-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P/8M76y+7YDWZDVEVgyWBbUSnGRLX/xw3ok4xwZdPlh4DP+FWtALTRO+xG/eKahw OPYOEHeO/1AGfbqWh1c4Zw== 0000912057-00-010027.txt : 20000307 0000912057-00-010027.hdr.sgml : 20000307 ACCESSION NUMBER: 0000912057-00-010027 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000306 EFFECTIVENESS DATE: 20000306 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGHT HEALTH SERVICES CORP CENTRAL INDEX KEY: 0001012697 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 330702770 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-31828 FILM NUMBER: 562005 BUSINESS ADDRESS: STREET 1: 4400 VON KARMAN AVENUE STE 800 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9494760733 MAIL ADDRESS: STREET 1: 4400 VON KARMAN AVE STE 800 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 S-8 1 S-8 Registration No. - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- INSIGHT HEALTH SERVICES CORP. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 33-0702770 (I.R.S. EMPLOYER IDENTIFICATION NO.) 4400 MACARTHUR BOULEVARD NEWPORT BEACH, CALIFORNIA 92660 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) INSIGHT HEALTH SERVICES CORP. 1997 MANAGEMENT STOCK OPTION PLAN INSIGHT HEALTH SERVICES CORP. 1998 EMPLOYEE STOCK OPTION PLAN INSIGHT HEALTH SERVICES CORP. 1999 STOCK OPTION PLAN (FULL TITLES OF THE PLANS) STEVEN T. PLOCHOCKI PRESIDENT AND CEO INSIGHT HEALTH SERVICES CORP. 4400 MACARTHUR BOULEVARD, SUITE 800 NEWPORT BEACH, CALIFORNIA 92660 (NAME AND ADDRESS OF AGENT FOR SERVICE) (949) 476-0733 (TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO: MARILYN U. MACNIVEN-YOUNG, ESQ. EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY INSIGHT HEALTH SERVICES CORP. 4400 MACARTHUR BOULEVARD, SUITE 800 NEWPORT BEACH, CALIFORNIA 92660 (949) 756-7222 CALCULATION OF REGISTRATION FEE
=================================================================================================================== Proposed Proposed Amount Maximum Maximum Amount of Title of Securities to be Offering Price Aggregate Offering Registration to be Registered Registered (1) Per Share (2) Price Fee - ------------------------------------------------------------------------------------------------------------------- Common Stock, $.001 par value 500,000 $ 8.37 $ 4,187,500.00 250,000 $ 12.57 $ 3,142,500.00 125,000 $ 8.37 $ 1,046,250.00 375,000 $ 7.25 $ 2,718,750.00 $2,929.08 ==================================================================================================================
(1) Also covers any additional shares of the registrant's Common Stock as may be required pursuant to the stock option plans by reason of any stock dividend, stock split, recapitalization or other similar change in the Common Stock. (2) Calculated pursuant to Rule 457(h)(1) based on the actual price at which the options may be exercised or based on the price of the registrant's Common Stock, as applicable. - ------------------------------------------------------------------------------- -2- PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS ITEM 1. PLAN INFORMATION* ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION* * Information required by Part I to be contained in the Section 10(a) prospectus is omitted from the Registration Statement in accordance with Rule 428 under the Securities Act of 1933 and the Note to Part I of Form S-8. -3- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the registrant with the Securities and Exchange Commission are incorporated by reference in this Registration Statement: 1. The registrant's annual report on Form 10-K for the year ended June 30, 1999, filed with the Securities and Exchange Commission on September 28, 1999, which contains audited financial statements for the year ended June 30, 1999. 2. Description of the registrant's Common Stock contained in the registrant's prospectus filed with the Securities and Exchange Commission on May 13, 1996, pursuant to Rule 424(b)(3) under the Securities Act of 1933. 3. The registrant's quarterly reports on Form 10-Q for the quarters ended September 30, 1999 (filed with the Securities and Exchange Commission on November 15, 1999) and December 31, 1999 (filed with the Securities and Exchange Commission on February 12, 2000). 4. The registrant's current report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2000. In addition, all documents subsequently filed by the registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. ITEM 4. DESCRIPTION OF SECURITIES Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under Section 145 of the Delaware General Corporation Law (the "Delaware Law"), a corporation formed under Delaware law is permitted to indemnify its directors, officers, and other corporate agents, against any expenses (including reasonable attorneys' fees), judgments, fines, and amounts paid in settlement of nonderivative lawsuits, actually and reasonably incurred in connection with the defense of any action, suit, or proceeding in which they or any of them were or are made parties or threatened to be made parties by reason of their serving or having served in such capacity. The Delaware Law provides, however, that such person must have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, in the case