Exhibit 10.20


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


EXECUTIVE
EMPLOYMENT AGREEMENT dated as of October 27, 2008 between InSight Health
Services Corp., a Delaware corporation (“Company”), and Steven M. King (“Executive”).
Company is a wholly owned subsidiary of InSight Health Services Holdings Corp.,
a Delaware corporation (“Parent”).


 


Company
wishes to employ Executive, and Executive wishes to accept such employment, in
each case subject to the terms and conditions hereof. Accordingly, Company and
Executive hereby agree as follows:


 


I.              TERM


 


Commencing as of the
first date of Executive’s employment with Company, Executive is to be employed
by Company for rolling twelve (12) month periods, whereby Executive’s term of
employment is twelve (12) months on a continuing basis, unless earlier
terminated in accordance with Article IV below.


 


II.            EMPLOYMENT


 


SECTION 2.01
 Employment by Company. Company
employs Executive to render full time services as Executive Vice President,
Sales and Marketing to Parent, Company, and its subsidiaries (“InSight
Companies”) and in such other capacities as the Company’s President and Chief
Executive Officer (“CEO”) may assign and, in connection therewith, to report to
the CEO and perform such duties as are reasonably consistent with Executive’s
position and as the CEO shall direct. Executive agrees to perform such duties
as are reasonably consistent with the duties normally pertaining to the office
to which Executive has been elected or appointed, subject always to the
direction of the CEO. Subject to Section 5.01 hereof, Executive’s
expenditure of reasonable amounts of time for personal business, charitable or
professional activities will not be deemed a breach of Executive’s undertaking
to provide full time services hereunder, provided that such activities do not
interfere materially with Executive’s rendering of such services.


 


SECTION 2.02  Acceptance of Employment
by Executive. Executive accepts such employment and shall render
the services required by this Agreement to be rendered by Executive. Executive
shall also serve on request during all or any part of the term of this
Agreement as an officer or director of any of the InSight Companies or
affiliates without any compensation therefor other than as specified in this
Agreement.


 


SECTION 2.03  Place of Employment.
Executive’s principal place of employment shall be located at 26250
Enterprise Court, Suite 100, Lake Forest, California 92630. In the event
that the principal place of employment of Executive is relocated to a site that
is more than 50 miles from Executive’s principal residence, subject to Section 4.05(a) hereof,
Company may require Executive to relocate Executive’s principal residence to
within 50 miles of such site. Notwithstanding the foregoing, Executive
acknowledges that the duties to be performed by Executive hereunder are such
that Executive may be required to travel extensively, principally within the
United States, in connection with Company Business (as defined below).


 


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III.           COMPENSATION


 


SECTION 3.01  Salary, Bonuses, Life
Insurance. As compensation for the services to be rendered
pursuant to this Agreement, Company shall pay Executive, and Executive shall
accept, a salary of $255,000 per annum (“Annual Salary”), payable in accordance
with the payroll policies of Company for senior executives as from time to time
in effect, less such amounts as may be required to be withheld by applicable
federal, state and local law and regulations (“Payroll Policies”).


 


In
addition to the Annual Salary, Executive shall be eligible to receive an annual
bonus in accordance with any executive incentive compensation plan for the
then-current fiscal year (“Bonus”), 80% of which Bonus shall be based upon
Parent achieving the target financial goals or other goals approved by the
Board of Directors of Parent (“Parent Board”) 
for the then-current fiscal year (“Target Goals”) and 20% of which the
Bonus shall be based on the achievement of certain personal management
objectives established over the course of each fiscal year and approved by the
CEO. The Target Goals shall be set forth in a budget prepared by the CEO and
Company management and approved by the Parent Board and shall as applicable, be
set at the plan level applicable to the other executive officers of Company,
and in accordance with any executive incentive compensation plan for the
then-current fiscal year. The Bonus is payable, if earned, promptly following
the completion of Parent’s year-end audit for such year and delivery of a certification
by the CEO to the Parent Board, certifying the results for the year and the
calculation of any Bonus so payable.


 


Company
shall purchase and maintain in full force and effect at all times during the
term of this Agreement a policy of term insurance on the life of Executive
payable to such beneficiary or beneficiaries as Executive may designate in an
amount equal to three (3) times the amount of the Annual Salary; provided
Executive shall comply with the issuing insurance company’s requirements for
issuance of the policy.


 


SECTION 3.02  Performance Review.
Executive’s performance shall be reviewed and evaluated by the CEO annually
during the term of this Agreement.


 


SECTION 3.03  Participation in Employee
Benefit Plans. Executive shall be entitled during the term of
this Agreement, if and to the extent eligible, to participate in any life
insurance, medical, health and accident and disability plan or program, pension
plan or similar benefit plan of Company, which may be available to senior
executives of Company generally, on the same terms as such other executives.


