Document:

Exhibit 4.01

	
  CUSIP NO. 52517PK26

  	
   

  	
   

  
	
  ISIN NO.
  US52517PK262

  	
   

  	
   

  
	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $5,300,000

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

PRINCIPAL PROTECTED BULLISH INR AND CNY
BASKET FX-LINKED NOTE
DUE JUNE 30, 2008

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY OR A NOMINEE OF THE DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
NOTES IN CERTIFICATED FORM (A “CERTIFICATED NOTE”), THIS GLOBAL SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

 

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the “Company,”
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to CEDE &
Co., or registered assigns, on the Maturity Date, an amount equal to the
Redemption Amount. The Notes do not bear interest. No payments on the Notes
will be made until the Maturity Date.

The “Maturity Date” is June 30, 2008, or if such day is not a
Business Day, on the next following Business Day.

The Redemption Amount, for each $1 principal amount of the Notes
represented hereby, is the amount equal to the sum of (a) $1 plus (b) the Additional Amount.

The “Additional Amount”, for each $1 principal amount of the Notes
represented hereby will be (subject to the occurrence of a Disruption Event) (i) 4.0%,
if the Basket Value is less than or equal to zero on the Valuation Date or (ii) 165%
times the Basket Value, if the Basket Value is greater than zero on the
Valuation Date.

The “Reference Currencies” are the Chinese Renminbi (CNY) and the
Indian Rupee (INR).

The “Basket
Value” equals the sum of:

(i)               a quotient, the
numerator of which is 4.00100 and the denominator of which is the
Settlement Rate for CNY plus

(ii)            a quotient, the numerator
of which is 23.19000 and the denominator of which is the
Settlement Rate for INR plus

(iii)         a quotient, the numerator of which is -1.0000 and the denominator of which is the Settlement Rate for USD.

The “Settlement Rate” for
each Reference Currency is the Reference Exchange Rate on the Valuation Date,
observed as per the Settlement Rate Option (subject to the occurrence of a
Price Source Unavailability Event). The Settlement Rate for the USD shall
be 1.

The “Reference Exchange Rates” are the spot exchange
rates for each of the Reference Currencies quoted against the U.S. dollar
expressed as number of currency units per USD 1.

The “Settlement Rate
Option” for each Reference Currency is as follows:

 

	
  Reference

  Currency

  	
   

  	
  Settlement Rate Option

  	
   

  	
  Principal

  Financial Center

  
	
  CNY

  	
   

  	
  The Chinese
  Renminbi/U.S. Dollar official fixing rate, expressed as the amount of Chinese
  Renminbi per one U.S. Dollar, for settlement in two business days reported by
  The State Administration of Foreign Exchange of the People’s Republic of
  China, Beijing, which appears on the Reuters Screen SAEC Page opposite
  the symbol “USDCNY=” at approximately 5:00 p.m., Beijing time, on the
  Valuation Date.

  	
   

  	
  Beijing

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INR

  	
   

  	
  The Indian Rupee/U.S. Dollar reference rate,
  expressed as the amount of Indian Rupee per one U.S. Dollar, for settlement
  in two business days 

  	
   

  	
  Mumbai

  

 

 2
 

 

 

	
  

  	
   

  	
  reported by the Reserve Bank of India which appears
  on the Reuters Screen RBIB Page at approximately 2:30 p.m., Mumbai
  time, or as soon thereafter as practicable, on the relevant Valuation Date.

  	
   

  	
   

  

 

The term “business day”
solely as used in any Settlement Rate Option described above shall mean any
day, other than a Saturday or Sunday, that is neither a legal holiday nor a day
on which commercial banks are authorized or required by law, regulation or
executive order to close (including for dealings in foreign exchange in
accordance with the practice of the foreign exchange market) in the Principal
Financial Center for both (a) the Reference Currency and (b) the
currency against which the Reference Currency is quoted (the “base currency”)
in accordance with the Reference Exchange Rate specified in the applicable
pricing supplement, in each case as specified for the applicable Reference
Currency or base currency in the table below.

The screen or time of
observation indicated in relation to any Settlement Rate Option above shall be
deemed to refer to such screen or time of observation as modified or amended
from time to time, or to any substitute screen thereto.

The “Valuation Date” is June 24, 2008 or, if such
day is not a Valuation Business Day, the immediately preceding Valuation
Business day.