of a criminal action, such person must have had no reasonable cause to believe his or her conduct was unlawful. In addition, the Delaware Law does not permit indemnification in an action or suit by or in the right of the corporation, where such person has been adjudged liable to the corporation, unless, and only to the extent that, a court determines that such person fairly and reasonably is entitled to indemnity for expenses the court deems proper in light of the liability adjudication. Indemnity is mandatory to the extent a claim, issue or matter has been successfully defended. -4- The registrant's bylaws provide that the registrant may indemnify its directors, officers, and certain of its other corporate agents to the fullest extent permitted under the Delaware Law for all expense, liability and loss (including attorneys' fees actually and reasonably incurred by them) in a proceeding by reason of such capacity. The registrant's certificate of incorporation states that, to the fullest extent permitted by the Delaware Law, a director of the registrant shall not be liable to the registrant or its stockholders for monetary damages for a breach of fiduciary duty as the registrant's director. The registrant has purchased and maintains liability insurance against liabilities that may be asserted against such persons in connection with the registrant, whether or not indemnification against such liabilities would be permitted under the provisions of the registrant's certificate of incorporation or bylaws. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS See Exhibit Index. ITEM 9. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; PROVIDED, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. -5- (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. o o o -6- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Newport Beach, California on the 3rd day of March, 2000. INSIGHT HEALTH SERVICES CORP. By: /s/ Steven T. Plochocki ------------------------------------- Steven T. Plochocki President and Chief Executive Officer -7- POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Steven T. Plochocki his true and lawful attorney-in-fact and agent, acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ------------------------ ----------------------- ---------------- /s/ Steven T. Plochocki Director, President and March 3, 2000 - --------------------------------- Chief Executive Officer Steven T. Plochocki (Principal Executive Officer) /s/ Thomas V. Croal Executive Vice President and March 3, 2000 - --------------------------------- Chief Financial Officer Thomas V. Croal (Principal Accounting Officer) /s/ Michael E. Aspinwall Director March 3, 2000 - --------------------------------- Michael E. Aspinwall /s/ Grant R. Chamberlain Director March 3, 2000 - --------------------------------- Grant R. Chamberlain /s/ W. Robert Dahl Director March 3, 2000 - --------------------------------- W. Robert Dahl - --------------------------------- Director March _, 2000 Frank E. Egger /s/ Leonard H. Habas Director March 3, 2000 - --------------------------------- Leonard H. Habas /s/ Ronald G. Pantello Director March 3, 2000 - --------------------------------- Ronald G. Pantello Director March _, 2000 - --------------------------------- Glenn A. Youngkin
-8- EXHIBIT INDEX ------------- EXHIBIT - ------- 4 Instruments Defining Rights of Security Holders (a) InSight Health Services Corp. 1997 Management Stock Option Plan, incorporated by reference to Exhibit 10.2 of the registrant's Registration Statement on Form S-4 ("Form S-4"), filed with the Securities and Exchange Commission on August 4, 1998. (b) InSight Health Services Corp. 1998 Employee Stock Option Plan, incorporated by reference to Exhibit 10.1 of the registrant's Form S-4. (c) InSight Health Services Corp. 1999 Stock Option Plan, filed herewith. 5 Opinion of Arent Fox Kintner Plotkin & Kahn, PLLC, filed herewith. 24 Consents (a) Consent of Arent Fox Kintner Plotkin & Kahn, PLLC: included in Exhibit 5. (b) Consent of Arthur Andersen LLP, filed herewith. 25 Power of Attorney: included on signature page. -9- EX-4.(C) 2 EXHIBIT 4(C) EXHIBIT 4(c) INSIGHT HEALTH SERVICES CORP. 1999 STOCK OPTION PLAN InSight Health Services Corp., a Delaware corporation ("Company") sets forth herein the terms of the InSight Health Services Corp. 1999 Stock Option Plan ("Plan") as follows: 1. PURPOSE The Plan is intended to advance the interests of the Company by providing the officers, key employees and independent contractors of the Company or its subsidiaries, which individuals will be the eligible participants under the Plan, with an opportunity to develop a proprietary interest in the Company. The Plan will thereby create strong performance incentives for such individuals to maximize the growth and success of the Company and its subsidiaries, and will encourage such individuals to remain in the employ of the Company or any of its subsidiaries. Options granted under the Plan ("Option") may be (i) "incentive stock options" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended from time to time ("Code") or (ii) nonstatutory stock options. 