 


SECTION 3.04  Business Expenses. Subject
to such policies as may from time to time be established by Company for senior
executives of Company generally, Company shall pay or reimburse Executive for
all reasonable business expenses actually incurred or paid by Executive during
the term of this Agreement in the performance by Executive of services under
this Agreement, upon presentation of expense statements or vouchers or such
other supporting information as Company may reasonably require.


 


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SECTION 3.05  Automobile Allowance.
Company shall pay Executive an automobile allowance of $750 per month and
shall reimburse Executive for all expenses of operating such automobile
consisting of gas, insurance, registration, in an amount and in accordance with
and subject to such policies as may from time to time be established and
amended by the Parent Board.


 


SECTION 3.06  Vacation. Executive
shall be entitled to three (3) weeks of paid vacation each year during the
term of this Agreement, which shall be taken at a time or times which do not
unreasonable interfere with Executive’s duties hereunder and in accordance with
Company policy. Executive may not accumulate any unused vacation in excess of
six (6) weeks at any one time.


 


SECTION 3.07  Equity Award. Executive
shall be entitled to participate in Parent’s 2008 Employee Stock Option Plan (“Option
Plan”) on the terms and conditions that are applicable to the other senior
officers of Company. The Parent Board currently expects to award Executive
nonstatutory stock options to acquire 70,000 shares of Parent common stock (“Options”),
although there is no present commitment to do so. The Options will be subject
to performance-based vesting, which will occur upon a successful refinancing
(as defined in the stock option grant agreement) of the currently outstanding
$312,500,000 Senior Floating Rate Notes. The successful refinancing will
include among other items, the absence of any dilution to the then-existing
holders of outstanding Parent common stock. The exercise price of the Options
will be set on the date of actual grant in accordance with the Option Plan.


 


IV.           TERMINATION


 


SECTION 4.01  Termination upon Death.
If Executive dies during the term of this Agreement, this Agreement shall
terminate as of the date of Executive’s death.


 


SECTION 4.02
 Termination upon Disability. Executive’s
employment may be terminated by Company due to Executive’s permanent and total
disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended) (“Code”) (“Disability”), so that Executive is
unable substantially to perform Executive’s services required by this Agreement
to be rendered by Executive for (i) a period of three (3) consecutive
months or (ii) for shorter periods aggregating three (3) months
during any twelve (12) month period. Company may, at any time after the last
day of the three (3) consecutive months of Disability or the day on which
the shorter periods of Disability equal an aggregate of three (3) months,
by 30 days’ written notice to Executive, terminate this Agreement and Executive’s
employment hereunder. Any such determination of Disability shall be made by a
physician chosen by a majority of the members of the Parent Board in its sole
and unfettered discretion. Nothing in this Section 4.02 shall be deemed to
extend the term of this Agreement or of Executive’s employment hereunder,
beyond the term specified in Article I hereof.


 


SECTION 4.03  Termination for Cause.
If the Parent Board decides that Cause (as defined below) exists, it may
remove Executive for Cause and terminate this Agreement and the term of
Executive’s employment hereunder on the date specified in written notice to
Executive. If terminated for Cause, Executive shall have no right to receive
any monetary compensation or benefit hereunder with respect to any period after
the date specified in such notice. Such notice may also terminate Executive’s
right to enter Company’s premises. For purposes of this Agreement, the term “Cause”
means any of the following:


 


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(a)           Executive
has been convicted or pled guilty or no contest to any crime or offense (other
than any crime or offense relating to the operation of a motor vehicle) which
is likely to have a material adverse impact on the business operations or
financial condition of Company, or any felony offense;


 


(b)           Executive
has committed fraud or embezzlement;


 


(c)           Executive
has breached any of Executive’s obligations under this Agreement and Executive
has failed to cure the breach within 30 business days following receipt of
written notice of such breach from Company;


 


(d)           Company,
after reasonable investigation, finds that Executive has violated material
written policies and procedures of Company, including but not necessarily
limited to, policies and procedures pertaining to harassment and
discrimination;


 


(e)           Executive
has failed to obey a specific written direction from the Parent Board (unless
such specific written instruction represents an illegal act), provided that (i) such
failure continues for a period of 30 business days after receipt of such
specific written direction, and (ii) such specific written direction includes
a statement that the failure to comply therewith will be a basis for
termination hereunder; or


 


(f)            any willful act or willful omission on Executive’s part which
is materially injurious to the financial condition or business reputation of
the InSight Companies.


 


SECTION 4.04  Termination in Discretion
of Company. Company may, at any time thereafter by 30 days’
written notice to Executive, terminate this Agreement and the term of Executive’s
employment hereunder, and Executive thereafter shall have only such rights to
receive monetary compensation or benefits hereunder in respect of any period
after the effective date of termination as are provided in Section 4.07
hereof. Such notice may also terminate Executive’s right to enter Company’s
premises.


