Exhibit 10.38

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of January 1, 2006 (as
amended, modified or supplemented from time to time, this “Agreement”), among
TODD W. LATZ (the “Executive”), MEDQUEST, INC., a Delaware corporation (the
“Company”), and MQ ASSOCIATES, INC., a Delaware corporation and parent entity of
the Company (the “Parent”).

 

WHEREAS, the Company and Executive are parties to an Employment Agreement dated
December 14, 2004 (the “Original Employment Agreement”) and desire to continue
the employment of Executive as a senior executive of the Company, and Executive
has agreed to continue such employment, on the terms and conditions set forth in
this Agreement;

 

WHEREAS, the Parent, the Company and Executive desire to amend and restate the
Original Employment Agreement in its entirety by entering into this Agreement;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:

 

1.                                         Employment. The Company hereby
employs the Executive and the Executive accepts such employment upon the terms
and conditions hereinafter set forth.

 

2.                                         Term of Employment. Subject to
earlier termination pursuant to the provisions of Section 6, the term of the
Executive’s employment pursuant to this Agreement shall commence on and as of
the date hereof (the “Effective Date”) and shall terminate on the third
anniversary of the Effective Date, subject to automatic annual extensions for
successive periods of one year each as of the third anniversary of the Effective
Date and each anniversary thereafter, unless either party gives written notice
of nonrenewal to the other at least 60 days before the term would otherwise
terminate (such period, the “Employment Period”).

 

3.                                         Duties; Extent of Service. During the
Employment Period, the Executive (a) shall serve as a senior executive officer
of the Company and the Parent with the title and position of General Counsel,
reporting to the Chief Executive Officer, and (b) shall have supervisory
responsibility in such capacity over matters as may be specified from time to
time by the Chief Executive Officer, consistent with the Executive’s position
and general area of experience and skills, provided, that in all cases the
Executive shall be subject to the oversight and supervision of the Chief
Executive Officer in the performance of his duties, (c) upon the request of the
Chief Executive Officer, shall serve as an officer and/or director of any of the
Company’s subsidiaries and/or other affiliates, and (d) shall render all
services reasonably incident to the foregoing. The Executive hereby accepts such
employment, agrees to serve in the capacities indicated, and agrees to use the
Executive’s best efforts in, and shall devote the Executive’s full working time,
attention, skill and energies to the advancement of the interests of the
Company, the Parent and their subsidiaries and to the performance of the
Executive’s duties

 

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and responsibilities hereunder. The Executive shall not during the Employment
Period be engaged in any other business activity that, in the reasonable
judgment of the Board of Directors of the Parent and/or the Company (the “Board
of Directors”), would conflict with the ability of the Executive to perform his
duties under this Agreement, whether or not such activity is pursued for gain,
profit or other pecuniary advantage.

 

4.                                         Salary and Bonus.

 

a.                                     Base
Salary.                               During the Employment Period, the Company
shall pay the Executive total base compensation at the rate of $250,000.00 per
annum, subject to increase from time to time at the discretion of the Chief
Executive Officer or the Board of Directors (as in effect from time to time, the
“Base Salary”). Such Base Salary shall be subject to withholding under
applicable law, shall be pro rated for partial years and shall be payable in
periodic installments not less frequently than monthly in accordance with the
Company’s usual practice for senior executive officers of the Company as in
effect from time to time.

 

b.                                    Annual Bonus. During the Employment
Period, in addition to the Base Salary, the Executive shall be eligible to
receive an annual bonus (the “Annual Bonus”) from the Company, based upon the
achievement of certain annual objectives (the “Bonus Objectives”) to be mutually
agreed upon by the Executive and the Chief Executive Officer. If 100% of the
Bonus Objectives shall be satisfied by the Executive, such Annual Bonus shall be
equal to 50% of the Base Salary (the “Target Annual Bonus”). The Annual Bonus
will be reduced ratably if less than 100% of such Bonus Objectives shall be
satisfied by the Executive and the Executive will have an opportunity, based
solely on the discretion of the Chief Executive Officer, to earn an Annual Bonus
in excess of the Target Annual Bonus taking into account personal performance,
bonus awards made to other members of the Company’s senior management team and
Company performance. The Annual Bonus calculated with respect to any fiscal year
will be earned and accrued, to the extent the Bonus Objectives shall be
achieved, if the Executive is an employee of the Company on the last day of such
fiscal year.

 

c.                                     Equity. The Company shall recommend to
the Board of Directors that the Executive participate in the Company’s stock
option or other equity interest plans in effect from time to time, with grants,
exercise prices, vesting and other provisions that are commensurate with the
Executive’s position and responsibilities and the grants provided to other
members of senior management.