A “Valuation
Business Day” means, with respect to each Reference Currency, any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close (including for dealings in foreign exchange in accordance with
the practice of the foreign exchange market) in the city or jurisdiction
indicated in the table below:

	
  Reference Currency

  	
   

  	
  Valuation Business Day

  
	
  CNY

  	
   

  	
  Beijing

  
	
  INR

  	
   

  	
  Mumbai

  

 

A “Business Day”,
notwithstanding any provision in the Indenture, is any day that is not is not a
Saturday or Sunday and that is not a day on which banking institutions in New
York City generally are authorized or obligated by law or executive order to be
closed.

Upon the occurrence of a Disruption Event with
respect to any Reference Currency on any day during the term of the notes, the
Calculation Agent shall determine the Additional Amount payable on the Maturity
Date in good faith and in a commercially reasonable manner.

“Calculation Agent” means Lehman Brothers Inc.

A “Disruption Event” means any of the following
events (other than a Price Source Unavailability Event), as determined in good
faith by the Calculation Agent:

(A)                              for any Reference Currency the occurrence
and/or existence of an event on any day that has the effect of preventing or
making impossible the delivery of USD from accounts inside the country for
which a Reference Currency is the lawful currency (such jurisdiction with
respect to such Reference Currency, the “Reference Currency Jurisdiction”) to
accounts outside that Reference Currency Jurisdiction;

 3
 

 

(B)                                the occurrence of any event causing the
Reference Exchange Rate for any Reference Currency to be split into dual or
multiple currency exchange rates; or

(C)                                the occurrence and/or existence of any event
(other than those set forth in (A) or (B) above or those constituting
a Price Source Unavailability Event) with respect to any Reference Currency
that prevents or makes impossible (x) the Calculation Agent’s ability to
calculate the Additional Amount, (y) the fulfilment of the Company’s
obligations under the notes, or (z) the ability of the Company or any of
its affiliates through which the Company hedges its position under the notes to
hedge such position or to unwind all or a material portion of such hedge.

Upon the occurrence of a Price Source Unavailability
Event with respect to a Reference Currency, the Settlement Rate for the
affected Reference Currency will be determined in accordance with the Fallback
Rate Observation Methodology.

A “Price Source
Unavailability Event” means, as determined in good faith by the Calculation
Agent, the Settlement Rate being unavailable for a Reference Currency, or the
occurrence of an event (other than an event constituting a Disruption Event)
that generally makes it impossible to obtain the Settlement Rate for a
Reference Currency, on the relevant Valuation Date.

The “Fallback Rate
Observation Methodology” means that the Settlement Rate in respect of a
Reference Currency will equal the noon buying rate in New York for cable
transfers in foreign currencies as announced by the Federal Reserve Bank of New
York for customs purposes (the “Noon Buying Rate”) on the relevant Valuation
Date. If the Noon Buying Rate is not announced on that date, the Settlement
Rate for a Reference Currency will be calculated on the basis of the arithmetic
mean of the applicable spot quotations received by the Calculation Agent at
approximately 10:00 a.m., New York City time, on the Valuation Business
Day next succeeding the Valuation Date for the purchase or sale for deposits in
the Reference Currency by the New York offices of three leading banks engaged
in the interbank market (selected in the sole discretion of the Calculation
Agent) (the “Reference Banks”). If fewer than three Reference Banks provide
spot quotations, then the Settlement Rate will be calculated on the basis of
the arithmetic mean of the applicable spot quotations received by the
Calculation Agent at approximately 10:00 a.m., New York City time, on the
relevant date from two Reference Banks (selected in the sole discretion of the
calculation agent), for the purchase or sale for deposits in the reference
currency. If these spot quotations are available from only one Reference Bank,
then the Calculation Agent, in its sole discretion, will determine whether that
quotation is reasonable to be used. If no spot quotation is available, then the
Settlement Rate for such Reference Currency will be determined by the
Calculation Agent in good faith and in a commercially reasonable manner.

Except as provided below,
the Redemption Amount may, at the option of the Company, be made by check
mailed to the person entitled thereto at such person’s address as it appears on
the registry books of the Company.

Payment of the Redemption
Amount will be made in immediately available funds upon surrender of this Note
at the corporate trust office or agency of the Trustee (or any duly appointed
Paying Agent) maintained for that purpose in the Borough of Manhattan, New York
City (the “Corporate Trust Office”), provided that this Note is presented to
the Trustee (or any such Paying Agent) in time for the Trustee (or any such
Paying Agent) to make such payments in such funds in accordance with its normal
procedures.

 4
 

 

The Company will pay any
administrative costs imposed by banks in making payments in immediately
available funds, but any tax, assessment or governmental charge imposed upon
payments hereunder, including, without limitation, any withholding tax, will be
borne by the Holder hereof.