 


SECTION 4.05  Voluntary Termination for
Good Reason. During the period commencing upon the occurrence of
Good Reason (as defined below) and continuing for 30 days thereafter, Executive
shall have the right to terminate Executive’s employment for Good Reason (as
defined below), whereupon Executive shall become entitled to receive
compensation as provided in Section 4.07 hereof. Termination by the
Executive pursuant to the preceding sentence shall be effective upon 30 days
written notice to Company. For purposes of this Agreement, “Good Reason” means
any of the following:


 


(a)           the
movement by Company, without Executive’s consent, of Executive’s principal
place of employment to a site that is more than 80 miles from Executive’s
principal residence;


 


(b)           a
reduction by Company, without Executive’s consent, in Executive’s Annual
Salary, bonus opportunity, duties and responsibilities, and title, as they may
exist from time to time; or


 


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(c)           a
failure by Company to comply with any material provisions of this Agreement
which has not been cured within 30 days after notice of such noncompliance has
been given by Executive to Company, or if such failure is not capable of being
cured in such time, for which a cure shall not have been diligently initiated
by Company within the 30 day period.


 


SECTION 4.06  Voluntary Termination
Without Good Reason. Executive shall have the right to terminate
this Agreement upon 30 days’ written notice to Company and, upon such
termination, Executive shall not have the right to receive any monetary
compensation or benefit hereunder with respect to any period after the date
specified in such notice.


 


SECTION 4.07  Compensation on
Termination.


 


(a)           If
the term of Executive’s employment hereunder is terminated pursuant to Section 4.01
hereof, Company shall pay to the executors or administrators of Executive’s
estate or Executive’s heirs or legatees (as the case may be) all compensation
accrued and unpaid up to the date of Executive’s death.


 


(b)           If
the term of Executive’s employment hereunder is terminated pursuant to Section 4.02,
4.04, 4.05, or 4.07(c) hereof, Company shall (i) pay to Executive all
compensation accrued and unpaid up to the effective date of termination; (ii) pay
to Executive additional compensation in an amount equal to twelve (12) months
of compensation at the Annual Salary rate then in effect, payable in accordance
with the Payroll Policies as in effect at the time of termination; and (iii) maintain,
at Company’s expense, in full force and effect, for Executive’s continued
benefit until the earlier of (x) twelve (12) months after the effective
date of termination or (y) commencement of Executive’s benefits pursuant
to full time employment with a new employer under such employer’s standard
benefits program, all life insurance, medical, health and accident, and
disability plans or programs, in which Executive was entitled to participate
immediately prior to the effective date of termination; provided, that
Executive’s continued participation is permissible under the general terms and
provisions of such plans or programs and provided further, that Company shall
be entitled to amend or terminate any employee benefit plans which are
applicable generally to Company’s employees. In the event that Executive’s
participation in any such plan or program is prohibited, Company shall arrange
to provide Executive with benefits substantially similar to those which
Executive was entitled to receive under such plans or programs; provided
further, that any such payments shall only be payable upon the execution of the
release described in Section 4.07(e) and shall commence at such time
as determined in accordance with such Section 4.07(e). Any amounts paid by
Company to Executive under (i) and (ii) above may be reduced, in the
case of termination pursuant to Section 4.02, by the amount which
Executive is entitled to receive under the terms of Company’s long-term
disability insurance policy for senior executives as and if in effect at the
effective date of termination. Any payments made pursuant to this Section 4.07
shall be reduced by such amounts as are required by law to be withheld or
deducted.


 


(c)           Notwithstanding any provision herein to the contrary, if
Executive is terminated by Company without Cause, or Executive terminates
Executive’s employment for Good Reason, within twelve (12) months of a Change
in Control (as defined herein) which occurs after the date hereof, Executive
shall be entitled to the payments and benefits set forth in Section 4.07(b).
For purposes hereof, a “Change in Control” shall be deemed to have occurred if (i) any
person, or any two or more 


 


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persons
acting as a group, and all affiliates of such person or persons (a “Group”),
who prior to such time beneficially owned less than 50% of the then outstanding
capital stock of Company or Parent, shall acquire shares of Company’s or Parent’s
capital stock in one or more transactions or series of transactions, including
by merger, and after such transaction or transactions such person or group and
affiliates beneficially own 50% or more of Company’s or Parent’s outstanding
capital stock, or (ii) Company or Parent shall sell all or substantially
all of its assets to any Group which, immediately prior to the time of such
transaction, beneficially owned less than 50% of the then outstanding capital
stock of Company or Parent.


