EX-10.19



 





Exhibit 10.19



August 9, 2004




PERSONAL AND CONFIDENTIAL



Michael S. Madler

9 Santa Isabel

Rancho Santa Margarita, CA 92688




     Re: Resignation Agreement and Mutual General Release



Dear Mike:



     This Letter Agreement (“Agreement”) sets forth the terms and conditions of
your resignation from InSight Health Services Corp. (“InSight” or “Company”)
effective today, August 9, 2004. InSight appreciates your service to the
Company and wishes you the best in your future endeavors. InSight will pay your
earned wages, thirty (30) days wages in lieu of notice and any unused accrued
vacation through today, regardless of whether you sign this Agreement.



     In consideration of the mutual covenants and promises made in this
Agreement, you and InSight agree as follows:



     Resignation. You acknowledge that, effective August 9, 2004, you
voluntarily resigned from your employment, and any and all positions you held
with InSight, and any of its respective subsidiary or affiliated entities
(collectively the “InSight Companies”), and as of that date you relinquished
any and all of your authorities with each of those companies. A press release
in the form of Exhibit A has been issued with your consent by the Company.



     Separation Payments. In addition to payment for your earned salary
through August 9, 2004, thirty (30) days pay in lieu of notice and payment for
any unused accrued vacation, and in consideration for your signing this
Agreement, InSight agrees that, beginning on the Company’s first regular payday
after the Effective Date of this Agreement, it will pay you an amount equal to
your current regular monthly base salary, less applicable taxes and
withholdings, on a regular payroll basis, for a period of twelve (12) months
(“Separation Payments”). The Separation Payments will be sent to your home
address as set forth above on this Agreement.



     InSight 401(K) Plan Match. As further consideration for signing this
Agreement, the Company will make a discretionary match to the InSight 401(K)
Plan for the fiscal year ending June 30, 2004 and if permitted by the Plan,
InSight agrees that it will contribute an applicable match to your account.



     Compliance with Stock Option Agreements. In accordance with the Stock
Option Agreement (i) entered into by you and InSight Health Services Holdings
Corp. (“IHSHC”), on June 29, 2001 (the “June 29th Stock Option Agreement”), and
(ii) entered into by you and IHSHC, dated October 17, 2001 (the “October 17th
Stock Option Agreement” and together with



 









 





Mr. Michael S. Madler

August 9, 2004

Page 2


the June 29th Stock Option Agreement, the “Stock Option Agreements”), you
agree to comply in full with their terms. Additionally, you agree to comply
with the terms of the Third Amended and Restated Stockholders Agreement, dated
October 10, 2002, by and among IHSHC and the stockholders of IHSHC signatory
thereto (the “Stockholders Agreement” and with the Stock Option Agreements are
collectively referred to herein as the “Stock Agreements”).




     Benefits. As additional consideration for this Agreement, the Company
agrees to continue the employee benefits specified in this provision until the
first of the following occurs: (a) expiration of the twelve (12) month period
following the date of your resignation; or (b) until you are eligible for
employment benefits as the result of full-time employment with another
employer. The benefits you will receive during the applicable period are life
insurance, medical, health and accident (including ExecuCare), and disability
plans or programs covering you and any dependents under the same terms and
conditions as if you had not resigned, including any required co-payments. The
Company’s agreement to provide these benefits during the applicable period is
contingent upon your participation being permissible under the general terms
and provisions of such plans and programs and contingent upon the Company’s
right to amend or terminate any employee benefit plans which are applicable
generally to the Company’s employees. In the event of either of these
contingencies, you will cease to receive these benefits effective the date of
the occurrence of the contingency. However, in such an event, the Company
agrees to arrange to provide you with benefits substantially similar to those
you were receiving at the time of your resignation for the applicable period or
its remainder.



     Outplacement Services. As additional consideration for signing this
Agreement, the Company agrees to provide you with outplacement counseling
services through a firm selected by the Company for a period of three (3)
months. If you are not employed by the end of the three (3) month period, the
Company will provide you with a further three (3) months of outplacement
counseling services. Your outplacement counseling benefits and limitations
will be explained in a separate document.



