Document:

Exhibit 10.15

 

Final Version

 

INSIGHT
HEALTH SERVICES HOLDINGS CORP.

2008 EMPLOYEE STOCK OPTION PLAN

 

I.              PURPOSE
AND DEFINITIONS

 

A.            PURPOSE OF THE PLAN

 

The Plan is intended to encourage ownership of Shares by
Eligible Employees and Key Non-Employees in order to attract and retain such
Eligible Employees in the employ of the Company or an Affiliate, or to attract
such Key Non-Employees to provide services to the Company or an Affiliate, and
to provide additional incentive for such persons to promote the success of the
Company or an Affiliate.

 

B.            DEFINITIONS

 

Unless otherwise specified or unless the context
otherwise requires, the following terms, as used in this Plan, have the
following meanings:

 

1.             Affiliate means
a corporation which, for purposes of Section 424 of the Code, is a parent
or subsidiary of the Company, direct or indirect.

 

2.             Board means the
Board of Directors of the Company.

 

3.             Code means the
Internal Revenue Code of 1986, as amended.

 

4.             Committee means
the committee to which the Board delegates the power to act under or pursuant
to the provisions of the Plan, or the Board if no committee is selected.  Initially, the Compensation Committee of the
Board will administer the Plan.  If the
Board delegates powers to a committee, and if the Company is or becomes subject
to Section 16 of the Exchange Act, then, if necessary for compliance
therewith, such committee shall consist initially of not less than two (2) members
of the Board, each member of which must be a “non-employee director,” within the
meaning of the applicable rules promulgated pursuant to the Exchange
Act.  If the Company is or becomes
subject to Section 16 of the Exchange Act, no member of the Committee
shall receive any Option pursuant to the Plan or any similar plan of the Company
or any Affiliate while serving on the Committee unless the Board determines
that the grant of such an Option satisfies the then current Rule 16b-3
requirements under the Exchange Act. 
Notwithstanding anything herein to the contrary, and insofar as the Board
determines that it is desirable in order for compensation recognized by
Participants pursuant to the Plan to be fully deductible to the Company for
federal income tax purposes, each member of the Committee also shall be an “outside
director” (as defined in regulations or other guidance issued by the Internal
Revenue Service under Code Section 162(m)).

 

 

5.             Common Stock
means the common stock of the Company.

 

6.             Company means
InSight Health Services Holdings Corp., a Delaware corporation, and includes
any successor or assignee corporation or corporations into which the Company
may be merged, changed, or consolidated; any corporation for whose securities
the securities of the Company shall be exchanged; and any assignee of or
successor to substantially all of the assets of the Company.

 

7.             Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of
the Code.

 

8.             Eligible Employee
means an employee of the Company or of an Affiliate (including, without
limitation, an employee who also is serving as an officer or director of the
Company or of an Affiliate), designated by the Board or the Committee as being
eligible to be granted one or more Options under the Plan.

 

9.             Exchange Act
means the Securities Exchange Act of 1934, as amended from time to time, or any
successor statute thereto.

 

10.           Incentive Option
means an Option which, when granted, is intended to be an “incentive stock
option,” as defined in Section 422 of the Code.

 

11.           Key Non-Employee
means a non-employee director, consultant, or independent contractor of the
Company or of an Affiliate who is designated by the Board or the Committee as
being eligible to be granted one or more Options under the Plan.  For purposes of this Plan, a non-employee
director shall be deemed to include the employer or other designee of such
non-employee director, if the non-employee director is required, as a condition
of his or her employment, to provide that any Option granted hereunder be made
to the employer or other designee.

 

12.           Nonstatutory Option
means an Option which, when granted, is not intended to be an “incentive stock
option,” as defined in Section 422 of the Code, or that subsequently fails
to comply with the requirements of Section 422 of the Code.

 

13.           Option means a
right or option granted under the Plan.

 

14.           Option Agreement
means an agreement between the Company and a Participant executed and delivered
pursuant to the Plan.

 

15.           Participant
means an Eligible Employee to whom one or more Incentive Options or Nonstatutory
Options are granted under the Plan, and a Key Non-

 

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Employee to whom one or more Nonstatutory Options are granted under the
Plan.

 

16.           Plan means this
Stock Option Plan, as amended from time to time.

 

17.           Shares means
the following shares of the capital stock of the Company as to which Options
have been or may be granted under the Plan: treasury shares or authorized but
unissued Common Stock, or any shares of capital stock into which the Shares are
changed or for which they are exchanged within the provisions of Article VI
of the Plan.

