**Exhibit 10.22**

 

**INSIGHT HEALTH SERVICES HOLDINGS CORP.**

**STOCK OPTION AGREEMENT**

 

THISAGREEMENT is entered into as of April 8, 2005 (the “Grant Date”) by andbetween InSight Health Services Holdings Corp., a Delaware corporation (the “Company”),and Michael N. Cannizzaro (the “Optionee”).

 

WHEREAS,the Company desires to grant the Optionee a stock option to acquire shares ofthe Company’s common stock, $0.001 par value per share (“Common Stock”); and

 

WHEREAS,the Optionee desires to accept such option subject to the terms and conditionsof this Agreement.

 

NOW,THEREFORE, in consideration of the premises and of the mutual covenants andagreements contained herein, the Company and the Optionee, intending to belegally bound, hereby agree as follows:

 

1.                                       Grant of Option.  As of the Grant Date, the Company grants tothe Optionee a nonqualified stock option (the “Option”) to purchase all (or anypart) of twenty thousand (20,000) shares of Common Stock (the “Shares”) on theterms and conditions hereinafter set forth. The Option is not intended to betreated as an incentive stock option under Section 422 of the InternalRevenue Code of 1986, as amended (the “Code”).

 

2.                                       Exercise Price of Option.  The exercise price (“Exercise Price”) for theShares covered by the Option shall be $19.82 per share.

 

3.                                       Vesting and Exercisabilityof Option.  The Optionshall be fully vested and exercisable as of the Grant Date.

 

4.                                       Term of Option.  The Option shall expire on the tenthanniversary of the Grant Date.

 

5.                                       Manner ofExercise of Option.

 

(a)                                  The Optioneemay exercise the Option by giving written notice to the Company stating thenumber of Shares (which shall not be less than 100) to be purchased andaccompanied by payment in full of the Exercise Price for such Shares.  Payment shall be either in cash or by acertified or bank cashier’s check or checks payable to the Company.

 

At any time when Common Stock is registered under Section 12 ofthe Securities Exchange Act of 1934, as amended, the Option may also beexercised by means of a “broker cashless exercise” procedure approved in allrespects in advance by the Board of Directors of the Company (the “Board”), inwhich a broker:  (i) transmits theExercise Price for any Shares to the Company in cash or acceptable cashequivalents, either (1) against the Optionee’s notice of

 

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exerciseand the Company’s confirmation that it will deliver to the broker stockcertificates issued in the name of the broker for at least that number ofShares having a fair market value equal to the Exercise Price therefore, or (2) asthe proceeds of a margin loan to the Optionee; or (ii) agrees to pay theExercise Price therefore to the Company in cash or acceptable cash equivalentsupon the broker’s receipt from the Company of stock certificates issued in thename of the broker for at least that number of Shares having a fair marketvalue equal to the Exercise Price therefore. The Optionee’s written notice of exercise of the Option pursuant to a “cashlessexercise” procedure must include the name and address of the broker involved, aclear description of the procedure, and such other information or undertakingby the broker as the Board shall reasonably require.  If payment is to be made in whole or in partin Shares underlying the Option, the Optionee shall direct the Company tosubtract from the number of Shares underlying the Option, that number of Shareshaving a fair market value (as determined in good faith by the Board) equal tothe purchase price (or portion thereof) to be paid with such underlyingShares.  Notwithstanding the forgoing, ifa “broker cashless exercise” would be deemed an extension of credit forpurposes of the Sarbanes-Oxley Act of 2002 or violate any other law orregulation, Optionee may not exercise the Option in such manner.

 

Upon such purchase, delivery of a certificate for paid-up,non-assessable Shares shall be made at the principal office of the Company tothe Optionee (or the person entitled to exercise the Option pursuant to Section 7),not more than ten (10) days from the date of receipt of the notice by theCompany.

 

(b)                                 The Companyshall at all times during the term of the Option reserve and keep availablesuch number of Shares as will be sufficient to satisfy the requirements of theOption.