     Release by Madler. In consideration of this Agreement, you hereby
irrevocably and unconditionally release, waive and forever discharge the
Company, its direct and indirect parents (including IHSHC), subsidiaries and
affiliates, affiliated persons, partnerships and corporations, successors and
assigns, and all of their past and present directors, members, partners,
contractors, distributors, officers, shareholders, consultants, agents,
representatives, attorneys, employees, employee benefit plans and plan
fiduciaries (collectively, the “Company Releasees”), individually and
collectively, from any and all actions, causes of action, claims, demands,
damages, rights, remedies and liabilities of whatsoever kind or character, in
law or equity, suspected or unsuspected, known or unknown, past or present,
that you have ever had, may now have, or may later assert against any of the
Company Releasees, concerning, arising out of or related to your employment by
or the performance of any services to or on behalf of any of the InSight
Companies or the termination of that employment, those services and your
positions with the InSight Companies, from the beginning of time to the
Effective Date (hereinafter referred to as “Executive’s Claims”), including
without limitation: (i) any claims arising out of or related to any federal,
state and/or local labor or civil rights laws, as amended, including, without
limitation, the federal Civil Rights Acts of 1866, 1871, 1964 and 1991
(including but not limited to Title VII), the Age Discrimination in Employment
Act of 1967, the National Labor Relations



 









 





Mr. Michael S. Madler

August 9, 2004

Page 3


Act, the Workers’ Adjustment and Retraining Notification Act, the Employee
Retirement Income Security Act of 1974, the Family and Medical Leave Act of
1993, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act
of 1938, the California Fair Employment and Housing Act, the California
Industrial Welfare Commission Wage Orders, and the California Labor Code and
(ii) any and all other of Executive’s Claims arising out of or related to any
contract, any and all other federal, state or local constitutions, statutes,
rules or regulations, or under the laws of any country or political
subdivision, or under any common law right of any kind whatsoever.
Notwithstanding the foregoing, this Agreement shall not affect any of your
rights or obligations under (A) the Stock Agreements, (B) the InSight 401k
Plan, (C) the Amended and Restated Indemnification Agreement executed by you
and the Company effective October 17, 2001 (“Indemnification Agreement”), (D)
the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), or (E) the terms
of this Agreement.




     You hereby waive and relinquish all rights and benefits afforded by
California Civil Code Section 1542. You understand and acknowledge the
significance and consequences of this specific waiver of Section 1542.
California Civil Code section 1542 states as follows:



A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known to him must have materially affected his
settlement with the debtor.



     To the fullest extent permitted by law, you represent, warrant and agree
not to lodge or assist anyone else in lodging any formal or informal complaint
in court, with any federal, state or local agency or any other forum, in any
jurisdiction, arising out of or related to Executive’s Claim. You hereby
represent and warrant that you have not brought any complaint, claim, charge,
action or proceeding against any of the Company Releasees in any jurisdiction
or forum, nor assisted or encouraged any other person or persons in doing so.
You further represent and warrant that you have not in the past and will not in
the future assign any of Executive’s Claims to any person, corporation or other
entity.



     Your execution of this Agreement operates as a complete bar and defense
against any and all of Executive’s Claims against the Company and each of the
other Company Releasees. If you should hereafter make any of Executive’s
Claims in any charge, complaint, action, claim or proceeding against the
Company or any of the other Company Releasees, this Agreement may be raised as,
and shall constitute a complete bar to, any such charge, complaint, action,
claim or proceeding.



     Release by the Company. In consideration of this Agreement, the Company
on behalf of itself, its parent and subsidiary corporations (“Company
Releasors”) hereby irrevocably and unconditionally releases, waives and forever
discharges Madler, his spouse, family members, and heirs, (the “Madler
Releasees”) individually and collectively, from any and all actions, causes of
action, claims, demands, damages, rights, remedies and liabilities of
whatsoever kind or character, in law or equity, suspected or unsuspected, past
or present, that they have ever had, may now have, or may later assert against
the Madler Releasees, whether or not arising out of or related to Madler’s
employment by or the performance of any services to or on behalf of the



 









 





Mr. Michael S. Madler

August 9, 2004

Page 4


Company or the termination of that employment and those services, from the
beginning of time to the Effective Date (hereinafter referred to as “Company’s
Claims”), including without limitation, any and all other of Company’s Claims
arising out of or related to any contract, any and all federal, state or local
constitutions, statutes, rules or regulations, or under the laws of any country
or political subdivision, or under any common law right of any kind whatsoever,
including, without limitation, any of Company’s Claims for any kind of tortious
conduct, promissory or equitable estoppel, breach of the Company’s policies,
rules, regulations, handbooks or manuals, breach of express or implied contract
or covenants of good faith, breach of duty of loyalty or fiduciary duty.
Notwithstanding the foregoing, this Agreement shall not affect any of the
Company’s rights or obligations under (A) the Stock Agreements, (B) the InSight
401k Plan, (C) the Indemnification Agreement, (D) the Consolidated Omnibus
Budget Reconciliation Act (“COBRA”), or (E) the terms of this Agreement.




     Further, notwithstanding the foregoing, the Company’s Claims which are
being released herein shall not include any claims or causes of action that the
Company Releasors may have against Madler which as of the Effective Date, which
may arise from or be related to any acts or omissions undertaken by Madler, or
undertaken at his express direction, which constitute fraud, theft or
embezzlement against the Company, or any act that constitutes a felony under
the laws of the United States or any state.



