amendments may require
shareholder approval.
FEDERAL TAX TREATMENT OF OPTIONS UNDER THE INCENTIVE PLAN. Under the
applicable Code provisions, an employee will generally recognize no income
subject to federal income taxation upon either the grant or exercise of
incentive stock options, although some optionees may be subject to an
alternative minimum tax on the difference between the fair market value at the
date of exercise and the exercise price. The Company will not be entitled to a
deduction for federal income tax purposes as a result of the grant or exercise
of the option. Generally, if an optionee disposes of shares of common stock
issued upon exercise of an incentive stock option more than two years from the
date the option was granted and more than one year after the exercise of the
option, any gain on the disposition of the option shares, equal to the
difference between the sales price and the option exercise price, will be
treated as a long- term capital gain. In that case, the Company would not be
entitled to a deduction at the time the optionee sells the option shares.
No taxable income will be recognized by an optionee upon the grant of a
non-statutory stock option under the Incentive Plan and the Company will not be
allowed a deduction at that time. Upon the exercise of the option, however, the
amount, if any, by which the fair market value of the shares on the date of
exercise exceeds the option price will be treated as ordinary income to the
optionee in the year of exercise. Subject to compliance with applicable tax
reporting requirements, the Company will be allowed an income tax deduction in
the year of exercise of the option in an amount equal to the amount the optionee
recognizes as ordinary income. Capital gains taxes may be payable by the
Optionee on the subsequent sale of the option shares.
The affirmative vote of the holders of a majority of the shares of
common stock represented and voting at the meeting is required to approve the
Incentive Plan.
A copy of the Primedex Health Systems, Inc. 2000 Long-Term Incentive
Plan is attached as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ended January 31, 2000, and incorporated by reference in this Proxy
Statement.
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THE BOARD OF DIRECTORS CONSIDERS PROPOSAL NO. 2 TO BE IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE "FOR"
THE APPROVAL AND ADOPTION OF THE PRIMEDEX HEALTH SYSTEMS, INC. 2000 LONG-TERM
INCENTIVE PLAN.
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S STOCK?
Two stockholders beneficially own more than five percent of the
Company's common stock. In general, "beneficial ownership" includes those shares
a person or entity has the power to vote or transfer, and stock options or
warrants that are exercisable currently or within 60 days. Unless otherwise
indicated, the persons and entities named below have sole voting and investment
power over the shares listed. The table below sets forth information, as of
April 1, 2000, regarding the beneficial ownership of these individuals and
entities. As of April 1, 2000, there were 38,932,760 shares of the Company
common stock outstanding.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AS OF APRIL 1, 2000
NAME OF BENEFICIAL OWNER NUMBER OF SHARES (1)
- ------------------------ --------------------
Howard G. Berger, M.D.* ...........................................12,809,428(2)
Norman R. Hames*....................................................2,913,550(3)
- --------------------
* The address of all of the above beneficial owners is c/o the Company,
1516 Cotner Avenue, Los Angeles, California 90025.
(1) Subject to applicable community property statutes and except as
otherwise noted, each holder named in the table has sole voting and investment
power with respect to all shares of common stock shown as beneficially owned.
(2) Includes 343,200 shares issuable upon conversion of Primedex
outstanding convertible debentures convertible at $10 per share.
(3) Represents options exercisable at $.60 per share.
HOW MUCH STOCK DO THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table shows, as of April 1, 2000, the amount of common
stock of the Company beneficially owned by:
- the Company's directors;
- the executive officers of the Company named in the Summary
Compensation Table below; and
- all of the directors and executive officers of the Company as
a group.
7
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<TABLE>
STOCK OWNERSHIP OF OFFICERS AND DIRECTORS
AS OF APRIL 1, 2000
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OF CLASS
- ---------------- ---------------------- ----------------
<S> <C> <C>
Howard G. Berger, M.D.* 12,809,428(2) 26.6%
John V. Crues, III, M.D.* 1,050,000(3) 2.2%
Norman R. Hames* 2,913,550(4) 6.1%
Michael J. Krane, M.D.* 2,216,228 4.6%
All directors and executive officers of the 18,939,206(2)(3)(4)(5) 38.5%
Company as a group [four persons]
- -------------------
* The address of all of the Company's officers and directors is c/o the
Company, 1516 Cotner Avenue, Los Angeles, California 90025.
(1) Subject to applicable community property statutes and except as
otherwise noted, each holder named in the table has sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned.
(2) Includes 343,200 shares issuable upon conversion of Primedex
outstanding convertible debentures convertible at $10 per share.
(3) Includes an option to purchase 500,000 shares exercisable at $.15
per share and an option to purchase 500,000 shares exercisable at $.40 per
share.