2. ADMINISTRATION The Plan shall be administered by the Board of Directors ("Board") of the Company, except to the extent the Board determines to delegate the administration of the Plan to the Compensation Committee ("Committee") of the Board. Each member of the Compensation Committee shall qualify in all respects as a "non-employee director" as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended ("1934 Act") and as an "outside director" as used in section 162 (m) of the Code, unless the Board determines otherwise. The Board shall have the full power and authority to take all actions, and to make all determinations required or provided for under the Plan or any Option granted or Option Agreement (as defined in Section 7 below) entered into hereunder, and all such other actions and determinations not inconsistent with the specific terms and provisions of the Plan deemed by the Board to be necessary or appropriate to the administration of the Plan or any Option granted or Option Agreement entered into hereunder. The interpretation and construction by the Board of any provision of the Plan or of any Option granted or Option Agreement entered into hereunder shall be final, binding and conclusive. The Board may remove members, add members, and fill vacancies on the Committee from time to time, all in accordance with the Company's Certificate of Incorporation and Amended and Restated Bylaws, and with applicable law. No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted or Option Agreement entered into hereunder. 3. COMMON STOCK The stock that may be issued pursuant to Options granted under the Plan shall be shares of common stock, par value $0.001 per share, of the Company ("Common Stock"), which shares may be treasury shares or authorized but unissued shares. The number of shares of Common Stock that may be issued pursuant to Options granted under the Plan shall not exceed in the aggregate 500,000, which number of shares is subject to adjustment as hereinafter provided in Section 16 below. If any Option expires, terminates, or is terminated for any reason prior to exercise in full, the shares of Common Stock that were subject to the unexercised portion of such Option shall be available for future Options granted under the Plan. 1999 STOCK OPTION PLAN PAGE 1 4. EFFECTIVE DATE AND TERM OF THE PLAN The Plan shall be effective as of the date the Board adopted the Plan, subject to approval of the Plan by the stockholders of the Company and shall continue in effect for a term of ten (10) years from the date the Board adopted the Plan. Any Options outstanding under the Plan on such date shall continue to be exercisable pursuant to their terms, except as otherwise provided herein. 5. GRANT OF OPTIONS Subject to the terms and conditions of the Plan, the Board may, at any time and from time to time, prior to the date of termination of the Plan, grant to such eligible individuals as the Board may determine ("Optionees"), Options to purchase such number of shares of Common Stock on such terms and conditions as the Board may determine, including any terms or conditions which may be necessary and appropriate to qualify such Options as "incentive stock options" under section 422 of the Code. 6. LIMITATION ON INCENTIVE STOCK OPTIONS An Option may constitute an incentive stock option to the extent that the aggregate Fair Market Value (as defined below) (as determined at the time the Option is granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by any Optionee during any calendar year (under the Plan and all other plans of the Company) does not exceed $100,000. 7. OPTION AGREEMENTS All Options granted pursuant to the Plan shall be evidenced by written agreements ("Option Agreements"), to be executed by the Company and the Optionee, in such form or forms and with such terms and conditions as the Board shall from time to time determine. Option Agreements covering Options granted from time to time or at the same time need not contain similar provisions; provided however, that no Option Agreements shall be inconsistent with the Plan. 8. OPTION PRICE The purchase price of each share of Common Stock subject to an Option ("Option Price") shall be fixed by the Board and stated in each Option Agreement. For an incentive stock option, the Option Price shall be not less than the greater of par value or 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted; provided however, that in the event the Optionee would otherwise be ineligible to receive an incentive stock option by reason of the provisions of section 422(b)(6) of the Code (relative to stock ownership of more than 10%), the Option Price of an Option which is intended to be an incentive stock option shall not be less than the greater of par value or 110% of the Fair Market Value of a share of Common Stock at the time such Option is granted. With respect to the grant of an Option that is not an incentive stock option, the Option Price shall not be less than the greater of (i) 50% of the Fair Market Value of the Common Stock on the date of the grant, or (ii) its par value. 