     To the fullest extent permitted by law, the Company agrees not to lodge or
assist anyone else in lodging any formal or informal complaint in court, with
any federal, state or local agency or any other forum, in any jurisdiction,
against Madler or any of the other Madler Releasees arising out of or related
to Company’s Claims. The Company hereby represents and warrants that it has
not brought any complaint, claim, charge, action or proceeding against any of
the Madler Releasees in any jurisdiction or forum, nor assisted or encouraged
any other person or persons in doing so. The Company further represents and
warrants that it has not in the past and will not in the future assign any of
Company’s Claims to any person, corporation or other entity.



     Execution of this Agreement by the Company operates as a complete bar and
defense against any and all of Company’s Claims against Madler or any of the
other Madler Releasees. If the Company should hereafter make any of Company’s
Claims in any charge, complaint, action, claim or proceeding against Madler or
any of the other Madler Releasees, this Agreement may be raised as and shall
constitute a complete bar to any such charge, complaint, action, claim or
proceeding and Madler and/or the other Madler Releasees shall be entitled to
and shall recover from the Company all costs incurred, including reasonable
attorneys’ fees, in defending against any such charge, complaint, action, claim
or proceeding.



     Continuing Obligations to Company. You understand and agree that you have
continuing obligations to the Company under Section V of the Executive
Employment Agreement executed by you and effective on June 29, 2001 (“Section
V”). You further understand and agree that should you breach any provisions
thereunder, the Company has the right to terminate any and all of its
obligations under this Agreement effective immediately. This right is in
addition to any other rights or remedies to which the Company is entitled for
your breach of Section V. A copy of Section V is attached hereto as Exhibit B
for your ease of reference. Notwithstanding your obligations under Section V,
the Company agrees that you may become employed by Newport



 









 





Mr. Michael S. Madler

August 9, 2004

Page 5


Radiology Group (“NRG”) in a chief financial officer/ chief operation
officer type function, provided that prior to August 9, 2005, you have no (i)
active involvement in NRG’s existing imaging center business or (ii) any direct
or active involvement in any expansion of NRG’s existing imaging business
beyond the single imaging center in which NRG currently owns an interest. In
connection with this section, you represent that you are presently unaware of
any plans by NRG to expand its imaging center business beyond its current
scope.




     Cooperation. After your resignation, you may be asked questions by the
Company, its accountants, financial advisors or attorneys relating to your
former duties, to which you agree to respond in a reasonably timely and
responsible manner by providing such information as may be within in your
knowledge.



     Return of InSight Property; Expenses. As set forth in Section V, you
agree to immediately return all Company property and equipment in your
possession or under your control. You should immediately submit to InSight all
outstanding business expenses incurred on or before August 9, 2004, for
reconciliation and payment in accordance with the Company’s policies.



     Legal Representation. You and InSight each acknowledge that you have had
the opportunity to receive the advice of independent legal counsel prior to the
execution of this Agreement and the opportunity to receive an explanation from
legal counsel of the legal nature and effect of this Agreement, and you have
fully exercised that opportunity to the extent desired and you understand the
terms and provisions of this Agreement and its nature and effect. You further
represent that you are entering into this Agreement freely and voluntarily.



     No Admission of Liability. Nothing contained in this Agreement or the
fact that InSight has signed this Agreement shall be considered as admission of
any liability whatsoever by InSight. This Agreement may not be introduced in
any action or proceeding by anyone for any purpose except to evidence or to
enforce its terms.



     Confidentiality. As a material inducement to InSight to enter into this
Agreement and as an indivisible part of the consideration to be received for
entering into this Agreement and for the performance of obligations under this
Agreement by each party to this Agreement, you agree that you will not
disclose, disseminate, and/or publicize or cause or permit to be disclosed,
disseminated, and/or publicized, any of the specific terms of this Agreement,
any claims or allegations or the basis for any claims or allegations, which
were or could have been made against InSight and its divisions, affiliates,
parents (including IHSHC), subsidiaries, predecessor and successor
corporations, and the past and present directors, officers, management
committees, shareholders, agents, servants, employees, representatives,
administrators, partners, general partners, managing partners, limited
partners, benefit plan fiduciaries and administrators, assigns, heirs,
successors or predecessors in interest, adjustors, insurers, and attorneys,
which concern and are within the scope of this Agreement, directly or
indirectly, specifically or generally, to any person, corporation, association,
governmental agency, or other entity except: (a) to the extent necessary to
report income to appropriate taxing authorities; (b) in response to an order of
a court of competent jurisdiction or a subpoena issued under authority thereof;
(c) in response to



 









 





Mr. Michael S. Madler

August 9, 2004

Page 6


any subpoena issued by a state or federal governmental agency; or (d) as
otherwise required by law.