(4) Represents options exercisable at $.60 per share.
(5) Includes 12,216,228 shares owned of record and 4,256,750 shares
issuable upon exercise of presently exercisable options and convertible
debentures.
</TABLE>
As a result of his stock ownership and his positions as president and a
director of the Company, Howard G. Berger, M.D. may be deemed to be a
controlling person of the Company.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS
WHO SITS ON THE COMPANY'S BOARD OF DIRECTORS?
The Board of Directors consists of three members. Each director serves
for one year and until his successor is elected. The term of office of the
Company's directors expires at this Annual Meeting. Howard G. Berger, M.D., John
V. Crues, III, M.D., and Norman Hames have been nominated for re-election at the
Annual Meeting.
The Board of Directors intends to establish an Audit Committee which
reviews the results and scope of the audit and other auditors, and a
compensation committee, which makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company. The
Board has not yet established such committees.
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HOW OFTEN DID THE BOARD MEET IN 1999?
The Board met informally in person or telephonically many times in
fiscal year 1999, but took action formally once by unanimous written consent.
Each director attended more than 75% of the meetings of the Board.
HOW ARE THE COMPANY'S DIRECTORS COMPENSATED?
Directors receive no compensation for serving on the Board or its
Committees.
ARRANGEMENTS FOR THE ELECTION OF DIRECTORS.
The Company does not have any current arrangements relating to the
election of directors to its Board.
RELATED PARTY TRANSACTIONS.
Howard G. Berger, M.D. is the 99% owner and John V. Crues, III, M.D. is
the 1% owner of Beverly Radiology Medical Group, Inc. and Pronet Imaging Medical
Group, Inc., who together have formed the partnership known as Beverly Radiology
Medical Group ("BRMG"), which has executed a Management and Services Agreement
with the Company's subsidiaries pursuant to which it supplies the professional
medical doctors at most of the Company's imaging centers and Temecula Oncology
Center through 2002. BRMG pays to the Company management fees equal to 74% of
revenues collected by it. In fiscal 1999, Dr. Berger was paid $300,000, Dr.
Crues was paid $125,000 and Dr. Krane was paid $150,000 by BRMG.
At October 31, 1995, Howard G. Berger, M.D. and Michael J. Krane, M.D.
were each indebted to Primedex in the amount $1,500,000 based on loans extended
to Drs. Berger and Krane at the time of the Company's acquisition of RadNet in
June 1992. In April 1996, Dr. Krane discharged his obligation. In August 1996,
Dr. Berger paid $500,000 against his obligation. Dr. Berger's note has been
extended to February 28, 2002.
On August 1, 1996, the Company acquired from Norman R. Hames, [not then
an officer or director of the Company] all of his common stock and warrants to
purchase shares of common stock of Diagnostic Imaging Services, Inc., a Delaware
corporation [3,042,704 shares] which then represented 21.6% of the outstanding
shares of that entity in exchange for five year warrants to purchase 2,913,550
shares of the Company's common stock at $.60 per share as well as the Company's
five year promissory note, payable interest only annually at 6.58% for
$2,448,862.
9
<PAGE>
EXECUTIVE OFFICERS
WHO ARE THE COMPANY'S EXECUTIVE OFFICERS AS OF APRIL 1, 2000?
NAME TITLE
- ---- -----
Howard G. Berger, M.D. President, Treasurer, Chief Executive and
Financial Officer and Director
John V. Crues, III, M.D. Vice President, Director of Medical
Operations
Norman R. Hames Vice President, Secretary, Chief Operating
Officer and Director
Michael J. Krane, M.D. Director of Utilization Management
Biographical information concerning the Company's executive officers
can be found under the caption "Directors and Executive Officers of the
Registrant" included in the Company's 1999 Annual Report on Form 10-K, which is
incorporated by reference in this Proxy Statement. Stockholders may obtain a
copy of this report, without exhibits, for no charge by requesting it in writing
from the Company at Primedex Health Systems, Inc., 1516 Cotner Avenue, Los
Angeles, California 90025, Attention: Investor Relations.
HOW WERE THE COMPANY'S EXECUTIVE OFFICERS COMPENSATED?
The following tables show salaries, bonuses, options and other compensation paid
during the last three years, options granted in 1999 and options exercised in
1999 for the Chief Executive Officer and the next most highly compensated
executive officers of the Company receiving more than $100,000 per year as of
October 31, 1999.