 

II.            SHARES
SUBJECT TO THE PLAN

 

The aggregate number of Shares as to which
Options may be granted from time to time shall be Seven Hundred Sixty-Eight
Thousand (768,000) Shares (subject to adjustment for stock splits, stock
dividends, and other adjustments described in Article VI hereof)  Notwithstanding the foregoing, the aggregate
number of Shares issuable upon exercise of all outstanding Options shall not
exceed a number of Shares which is equal to thirty percent (30%) of the then
outstanding shares of the Company, as calculated in accordance with and if
required to otherwise comply with the conditions and exclusions of California
Corporate Securities Rule 260.140.45, unless a percentage higher than
thirty percent (30%) is approved by at least two-thirds (2/3) of the
outstanding Shares entitled to vote.

 

Shares subject to Options that are forfeited,
terminated, expire unexercised, canceled by agreement of the Company and the
Participant (whether for the purpose of repricing such Options or otherwise),
settled in cash in lieu of Common Stock or in such manner that all or some of
the Shares covered by such Options are not issued to a Participant (or, if
issued to the Participant, are returned to the Company by the Participant
pursuant to a right of repurchase or right of first refusal exercised by the
Company), shall immediately become available for Options hereunder.  In addition, if the exercise price of any
Option is satisfied by tendering Shares to the Company (by actual delivery or
attestation), only the number of Shares issued net of the Shares tendered shall
be deemed delivered for purposes of determining the maximum number of Shares
available for Options.

 

III.           ADMINISTRATION
OF THE PLAN

 

The Plan shall be administered by the
Committee.  A majority of the Committee
shall constitute a quorum at any meeting thereof (including by telephone
conference) and the acts of a majority of the members present, or acts approved
in writing by a majority of the entire Committee without a meeting, shall be
the acts of the Committee for purposes of this Plan.  The Committee may authorize one or more of
its members or an officer of the Company to execute and deliver documents on
behalf of the Committee.  A member of the
Committee shall not exercise any discretion respecting himself or herself under
the Plan.  The Board shall have the
authority to remove, replace or fill any vacancy of any member of the Committee
upon notice to the Committee and the affected member.  Any member of the 

 

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Committee may resign upon notice to the
Board.  If permitted by applicable law,
and in accordance with any such law, the Committee may allocate among one or
more of its members, or may delegate to one or more of its agents, such duties
and responsibilities as it determines.

 

Subject to the provisions of the Plan, the
Committee is authorized to:

 

A.            interpret the provisions of the Plan or of
any Option or Option Agreement and to make all rules and determinations
which it deems necessary or advisable for the administration of the Plan;

 

B.            determine which employees of the Company or
of an Affiliate shall be designated as Eligible Employees and which of the
Eligible Employees shall be granted Options;

 

C.            determine the Key Non-Employees to whom
Nonstatutory Options shall be granted;

 

D.            determine whether the Option to be granted
shall be an Incentive Option or Nonstatutory Option;

 

E.             determine the number of Shares for which
an Option or Options shall be granted;

 

F.             provide for the acceleration of the right
to exercise an Option (or portion thereof); and

 

G.            specify the terms and conditions upon which
Options may be granted;

 

provided, however, that with respect to
Incentive Options, all such interpretations, rules, determinations, terms, and
conditions shall be made and prescribed in the context of preserving the tax
status of the Incentive Options as “incentive stock options” within the meaning
of Section 422 of the Code.

 

The Committee may delegate to the chief
executive officer and to other senior officers of the Company or its Affiliates
its duties under the Plan pursuant to such conditions or limitations as the
Committee may establish, except that only the Committee may select, and grant
Options to, Participants who are subject to Section 16 of the Exchange
Act.  All determinations of the Committee
shall be made by a majority of its members. 
No member of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Option.