 

5.                                         Benefits.

 

a.                                     Effective from and after the first day of
the month following the 30th day of the Employment Period, or such earlier date
as may be permitted pursuant to the terms of the applicable plans or policies,
and throughout the remainder of the Employment Period, the Executive shall be
entitled to participate in any and all medical, dental, vision care, short and
long term disability, life insurance, and accidental death and disability plans,
retirement arrangements and automobile allowance programs as in effect from time
to time for senior executive officers of the Company generally and approved by
the Board of Directors. Such participation shall be subject to (i) the terms of
the applicable plan documents (including, as applicable, provisions granting
discretion to the Board of Directors or any administrative or other

 

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committee provided for therein or contemplated thereby) and (ii) generally
applicable policies of the Company.

 

b.                                    During the Employment Period, to the
extent permitted by law, the Executive shall be entitled to four (4) weeks paid
vacation during each twelve (12) month period worked, commencing on the
Effective Date; provided, however, that the Executive shall be entitled to
accumulate not more than eight (8) weeks of unused vacation for which the
Executive shall be compensated if the Executive’s employment is terminated.

 

c.                                     The Company shall promptly reimburse
Executive for all reasonable business expenses incurred by Executive during the
Employment Period in accordance with the Company’s practices for senior
executive officers of the Company as in effect from time to time.

 

d.                                    Compliance with the provisions of this
Section 5 shall in no way create or be deemed to create any obligation, express
or implied, on the part of the Parent or any of its affiliates with respect to
the continuation of any particular benefit or other plan or arrangement
maintained by them or their affiliates as of or prior to the date hereof or the
creation and maintenance of any particular benefit or other plan or arrangement
at any time after the date hereof.

 

6.                                         Termination and Termination Benefits;
Effect of Termination. Notwithstanding the provisions of Sections 2 or 3, the
Executive’s employment under this Agreement shall terminate under the following
circumstances:

 

a.                                     Termination by the Company for Cause. The
Employment Period may be terminated by the Company for Cause without further
liability on the part of the Company or any of its affiliates upon written
notice to the Executive, such termination to be effective on the date specified
in such notice. “Cause” means (i) a failure by the Executive to observe policies
of the Parent and its affiliates generally applicable to executives of the
Parent and its affiliates that causes material harm to the Parent or its
affiliates, (ii) gross negligence or willful misconduct by the Executive in the
performance of his duties, (iii) failure by the Executive to substantially
perform the duties contemplated by Section 3 hereof, which failure is not
remedied within ten (10) days after a written notice of such failure is
delivered to the Executive by the Company, or (iv) the commission by the
Executive of any act of fraud, theft or financial dishonesty with respect to the
Company, the Parent or any of its or their affiliates, (iv) the Executive’s
indictment, conviction of, or pleading no contest or nolo contendere to, any
felony or a lesser crime involving dishonesty or (v) the material breach by the
Executive of this Agreement (including, without limitation, the failure to
perform his duties hereunder in accordance with Section 3 hereof other than
absences due to illness, injury, vacations or holidays), or any other material
agreement or contract between or among the Executive, the Company, the Parent or
any of its or their affiliates, which breach (if susceptible to cure) is not
cured by the Executive within ten days following written notice by the Company
to the Executive of such breach.

 

b.                                    Termination by the Executive. The
Employment Period may be terminated by the Executive by written notice to the
Chief Executive Officer without Good

 

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Reason at least 90 days prior to such termination and with Good Reason at least
30 days prior to such termination, such termination to be effective on the date
specified in such notice. “Good Reason” means (i) a reduction in the Executive’s
Base Salary, (ii) a material reduction in the Executive’s duties or reporting
relationships provided in this Agreement, (iii) a material breach of this
Agreement by the Company, or (iv) any requirement that the Executive relocate
his principal place of business to a location more than 50 miles from the
Company’s headquarters as of the date hereof; provided, however, that if the
Executive consents to such relocation, or actually relocates, such relocation
requirement shall not constitute Good Reason.

 

c.                                     Termination by the Company Without Cause.
The Employment Period under this Agreement may be terminated by the Company
without further liability on the part of the Company or any of its affiliates
without Cause upon written notice to the Executive, such termination to be
effective as of the date of such notice.