References herein to “USD”,
“U.S. dollars” or “U.S.$” or “$” are to the coin or currency of the United
States as at the time of payment is legal tender for the payment of public and
private debts.

REFERENCE
IS HEREBY MADE TO THE FURTHER
PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER
PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS
PLACE.

This Note shall not be
valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the
Indenture.

 5
 

 

IN WITNESS WHEREOF,
Lehman Brothers Holdings Inc. has caused this instrument to be signed by its
Chairman of the Board, its President, its Vice Chairman, its Chief Financial
Officer, one of its Vice Presidents or its Treasurer, by manual or facsimile
signature under its corporate seal, attested by its Secretary or one of its
Assistant Secretaries by manual or facsimile signature.

Dated:  June 30, 2006

	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.

CITIBANK, N.A.

  as
Trustee

	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  	
   

  

 

 6
 

 

[REVERSE
OF NOTE]

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I
PRINCIPAL PROTECTED BULLISH INR AND CNY
BASKET FX-LINKED NOTE
DUE JUNE 30, 2008

Section 1. General.
This Note is one of a duly authorized series of Notes of the Company designated
as the Medium-Term Notes, Series I, Principal Protected Bullish INR and
CNY Basket FX-Linked Note (herein called the “Notes”). The Notes are one of an indefinite number of series of debt
securities of the Company (collectively, the “Securities”) issued or issuable
under and pursuant to an indenture dated as of September 1, 1987, as
amended and supplemented (the “Indenture”), duly executed and delivered by the
Company and Citibank, N.A., as Trustee (herein called the “Trustee”), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Securities. The separate series of Securities may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
or repurchase rights (if any), may be subject to different sinking, purchase or
analogous funds (if any), may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided.

Section 2. Principal
Amount for Indenture Purposes. For the purpose of determining whether
Holders of the requisite amount of Notes of this series outstanding under the
Indenture have made a demand, given a notice or waiver or taken any other
action, the principal amount of this Note will be deemed to be the principal
amount of this Note then outstanding.

Section 3. Modification
and Waivers. The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the Holders of not less than 66-2/3% in
aggregate principal amount of each series of the Securities at the time
Outstanding to be affected, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the
Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Redemption Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Redemption Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that hereinabove
provided, without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in 

 7
 

 

the Indenture that, prior to any declaration
accelerating the maturity of any series of Securities, the holders of a
majority in aggregate principal amount of the Securities of such series
Outstanding may on behalf of the holders of all the Securities of such series
waive any past default or Event of Default under the Indenture with respect to
such series and its consequences, except a default in the payment of interest,
if any, on the Redemption Amount or the principal amount, or premium, if any,
on any of the Securities of such series, or in the payment of any sinking fund
installment or analogous obligation with respect to Securities of such series. Any
such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future holders and owners of this Note
and any Notes of this series which may be issued in exchange or substitution
herefor, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes of this series.

Section 4. Obligations
Unconditional. No reference herein to the Indenture and no provisions of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the Redemption Amount or
the principal amount on this Note at the place, at the respective times, at the
rate, and in the coin or currency herein prescribed.

Section 5. Defeasance.
The Indenture contains provisions for the discharge of the Indenture and
defeasance at any time of the indebtedness on this Note upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Note.

Section 6. Authorized
Form and Denominations. The Notes of this series are issuable in
registered form, without coupons. Each Note will be issued initially as either
a Global Security or a Certificated Note, at the option of the Company, in
denominations of $1,000 or whole multiples of $1,000, either at the office or
agency to be designated and maintained by the Company for such purpose in the
Borough of Manhattan, New York City, pursuant to the provisions of the
Indenture or at any of such other offices or agencies as may be designated and
maintained by the Company for such purpose pursuant to the provisions of the
Indenture, and in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge, except for any tax or
other governmental charges imposed in connection therewith. Notes of this
series are exchangeable for a like aggregate principal amount of Notes of this
series of a different authorized denomination, except that Global Securities
will not be exchangeable for Certificated Notes of this series.

Section 7. Registration
of Transfer. As provided in the Indenture and subject to certain
limitations as therein set forth, the transfer of this Note is registrable in
the Security Register, upon surrender of this Note for registration of
transfer, at the Corporate Trust Office or agency in a Place of Payment for
this Note, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar requiring such
written instrument of transfer duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

If at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under
the 

 8
 

 

Indenture, the Company shall appoint a successor
Depository. If a successor Depository for the Notes of this series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such ineligibility, the Company will issue, and the Trustee
will authenticate and deliver, Notes of this series in definitive form in an
aggregate principal amount equal to the principal amount of this Note.