 

IV.           ELIGIBILITY
FOR PARTICIPATION

 

The Committee may, at any time and from time
to time, grant one or more Options to one or more Eligible Employees or Key
Non-Employees and may designate the number of Shares to be subject to each
Option so granted, provided, however, that (i) each Participant receiving
an Incentive Option must be an Eligible Employee of the Company or of an
Affiliate at the time an Incentive Option is granted; (ii) no Incentive
Options shall be granted 

 

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after the expiration of ten (10) years
from the earlier of the date of the adoption of the Plan by the Company or the
approval of the Plan by the stockholders of the Company; and (iii) the
fair market value of the Shares (determined at the time the Option is granted)
as to which Incentive Options are exercisable for the first time by any
Eligible Employee during any single calendar year (under the Plan and under any
other incentive option plan of the Company or an Affiliate) shall not exceed
$100,000.

 

Notwithstanding the foregoing, if the Company
is or becomes subject to Section 16 of the Exchange Act, then no
individual who is a member of the Committee shall be eligible to receive an
Option, unless the Board determines that the grant of the Option satisfies the
then current Rule 16b-3 requirements under the Exchange Act.  If the Company is not subject to Section 16
of the Exchange Act, then no individual who is a member of the Committee shall
be eligible to receive an Option under the Plan unless the granting of such
Option shall be approved by the Committee, with all of the members voting
thereon being disinterested members.  For
the purpose of this Article IV, a “disinterested member” shall be any
member who shall not then be, or at any time within the year prior thereto have
been, granted an Option under the Plan or any other plan of the Company or an
Affiliate, other than an Option granted under a formula plan established by the
Company or an Affiliate.

 

Notwithstanding any of the foregoing
provisions, the Committee may authorize the grant of an Option to a person not
then in the employ of or serving as a director, consultant, or independent
contractor of the Company or of an Affiliate, conditioned upon such person
becoming eligible to become a Participant at or prior to the execution of the
Option Agreement evidencing the actual grant of such Option.

 

V.            TERMS
AND CONDITIONS OF OPTIONS

 

Each Option shall be set forth in an Option
Agreement, duly executed on behalf of the Company and by the Participant to
whom such Option is granted.  Except for
the setting of the Option price under Paragraph A, no Option shall be granted
and no purported grant of any Option shall be effective until such Option
Agreement shall have been duly executed on behalf of the Company and by the
Participant.  Each such Option Agreement
shall be subject to at least the following terms and conditions:

 

A.            OPTION PRICE

 

The exercise price of the Shares covered by each Option
granted under the Plan shall be determined by the Committee.  The Option price per share of the Shares
covered by each Nonstatutory Option shall be at such amount as may be
determined by the Committee in its sole discretion on the date of the grant of
the Option.  In the case of an Incentive
Option, if the optionee owns directly or by reason of the applicable
attribution rules ten percent (10%) or less of the total combined voting
power of all classes of stock of the Company, the Option price (per share) of
the Shares covered by each Incentive Option shall be not less than the “fair
market value” of the Shares on the date of the grant of the Incentive
Option.  In all other cases of Incentive
Options, the Option price shall be not less than one hundred ten percent (110%)
of 

 

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the said fair market value on the date of grant.  If the Shares are listed on any national
securities exchange, the fair market value shall be the closing sales price, if
any, on the largest such exchange on the date of the grant of the Option, or,
if none, on the most recent trade date thirty (30) days or less prior to the
date of the grant of the Option.  If the
Shares are not then listed on any such exchange, the fair market value of such
Shares shall be the closing sales price if such is reported or otherwise the
mean average of the closing “Bid” and the closing “Ask” prices, if any, as
reported on the National Association of Securities Dealers Automated Quotation
System (“NASDAQ”) for the date of the grant of the Option, or if none, on the
most recent trade date thirty (30) days or less prior to the date of the grant
of the Option for which such quotations are reported.  If the Shares are not then either listed on
any such exchange or quoted on NASDAQ, the fair market value shall be the mean
between the average of the “Bid” and the average of the “Ask” prices, if any,
as reported by the Electronic Quotation Service or Pink Sheets LLC (or such
equivalent reporting service) for the date of the grant of the Option, or, if
none, for the most recent trade date thirty (30) days or less prior to the date
of the grant of the Option for which such quotations are reported.  If the fair market value cannot be determined
under the preceding three sentences, it shall be determined in good faith by
the Committee.

 

B.            NUMBER OF SHARES

 

Each Option shall state the
number of Shares to which it pertains.

 

C.            TERM OF OPTION

 

Each Incentive Option shall terminate not
more than ten (10) years from the date of the grant thereof, or at such
earlier time as the Option Agreement may provide, and shall be subject to
earlier termination as herein provided, except that if the Option price is
required under Paragraph A of this Article V to be at least one hundred
ten percent (110%) of fair market value, each such Incentive Option shall
terminate not more than five (5) years from the date of the grant thereof,
and shall be subject to earlier termination as herein provided.