 

d.                                    Certain Termination Benefits. Unless
otherwise specifically provided in this Agreement, all of the Company’s
obligations under this Agreement shall terminate on the date of termination of
the Employment Period. Notwithstanding the foregoing, in the event of
termination of the Executive’s employment with the Company by the Executive for
Good Reason or by the Company without Cause (including a termination without
Cause as contemplated by the last paragraph of Section 8.a), the Company shall
provide to Executive the following termination benefits (“Termination
Benefits”):

 

(i)                                   continuation of the Executive’s Base
Salary at the rate then in effect pursuant to Section 4.a;

 

(ii)                                an amount equal to the product of (A) that
portion, expressed as a percentage, of the year-to-date Bonus Objectives
realized by the Executive as of the date of such termination and (B) the product
of (x) the quotient obtained by dividing (I) the number of calendar days elapsed
from the beginning of the respective calendar year to the date of such
termination by (II) 365 and (y) the Target Annual Bonus with respect to the year
of termination for which the Executive is eligible, which amount shall be paid
to the Executive at the frequency and in the manner provided for payments
pursuant to clause (i) above; provided, however, that in the event that such
termination without Cause or for Good Reason shall be effective on the date of
the consummation of a Sale of the Company (as defined in that certain
Stockholders’ Agreement, dated as of August 15, 2002, as amended from time to
time, among the Parent and the stockholders party thereto (the “Stockholders’
Agreement”)) or, within 180 days thereafter, such amount shall be payable on the
effective date of such termination; and

 

(iii)                             continuation of group health, dental, and
disability plan benefits as described in Section 5.a of this Agreement, with the
cost for such benefits shared in the same relative proportion by the Company and
the Executive as in effect on the date of termination.

 

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The Termination Benefits set forth in clauses (i) and (iii) above shall
continue, so long as the Executive is in compliance with the Executive’s
continuing obligations under this Agreement, until twelve (12) months after the
date of termination; provided, however, that in the event that such termination
without Cause or for Good Reason shall be effective on the date of the
consummation of a Sale of the Company (as defined in Section 6(d)(ii) hereof)
or, within 180 days thereafter, the Termination Benefits set forth in clause
(i) shall be in an amount equal to two times Executive’s Base Salary and shall
be payable on the effective date of such termination. The Company and the
Executive agree that the Termination Benefits paid by the Company to the
Executive under this Section 6.d shall be contingent upon the Executive’s
delivery of a general release of any and all claims (other than those arising
under this Section 6.d and Section 6.f) upon termination of employment in the
form attached hereto as Exhibit A (with such changes as may be necessitated by
any change in law after the date hereof to obtain the full benefits thereunder),
it being understood that no Termination Benefits shall be provided unless and
until the Executive executes and delivers such release and such release shall
not be revoked. Notwithstanding anything contained herein to the contrary, any
payment required to be made pursuant to clause (ii) above that would result in a
violation of, or a default under, any agreement governing any indebtedness for
borrowed money of the Parent or any of its affiliates, shall not be made so long
as such agreement would prohibit such payment or such payment would result in a
violation or default thereunder; provided, however, that the Parent shall use
its good faith efforts to negotiate with the lenders under any such agreement to
permit the payment of such amounts as promptly as practicable. Any such delay in
making such payments shall not be deemed to be a violation of this Agreement so
long as the Employment Period and/or termination date shall be extended until
such time as such payments are made; provided, however, that any compensation
that Executive shall receive from the Company during such extension of the
Employment Period and/or termination date shall be offset against, and in no
event shall be greater than, the aggregate amount of the aforementioned delayed
payments. The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or otherwise,
and the amount of any payment or benefit provided for in this Section 6 shall
not be reduced by any compensation earned by the Executive as the result of
employment by another employer or by retirement benefits.

 

e.                                     Death or Disability. The Executive’s
employment and all obligations of the Company hereunder shall terminate upon the
death or Disability of the Executive, other than the obligation to pay the
greater of (A) the product of (x) the aggregate amount of the Annual Bonus the
Executive received in the preceding calendar year and (y) that portion,
expressed as a percentage, of the Bonus Objectives for the calendar year of
termination realized by the Executive as of the date of such termination and
(B) the prorated bonus amount as calculated pursuant to Section 6.d(ii).
“Disability” means a condition under which the Executive is unable due to
illness or injury to perform the essential functions of the Executive’s then
existing position or positions under this Agreement for a continuous six-month
period with reasonable accommodation, as determined in the sole discretion of
the Chief Executive Officer.