 

(c)                                  NotwithstandingSection 5(a) of this Agreement, the Company may delay the issuance ofShares covered by the Option and the delivery of a certificate for such Sharesuntil one of the following conditions is satisfied:   (i) the Shares purchased pursuant tothe Option are at the time of the issuance of such Shares effectivelyregistered or qualified under applicable federal and state securities laws or (ii) suchShares are exempt from registration and qualification under applicable federaland state securities laws.

 

6.                                       Administration.  This Agreement shall be administered by theBoard.  The Board shall be authorized tointerpret this Agreement and to make all other determinations necessary oradvisable for the administration of this Agreement.  The determinations of the Board in the administrationof this Agreement, as described herein, shall be final and conclusive.  The Secretary of the Company shall beauthorized to implement this Agreement in accordance with its terms and to takesuch actions of a ministerial nature as shall be necessary to effectuate theintent and purposes thereof.

 

7.                                       Non-Transferabilityof Option.  The rightof the Optionee to exercise the Option shall not be assignable or transferableby the Optionee otherwise than by will or the laws of descent and distribution,and such Shares may be purchased during the lifetime of the Optionee only byhim.  Any other such transfer shall benull and void and without effect upon any attempted assignment or transfer,except as hereinabove provided, including without limitation

 

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any purported assignment,whether voluntary or by operation of law, pledge, hypothecation or otherdisposition contrary to the provisions hereof, or levy of execution,attachment, trustee process or similar process, whether legal or equitable,upon the Option.

 

8.                                       RepresentationLetter and Investment Legend.

 

(a)                                  In the eventthat for any reason the Shares to be issued upon exercise of the Option shallnot be effectively registered under the Securities Act of 1933, as amended (the“1933 Act”), upon any date on which the Option is exercised, the Optionee (orthe person exercising the Option pursuant to Section 7) shall give awritten representation to the Company in the form attached hereto as Exhibit A,and the Company shall place the legend described on Exhibit A, upon anycertificate for the Shares issued by reason of such exercise.

 

(b)                                 The Companyshall be under no obligation to qualify Shares or to cause a registrationstatement or a post-effective amendment to any registration statement to beprepared for the purposes of covering the issuance of the Shares; provided,that the Company will use its reasonable best efforts to comply with anyavailable exemption from registration and qualification of the Shares underapplicable federal and state securities laws.

 

9.                                       Adjustmentsupon Changes in Capitalization.

 

(a)                                  In the eventthat the outstanding shares of the Common Stock of the Company are changed intoor exchanged for a different number or kind of shares or other securities ofthe Company or of another corporation by reason of any reorganization, merger,consolidation, recapitalization, reclassification, stock split-up, combinationof shares, or dividends payable in capital stock, appropriate adjustment shallbe made in the number and kind of the Shares, and the Exercise Price therefore,as to which the Option, to the extent not theretofore exercised, shall beexercisable.

 

In addition, unless otherwise determined by the Board in its solediscretion, in the case of a Change in Control (as hereinafter defined) of theCompany, the purchaser of the Company’s assets or stock may, in its discretion,deliver to the Optionee the same kind of consideration (net of the ExercisePrice for such Shares) that is delivered to the stockholders of the Company asa result of the Change in Control, or the Board may, in its sole determination,cancel the Option, to the extent not theretofore exercised, in exchange forconsideration in cash or in kind, which consideration in either case shall beequal in value to the value of those shares of stock or other consideration theOptionee would have received had the Option been exercised (to the extent ithas not been exercised) and no disposition of the shares acquired upon such exercisehad been made prior to the Change in Control, less the Exercise Pricetherefore.  Upon receipt of suchconsideration by the Optionee, the Option shall immediately terminate and be ofno further force and effect.  The valueof the stock or other securities the Optionee would have received if the Optionhad been exercised shall be determined in good faith by the Board.  A “Change in Control” shall be deemed to haveoccurred if (i) any person, or any two or more persons acting as a group,and all affiliates of such person or persons (a “Group”) who prior to such timebeneficially owned less than 50% of the then outstanding capital stock of theCompany shall acquire shares of the Company’s capital stock in one or moretransactions or series of

 

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transactions,including by merger, and after such transaction or transactions such person orGroup and affiliates beneficially own 50% or more of the Company’s outstandingcapital stock, or (ii) the Company shall sell all or substantially all ofits assets to any Group which, immediately prior to the time of suchtransaction, beneficially owned less than 50% of the then outstanding capitalstock of the Company.