 

D.            DATE OF EXERCISE

 

Upon the authorization of the grant of an Option, or at any
time thereafter, the Committee may, subject to the provisions of Paragraph C of
this Article V, prescribe the date or dates on which the Option becomes
exercisable, and may provide that the Option rights become exercisable in
installments over a period of years, and/or upon the attainment of stated
goals.  Unless the Committee otherwise
provides in writing, the date or dates on which the Option becomes exercisable
shall be tolled during any unpaid leave of absence.  It is expressly understood that Options
hereunder shall, unless otherwise provided for in writing by the Committee, be
granted in contemplation of, and earned by the Participant through the
completion of, future employment or service with the Company.

 

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E.             METHOD OF PAYMENT

 

The Option price shall be paid on the date of purchase
specified in the notice of exercise, as set forth in Paragraph I.  It shall be paid in such form (permitted by Section 422
of the Code in the case of Incentive Options) as the Committee shall, either by
rules promulgated pursuant to the provisions of Article III of the
Plan, or in the particular Option Agreement, provide.

 

F.             TERMINATION OF
EMPLOYMENT

 

1.                                       A Participant
who ceases to be an employee or Key Non-Employee of the Company or of an
Affiliate for any reason other than death, Disability, or termination for
cause, may exercise any Option granted to such Participant, to the extent that
the right to purchase Shares thereunder has become exercisable by the date of
such termination, but only within three (3) (or such other period of time
as the Committee may determine, with such determination in the case of an
Incentive Option being made at the time of the grant of the Option and not
exceeding three (3) months) months after such date, or, if earlier, within
the originally prescribed term of the Option, and subject to the conditions
that (i) no Option shall be exercisable after the expiration of the term
of the Option and (ii) unless the Committee otherwise provides, no Option
that has not become exercisable by the date of such termination shall at any
time thereafter be or become exercisable. 
A Participant’s employment shall not be deemed terminated by reason of a
transfer to another employer which is the Company or an Affiliate.

 

2.                                       A Participant
who ceases to be an employee or Key Non-Employee for cause shall, immediately
upon such termination, cease to have any right to exercise any Option, whether
or not then vested or unvested.  For
purposes of this Plan, cause shall be as defined in any employment or other
agreement between the Participant and the Company (or an Affiliate) or, if
there is no such agreement or definition therein, cause shall be defined to
include (but shall not be limited to) wrongful appropriation of funds of the
Company or an Affiliate, divulging confidential information about the Company
or an Affiliate to the public, the commission of a gross misdemeanor or felony,
or the performance of any other action that the Board or the Committee, in
their sole discretion, may deem to be sufficiently injurious to the interests
of the Company or an Affiliate to constitute substantial cause for termination.
The determination of the Board or the Committee as to the existence of cause
shall be conclusive and binding upon the Participant and the Company.

 

3.                                       Except as the
Committee may otherwise expressly provide or determine (consistent with Section 422
of the Code, if applicable), a Participant who is absent from work with the
Company or an Affiliate because of temporary disability (any disability other
than a permanent and total Disability as 

 

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defined at Paragraph B(7) of Article I hereof), or who is on
leave of absence for any purpose permitted by the Company or by any authoritative
interpretation (i.e., regulation, ruling, case law, etc.) of Section 422
of the Code, shall not, during the period of any such absence, be deemed, by
virtue of such absence alone, to have terminated his or her employment or
relationship with the Company or with an Affiliate.  For purposes of Incentive Options, no leave
of absence may exceed ninety (90) days, unless reemployment upon expiration of
such leave is guaranteed by statute or contract (or the Committee approves such
longer leave of absence, in which event the Incentive Option held by the
Participant shall be treated as a Nonstatutory Option following the ninetieth
(90th) day of such leave).

 

4.                                       Paragraph F(1) shall
control and fix the rights of a Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for any reason other than death,
Disability, or termination for cause, and who subsequently becomes Disabled or
dies.  Nothing in Paragraphs G and H of
this Article V shall be applicable in any such case except that, in the
event of such a subsequent Disability or death within the three (3) month
period after the termination of employment or, if earlier, within the
originally prescribed term of the Option, the Participant or the Participant’s
estate or personal representative may exercise the Option permitted by this
Paragraph F, in the event of Disability, within twelve (12) months after the
date that the Participant ceased to be an employee or Key Non-Employee of the
Company or of an Affiliate or, in the event of death, within twelve (12) months
after the date of death of such Participant.