 

f.                                       Continuing Obligations. Notwithstanding
termination of the Employment Period or any other provision hereof, the Company
shall remain obligated to pay (without duplication of any payment hereunder) all
earned (to the date of such termination of the Employment Period) but unpaid
Base Salary, the earned and accrued Annual Bonus for any completed fiscal year
as of the date of termination of the Employment Period (to the extent the

 

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Bonus Objectives shall have been achieved) as set forth in this Section 6,
benefits, payments, or rights to which the Executive remains entitled after the
termination of the Employment Period pursuant to the terms of any agreement,
plan, program or policy, and reimbursement for business expenses incurred to the
date of termination of the Employment Period that are reimbursable in accordance
with the terms of this Agreement. Notwithstanding termination of this Agreement
as provided in this Section 6 or any other termination of the Executive’s
employment with the Company, the Executive’s obligations under Section 7 and
Section 8 hereof shall survive any termination of the Executive’s employment
with the Company at any time and for any reason.

 

g.                                    Effect of
Termination.                             Effective immediately upon termination
of the Employment Period, regardless of reason, and without the necessity of any
further action on the part of the Executive, the Company or any other person,
the Executive’s service (i) on any and all boards of directors, boards of
managers or similar governing bodies of any of the Parent and any of its
subsidiaries, (ii) as an officer of the Parent and any of its subsidiaries and
(iii) as an employee of the Parent and any of its subsidiaries shall, in each
case, be terminated and the Executive shall be deemed to have resigned from any
and all such positions then held by the Executive.

 

7.                                         Confidentiality; Proprietary Rights.

 

a.                                     In the course of performing services
hereunder on behalf of the Parent, the Company (including all predecessors and
successors of each of the Parent and the Company) and its and their affiliates
(the Parent and its subsidiaries collectively, the “Employer Parties”), the
Executive from time to time will have access to Confidential Information (as
defined below). The Executive agrees (a) to hold the Confidential Information in
strict confidence, (b) not to disclose the Confidential Information to any
person (other than in the ordinary course of the regular business of the
Employer Parties), and (c) not to use, directly or indirectly, any of the
Confidential Information for any purpose other than on behalf of the Employer
Parties. All documents, records, data, apparatus, equipment and other physical
property, whether or not pertaining to Confidential Information, that are
furnished to the Executive by any Employer Party or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the applicable Employer Party. Upon the termination of the
Employment Period for any reason and as and when otherwise requested by any
Employer Party, all Confidential Information (including, without limitation, all
data, memoranda, customer lists, notes, programs and other papers and items, and
reproductions thereof relating to the foregoing matters) in the Executive’s
possession or control shall be immediately returned to the Company.

 

b.                                    The Executive hereby confirms that the
Executive is not bound by the terms of any agreement with any previous employer
or other party that restricts in any way the Executive’s engagement in any
business. The Executive represents to the Company that the Executive’s execution
of this Agreement, the Executive’s employment with the Company and the
performance of the Executive’s proposed duties for the Employer Parties will not
violate any obligations the Executive may have to any such previous employer or
other party. In the Executive’s work for the Employer Parties, the Executive
will not disclose or make use of any information in violation of any agreements
with or rights of any such previous employer or other party, and the Executive
will not bring to the premises of the Employer Parties any copies or

 

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other tangible embodiments of non-public information belonging to or obtained
from any such previous employment or other party. The Executive represents and
warrants that he is not a party to any consulting or advisory agreement with any
third party (including a previous employer) that would interfere with the
Executive’s performance of his obligations and duties hereunder and the
Executive shall advise and update the Chief Executive Officer (including
providing copies of notices, agreements and other relevant documentation) from
time to time and as requested by the Chief Executive Officer of any matters or
developments relating to his relationship with any previous employer.

 

c.                                     During and after the Employment Period,
the Executive shall reasonably cooperate with the Employer Parties in the
defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of any Employer Party or any of their
respective affiliates that relate to events or occurrences that transpired while
the Executive was employed by the Company. The Executive’s reasonable
cooperation in connection with such claims or actions shall include, but not be
limited to, being available to meet with counsel to prepare for discovery or
trial and to act as a witness on behalf of the Employer Parties or any of their
respective affiliates at mutually convenient times. During and after the
Employment Period, the Executive also shall reasonably cooperate with the
Employer Parties in connection with any investigation or review of any federal,
state or local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while the Executive was employed by the
Company. The Company shall reimburse the Executive for any reasonable
out-of-pocket expenses incurred in connection with the Executive’s performance
of obligations pursuant to this Section 7.c, and in the event the Executive’s
performance of obligations under this Section 7.c requires more than 20 hours of
the Executive’s time, the Company will pay the Executive an hourly rate of $250
per hour for his time, beginning only as of such 21st hour.