 


(d)           The
compensation rights provided for Executive in this Section 4.07 shall be
Executive’s sole and exclusive remedies with respect to Section 4.01,
4.02, 4.04, 4.05, or 4.07(c) hereof, and Executive, the executors or
administrators of Executive’s estate or Executive’s heirs or legatees (as the
case may be) shall not be entitled to any other compensation, damages or relief
in connection therewith.


 


(e)           Executive
shall forfeit all rights to such payments and benefits provided in this Section 4.07
unless a release substantially in the form of Exhibit A attached hereto is
signed and delivered (and no longer subject to revocation, if applicable)
within 30 days following the date of Executive’s termination of employment. The cash payments that are contingent upon
the execution of a release consistent with the foregoing sentence shall be paid
on the thirtieth day following Employee’s termination of employment, and the
first payment in respect thereof shall include payment of all amounts that
otherwise would have been due prior thereto had the foregoing release
requirement not been imposed.


 


Notwithstanding
any other payment schedule provided herein to the contrary, if Executive is
deemed on the date of termination to be a “specified employee” within the
meaning of that term under Code Section 409A(a)(2)(B), then each of the
following shall apply:


 


(i) With
regard to any payment that is considered deferred compensation under Code Section 409A
payable on account of a “separation from service,” such payment shall be made
on the date which is the earlier of (A) the expiration of the six
(6)-month period measured from the date of such “separation from service” of
Executive, and (B) the date of Executive’s death (the “Delay Period”) to
the extent required under Code Section 409A. Upon the expiration of the
Delay Period, all payments delayed pursuant to this Section (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid to Executive in a lump sum, and all
remaining payments due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein; and


 


(ii) To
the extent that any benefit to be provided during the Delay Period are
considered deferred compensation under Code Section 409A payable on
account of a “separation from service,” and such benefits are not otherwise exempt
from Code Section 409A, Executive shall pay the cost of such benefits
during the Delay Period, and Company shall reimburse Executive, to the extent
that such costs would otherwise have been paid by Company or to the extent that
such benefits would otherwise have been provided by Company at no cost to
Executive, Company’s share of the cost of such benefits upon expiration of the
Delay Period, and any remaining benefits shall be reimbursed or provided by
Company in accordance with the procedures specified herein.


 


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V.            CERTAIN COVENANTS OF EXECUTIVE


 


SECTION 5.01  Covenants Against Unfair
Competition.


 


(a)           Acknowledgments. Executive
acknowledges that, as of the date hereof (i) the principal business of the
InSight Companies and affiliates is the provision of diagnostic imaging,
treatment and related management services through a network of mobile magnetic
resonance imaging (“MRI”) Computed Tomography (“CT”), positron emission
tomography (“PET”) and PET/CT facilities, fixed-site MRI and PET and PET/CT
facilities and multi-modality centers, at times, together with other healthcare
providers, utilizing the related equipment and computer programs and “software”
and various corporate investment structures (“Company Business”); (ii) Company
Business is primarily national in scope; (iii) the industry is highly
competitive; and (iv) Executive’s duties hereunder will cause Executive to
have access to and be entrusted with various trade secrets not readily
available to the public or competitors, consisting of business accounts, lists
of customers and other business contacts, information concerning Company’s
relationships with actual or potential clients or customers and the needs or
requirements of such clients or customers, budgets, business and financial
plans, employee lists, financial information, artwork, designs, graphics,
marketing plans and techniques, business strategy and development, know-how or
other matters connected with Company Business, computer software programs and
specifications (some of which may be developed in part by Executive under this
Agreement), which items are owned exclusively by Company and used in the
operation of Company Business (“Trade Secrets”). Notwithstanding the foregoing,
the parties agree that the term “Trade Secrets” shall not include information
which (i) is or becomes generally available to the public, without
violation of any obligation of confidentiality by Executive, (ii) is or
becomes available from a third party on a nonconfidential basis, provided that
such third party is not bound by a confidentiality agreement with any of the
InSight Companies concerning the Trade Secrets and (iii) is or has been
independently acquired or developed by Executive without violating the
provisions of this Section.


 


Executive
further acknowledges that the Trade Secrets will be disclosed to Executive or
obtained by Executive and received in confidence and trust for the sole purpose
of using the same for the sole benefit of Company Business. Executive also
acknowledges that such Trade Secrets are valuable to Company, of a unique and
special nature, and important to Company in competing in the marketplace.


 


During
and after the term of this Agreement (otherwise than in the performance of this
Agreement), without Company’s prior written consent, Executive shall not
divulge or use all or any of the Trade Secrets to or for any person or entity
except (i) for the benefit of Company and as necessary to perform
Executive’s services under this Agreement; and (ii) when required by law,
and then only after consultation with Company or unless such information is in
the public domain. In the event that Executive, becomes or is legally compelled
(whether by deposition, interrogatories, request for documents, subpoena, civil
investigative demand or similar process) to disclose any Trade Secrets,
Executive shall provide Company with prompt, prior written notice of such
requirement so that Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Section. Executive
agrees that Executive’s obligations under this Section 5.01 shall be
absolute and unconditional.