No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

Prior to due presentment
of this Note for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this
Note is registered as the owner hereof for all purposes, and neither the
Company nor the Trustee nor any agent of the Company or of the Trustee shall be
affected by any notice to the contrary.

Section 8. Events
of Default. If an Event of Default with respect to Notes of this series
shall occur and be continuing, the amount declared due and payable upon any
acceleration of the Notes will be determined by the Calculation Agent and will
equal the Redemption Amount calculated as though the maturity of the Notes were
the date of early repayment in the manner and with the effect provided in the
Indenture. The amount payable to the Holder hereof upon any acceleration
permitted under the Indenture will be equal to the Redemption Amount calculated
as though the date to which the maturity has been accelerated were the Maturity
Date as determined by the Calculation Agent.

Section 9. No
Recourse Against Certain Persons. No recourse for the payment of the
Redemption Amount or for any claim based hereon or otherwise in respect hereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any Indenture supplemental thereto or in any Note,
or because of the creation of any indebtedness represented thereby, shall be
had against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

Section 10. Defined
Terms. All terms used but not defined in this Note are used herein as
defined in the Indenture.

Section 11. GOVERNING LAW. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

 9Exhibit 10.24

June 29, 2006

PERSONAL AND
CONFIDENTIAL

 

 

Michael A. Boylan

1005 Putters Place

Doylestown, PA 18901

 

Re:  Separation Agreement

Dear
Mike:

This Letter Agreement (“Agreement”) sets forth the terms and conditions
of your separation from InSight Health Services Corp. (“InSight” or “Company”)
effective June 30, 2006.  InSight
appreciates your service to the Company and wishes you the best in your future
endeavors. InSight will pay your earned wages and any unused accrued vacation
through June 30, 2006, 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:

Termination.  Effective June 30, 2006, your employment, and
any and all positions you held with InSight and any of its  subsidiary or affiliated entities (collectively
the “InSight Companies”) is terminated, and as of that date you relinquish any
and all of your authorities with each of those companies.

Separation Payments.  In addition
to your final paycheck and payment for any unused accrued vacation through and
including June 30, 2006, in accordance with the “Consideration Period” and “Revocation
Period” (defined below), and in consideration for your signing this Agreement,
InSight agrees to pay you an amount equal to your current regular monthly base
salary, less applicable taxes and withholdings required by law, on a regular
payroll basis, for a period of twelve (12) months (“Separation Payments”).  Payments will be made on the subsequent pay periods
following the “Consideration Period” and “Revocation Period.”  The Separation Payments will be sent to your
home address as set forth above.

FY 2006 Incentive Compensation.   Also, in
accordance with the “Consideration Period” and Revocation Period,” the Company
agrees to pay you, when it is determined and approved by the Company’s
Compensation Committee, any FY 2006 incentive compensation you may have earned
pursuant to the InSight Executive Management Incentive Compensation Plan.

Outplacement Counseling Services.   As further
consideration for signing this Agreement, the Company agrees to provide you
with outplacement counseling services through 
a firm mutually agreed by you and the Company for the six (6)
month-period immediately following your resignation.  Your outplacement counseling benefits and
limitations will be explained in a separate agreement.

 

 

Reference.   The Company agrees to provide you with a
reference letter in the form attached hereto as Exhibit A.

Compliance with Stock Option Agreements.  In accordance
with the Stock Option Agreement (i) entered into between you and InSight
Health Services Holdings Corp. (“IHSHC”), on June 29, 2001 (the “June 29th
Stock Option Agreement”), and (ii) entered into between you and IHSHC,
dated October 17, 2001 (the “October 17th Stock Option Agreement” and
together with 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 Fourth Amended and Restated Stockholders Agreement, dated July 2,
2005, 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 termination; 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, and disability plans or programs
covering you and any dependents under the same terms and conditions as if you
had not been terminated, 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 termination for the applicable period or its remainder.

Consulting Services. You and the Company will enter into a Services
Agreement, a copy of which is attached hereto as Exhibit B, pursuant to which
you will provide services to the Company for an initial period of sixty (60)
days commencing July 1, 2006, which may be extended for additional thirty (30)
day periods as mutually agreed by you and the Company.  Both you and the Company may terminate the
Services Agreement upon thirty (30) days prior written notice.  The monthly fee for such services will be $25,500
per month.

Release.  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 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 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
anti-discrimination and employment statutes; 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 Health Services
Corp. 401(k) Savings Plan (“InSight 401(k) 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”), (e) workers’ compensation or unemployment insurance benefits
claims, or (f) the terms of this Agreement.