1999 STOCK OPTION PLAN PAGE 2 9. TERM AND EXERCISE OF OPTIONS (a) TERM. Each Option granted under the Plan shall terminate and all rights to purchase shares thereunder shall cease upon the date as may be fixed by the Board and stated in the Option Agreement relating to such Option; provided however, that in the event the Optionee would otherwise be ineligible to receive an incentive stock option by reason of the provisions of section 422 (b)(6) of the Code (relative to stock ownership of more than 10%), an Option granted to an Optionee which is intended to be an incentive stock option shall in no event be exercisable after the expiration of five (5) years from the date it is granted. All Options granted under the Plan shall terminate no later than ten (10) years from the date of grant. (b) OPTION PERIOD AND LIMITATIONS ON EXERCISE. Each Option shall be exercisable, in whole or in part, at any time and from time to time during the term of the Option, at such times, and with such conditions, as the Board shall determine and set forth in the Option Agreement relating to such Option. Without limiting the foregoing, the Board, subject to the terms and conditions of the Plan, may in its sole discretion provide that an Option may not be exercised in whole or in part for any period or periods of time during which such Option is outstanding; provided however, that any such time limitation on the exercise of an Option contained in any Option Agreement may be rescinded, modified or waived by the Board, in its sole discretion, at any time and from time to time after the date of grant of such Option, so as to remove such time limitations. (c) METHOD OF EXERCISE AND PAYMENT. An Option that is exercisable hereunder may be exercised by delivery to the Company on any business day, at its principal office, addressed to the attention of the corporate secretary of the Company, of written notice of exercise, which notice shall specify the number of shares with respect to which the Option is being exercised, and shall be accompanied by payment in full of the Option Price of the shares for which the Option is being exercised. The minimum number of shares of Common Stock with respect to which an Option may be exercised, in whole or in part, at any time shall be the lesser of 100 shares or the maximum number of shares available for purchase under the Option at the time of exercise. Payment of the Option Price for the shares of Common Stock purchased pursuant to the exercise of an Option shall be made (i) in cash or in cash equivalents; (ii) with the consent of the Board, through the tender to the Company of shares of Common Stock, which shares shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at their Fair Market Value on the date of exercise; (iii) by a combination of the methods described in (i) and (ii); or (iv) by such other method or methods as the Board may from time to time authorize. If shares of Common Stock are surrendered by an officer of the Company (as the term "officer" is defined in the rules promulgated under Section 16 of the 1934 Act) for payment and the Common Stock surrendered was acquired pursuant to an Option of the Company, then six (6) months must have elapsed since the date of exercise of such Option. The payment in full of the Option Price need not accompany the written notice of exercise provided the notice of exercise directs that the Common Stock certificate or certificates for the shares for which the Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual exercising the Option and, at the time such Common Stock certificate or certificates are delivered, the broker shall tender to the Company cash (or cash equivalents acceptable to the Company) equal to the Option Price for the shares of Common Stock purchased pursuant to the exercise of the Option plus the amount (if any) of federal and/or other taxes which the Company, may, in its judgment, be required to withhold with respect to the exercise of the Option. Any attempt to exercise any Option granted hereunder other than as set forth above shall be invalid and of no force and effect. Promptly after the exercise of an Option and the payment in full of the Option Price of the shares of Common Stock covered thereby, the individual exercising the Option shall be entitled to the issuance of a Common Stock certificate or certificates evidencing the Optionee's ownership of such shares. A separate Common Stock certificate or certificates 1999 STOCK OPTION PLAN PAGE 3 shall be issued for any shares purchased pursuant to the exercise of an Option which is an incentive stock option, which certificate or certificates shall not include any shares which were purchased pursuant to the exercise of an Option which is not an incentive stock option. An individual holding or exercising an Option shall have none of the rights of a stockholder until the shares of Common Stock covered thereby are fully paid and issued to the Optionee, and except as provided in Section 16 below, no adjustment shall be made for dividends or other rights for which the record date is prior to the date of such issuance. (d) FAIR MARKET VALUE. "Fair Market Value" means the value of each share of Common Stock subject to the Plan determined as follows: If on the date of grant or exercise the Common Stock is listed on an established national or regional stock exchange, is admitted to quotation on The Nasdaq Stock Market, or is publicly traded on an established securities market, the Fair Market Value of the Common Stock shall be the closing price of the Common