 


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(b)           Breach. Executive
understands and agrees that Executive’s employment with Company may be
terminated if Executive materially breaches Section 5.01 of this Agreement
or in any way divulges such Trade Secrets. Executive further understands and
agrees that Company may be irreparably harmed by any violation or threatened
violation of Section 5.01 of this Agreement and, therefore, Company may be
entitled to injunctive relief to enforce any of the provisions contained in Section 5.01.


 


(c)           Non-Compete. During
the period of Executive’s employment, Executive will not directly or indirectly
either as an employee, employer, consultant, agent, principal, partner,
stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any activity or business
which Company shall determine in good faith to be in competition in any
substantial way with Company Business within any metropolitan area in the
United States or elsewhere in which Company is then engaged in Company Business.
The parties acknowledge that in California and some states post-employment
non-compete clauses may be generally unenforceable, but that other states and
jurisdictions permit such agreements. Executive hereby agrees that Executive
will not directly or indirectly, either as an employee, employer, consultant,
agent, principal, partner, stockholder, corporate officer, director, or in any
other individual or representative capacity, engage or participate in any
activity or business which Company shall determine in good faith to be in
competition in any substantial way with Company Business as conducted at the
effective date of termination of Executive’s employment by Company for or a
period of twelve (12) months after the termination of Executive’s employment
and that this Section will be enforceable to the greatest extent of the
law.


 


(d)           No Solicitation of Employees. During
Executive’s employment and for a period of twelve (12) months after the
termination of Executive’s employment, Executive will not, either directly or
indirectly, either alone or in concert with others, solicit or entice or
participate in the solicitation or attempt to solicit or in any manner
encourage employees of Company to leave Company or work for anyone that is in
competition in any substantial way with Company Business (which in the case of
the period following Executive’s termination, shall mean Company Business as
conducted as of the effective date of termination of Executive’s employment
with Company); provided, however, that the public listing, advertising or
posting of an available position shall not constitute solicitation or an
attempt to solicit hereunder and this subsection (d) shall not
preclude Executive from hiring an individual pursuant thereto.


 


(e)           No Solicitation of Customers. Executive
will not during the course of Executive’s employment, or for twelve (12) months
thereafter, either directly or indirectly call on, solicit, or take away, or
attempt to call on, solicit or take away any of Company’s customers on behalf
of any business that is in competition in any substantial way with Company. Executive
promises and agrees not to engage in any unfair competition with Company. During
Executive’s employment, Executive agrees not to plan or otherwise take any
preliminary steps, either alone or in concert with others, to set up or engage
in any business enterprise that would be in competition with Company Business. In
the event of the termination of Executive’s employment and for a period of
twelve (12) months thereafter, Executive will not accept any employment or
engage in any activities which Company shall determine in good faith to be
competitive with Company, if the fulfillment of the duties of the competitive
employment or activities would inherently require Executive to reveal Trade
Secrets to which Executive has access or learned during Executive’s employment
on behalf of any business that is in competition in any substantial way with
Company.


 


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(f)            Return of Company Property. In
the event of the termination of Executive’s employment, Executive will deliver
to Company all devices, records, sketches, reports, proposals, files, customer
lists, mailing or contact lists, correspondence, computer tapes, discs and design
and other document and data storage and retrieval materials (and all copies,
compilations and summaries thereof), equipment, documents, duplicates, notes,
drawings, specifications, research tape or other electronic recordings,
programs, data and other materials or property of any nature belonging to
Company or relating to Company Business, and Executive will not take with
Executive or allow a third party to take, any of the foregoing or any
reproduction of any of the foregoing. Company property includes personal
property, made or compiled by Executive, in whole or in part and alone or with
others, or in any way coming into Executive’s possession concerning Company
Business or other affairs of Company or any of its affiliates.


 


(g)           Disclosure and Assignment of Rights. (i)  Executive
shall promptly disclose and assign to Company and its affiliates or its
nominee(s), to the maximum extent permitted by Section 2870 of the
California Labor Code, as it may be hereafter amended from time to time, all
right, title and interest of Executive in and to any and all ideas, inventions,
discoveries, secret processes and methods and improvements, together with any
and all patents that may be issued thereon in the United States and in all
foreign countries, which Executive may invent, develop or improve, or cause to
be invented, developed or improved, during the term of this Agreement or which
are (1) conceived and developed during normal working hours, and (2) related
to the scope of Company Business. As used in this Agreement, the term “invent”
includes “make”, “discover”, “develop”, “manufacture” or “produce”, or any of
them; “invention” includes the phrase “any new or useful original art, machine,
methods of manufacture, process, composition of matter, design, or configuration
of any kind”; “improvement” includes “discovery” or “production”; and “patent”
includes “Letters Patent” and “all the extensions, renewals, modifications,
improvements and reissues of such patents”.