 

d.                                    The Executive recognizes that the Employer
Parties and their respective affiliates possess a proprietary interest in all of
the information described in Section 7.a and have the exclusive right and
privilege to use, protect by copyright, patent or trademark, or otherwise
exploit the processes, ideas and concepts described therein to the exclusion of
the Executive, except as otherwise agreed between the Company and the Executive
in writing. The Executive expressly agrees that any products, inventions or
discoveries made by the Executive or the Executive’s agents or affiliates in the
course of the Executive’s employment, including any of the foregoing that is
based on or arises out of the information described in Section 7.a, shall be the
property of and inure to the exclusive benefit of the Company. The Executive
further agrees that any and all products, inventions, or discoveries developed
by the Executive (whether or not able to be protected by copyright, patent or
trademark) during the course of his employment, or involving the use of the
time, materials or other resources of the Employer Parties or any of their
respective affiliates, shall be promptly disclosed to the Company and shall
become the exclusive property of the Company, and the Executive shall execute
and deliver any and all documents necessary or appropriate to implement the
foregoing.

 

e.                                     During the Employment Period, the
Executive will offer or otherwise make known or available to the Company, as
directed by the Chief Executive Officer or Board of Directors and without
additional compensation or consideration, any business prospects, contracts or
other business opportunities that the Executive may discover, find,

 

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develop or otherwise have available to the Executive in the Company’s general
industry and further agrees that any such prospects, contacts or other business
opportunities shall be the property of the Company (or other appropriate
Employer Party, as applicable).

 

f.                                       The Executive acknowledges that the
provisions of this Section 7 and the following Section 8 are an integral part of
the Executive’s employment arrangements with the Company.

 

g.                                    For purposes of this Agreement, the term
“Confidential Information” shall mean: information belonging to any Employer
Party that is of value to any Employer Party or with respect to which any
Employer Party has rights in the course of conducting its respective business
and the disclosure of which could result in a competitive or other disadvantage
to any Employer Party. Confidential Information includes information, whether or
not patentable or copyrightable, in written, oral, electronic or other tangible
or intangible forms, stored in any medium, including, by way of example and
without limitation, trade secrets, ideas, concepts, designs, configurations,
specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts, processes, techniques, formulas, software, improvements,
inventions, data, know-how, discoveries, copyrightable materials, marketing
plans and strategies, sales and financial reports and forecasts, studies,
reports, records, books, contracts, instruments, surveys, computer disks,
diskettes, tapes, computer programs and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses or
facilities) that have been discussed or considered by the management of any
Employer Party. Confidential Information includes information developed by the
Executive in the course of the Executive’s employment by the Company, as well as
other information to which the Executive may have access in connection with the
Executive’s employment. Confidential Information also includes the confidential
information of others with which any Employer Party has a binding
confidentiality agreement. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain, unless due to
breach of the Executive’s duties under Section 7.a.

 

8.                                         Non-Competition; Non-Solicitation;
Other Boards.

 

a.                                     The Executive acknowledges that, in the
course of his employment with the Company and/or its affiliates and their
predecessors, he will become familiar with the Company’s and its affiliates’ and
their predecessors’ trade secrets and with other confidential information
concerning the Company, its affiliates and their respective predecessors and
that his services will be of special, unique and extraordinary value to the
Company and its affiliates. Therefore, the Executive agrees that, during the
Employment Period and for one (1) year thereafter (the “Non-Compete Period”), he
shall not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any manner engage in or represent any business
competing with the Business of the Company or its affiliates within any
Restricted Territory. “Business” means the management and/or operation of
outpatient diagnostic imaging centers. “Restricted Territory” means the states
and/or other territories set forth on Schedule I; provided, that, not less than
annually, the Company and the Executive shall update Schedule I to (i) add to
Schedule I any states or other territories in which the Company or its
affiliates is then conducting its Business and (ii) delete from Schedule I any
states or other territories in which the Company or its affiliates is no longer
conducting its Business; provided, further, that, in the

 

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event that the Company and the Executive fail to agree on any such update, the
then-existing Schedule I (as may have been previously amended) shall govern.

 

Notwithstanding the foregoing, if the Executive’s employment is terminated as a
result of a scheduled expiration of the Employment Period or a nonrenewal as
provided in Section 2, or if the Company fails to provide the post-termination
benefits pursuant to Section 6.d, the Executive shall not be bound by the
non-competition and non-solicitation restrictions in this Section 8, except to
the extent that the Company notifies the Executive in writing on or prior to the
date of such scheduled expiration or nonrenewal that the Company has elected to
treat such scheduled expiration or nonrenewal as a Termination without Cause.

