California Federal Court finds for Steel Partners; denies Medical Imaging's application for expedited discovery in proxy contest and court also sets date for dismissal.

NEW YORK--(BUSINESS WIRE)--Jan. 19, 1996--Steel Partners II L.P., a New York based investment partnership, announced today that a federal district court in San Diego, rejected the application of Medical Imaging Centers of America Inc. ("NASDAQ; MIGA") for an order granting Medical Imaging expedited discovery in a contest for corporate control and granted Steel Partners' application for a stay of all discovery.

The ruling of the U.S. District Court for the Southern District of California, found that Medical Imaging has been unable to show that it would be "unduly prejudiced" by a stay of discovery.

Steel Partners today also announced that it has filed a motion to dismiss the lawsuit brought against it last week by Medical Imaging. Medical Imaging's suit was filed in response to Steel Partners' Dec. 29, 1995 announcement that it had called for a special meeting of Medical Imaging shareholders, to be held Feb. 26, 1996. Steel Partners had filed preliminary proxy materials with the SEC in order to seek the ouster of Medical Imaging's present board of directors.

Mr. Lichtenstein of Steel Partners said, "shareholders should take note of the court's ruling particularly in light of E. Keene Wolcott's January 11, 1996 decision to resign from the Medical Imaging board over the decision to sue Steel Partners."

According to Lichtenstein, "Steel Partners looks forward to establishing that a 19.7 percent shareholder of a publicly traded U.S. company has the right to commence a proxy solicitation of, and communicate with, its fellow shareholders, free from the heavy costs and distractions of a federal court action, and particularly of the expense and burdens of frivolous discovery. We are extremely disappointed to learn in their preliminary proxy materials that Medical Imaging expects to spend $500,000 on the solicitation alone, and that $200,000 of that sum has already been expended, before the solicitation has officially begun."

Steel Partners' attorney and a nominee for director, Steven Wolosky of Olshan Grundman Frome & Rosenzweig LLP, said he believes that the Court's ruling was the first in a corporate takeover battle under the Private Securities Litigation Reform Act of 1995, enacted by Congressional vote last December 22. According to the attorney, the new federal law requires that a Court issue such a stay, absent extraordinary circumstances, where a party, such as Steel Partners moves to dismiss a complaint for violation of the Federal Securities Exchange Act. Steel Partners filed its motion to dismiss Medical Imaging's complaint which it believes lacks good grounds and is frivolous.

According to the Steel Partners attorney, the 1995 Act imposes broad new pleading requirements on any action interposed under the federal Securities Exchange Act of 1934, including all of Medical Imaging's federal claims. Steel Partners' attorney indicated that Medical Imaging's complaint fails to comport with the new pleading standards because it fails to particularize or provide any factual support for Medical Imaging's various charges. The Court is to hear Steel Partners' motion to dismiss on Feb. 20, 1996.

The Steel Partners' Committee is made up of Steel Partners and Steel Partners Services Ltd. The members of the committee hold 487,374 shares, or 19.7 percent, of Medical Imaging's common stock. The committee's nominees for election to the board of directors of Medical Imaging are Warren Lichtenstein, Lawrence Butler, Jack L. Howard, David C. Flaugh and Steven Wolosky. Both Warren Lichtenstein and Lawrence Butler beneficially own 487,374 shares of Medical Imaging's common stock, all of which are owned by either Steel Partners or Steel Partners Services. Both Lichtenstein and Butler are executive officers of the members of the committee, or their general partner. Howard beneficially owns 700 shares of Medical Imaging's common stock, all of which are owned by his wife, in trust for their children. Neither Wolosky nor Flaugh beneficially owns any shares of Medical Imaging's common stock.

CONTACT: Daniel Burch, 212/929-5748

Mark Harnett, 212/929-5877