Stock on such exchange or in such market (the highest such closing price if there is more than one such exchange or market) on the date of grant or exercise or on the trading day immediately preceding the date of grant or exercise if the date of grant or exercise is not a trading day (or, if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day), or, if no sale of the Common Stock is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Common Stock is not listed on such an exchange, quoted on such stock market or traded on such a market, Fair Market Value shall be determined by the Board in good faith. (e) WITHHOLDING. The Company shall have the right to withhold, or require an Optionee to remit to the Company, an amount sufficient to satisfy any applicable federal, state, local or foreign withholding tax requirements imposed with respect to the exercise of Options. Subject to the consent of the Board which may be withheld in its sole and absolute discretion, and to the extent permissible under applicable tax, securities, and other laws, an Optionee may (a) have shares of Common Stock otherwise issuable to the Optionee hereunder withheld, or (b) tender to the Company previously acquired shares of Common Stock, having a Fair Market Value sufficient to satisfy all or part of the Optionee's federal, state and local tax obligations associated with the exercise of Options. 10. TRANSFERABILITY OF OPTIONS (a) Except as provided in subparagraph (b) below, during the lifetime of an Optionee to whom an Option is granted, only such Optionee (or, in the event of legal incapacity or incompetency, the Optionee's guardian or legal representative) may exercise the Option. No Option shall be assignable or transferable by the Optionee to whom it is granted, other than by will, the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined in section 414 of the Code, and no Option shall be pledged or hypothecated (by operation of law or otherwise), or subject to execution, attachment or similar process. (b) During the lifetime of an Optionee to whom an Option is granted, the Board may permit the transfer, assignment or other encumbrance of an outstanding Option unless such Option is an incentive stock option and the Board and the Optionee intend that it shall retain such status. Subject to any conditions that the Board may prescribe, an Optionee may, upon providing written notice to the corporate secretary, elect to transfer any or all Options granted to such Optionee pursuant to the Plan to members of his or her immediate family, including but not limited to, children, grandchildren and spouse or to trusts for the benefit of such immediate family members or to partnerships in which such family members are the only partners; provided however, that no such transfer by any Optionee may be made in exchange for consideration. 1999 STOCK OPTION PLAN PAGE 4 11. TERMINATION OF EMPLOYMENT Upon the termination of the employment of an Optionee with the Company or a subsidiary of the Company, other than by reason of the death or "permanent and total disability" (within the meaning of section 22(e)(3) of the Code) of such Optionee, any Option granted to an Optionee pursuant to the Plan shall terminate ninety (90) days after the date of such termination of employment, unless otherwise provided pursuant to the Option Agreement or unless the Board determines in its sole discretion to extend the date the Option may be exercised. A leave of absence or leave on military or government service approved by the Board shall not constitute a termination of employment for purposes of the Plan. For purposes of the Plan, a termination of employment with the Company or a subsidiary of the Company shall not be deemed to occur if the Optionee is immediately thereafter employed with the Company or any subsidiary of the Company. Subject to the termination date for the Options under Section 9(a) above, the Board may extend the date the Option may be exercised beyond the ninety (90) day period after the date of termination of employment or beyond the period provided in the Option Agreement. 12. RIGHTS IN THE EVENT OF DEATH OR DISABILITY (a) DEATH. If the Optionee dies while employed by the Company or a subsidiary, except as is otherwise provided in the Option Agreement relating to such Option, the executors or administrators or distributees of such Optionee's estate shall have the right (subject to the general limitations on exercise set forth in Section 9(b) above), within the earlier of (i) twelve months after such Optionee's death or (ii) the termination of the Option as provided in Section 9(a) above, to exercise, in whole or in part, any Option held by such Optionee at the date of such Optionee's death, on such terms as the Board may provide in the Option Agreement. (b) DISABILITY. If the Optionee terminates employment with the Company or a subsidiary by reason of the "permanent and total disability" (within the meaning of section 22(e)(3) of the Code) of such Optionee, then such Optionee shall have the right (subject to the general limitations on exercise set forth in Section 9(b) above), within the earlier of (i) twelve months after such termination, or (ii) the termination of the Option as provided in Section 9(a) above, to exercise, in