 

b.                                    Nothing herein shall prohibit the
Executive from being a passive owner of not more than 2% of the outstanding
stock of any class of a corporation that is publicly traded, so long as the
Executive has no active participation in the business of such corporation.

 

c.                                     During the Non-Compete Period, the
Executive shall not directly, or indirectly through another person or entity,
(i) induce or attempt to induce any employee of any Employer Party to leave the
employ of such Employer Party, or in any way interfere with the relationship
between such Employer Party, on the one hand, and any employee thereof, on the
other hand, (ii) hire any person who was an employee of any Employer Party until
sixty (60) days after such individual’s employment relationship with such
Employer Party has been terminated or (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of any Employer Party to
cease doing business with such Employer Party, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation,
on the one hand, and such Employer Party, on the other hand.

 

d.                                    The Executive understands that the
foregoing restrictions may limit his ability to earn a livelihood in a business
similar to the business of the Employer Parties, but he nevertheless believes
that he will receive sufficient consideration and other benefits as an employee
of the Company and the Parent and as otherwise provided hereunder to clearly
justify such restrictions (including any restrictions imposed in the future by
any amendment to Schedule I mutually agreed upon by the Company and the
Executive) which, in any event (given his education, skills and ability), the
Executive does not believe would prevent him from otherwise earning a living.
The Executive has carefully considered the nature and extent of the restrictions
placed upon him by this Agreement, and hereby acknowledges and agrees that the
same are reasonable in time and territory (including as such territory as
may hereafter be amended by mutual agreement of the Company and the Executive)
and do not confer a benefit upon any Employer Party disproportionate to the
detriment of the Executive.

 

9.                                         Non-Disparagement. From the Effective
Date through the date that is the second anniversary of the date of the
termination of the Employment Period, the Executive agrees that he will not
make, or cause to be made, any statement, observation, or opinion, or
communicate any information (whether oral or written), to any person other than
a member of the Board of Directors, that disparages any Employer Party or is
likely in any way to harm the business or the reputation of any Employer Party,
or any of their respective former, present, or future directors, officers,
stockholders or employees.

 

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10.                                   Certain Restrictions on Transfers; Fees in
Connection with Certain Sales of Common Stock. If the Parent at any time shall
register an offering and sale of shares of Common Stock under the Securities Act
of 1933, as amended (or any successor statute thereto) (the “Securities Act”),
in an underwritten offering (i) pursuant to an initial public offering or
(ii) pursuant to any other registration under the Securities Act (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms
thereto), if requested by the managing underwriter(s) and provided that the
directors and officers of the Parent are so restricted, the Executive shall not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any capital stock of the Parent (other than (A) any shares of Common
Stock held by, or issuable to, the Executive that are included in such
registration or (B) a Permitted Transfer (as defined in the Stockholders’
Agreement)) without the prior written consent of the Parent for a period as
shall be determined by the managing underwriters, which period cannot begin more
than seven (7) days prior to the effectiveness of such registration statement
and cannot last more than ninety (90) days (180 days in the case of the Parent’s
or the Company’s initial public offering) after the effective date of such
registration statement.

 

11.                                   Parties in Interest; Certain Remedies. It
is specifically understood and agreed that this Agreement is intended to confer
a benefit, directly and indirectly, on the Parent, the Company and their direct
and indirect subsidiaries and affiliates, and that any breach of the provisions
of this Agreement by the Executive will result in irreparable injury to the
Parent, the Company and their subsidiaries and affiliates, that the remedy at
law alone will be an inadequate remedy for such breach and that, in addition to
any other remedy it may have, the Parent, the Company or their subsidiaries and
affiliates shall be entitled to enforce the specific performance of this
Agreement by the Executive through both temporary and permanent injunctive
relief without the necessity of posting a bond or proving actual damages, but
without limitation of their right to damages and any and all other remedies
available to them, it being understood that injunctive relief is in addition to,
and not in lieu of, such other remedies.

 

12.                                   Notices. All notices, requests, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if faxed (with transmission acknowledgment received),
delivered personally or by nationally recognized overnight courier (providing
proof of delivery) or mailed by certified or registered mail (return receipt
requested) as follows:

 

To the Company or the Parent:

 

MedQuest, Inc.

4300 North Point Parkway

Alpharetta, GA 30022

Fax: (770) 734-9652

Attention: Chief Executive Officer

 

with a copy to:

 

MedQuest, Inc.

4300 North Point Parkway

Alpharetta, GA 30022

 

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Fax: (770) 734-9652

Attention: Chief Financial Officer

 

To Executive:

 

c/o MedQuest, Inc.