     No Future Employment. You agree not to apply for a position as an
employee, consultant, vendor, or other position with the Company or with any of
the other Company Releasees.



     Non Disparagement. As a material inducement to InSight to enter into this
Agreement, you agree that you will not make any negative or disparaging
comments about InSight or IHSHC. InSight agrees that its senior management and
Board of Directors will not make any negative or disparaging comments about
you.



     Recommendation to Potential Employers. You may refer potential employers
with whom you are seeking employment to contact Michael Cannizzaro, who will
provide a positive recommendation for future employment. Further, Mr.
Cannizzaro and/or the Company’s Vice President, Human Resources, will at your
request, provide potential employers with information regarding the dates of
your employment with the Company, your last position with the Company, and your
ending compensation.



     Other Agreements. Except for (i) Section V (as defined above), (ii) the
Stock Agreements (as defined above), (iii) the InSight 401k Plan, and the (iv)
Indemnification Agreement, the terms of this Agreement supercede any and all
other agreements, understandings, negotiations, or discussions, either oral or
in writing, express or implied, among you and the Company and IHSHC. For
avoidance of doubt, this Agreement shall have no affect on the 10 year Term of
the 24,000 “Rollover Options” granted to you pursuant to the June 29th Stock
Option Agreement, which unless terminated earlier pursuant to the terms of that
agreement or the Insight Health Services Holdings Corp. 2001 Stock Option Plan,
shall expire on October 17, 2011.



     Entire Agreement. This Agreement constitutes the full, complete, and
exclusive agreement between you and InSight with respect to the subject matter
discussed herein. This Agreement cannot be changed unless in writing, signed
by you, InSight, and IHSHC.



     Waiver. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar. No waiver shall constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party charged with the waiver.



     Severability. In the event any provision of this Agreement shall be
determined to be unlawful, such provision shall be deemed to be severed from
this Agreement and every other provision of this Agreement shall remain in full
force and effect.



     Governing Law. This Agreement is made and entered into in the State of
California, and shall in all respects be interpreted, enforced, and governed
under the laws of said state.



     Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof, will be submitted to final
and binding arbitration in Orange



 









 





Mr. Michael S. Madler

August 9, 2004

Page 7


County, California, before a mutually agreed upon arbitrator from Judicial
Arbitration and Mediation Services (JAMS), as the exclusive remedy for such
controversy or dispute. Judgment upon any award rendered by the arbitrator may
be entered in the Superior Court of the County of Orange, State of California,
which will have exclusive jurisdiction thereof. The prevailing party in any
proceeding brought to enforce the terms of this Agreement will be entitled to
recover from the other party all damages, costs and expenses, including without
limitation, attorneys’ and arbitrators’ fees, incurred as a result of such
action. In agreeing to this arbitration, you understand and agree that you are
waiving the right to a jury trial as to any issue(s) subject to this Agreement.
The decision of the arbitrator will be bound by generally accepted legal
principles, including but not limited to all rules of law and legal principles
concerning potential liability, burdens of proof, and measure of damages found
in all applicable California statutes and administrative rules and codes, and
all California case law. The parties agree that this provision does not limit
their right to seek injunctive relief in the threat of imminent and irreparable
harm as a result of breach of this Agreement.




     Consideration Period. You have twenty-one (21) days from receipt to
consider this Agreement. InSight hereby advises you to consult with an
attorney before signing this Agreement.



     Revocation Period. For a period of seven (7) days following the signing
of this Agreement, you may revoke this Agreement. This Agreement does not
become effective or enforceable until the revocation period has expired without
you exercising your option to revoke (“Effective Date”).



     Please acknowledge your understanding and acceptance of this Agreement by
signing this Agreement below and returning it to me no later than 5:00 p.m. on
August 31, 2004.


	 	 	 	 	 
	 	Sincerely,

 	 
	 	/s/ Michael N. Cannizzaro
 	 
	 	Michael N. Cannizzaro 	 
	 	Chairman of the Board

InSight Health Services Corp. and

InSight Health Services Holdings Corp. 	 
	 




Enclosures



ACKNOWLEDGED AND AGREED:


	 	 	 	 	 
	 	 	 
	Dated:            September 16, 2004. 	/s/ Michael Madler
 	 
	 	Michael S. Madler 	 
	 	 	 
	 




 









 





Mr. Michael S. Madler

August 9, 2004

Page 8


	 	 	 	 	 
	 	 	 
	Dated:            9/21, 2004.  	/s/ Michael N. Cannizzaro
 	 
	 	Michael N. Cannizzaro 	 
	 	Chairman of the Board

InSight Health Services Corp. and

InSight Health Services Holdings Corp.