whole or in part, any Option held by such Optionee at the date of such termination of employment on such terms as the Board may provide in the Option Agreement; provided however, that the Board may provide, by inclusion of appropriate language in the Option Agreement, that the Optionee may (subject to the general limitations on exercise set forth in Section 9(b) above), in the event of the termination of employment of the Optionee with the Company or a subsidiary by reason of the "permanent and total disability" (within the meaning of section 22(e)(3) of the Code) of such Optionee, exercise an Option, in whole or in part, at any time subsequent to such termination and prior to termination of the Option as provided in Section 9(a) above, either subject to or without regard to any installment limitation on exercise imposed pursuant to Section 9(b) above. Whether a termination of employment is to be considered by reason of "permanent and total disability" for purposes of this Plan shall be determined by the Board, which determination shall be final and conclusive. 13. USE OF PROCEEDS The proceeds received by the Company from the sale of Common Stock pursuant to Options granted under the Plan shall constitute general funds of the Company. 1999 STOCK OPTION PLAN PAGE 5 14. REQUIREMENTS OF LAW (a) VIOLATIONS OF LAW. The Company shall not be required to sell or issue any shares of Common Stock under any Option if the sale or issuance of such shares would constitute a violation by the individual exercising the Option or the Company of any provisions of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. Specifically in connection with the Securities Act of 1933, as amended ("1933 Act"), upon exercise of any Option, unless a registration statement under the 1933 Act is in effect with respect to the shares of Common Stock covered by such Option, the Company shall not be required to sell or issue such shares unless the Board has received evidence satisfactory to it that the holder of such Option may acquire such shares pursuant to an exemption from registration under the 1933 Act. Any determination in this connection by the Board shall be final, binding and conclusive. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of shares of Common Stock pursuant thereto to comply with any law or regulation of any governmental authority, except the Company shall timely file for registration, on Form S-8 under the 1933 Act, of the shares of Common Stock to be issued upon exercise of the Options granted under the Plan. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable unless and until the shares of Common Stock covered by such Option are registered or are subject to an available exemption from registration, the exercise of such Option (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. (b) COMPLIANCE WITH RULE 16b-3. The Plan is intended to comply with Rule 16b-3 or its successor rule, promulgated under the 1934 Act. With respect to persons subject to Section 16 of the 1934 Act, any provision of the Plan or action of the Board that is inconsistent with such Rule shall be deemed null and void to the extent permitted by law and deemed advisable by the Board. 15. AMENDMENT AND TERMINATION OF THE PLAN The Board may, at any time and from time to time, amend, suspend or terminate the Plan as to any shares of Common Stock as to which Options have not been granted; provided however, that stockholder approval shall be required if and to the extent the Board determines that such approval is appropriate for purposes of satisfying section 162(m) or 422 of the Code or is otherwise required by law or applicable stock exchange or stock market requirements. Grants may be made under the Plan prior to the receipt of such approval but each such grant shall be subject in its entirety to such approval and no Option may be exercised or vested prior to the receipt of such approval. Nothing herein shall restrict the Board's ability to exercise its discretionary authority pursuant to Section 2, which discretion may be exercised without amendment of the Plan. Except as permitted under Section 16 hereof, no amendment, suspension or termination of the Plan by the Board may, without the consent of the holder of the Option, adversely affect any rights or obligations under any Option theretofor granted under the Plan. 16. EFFECT OF CHANGES IN CAPITALIZATION (a) CHANGES IN COMMON STOCK. If the outstanding shares of Common Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split-up, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease affecting such outstanding shares generally that is effected without receipt of consideration by the Company, occurring after the effective date of the Plan, the number and kind of shares for the purchase of which Options may be granted under the Plan shall be adjusted proportionately and accordingly by the Board. In addition, the number and kind of shares for which Options are outstanding shall be adjusted 1999 STOCK OPTION PLAN PAGE 6 proportionately and accordingly so that the proportionate ownership interest of the holder of the Option immediately following such event shall, to the extent practicable, be the same as immediately prior to such event. Any such adjustment in outstanding