 


(ii)           Executive
shall disclose immediately to duly authorized representatives of Company any
ideas, inventions, discoveries, secret processes and methods and improvements
covered by the provisions of paragraph (i) above, and execute all
documents reasonably required in connection with the application for an
issuance of Letters Patent in the United States and in any foreign country and
the assignment thereof to Company and its affiliates or its nominee(s).


 


SECTION 5.02  Rights and Remedies Upon
Breach. If Executive breaches, or threatens to breach, in any
material respect any of the provisions of Section 5.01 hereof (“Restrictive
Covenants”), Company shall, in addition to all its other rights hereunder and
under applicable law and in equity, have the right to seek specific enforcement
of the Restrictive Covenants by any court having jurisdiction, including,
without limitation, the granting of a preliminary injunction which may be
granted without the necessity of proving damages or the posting of a bond or
other security, it being acknowledged that any such breach or threatened breach
may cause irreparable injury to Company and that money damages may not provide
an adequate remedy to Company. In addition to
and not in lieu of any other remedy that Company may have pursuant to this
Agreement or otherwise, in the event of any breach of any provision of Section 5.01
during the period which Executive is entitled to receive payments and benefits
pursuant to Section 4.07, such period shall terminate as of the date of
such breach and Executive shall not thereafter be entitled to receive any
compensation or other payments or benefits under this Agreement.


 


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SECTION 5.03  Severability and
Modification of Covenants. Company
and Executive agree and acknowledge that the duration, scope and geographic
area of the Restrictive Covenants described in this Section 5.01 are fair,
reasonable and necessary in order to protect the good will and other legitimate
interests of Company, that adequate consideration has been received by Executive
for such obligations, and that these obligations do not prevent Executive from
earning a livelihood. If any court of competent jurisdiction determines
that any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
If any court of competent jurisdiction construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration or
geographic scope of such provision or otherwise, such provision shall be deemed
amended to the minimum extent required to make it enforceable and, in its
reduced form, such provision shall then be enforceable and enforced.


 


VI.           CERTAIN AGREEMENTS


 


SECTION 6.01
   (a)            Customers, Suppliers. Executive
does not have, and at any time during the term of this Agreement shall not
have, any employment with or any direct or indirect interest in (as owner,
partner, shareholder, employee, director, officer, agent, consultant or
otherwise) any customer of or supplier to Company.


 


(b)           Certain Activities. Executive
during the term of this Agreement shall not (i) give or agree to give, any
gift or similar benefit of more than nominal value to any customer, supplier,
or governmental employee or official or any other person who is or may be in a
position to assist or hinder Company in connection with any proposed
transaction, which gift or similar benefit, if not given or continued in the
future, might adversely affect the business or prospects of Company, (ii) use
any corporate or other funds for unlawful contributions, payments, gifts or
entertainment, (iii) make any unlawful expenditures relating to political
activity to government officials or others, (iv) establish or maintain any
unlawful or unrecorded funds in violation of Section 30A of the Securities
Exchange Act of 1934, as amended, and (v) accept or receive any unlawful
contributions, payments, gifts, or expenditures.


 


VII.         MISCELLANEOUS


 


SECTION 7.01  Notices. Any
notice or other communication required or which may be given hereunder shall be
in writing and shall be delivered personally, telegraphed, telexed or faxed, or
sent by certified, registered or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed, telexed or faxed, or if
mailed, two (2) days after the date of mailing, as follows:


 


	
  (i)

  	
   

  	
  If
  to Company, addressed to it at:

  	
   

  	
  InSight
  Health Services Corp.

  
	
   

  	
   

  	
   

  	
   

  	
  26250
  Enterprise Court, Suite 100

  
	
   

  	
   

  	
   

  	
   

  	
  Lake
  Forest, CA 92630

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile
  No.: (949) 462-3703

  



 


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  (ii)

  	
   

  	
  If
  to Parent, addressed to it at:

  	
   

  	
  InSight
  Health Services Holdings Corp.

  
	
   

  	
   

  	
   

  	
   

  	
  26250
  Enterprise Court, Suite 100

  
	
   

  	
   

  	
   

  	
   

  	
  Lake
  Forest, CA 92630

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile
  No.: (949) 462-3703

  



 


(iii)          If
to Executive, to the address or facsimile set forth below Executive’s signature
hereto. Any party hereto may, by notice to the other, change its address for
receipt of notices hereunder.


 


SECTION 7.02  Entire Agreement.
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.