You and the Company hereby waive and relinquish all
rights and benefits afforded by California Civil Code Section 1542.  You and the Company 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 by 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 Claims.  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 you, your spouse,
family members, and heirs, (collectively, the “Boylan 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 they have ever had, may now have, or may later assert against the Boylan
Releasees, whether or not arising out of or related to Boylan’s employment by
or the performance of any services to or on behalf of the 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 401(k) Plan, (c) the Indemnification Agreement, (d)
COBRA, (e) workers’ compensation or unemployment insurance benefits claims, or
(f) 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 you as of the Effective
Date, which may arise from or be related to (i) any acts or omissions undertaken
by you, or undertaken at your 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; or (ii) any voluntary act
undertaken by you in knowing and willful violation of a specific written
Company directive or policy, which causes the Company material harm or subjects
it to material liability.

 

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 you or any of the other Boylan 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 Boylan
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 you or any of the other Boylan Releasees.  If the Company should hereafter make any of
Company’s Claims in any charge, complaint, action, claim or proceeding against you
or any of the other Boylan Releasees, this Agreement may be raised as and shall
constitute a complete bar to any such charge, complaint, action, claim or
proceeding and you and/or the other Boylan 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 entered into among you,
the Company and IHSHC 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 C for your ease of reference.  Should you have a legitimate question as to
whether a particular prospective employment would be in breach of your
obligations under Section V, you may make an inquiry to the Company prior to
accepting such a position and if the Company determines that such potential
employment will not be a breach of Section V, it will so advise you and/or your
prospective employer in writing.

In addition, the twelve (12) month periods referred to in Section
5.01(d) and (e) of Section V will be extended until the later of (i) August 31,
2007 and (ii) the termination of  the
Services Agreement.

Cooperation.  After your termination, 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 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, including, but not limited
to, credit cards, keys, building access cards, manuals, notebooks, financial
statements, reports and any other property of InSight; however, you may retain
the cell phone, TREO and computer hardware and software you currently use until
(i) you acquire your own cell phone, TREO and personal computer and service or
(ii) the termination of the Services Agreement, whichever occurs earlier.  You should immediately submit to InSight all
outstanding business expenses incurred on or before June 30, 2006, 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 any subpoena issued by a state or federal
governmental agency; or (d) as otherwise required by law.  Notwithstanding the foregoing, InSight may
file this Agreement with the Securities and Exchange Commission in accordance
with the Securities Exchange Act of 1934.

Assistance/Cooperation Regarding Current or Future Litigation. 
In connection with InSight’s participation in current or future
litigation relating to events which occurred during your employment with the
Company and/or about which you have information, you agree to cooperate to the
fullest extent possible in the preparation, prosecution, or defense of the
Company’s case, including, but not limited to, meeting with the Company’s
counsel, the execution of truthful declarations, being a deponent and/or
witness as required, or providing information and/or documents requested by the
Company.  You acknowledge that the
Company is actively engaged in litigation with Southwest Outpatient Radiology,
P.C. and William B. Kessler Memorial Hospital and that you have been or may be
identified as a witness and will cooperate with InSight and its counsel, as
required. You further agree not to voluntarily assist any party, any current or
former employee of the Company, and/or attorney in any claim, dispute, charge,
or litigation adverse to the Company. 
This section does not prohibit you from testifying truthfully pursuant
to a subpoena or lawful court order.

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.

Other Agreements.  Except for (i) Section V as
modified by the terms of this Agreement, (ii) the Stock Agreements, (iii) the
InSight 401(k) Plan, and (iv) the 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 ten (10) year term of the  46,990 “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 IHSHC 2001 Stock Option Plan, shall expire on October
17, 2011.

 

 

Successors.  This Agreement is binding upon the Company
and you and upon the Company’s and your respective successors, assigns, heirs,
executors, administrators and legal representatives.

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 Commonwealth of Pennsylvania, 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
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
until 5:00 p.m. on August 14, 2006, or forty-five (45) days from receipt of
this Agreement to consider it.  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 14, 2006, or on the
forty-fifth (45th) day from the day you receive this Agreement.  An extra copy of this Agreement has been
signed by me and is enclosed for your records.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Mitch C. Hill

  	
   

  
	
   

  	
  Mitch C. Hill

  
	
   

  	
  Executive Vice President and Chief Financial Officer

  
	
   

  	
  InSight Health Services Corp. and

  
	
   

  	
  InSight Health Services Holdings Corp.

  
	
   

  	
   

  
	
  Enclosures

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED AND
  AGREED:

  	
   

  
	
   

  	
   

  
	
  Dated: June 29, 2006.

  	
  /s/ Michael A. Boylan

  	
   

  
	
   

  	
                  Michael
  A. Boylan

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