 

G.            TOTAL AND PERMANENT
DISABILITY

 

A Participant who ceases to be an employee or
Key Non-Employee of the Company or of an Affiliate by reason of Disability may
exercise any Option granted to such Participant to the extent that the right to
purchase Shares thereunder has become exercisable on or before the date such
Participant becomes Disabled as determined by the Committee.

 

A Disabled Participant, or his or her estate
or personal representative, shall exercise such rights, if at all, only within
a period of not more than twelve (12) months after the date that the
Participant became Disabled as determined by the Committee (notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become Disabled)
or, if earlier, within the originally prescribed term of the Option.

 

H.            DEATH

 

In the event that a Participant to whom an
Option has been granted ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate by reason of such Participant’s death, such Option,
to the extent that the right is exercisable but 

 

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not exercised on the date of death, may be
exercised by the Participant’s estate or personal representative within twelve
(12) months after the date of death of such Participant or, if earlier, within
the originally prescribed term of the Option, notwithstanding that the decedent
might have been able to exercise the Option as to some or all of the Shares on
a later date if the Participant were alive and had continued to be an employee
or Key Non-Employee of the Company or of an Affiliate.

 

I.              EXERCISE OF OPTION AND
ISSUE OF STOCK

 

Options shall be exercised by giving written
notice to the Company.  Such written
notice shall: (l) be signed by the person exercising the Option, (2) state
the number of Shares with respect to which the Option is being exercised, (3) contain
the warranty required by Paragraph M of this Article V, and (4) specify
a date (other than a Saturday, Sunday or legal holiday) not less than five (5) nor
more than ten (10) days after the date of such written notice, as the date
on which the Shares will be purchased. 
Such tender and conveyance shall take place at the principal office of
the Company during ordinary business hours, or at such other hour and place
agreed upon by the Company and the person or persons exercising the
Option.  On the date specified in such
written notice (which date may be extended by the Company in order to comply
with any law or regulation which requires the Company to take any action with
respect to the Option Shares prior to the issuance thereof, whether pursuant to
the provisions of Article VI or otherwise), the Company shall accept
payment for the Option Shares, and shall deliver to the person or persons
exercising the Option in exchange therefor an appropriate certificate or
certificates for fully paid non-assessable Shares.  In the event of any failure to pay for the
number of Shares specified in such written notice on the date set forth therein
(or on the extended date as above provided), the right to exercise the Option
shall terminate with respect to such number of Shares, but shall continue with
respect to the remaining Shares covered by the Option and not yet acquired
pursuant thereto.

 

J.             RIGHTS AS A
STOCKHOLDER

 

No Participant to whom an Option has been
granted shall have rights as a stockholder with respect to any Shares covered
by such Option except as to such Shares as have been issued to or registered in
the Company’s share register in the name of such Participant upon the due
exercise of the Option and tender of the full Option price.

 

K.            ASSIGNABILITY AND TRANSFERABILITY
OF OPTION

 

Unless otherwise permitted by the Code and by
Rule 16b-3 of the Exchange Act and by Section 260.140.41(d) of
Title 10 of the California Code of Regulations, if applicable, and approved in
advance by the Committee, an Option granted to a Participant shall not be
transferable by the Participant and shall be exercisable, during the
Participant’s lifetime, only by such Participant or, in the event of the 

 

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Participant’s incapacity, his guardian or
legal representative.  Except as
otherwise permitted herein, such Option shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment, or similar process.  Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Option or of any rights granted
thereunder contrary to the provisions of this Paragraph K, or the levy of any
attachment or similar process upon an Option or such rights, shall be null and
void.

 

L.            OTHER PROVISIONS

 

The Option Agreement for an Incentive Option
shall contain such limitations and restrictions upon the exercise of the Option
as shall be necessary in order that such Option qualifies as an “incentive
stock option” within the meaning of Section 422 of the Code.  Further, the Option Agreements authorized
under the Plan shall be subject to such other terms and conditions including,
without limitation, restrictions upon the exercise of the Option, as the Committee
shall deem advisable and which, in the case of Incentive Options, are not
inconsistent with the requirements of Section 422 of the Code.