 


SECTION 7.03
Waivers and Amendments. This
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms and conditions hereof may be waived, amended, modified,
superseded, canceled, renewed or extended, only by a written instrument signed
by Executive and Company. No waiver of any provision of this Agreement shall be
deemed to be a waiver of any other provision, whether or not similar. No such
waiver shall constitute a continuing waiver. No delay on the part of either
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of either party of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.


 


SECTION 7.04  Assignment. This
Agreement is personal to Executive, and Executive’s rights and obligations
hereunder may not be assigned by Executive. Company may assign this Agreement
and its rights, together with its obligations, hereunder (i) in connection
with any sale, transfer or other disposition of all or substantially all of its
assets or business(s), whether by merger, consolidation or otherwise; or (ii) to
any wholly owned subsidiary of Company, provided that Company shall remain
liable for all of its obligations under this Agreement.


 


SECTION 7.05  Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.


 


SECTION 7.06  Headings. The
article and section headings in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.


 


SECTION 7.07  Number. Unless
the context of this Agreement otherwise requires, words using the singular or
plural number will also include the plural or singular number.


 


11

















 


SECTION 7.08  Governing Law. This
Agreement shall be governed by the laws of the State of California, without
regard to any conflicts of law principles thereof that would call for the
application of the laws of any other jurisdiction. Subject to Section 7.10
below, any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against either of
the parties in the courts of the State of California, or if it has or can
acquire jurisdiction, in the United States District Court for the Southern
District of California, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein. Process
in any action or proceeding referred to in the preceding sentence may be served
on any party anywhere in the world, whether within or without the State of
California.


 


SECTION 7.09  Expenses. Should
either party institute an action to enforce this Agreement or any provision
hereof, or for damages by reason of any alleged breach of this Agreement or any
provisions hereof, Executive shall be entitled to receive from Company
Executive’s reasonable travel and living expenses, incurred by Executive in
connection with preparation for and participation in any proceeding relating to
the action if Executive is the prevailing party or such portion thereof as the
court may award.


 


SECTION 7.10   (a)   Resolution of Disputes. Executive
and Company mutually agree and understand that as an inducement for Company to
enter into this Agreement, Executive and Company agree and consent to the
resolution by arbitration of all claims or controversies, past, present or
future, whether arising out of the employment relationship (or its termination)
or relating to this Agreement that Company may have against Executive or that
Executive may have against Company or against its officers, directors,
employees or agents in their capacity as such or otherwise. The only claims
that are arbitrable are those that, in the absence of this arbitration
provision, would have been justiciable under applicable state or federal law.
The claims covered by this arbitration provision, include, but are not limited
to, claims for wages or other compensation due; claims for breach of any
contract or covenant (express or implied); tort claims; claims for
discrimination, retaliation or harassment (including, but not limited to, race,
sex, sexual orientation, religion, national origin, age, marital status, or
medical condition, handicap or disability); claims for benefits (except claims
under an employee benefit or pension plan that either (i) specifies that
its claims procedure shall culminate in an arbitration procedure different from
this one, or (ii) is underwritten by a commercial insurer which decides the
claims); and claims for violation of any federal, state, or other governmental
law, statute, regulation or ordinance, except claims excluded in Section 7.10
(b) below.


 


Except
as otherwise provided in this arbitration provision, both Company and Executive
agree that neither of them shall initiate or prosecute any lawsuit or
administrative action (other than an administrative charge of discrimination)
in any way related to any claim covered by this arbitration provision.


 


(b)           Claims Excluded From Arbitration.
Claims Executive may have for workers’ compensation or unemployment
compensation benefits are not covered by this arbitration provision. Also not
covered are claims by Company for injunctive and/or other equitable relief,
including but not limited to those for unfair competition and/or the use and/or
unauthorized disclosure of Trade Secrets or confidential information, as to
which Executive understands and agrees that Company may seek and obtain relief
from a court of competent jurisdiction.


 


12

















 


(c)           Arbitration Procedures.
Executive and Company understand and agree that the arbitration will take place
in Orange County, California, in accordance with the California Employment
Dispute Resolution Rules of the American Arbitration Association then in
effect in the State of California, and judgment upon such award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
decision of the arbitrator(s) shall 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.


 


SECTION 7.11.
Section 409A Compliance.


 


(a)           The intent of the
parties is that payments and benefits under this Agreement comply with Code Section 409A
and the regulations and guidance promulgated thereunder and, accordingly, to
the maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith. In no event whatsoever shall Company be liable for any
additional tax, interest or penalty that may be imposed on Executive by Code Section 409A
or damages for failing to comply with Code Section 409A.