 

(b)                                 Upondissolution or liquidation of the Company, the Option shall terminate, but theOptionee shall have the right, immediately prior to such dissolution orliquidation, to exercise the Option.

 

(c)                                  No fraction ofa share of Common Stock shall be purchasable or deliverable upon the exerciseof the Option, but in the event any adjustment hereunder of the number ofshares covered by the Option shall cause such number to include a fraction of ashare, such fraction shall be adjusted to the nearest smaller whole number ofshares.

 

10.                                 Rights as aStockholder.  TheOptionee shall have no rights as a stockholder with respect to any Shares whichmay be purchased pursuant to the Option unless and until a certificate orcertificates representing such Shares are duly issued and delivered to theOptionee.  Except as otherwise expresslyprovided herein, no adjustment shall be made for dividends or other rights forwhich the record date is prior to the date the stock certificate is issued.

 

11.                                 WithholdingTaxes.  The Optionee hereby agrees, asa condition to any exercise of the Option, to provide to the Company an amountsufficient to satisfy its obligation to withhold certain federal, state andlocal taxes arising by reason of such exercise (the “Withholding Amount”), ifany, by remitting the Withholding Amount to the Company in cash; provided that,to the extent that the Withholding Amount is not so provided, the Company mayat its election withhold from the Shares delivered upon exercise of the Optionthat number of Shares having a fair market value (in the good faith judgment ofthe Board) equal to the Withholding Amount.

 

12.                                 Execution ofStockholders’ Agreement.  TheOptionee acknowledges that he has previously executed and delivered thestockholders agreement by and among the Company and the stockholders of theCompany named therein (the “Stockholders’ Agreement”).  The Optionee further agrees that thisAgreement, the Option and all Shares acquired by him upon exercise of theOption will be subject to the terms and conditions of the Stockholders’Agreement, as the same may have been amended or modified in accordance with itsterms.

 

13.                                 Governing Law.  This Agreement shall be governed by the lawsof the State of Delaware, without regard to any conflicts of law principlesthereof that would call for the application of the laws of any otherjurisdiction.  Any action or proceedingseeking to enforce any provision of, or based on any right arising out of, thisAgreement may be brought against either of the parties in the courts of the Stateof Delaware, or if it has or can acquire jurisdiction, in the United StatesDistrict Court for the District of Delaware, and each of the parties herebyconsents to the jurisdiction of such courts (and of the appropriate appellatecourts) in any such action or proceeding and waives any objection to venue laidtherein.  Process in any action or

 

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proceeding referred to inthe preceding sentence may be served on any party anywhere in the world,whether within or without the State of Delaware.

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to beexecuted by its officer thereunto duly authorized, and the Optionee hasexecuted this Agreement, all as of the day and year first above written.

 

 
| **INSIGHT HEALTH SERVICES  HOLDINGS CORP.** | **OPTIONEE**                              |
|---------------------------------------------|-------------------------------------------|
| ** **                                  | ** **                                |
| By:                                         | /s/ Marilyn U.  MacNiven-Young            |   | /s/  Michael N. Cannizzaro |   |
| ** **                                  | Name:  Marilyn U. MacNiven-Young          | Name:  Michael N. Cannizzaro |
| ** **                                  | Title:  Executive Vice President, General |   |
| ** **                                  | Counsel &  Secretary             | Address: | 1531  South Telegraph Rd.  Lake Forest, IL 60045 |
|                                             |                                           |  |  |  |  |

 

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**EXHIBIT A**

**TO STOCKOPTION AGREEMENT**

 

Ladiesand Gentlemen:

 

In connection with the purchase by me of                               shares of common stock, $0.001 par value per share, of InSight Health ServicesHoldings Corp., a Delaware corporation (the “Company”) under the nonqualifiedstock option granted to me pursuant to that certain Stock Option Agreementdated as of August 12, 2004 (the “Option Agreement”), I hereby acknowledgethat I have been informed as follows:

 

1.                                       The shares of common stockof the Company to be issued to me upon exercise of said option have not beenregistered under the Securities Act of 1933, as amended (the “Act”), andaccordingly, must be held indefinitely unless such shares are subsequentlyregistered under the Act, or an exemption from such registration is available.

 

2.                                       Routine sales of securitiesmade in reliance upon Rule 144 under the Act can be made only after theholding period and in limited amounts in accordance with the terms andconditions provided by that Rule, and with respect to which that Rule isnot applicable, registration or compliance with some other exemption under theAct will be required.

 

3.                                       The Company is under noobligation to me to register the shares or to comply with any such exemptionsunder the Act, other than as set forth in the Stockholders’ Agreementreferenced and defined in Section 12 of the Option Agreement (the “Stockholders’Agreement”).

 

4.                                       The availability of Rule 144is dependent upon adequate current public information with respect to theCompany being available and, at the time that I may desire to make a salepursuant to the Rule, the Company may neither wish nor be able to comply withsuch requirement.

 

5.                                       The shares of common stockof the Company to be issued to me upon the exercise of said option are subjectto the terms and conditions, including restrictions on transfer, of theStockholders’ Agreement.

 

In consideration of the issuance of certificates for the shares to me,I hereby represent and warrant that I am acquiring such shares for my ownaccount for investment, and that I will not sell, pledge, hypothecate orotherwise transfer such shares in the absence of an effective registrationstatement covering the same, except as permitted by an applicable exemptionunder the Act.  In view of thisrepresentation and warranty, I agree that there may be affixed to thecertificates for the shares to be issued to me, and to all certificates issuedhereafter representing such shares (until in the opinion of counsel, whichopinion must be reasonably satisfactory in form and substance to counsel forthe Company, it is no longer necessary or required) a legend as follows:

 

“The securities represented by this certificate have not beenregistered under the Securities Act of 1933, as amended (the “Act”), and may notbe sold, transferred, offered

 

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for sale, pledged or hypothecated in the absence of an effectiveregistration statement as to the securities under the Act or an opinion ofcounsel satisfactory to the Company and its counsel that such registration isnot required.”

 

“The securities represented by this certificate are subject to theterms and conditions, including restrictions on transfer, of a Third Amendedand Restated Stockholders’ Agreement among the Company and its stockholdersdated as of October 10, 2002, as amended from time to time, a copy ofwhich is on file at the principal office of the Company.”

 

I further agree that the Company may place a stop order with itstransfer agent, prohibiting the transfer of such shares, so long as the legendremains on the certificates representing the shares.

 

I hereby represent and warrant that:  My financial situation is such that I canafford to bear the economic risk of holding the shares issued to me uponexercise of said option for an indefinite period of time, I have no need forliquidity with respect to my investment and I have adequate means to providefor my current needs and personal contingencies, and I can afford to suffer thecomplete loss of my investment in such shares.

 

(a)                                  I am an “accredited investor”within the meaning of Rule 501 under the Act and I, either alone or withmy purchaser representative (as such term is defined in Rule 501 under theAct) have such knowledge and experience in financial and business matters thatI am capable of evaluating the merits and risks of my investment in the sharesissued to me upon exercise of said option.

 

(b)                                 I have been afforded theopportunity to ask questions of, and to receive answers from, the Company andits representatives concerning the shares issued to me upon exercise of saidoption and to obtain any additional information I have deemed necessary.

 

(c)                                  I have a high degree offamiliarity with the business, operations, financial condition and prospects ofthe Company.

 
|   | Very  truly yours, |
|--------|--------------------|
|   |               |
|   |               |   |
|   | [Optionee]         |

 

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