Options shall not change the aggregate Option Price payable with respect to shares subject to the unexercised portion of the Option outstanding but shall include a corresponding proportionate adjustment in the Option Price per share. If there is a distribution payable in the capital stock of a subsidiary of the Company ("Spin-off Shares"), to the extent consistent with Treasury Regulation section 1.425-1(a)(6) or the corresponding provision of any subsequent regulation, each outstanding Option shall thereafter additionally pertain to the number of Spin-off Shares that would have been received in such distribution by a stockholder of the Company who owned a number of shares of Common Stock equal to the number of shares that are subject to the Option at the time of such distribution, and the aggregate Option Price of the Option shall be allocated between the Spin-off Shares and the Common Stock in proportion to the relative Fair Market Values of a Spin-off Share and a share of Common Stock immediately after the distribution of Spin-off Shares. (b) REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING CORPORATION. If the Company shall be the surviving corporation in any reorganization, merger, or consolidation of the Company with one or more other corporations, any Option theretofor granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Common Stock subject to such Option would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the Option immediately prior to such reorganization, merger, or consolidation. (c) REORGANIZATION IN WHICH THE COMPANY IS NOT THE SURVIVING CORPORATION; SALE OF ASSETS OR STOCK. Upon the dissolution or liquidation of the Company, or upon a merger, consolidation or reorganization of the Company with one or more other corporations in which the Company is not the surviving corporation, or upon a sale of substantially all of the assets of the Company to another corporation, or upon any transaction (including, without limitation, a merger or reorganization in which the Company is the surviving corporation) approved by the Board which results in any person or entity owning 80% or more of the combined voting power of all classes of stock of the Company, the Plan and all Options outstanding hereunder shall terminate, except to the extent provision is made in writing in connection with such transaction for the continuation of the Plan and/or the assumption of the Options theretofor granted, or for the substitution for such Options of new options covering the stock of a successor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and exercise prices, to preserve the then excess, if any, of the aggregate Fair Market Value of the shares subject to Options over the purchase price for the shares under the Options, in which event the Plan and Options theretofor granted shall continue in the manner and under the terms so provided. In the event of any such termination of the Plan, each individual holding an Option shall have the right, immediately prior to the occurrence of such termination and during such period occurring prior to such termination as the Board in its sole discretion shall determine and designate, to exercise such Option, in whole or in part, whether or not such Option was otherwise exercisable at the time such termination occurs and without regard to any installment limitation on exercise imposed pursuant to the Option Agreement. The Board shall send written notice of an event that will result in such a termination to all individuals who hold Options not later than the time at which the Company gives notice thereof to its stockholders. Notwithstanding the foregoing, the occurrence of any event described in this Section 16(c) which also constitutes a Change of Control (as defined below) shall cause the exercisability in full of all Options whether or not (i) all conditions to exercise have been satisfied and (ii) the Plan is terminated pursuant to this Section 16(c). (d) ADJUSTMENTS. Adjustments under this Section 16 related to stock or securities of the Company shall be made by the Board, whose determination in that respect shall be final, binding and 1999 STOCK OPTION PLAN PAGE 7 conclusive. No fractional shares of Common Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share or unit. (e) NO LIMITATIONS ON THE COMPANY. The grant of an Option pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer all or any part of its business or assets. 17. CHANGE OF CONTROL If a "Change of Control" (as defined below) occurs, all Options shall be exercisable in full whether or not all conditions of exercise have been satisfied. A "Change of Control" shall be deemed to occur (i) at such time as any person [as defined in Section 13(d)(3) of the 1934 Act, but excluding General Electric Company ("GE") and the entities to whom shares of the Company's Convertible Preferred Stock, Series B ("Series B Preferred Stock") were initially issued ("Carlyle"), and successors and permitted assigns of GE and Carlyle, individually and collectively] at any time shall directly or indirectly acquire more than 40% of the voting power of the Common Stock, (ii) at such time as during any one year period, individuals who at the beginning of such period constitute the Board (together with