4300 North Point Parkway

Alpharetta, GA 30022

Fax: (770) 734-9652,

 

or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.

 

13.                                   Scope of Agreement. The parties
acknowledge that the time, scope, geographic area (including as such geographic
area may be amended pursuant to Section 8) and other provisions of Section 8
hereof have been specifically negotiated by sophisticated parties and agree that
all such provisions are reasonable under the circumstances of the transactions
contemplated hereby, and are given as an integral and essential part of the
transactions contemplated hereby. The Executive has independently consulted with
counsel and has been advised in all respects concerning the reasonableness and
propriety of the covenants contained herein, with specific regard to the
business to be conducted by the Parent, the Company and their subsidiaries and
affiliates, and represents that this Agreement is intended to be, and shall be,
fully enforceable and effective in accordance with its terms.

 

14.                                   Severability. In the event that any
covenant contained in this Agreement shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action. The existence of any claim or cause of
action that the Executive may have against the Parent, the Company or any of
their subsidiaries or affiliates shall not constitute a defense or bar to the
enforcement of any of the provisions of this Agreement.

 

15.                                   No Amendment of Certain Indemnification
Provisions. The Employer Parties shall not amend or modify their respective
certificates of incorporation to reduce the breadth of indemnification available
thereunder for directors of the Employer Parties from that in effect as of the
date hereof. If an Employer Party shall enter into indemnification agreements
with its directors or officers providing indemnification related to their
positions as directors or officers, as applicable, the Executive shall be
entitled to enter into the same indemnification agreement as the Employer Party
shall enter into with such other directors or officers, as applicable.

 

16.                                   Miscellaneous. This Agreement shall be
governed by and construed under the laws of the State of Georgia, without
consideration of its choice of law provisions, and shall not be amended,
modified or discharged in whole or in part except by an agreement in writing

 

11

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signed by both of the parties hereto. The failure of either of the parties to
require the performance of a term or obligation or to exercise any right under
this Agreement or the waiver of any breach hereunder shall not prevent
subsequent enforcement of such term or obligation or exercise of such right or
the enforcement at any time of any other right hereunder or be deemed a waiver
of any subsequent breach of the provision so breached, or of any other breach
hereunder. This Agreement shall inure to the benefit of, and be binding upon and
assignable to, successors of the Employer Parties by way of merger,
consolidation or sale and may not be assigned by the Executive. This Agreement
supersedes and terminates all prior understandings and agreements between the
parties (or their predecessors) relating to the subject matter hereof. For
purposes of this Agreement, the term “person” shall be construed broadly and
shall include an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental authority (or any department,
agency or political subdivision thereof); a “subsidiary” of a person means any
corporation more than 50 percent of whose outstanding voting securities, or any
partnership, joint venture or other entity more than 50 percent of whose total
equity interest, is directly or indirectly owned by such person; and an
“affiliate” of a person shall mean, with respect to a person or entity, any
person or entity which directly or indirectly controls, is controlled by, or is
under common control with such person or entity.

 

17.                                   Arbitration. Except with respect to
matters as to which injunctive relief may be sought pursuant to Section 11
hereof, all disputes relating to the Executive’s employment by the Company or
the Parent or pursuant to this Agreement shall be submitted to arbitration in
Atlanta, Georgia and shall be subject to the commercial arbitration rules of the
American Arbitration Association then in effect. Each of the Company, the Parent
and the Executive shall bear its or his own costs and expenses related to such
arbitration; provided, that, notwithstanding the foregoing, the Company shall
pay that portion of the Executive’s reasonable expenses relating to such dispute
equal to the percentage of claims, based on dollar amounts (out of the aggregate
of such claims adjudicated) (if at all) under which the Executive shall have
prevailed in the arbitration, as finally determined by the arbitrator, who shall
specifically be asked to render a decision on such point.

 

18.                                   Parachute Payment. Notwithstanding any
other provision of this Agreement or any other agreement, if the aggregate
payments and benefits payable to the Executive under this Agreement and under
any other plan, program, arrangement, or agreement of the Parent or an affiliate
would result in a “parachute payment” (within the meaning of Section 280G of the
Internal Revenue Code), then the payments and benefits under this Agreement, or
any other agreement, arrangement, program or plan will be reduced to the minimum
extent necessary to cause no such parachute payment to occur, but such reduction
will be made only if the aggregate payments and benefits as so reduced would
result in the Executive retaining a larger after-tax (taking into account all
income, employment and excise taxes applicable to the Executive) amount than if
no such reduction were made. If such reduction is to be made, the Executive
shall select which payments and benefits will be reduced.