 

M.           PURCHASE FOR INVESTMENT

 

Unless the Shares to be issued upon the
particular exercise of an Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended, the Company
shall be under no obligation to issue the Shares covered by such exercise
unless and until the following conditions have been fulfilled.  In accordance with the direction of the
Committee, the persons who exercise such Option shall warrant to the Company
that, at the time of such exercise, such persons are acquiring their Option
Shares for investment and not with a view to, or for sale in connection with,
the distribution of any such Shares, and shall make such other representations,
warranties, acknowledgments and/or affirmations, if any, as the Committee may
require.  In such event, the persons
acquiring such Shares shall be bound by the provisions of the following legend
(or similar legend) which shall be endorsed upon the certificate(s) evidencing
their Option Shares issued pursuant to such exercise.

 

“The shares represented by this certificate have been
acquired for investment and they may not be sold or otherwise transferred by
any person, including a pledgee, in the absence of an effective registration
statement for the shares under the Securities Act of 1933 or an opinion of
counsel satisfactory to the Company that an exemption from registration is then
available.”

 

Without limiting the generality of
the foregoing, the Company may delay issuance of the Shares until completion of
any action or obtaining any consent that the Company deems necessary under any
applicable law (including without limitation state securities or “blue sky”
laws).

 

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VI.           ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION; SALE OF COMPANY

 

If the outstanding Shares of the Company are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, or consolidation, or if a change is made to the Common
Stock of the Company by reason of any recapitalization, reclassification, change
in par value, stock split, reverse stock split, combination of shares or
dividend payable in capital stock, or the like, the Company shall make
adjustments to such Options (including, by way of example and not by way of
limitation, the grant of substitute options under the Plan or under the plan of
such other corporation) as it may determine to be appropriate under the
circumstances, and, in addition, appropriate adjustments shall be made in the
number and kind of shares and in the option price per share subject to
outstanding options under the Plan or under the plan of such successor
corporation.  No such adjustment shall be
made which shall, within the meaning of Section 424 of the Code,
constitute such a modification, extension, or renewal of an option as to cause
the adjustment to be considered as the grant of a new option.

 

Notwithstanding anything herein to the
contrary, the Company  may, in its sole
discretion, accelerate the timing of the exercise provisions of any Option to
an earlier date designated by the Committee in the event of (i) the
adoption of a plan of merger or consolidation under which all the Shares of the
Company would be eliminated, or (ii) a sale of all or substantially all of
the Company’s assets or Shares. 
Alternatively, the Company may, in its sole discretion, cancel any or
all Options upon any of the foregoing events and provide for the payment to
Participants in cash of an amount equal to the difference between the Option
price and the price of a Share, as determined in good faith by the Committee,
at the close of business on the date of such event, multiplied by the number of
Shares subject to Option so canceled.

 

Upon a business combination by the Company or
any of its Affiliates with any corporation or other entity through the adoption
of a plan of merger or consolidation or a share exchange or through the
purchase of all or substantially all of the capital stock or assets of such
other corporation or entity, the Board or the Committee may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on the
effective date of such transaction, hold outstanding options to purchase
securities of such other corporation or entity and who, on and after the
effective date of such transaction, will become employees or directors of, or
consultants to, the Company or its Affiliates. 
The number of Shares subject to such substitute Options shall be
determined in accordance with the terms of the transaction by which the
business combination is effected. 
Notwithstanding the other provisions of this Plan, the other terms of
such substitute Options shall be substantially the same as or economically
equivalent to the terms of the options for which such Options are substituted,
all as determined by the Board or by the Committee, as the case may be.  Upon the grant of substitute Options pursuant
hereto, the options to purchase securities of such other corporation or entity
for which such Options are substituted shall be canceled immediately and
without payment of any consideration to the holder of such Options.

 

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VII.         DISSOLUTION
OR LIQUIDATION OF THE COMPANY

 

Upon the dissolution or liquidation of the
Company other than in connection with a transaction to which the preceding Article VI
is applicable, all Options granted hereunder shall terminate and become null
and void; provided, however, that if the rights of a Participant under the
applicable Options have not otherwise terminated and expired, the Participant
shall have the right immediately prior to such dissolution or liquidation to
exercise any Option granted hereunder to the extent that the right to purchase
shares thereunder has become exercisable as of the date immediately prior to
such dissolution or liquidation.