10
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
AS OF OCTOBER 31, 1999
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
---------------------- ----------------------
Other Securities Restricted All
Name and Year Ended Annual Underlying Stock LTIP Other
Principal Position 10/31 SALARY($) BONUS($) COMP.($) OPTIONS (#) AWARDS($) PAY-OUTS($) COMP($)
---------- --------- -------- -------- ----------- --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Howard G. Berger, M.D. 1999 $75,000 (2) -- -- -- -- -- --
Chief Executive Officer 1998 $100,000 (2) -- -- -- -- -- --
1997 $78,000 (2) -- -- -- -- -- --
John V. Crues, III, M.D. 1999 $125,000 (3) - - 500,000 - - -
Vice President, Director of 1998 $125,000 (3) - - 100,000 - - -
Medical Operations 1997 $125,000 (3) - - 150,000 - - -
Norman R. Hames 1999 $150,000 - - - - - -
Vice President, Secretary and 1998 $139,000 - - - - - -
Chief Operating Officer of the 1997 $150,000 - - - - - -
Company and President of DIS
Michael J. Krane, M.D. 1999 $100,000 (4) - - - - - -
Director of Utilization 1998 $96,000 (4) - - - - - -
Management 1997 $103,846 (4) - - - - - -
</TABLE>
- -------------------------------
(1) The dollar value of perquisities and other personal benefits, if any
for each of the named executive officers was less than the reporting
thresholds established by the Securities and Exchange Commission.
(2) Does not include $300,000 per annum received from Beverly Radiology
Medical Group.
(3) Does not include $125,000 per annum received from Beverly Radiology
Medical Group.
(4) Does not include $150,000 per annum received from Beverly Radiology
Medical Group.
11
<PAGE>
STOCK OPTIONS
During the fiscal year ended October 31, 1999, no options were
exercised by or granted to a person who served as chief executive officer of
Primedex during such year or to a Primedex executive officer, or chief executive
officer of a Primedex subsidiary, who earned at least $100,000 in compensation
during such year except the options granted as follows:
<TABLE>
1999 OPTION/SAR GRANTS
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF TOTAL EXERCISE OR POTENTIAL ASSUMED ANNUAL RATES OF STOCK
SHARES UNDERLYING OPTIONS GRANTED TO BASE PRICE EXPIRATION PRICE APPRECIATION
NAME OPTIONS GRANTED(1) EMPLOYEES IN 1999 PER SHARE DATE FOR OPTION TERM (2)
------------------ ----------------- --------- ------------- -----------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
John V. Crues, III, M.D. 500,000 100% $0.15 5/20/04 $45,000 $120,000
</TABLE>
- ------------------------------
(1) In connection with the grant of this option Dr. Crues returned to the
Company options to purchase 268,197 shares granted at various dates
with exercise prices of $0.25 (18,197 shares), $0.43 (150,000 shares)
and $0.15 (100,000 shares) expiring at various dates through 2003.
(2) These columns represent hypothetical future values of the Company's
common stock obtainable upon exercise of stock options, net of the
options exercise price, assuming that the market price of the Company's
common stock appreciates at a five and ten percent compound annual rate
over the ten year term of the options. The five and ten percent rates
of stock price appreciation are presented as examples pursuant to the
rules and regulations of the Securities and Exchange Commission and do
not necessarily reflect management's assessment of the Company's future
stock price performance.
At October 31, 1999, the Company had an Incentive Stock Option Plan in
force. Under the Plan, an aggregate 2,000,000 shares of Common Stock are
reserved for issuance upon exercise of outstanding incentive stock options.
Outstanding options are held by eight Company employees at exercise prices
ranging from $.15 to $.53 per share. At December 31, 1999, none of the options
were in-the-money options.
Other than the warrants held by Norman R. Hames there are no options
outstanding at October 31, 1999, held by the individuals named in the Summary
Compensation Table.
DO THE COMPANY'S EXECUTIVE OFFICERS HAVE ANY SPECIAL EMPLOYMENT, TERMINATION OR
CHANGE-IN-CONTROL ARRANGEMENTS?
As of January 1, 1994, Beverly Radiology Medical Group entered into an
eight year Management Consulting Agreement with Howard G. Berger, M.D. whereby
Dr. Berger agreed to serve as the chief executive for the partnership entities
for $300,000 per year.
John V. Crues, III, M.D. has renewable one year employment agreements
with the Company and with Beverly Radiology Medical Group which were executed in
1996 and require him to devote one-half of his time to each entity in exchange
for annual remuneration from each entity of $125,000. Dr. Crues serves as the
medical director of each entity.
Norman R. Hames has an employment agreement with Diagnostic Imaging
Services, Inc. ending in 2001 whereby he serves as president of that company and
receives annual compensation of $150,000.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
During fiscal 1999 all executive compensation has been determined by
the three member board of directors of PHS, Howard G. Berger, M.D., John V.