any new directors (a) whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved or (b) elected or appointed by Carlyle, GE or their successors and permitted assigns) cease to constitute at least a majority of such Board (provided however, that a change in directors upon a Type B Event Date [as defined in the Company's Certificate of Designation, Preferences and Rights] of Convertible Preferred Stock Series B ("Series B Certificate of Designation") shall not be deemed to cause a Change of Control pursuant to this subparagraph (ii), (iii) upon consummation of a merger or consolidation of the Company into or with another Person (as defined below) in which the stockholders of the Company immediately prior to the consummation of such transaction shall own 50% or less of the voting securities of the surviving corporation (or the parent corporation of the surviving corporation where the surviving corporation is wholly owned by the parent corporation) immediately following the consummation of such transaction, or (iv) the sale, transfer or lease of all or substantially all of the assets of the Company, in any of cases (i), (ii), (iii) or (iv) in a single transaction or series of related transactions; provided, that no Change of Control hereunder with respect to the Company shall be deemed to occur solely by reason of (x) the ownership of the Company's capital stock by any of Carlyle, TC Group, L.L.C., any investor in any entity comprising Carlyle or TC Group, L.L.C. as of October 14, 1997, GE or its Affiliates (as defined in the Series B Certificate of Designation), (y) the conversion of shares of Series B Preferred Stock into either the Company's Convertible Preferred Stock, Series D ("Series D Preferred Stock") (and any change in the Board incident thereto) or Common Stock, or (z) the conversion of shares of Series D Preferred Stock into Common Stock. "Person" means any corporation, partnership, limited partnership, limited liability partnership, joint venture, association, limited liability company, joint-stock company, trust or unincorporated organization. 18. DISCLAIMER OF RIGHTS No provision in the Plan or in any Option granted or Option Agreement entered into pursuant to the Plan shall be construed to confer upon any individual the right to remain in the employ of the Company or any subsidiary of the Company, or to interfere in any way with the right and authority of the Company or any subsidiary of the Company either to increase or decrease the compensation of any individual at any time, or to terminate any employment or other relationship between any individual and the Company or any subsidiary of the Company. 1999 STOCK OPTION PLAN PAGE 8 19. NONEXCLUSIVITY OF THE PLAN Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of stock options otherwise than under the Plan. 20. GOVERNING LAW THE VALIDITY, INTERPRETATION AND EFFECT OF THE PLAN, AND THE RIGHTS OF ALL PERSONS HEREUNDER, SHALL BE GOVERNED BY AND DETERMINED IN ACCORDANCE WITH THE LAWS OF DELAWARE, OTHER THAN THE CHOICE OF LAW RULES THEREOF. 21. HEADINGS The headings herein are for convenience only and shall not be used in interpreting the Plan. 1999 STOCK OPTION PLAN PAGE 9 EX-5 3 EXHIBIT 5 EXHIBIT 5 [LETTERHEAD] March 1, 2000 InSight Health Services Corp. 4400 MacArthur Boulevard Newport Beach, CA 92660 Ladies and Gentleman: We have acted as counsel to InSight Health Services Corp. (the "Company") with respect to the Company's Registration Statement on Form S-8 (the "Registration Statement") filed with the Securities and Exchange Commission in connection with the registration, under the Securities Act of 1933, as amended, by the Company of an aggregate of 1,250,000 shares of its $0.001 par value common stock (the "Shares") issuable upon exercise of stock options granted under the InSight Health Services Corp. 1997 Management Stock Option Plan, the InSight Health Services Corp. 1998 Employee Stock Option Plan and the InSight Health Services Corp. 1999 Stock Option Plan (collectively, the "Plans"). In connection with this opinion letter, we have examined the originals or copies certified or otherwise identified to our satisfaction of the Registration Statement and such other records, documents, certificates, agreements, or other instruments and have made such other inquiries, all as we deemed necessary to enable us to render the opinions expressed below. Based on the foregoing, we are of the opinion that the Shares have been duly and validly authorized for issuance and, when issued in accordance with the terms of the Plans, will be validly issued, fully paid and non-assessable. We consent to the inclusion of this opinion as part of the Registration Statement and to the reference to our firm therein. In giving this consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the rules promulgated thereunder. Very truly yours, ARENT FOX KINTNER PLOTKIN & KAHN, PLLC EX-24.(B) 4 EXHIBIT 24(B) EXHIBIT 24(b) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement (Form S-8) of our report dated September 24, 1999 included in InSight Health Services Corp.'s Form 10-K for the year ended June 30, 1999 and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Orange County, California February 24, 2000 -----END PRIVACY-ENHANCED MESSAGE-----