 


(b)           Termination of
employment shall not be deemed to have occurred for purposes of any provision
of this Agreement providing for the payment of any amounts or benefits upon or
following a termination of employment unless such termination is also a “separation
from service” within the meaning of Code Section 409A and, for purposes of
any such provision of this Agreement, references to a “termination,” “termination
of employment” or like terms shall mean “separation from service.”All expenses
or other reimbursements under this Agreement shall be made on or prior to the
last day of the taxable year following the taxable year in which such expenses
were incurred by Executive (provided that if any such reimbursements constitute
taxable income to Executive, such reimbursements shall be paid no later than March 15th
of the calendar year following the calendar year in which the expenses to be
reimbursed were incurred), and no such reimbursement or expenses eligible for
reimbursement in any taxable year shall in any way affect the expenses eligible
for reimbursement in any other taxable year.


 


(c)           For purposes of Code Section 409A,
Executive’s right to receive any installment payment pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct
payments.


 


(d)           Whenever a payment
under this Agreement specifies a payment period with reference to a number of
days (e.g. “payment shall be made within 30 days following the date of
termination”), the actual date of payment within the specified period shall be
within the sole discretion of Company. Notwithstanding any other provision of
this Agreement to the contrary, in no event shall any payment under this
Agreement that constitutes “deferred compensation” for purposes of Code Section 409A
be offset by any other payment pursuant to this Agreement or otherwise.


 


13

















 


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


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  INSIGHT HEALTH SERVICES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Louis E. Hallman, III

  
	
   

  	
   

  	
  Name:

  	
  Louis
  E. Hallman, III

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Steven M. King

  
	
   

  	
  Steven
  M. King

  
	
   

  	
   

  
	
   

  	
  Address
  and Facsimile Number:

  
	
   

  	
  2327
  Casa Hermosa Ct.

  
	
   

  	
  Encinitas,
  CA 92024

  



 


14

















 


EXHIBIT A


 


Waiver
and Release


 


In consideration of
compensation rights and other benefits, Executive will irrevocably and unconditionally
release, waive and forever discharge Company, its Parent, its direct and
indirect subsidiaries and affiliates, affiliated persons, partnerships and
corporations, successors and assigns, and all of their past and present
directors, members, partners, contractors, distributors, officers,
stockholders, consultants, agents, representatives, attorneys, employees,
employee benefit plans and plan fiduciaries (collectively, “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 Executive has ever had, may now have, or may later assert
against any of Company Releasees, concerning, arising out of or related to
Executive’s employment by or the performance of any services to or on behalf of
any of the InSight Companies, arising out of or related to the termination of
Executive’s employment agreement with Company, or arising out of any other
agreement Executive may have or may have had with the InSight Companies, in all
cases from the beginning of time to the effective date of termination
(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 1866,1964, and 1991 (including but
not limited to Title VII), the Age Discrimination in Employment Act of 1967,
the National Labor Relations Act, the Worker 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 Older Workers Benefit
Protection Act, the California Fair Employment and Housing Act, the California
Industrial Welfare Commission Wage Orders, and the California Labor Code and/or
any similar state antidiscrimination and employment statutes, and (ii) any
and all other Executive’s Claims arising out of or related to any contract or
employment agreement, 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. Executive
also agrees, with respect to Executive’s Claims, to waive all rights to sue or
obtain equitable, remedial or point relief from any or all Company Releasees of
any kind whatsoever, including, without limitation, reinstatement, back pay,
front pay, attorneys’ fees and any form of injunction relief. Through the
effective date of termination, notwithstanding the foregoing, this Waiver and
Release shall not affect any of Executive’s rights or obligations under (a) Company’s
401(k) Savings Plan, (b) the Indemnification Agreement executed among
Executive, Parent and Company effective
              ,
2008, (c) Executive’s right to statutory indemnification pursuant to California
Labor Code Section 2802, (d) the Consolidated Omnibus Budget
Reconciliation Act, (e) workers compensation or unemployment insurance
benefit claims, or (f) the terms of the Agreement.


 


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


 


15

















 


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


 


To the fullest extent
permitted by law, Executive represents, warrants and 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,
arising out of or related to Executive’s Claims. Executive hereby represents
and warrants that Executive has not brought any complaint, claim, charge,
action or proceeding against any of Company Releasees in any jurisdiction or
forum, nor assisted or encouraged any other person or persons in doing so. Executive
further represents and warrants that Executive has not in the past and will not
in the future assign any of Executive’s Claims to any person, corporation or
other entity.


 


Executive’s execution of
this Waiver and Release operates as a complete bar and defense against any and
all of Executive’s Claims against Company and each of the other Company
Releasees to the maximum extent permitted by law. If Executive should hereafter
make any of Executive’s Claims in any charge, complaint, action, claim or
proceeding against Company or any of the other Company Releasees, Waiver and
Release Agreement may be raised as, and shall constitute a complete bar to, any
such charge, complaint, action, claim or proceeding and Executive agrees to
disclaim and waive any right to share or participate in any monetary award
resulting from the prosecution of any administrative investigation or
proceeding.


 


16