Crues, III, M.D. (and previously, Jaana Shellock) and Norman R. Hames. In
addition, no individual who served as an executive officer of the Company during
fiscal 1999, served during fiscal 1999 on the board of directors or compensation
committee of another entity where an executive officer of the other entity also
served on the board of directors of the Company, except that Howard G. Berger,
M.D., chairman and president of Primedex and Norman R. Hames, vice president and
a director of Primedex serves as a director and as president and a director of
Diagnostic Imaging Services, Inc., respectively.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the five-year total return to stockholders on
Primedex common stock with the return of the Standard & Poor's 500 Stock Index
and the Standard & Poor's Healthcare (Specialized Services) Index. The graph
assumes $100 was invested in the Company's common stock and in each of the named
indices on January 1, 1995, and that all dividends were reinvested.
[STOCK PERFORMANCE GRAPHIC HERE]
<TABLE>
<CAPTION>
Jan. 95 Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Primedex Health Systems, Inc. $100 $64.30 $93.88 $76.14 $27.94 $20.31
Healthcare (Specialized Services) Index $100 $95.00 $99.08 $119.29 $172.49 $52.61
S & P 500 Index $100 $122.00 $142.50 $177.70 $215.19 $250.27
</TABLE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
Moss Adams LLP has been the independent auditors for the Company and
will serve in that capacity for the 2000 fiscal year. A representative of Moss
Adams LLP will be present at the Annual Meeting, will have an opportunity to
make a statement if the representative desires to do so, and will be available
to respond to appropriate questions from stockholders.
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's
directors, its executive officers and any persons holding more than ten percent
of the Company's Common Stock are required to report their ownership of the
Company's common stock and any changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to report in this Proxy Statement any failure to
file by these dates during 1999. To the best knowledge of the Company, all of
these filing requirements were timely satisfied by its directors, officers and
ten percent holders except that Dr. Berger failed to timely report his
acquisition of convertible debentures convertible into 10,500 shares of the
Company's common stock. The report has been filed. In making these statements,
the Company has relied upon the written representations of its directors,
officers and ten percent holders and copies of the reports that have been filed
with the Securities and Exchange Commission.
STOCKHOLDER PROPOSALS
If you wish to submit proposals to be included in the Company's year
2001 Proxy Statement, we must receive them on or before January 5, 2001. Please
address your proposals to the Company's Secretary at Primedex Health Systems,
Inc., 1516 Cotner Avenue, Los Angeles, California 90025. Proposals must satisfy
the procedures set forth in Rule 14a-8 under the Securities Exchange Act of
1934.
DIRECTOR NOMINATIONS
The Board will consider qualified nominees for director recommended by
stockholders of the Company. Recommendations should be sent to the Secretary of
the Company at the address listed above.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
WILL BE SENT WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM:
PRIMEDEX HEALTH SYSTEMS, INC., ATTN: INVESTOR RELATIONS, 1516 COTNER AVENUE, LOS
ANGELES, CALIFORNIA 90025.
15
<PAGE>
PROXY
PRIMEDEX HEALTH SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN CORRIGAN and LINDA HOOVER, and
each of them acting solely, proxies, with full power of substitution and with
all powers the undersigned would possess if personally present, to represent and
vote, as designated hereon, all of the shares of common stock of Primedex Health
Systems, Inc. (the "Company"), par value $.01 per share to vote all of the
shares of common stock allocated to the account of the undersigned, which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Sheraton Hotel, 5990 Green Valley Circle, Culver City,
California on Friday, June 23, 2000, at 1:00 P.M. (Pacific Daylight Time), and
at any adjournment or postponement thereof.
THE UNDERSIGNED HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN AND
ACKNOWLEDGES RECEIPT OF THE NOTICE OF AND PROXY STATEMENT FOR THE ANNUAL
MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY HE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
(PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE)
SEE REVERSE SEE REVERSE
SIDE SIDE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSALS BELOW.
1. Election of Directors.
NOMINEES: Howard G. Berger, M.D., John V. Crues, III, M.D. and
Norman R. Hames
FOR ALL NOMINEES [ ] [ ] WITHHELD FROM ALL NOMINEES
[ ] --------------------------------------------------------------
For all nominees except as noted above
2. Approval and Adoption of the Primedex Health Systems, Inc. 2000 Long-
Term Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
Sign exactly as your name appears on this Proxy. If the shares are registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, partners, custodians, guardians, attorneys and corporate officers
should add their full titles.
Signature: Date:
---------------------------------- ---------------------------
Signature: Date:
---------------------------------- ---------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