 

*       *        *

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first set forth above.

 

 

COMPANY:

 

 

 

 

MEDQUEST, INC.

 

 

 

 

 

 

 

By:

/S/ C. Christian Winkle

 

 

 

Name:  C. Christian Winkle

 

 

Title:  Chief Executive Officer

 

 

 

 

 

 

 

PARENT:

 

 

 

 

MQ ASSOCIATES, INC.

 

 

 

 

 

 

 

By:

/S/ C. Christian Winkle

 

 

 

Name:  C. Christian Winkle

 

 

Title:  Chief Executive Officer

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/S/ Todd W. Latz

 

 

 

Todd W. Latz

 

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Schedule I

 

Restricted Territory

 

1.                                       Georgia

2.                                       North Carolina

3.                                       South Carolina

4.                                       Arizona

5.                                       Florida

6.                                       Missouri

7.                                       Alabama

8.                                       Tennessee

9.                                       Virginia

10.                                 Texas

11.                                 Wisconsin

12.                                 New Mexico

13.                                 Illinois

 

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Exhibit A

 

FORM OF GENERAL RELEASE

 

In consideration of the payments and benefits set forth in your Employment
Agreement dated as of                       , 2006 (as may be amended from time
to time, the “Employment Agreement”) with each of MQ ASSOCIATES, INC. and
MEDQUEST, INC. (collectively, the “Companies”), you voluntarily, knowingly and
willingly release and forever discharge the Companies, their subsidiaries,
affiliates and parents, together with each of those entities’ respective
officers, directors, shareholders, employees, agents, fiduciaries and
administrators (collectively, the “Releasees”) from any and all claims and
rights of any nature whatsoever that you now have or in the future may have
against them solely arising from, or relating to, your relationship with the
Companies. This release includes, but is not limited to, any rights or claims
relating in any way to your employment relationship with the Companies or any of
the other Releasees or the termination thereof, any contract claims (express or
implied, written or oral), or any rights or claims under any statute, including,
without limitation, the Americans with Disabilities Act, the Age Discrimination
in Employment Act, the Older Workers’ Benefit Protection Act, the Rehabilitation
Act of 1973 (including Section 504 thereof), the Family Medical Leave Act, Title
VII of the 1964 Civil Rights Act, the Civil Rights Act of 1866 (42 U.S.C.
§ 1981), the Civil Rights Act of 1991, the Equal Pay Act, the Fair Labor
Standards Act, the National Labor Relations Act, the Worker Adjustment and
Retraining Notification Act, the Employee Retirement Income Security Act of
1974, all as amended, Georgia state law and any other federal, state or local
law. This release specifically includes, but is not limited to, any claims based
upon the right to the payment of wages, bonuses, vacation, pension benefits,
401(k) plan benefits, stock benefits or any other employee benefits (unless
expressly provided to be payable after the date hereof pursuant to the
Employment Agreement), or any other rights arising under federal, state or local
laws prohibiting discrimination and/or harassment on the basis of race, color,
age, religion, sex, national origin, mental or physical disability, military
status, harassment or any other basis prohibited by law.

 

By signing and returning this General Release, you acknowledge that you:

 

(a)  have had at least twenty-one (21) days to review and consider its terms;

 

(b)  have carefully read and fully understand the terms of this General Release;

 

(c)  are entering into this General Release voluntarily and knowing that you are
releasing claims that you have or may have against the Company, including any
claims under the Age Discrimination in Employment Act;

 

(d) have had a reasonable opportunity to seek advice from an attorney of your
choosing prior to signing this General Release;

 

(e) release all claims that arise up to and including the date of execution of
this General Release in return for the consideration specified in the Employment
Agreement, to which you otherwise would not have been entitled; and

 

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(f) have been advised to consult an attorney before executing this General
Release.

 

You further represent that you have not filed against the Companies or any of
the other Releasees any complaints, charges or lawsuits with any governmental
agency or any court prior to the date of this General Release.

 

You understand that you may revoke this General Release in writing by so
notifying the General Counsel of MQ Associates, Inc., in writing, at
MedQuest, Inc., 4300 North Point Parkway, Alpharetta, GA 30022 (fax: (678)
992-7538) within seven (7) days of executing this General Release. You
understand that if you revoke this General Release you will not be entitled to
any benefits as set forth in Section 6.d of your Employment Agreement.

 

Read, Accepted and Agreed to:

 

 

 

 

Todd W. Latz

 

 

Dated:

 

 

 

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