 

VIII.        TERMINATION
OF THE PLAN

 

The Plan shall terminate (10) years from
the earlier of the date of its adoption or the date of its approval by the
stockholders.  The Plan may be terminated
at an earlier date by vote of the stockholders or the Board; provided, however,
that any such earlier termination shall not affect any Options granted or
Option Agreements executed prior to the effective date of such
termination.  Except as may otherwise be
provided for under Articles VI and VII, and notwithstanding the termination of
the Plan, any Options granted prior to the effective date of the Plan’s
termination may be exercised until the earlier of (i) the date set forth
in the Option Agreement, or (ii) in the case of Incentive Options, ten (10) years
from the date the Option is granted, and the provisions of the Plan with
respect to the full and final authority of the Committee under the Plan shall
continue to control.

 

IX.           AMENDMENT
OF THE PLAN

 

The Plan may be amended by the Board and such
amendment shall become effective upon adoption by the Board; provided, however,
that any amendment shall be subject to the approval of the stockholders of the
Company at or before the next annual meeting of the stockholders of the Company
if such stockholder approval is required by the Code, any federal or state law
or regulation, the rules of any stock exchange or automated quotation
system on which the Shares may be listed or quoted, or if the Board, in its
discretion, determines to submit such changes to the Plan to its stockholders
for approval.

 

X.            EMPLOYMENT
RELATIONSHIP

 

Nothing herein contained shall be deemed to
prevent the Company or an Affiliate from terminating the employment of a
Participant, nor to prevent a Participant from terminating the Participant’s
employment with the Company or an Affiliate, unless otherwise limited by an
agreement between the Company (or an Affiliate) and the Participant.

 

XI.           INDEMNIFICATION
OF COMMITTEE

 

In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against all
reasonable expenses, including attorneys’ fees, actually and reasonably 

 

12

 

incurred in connection with the defense of
any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken by them
as members of the Committee and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that the Committee member
is liable for gross negligence or willful misconduct in the performance of his
or her duties.  To receive such
indemnification, a Committee member must first offer in writing to the Company
the opportunity, at its own expense, to defend any such action, suit or
proceeding.

 

XII.         MITIGATION
OF EXCISE TAX

 

Unless otherwise provided for in the Option
Agreement or in any other agreement between the Company (or an Affiliate) and
the Participant, if any payment or right accruing to a Participant under this
Plan (without the application of this Article XII), either alone or
together with other payments or rights accruing to the Participant from the
Company or an Affiliate would constitute a “parachute payment” (as defined in Section 280G
of the Code and regulations thereunder), such payment or right shall be reduced
to the largest amount or greatest right that will result in no portion of the
amount payable or right accruing under the Plan being subject to an excise tax
under Section 4999 of the Code or being disallowed as a deduction under Section 280G
of the Code.  The determination of
whether any reduction in the rights or payments under this Plan is to apply
shall be made by the Company.  The
Participant shall cooperate in good faith with the Company in making such
determination and providing any necessary information for this purpose.

 

XIII.            SAVINGS CLAUSE

 

This Plan is intended to comply in all
respects with applicable law and regulations, including, (i) with respect
to those Participants who are officers or directors for purposes of Section 16
of the Exchange Act, Rule 16b-3 of the Securities and Exchange Commission,
if applicable, (ii) Section 402 of the Sarbanes-Oxley Act, and (iii) with
respect to executive officers, Code Section 162(m).  In case any one or more provisions of this
Plan shall be held invalid, illegal, or unenforceable in any respect under
applicable law and regulation (including Rule 16b-3 and Code Section 162(m)),
the validity, legality, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby and the invalid, illegal, or
unenforceable provision shall be deemed null and void; however, to the extent
permitted by law, any provision that could be deemed null and void shall first
be construed, interpreted, or revised retroactively to permit this Plan to be
construed in compliance with all applicable law (including Rule 16b-3 and
Code Section 162(m)) so as to foster the intent of this Plan.  Notwithstanding anything herein to the
contrary, with respect to Participants who are officers and directors for
purposes of Section 16 of the Exchange Act, no grant of an Option to
purchase Shares shall permit unrestricted ownership of Shares by the
Participant for at least six (6) months from the date of the grant of such
Option, unless the Board determines that the grant of such Option to purchase
Shares otherwise satisfies the then current Rule 16b-3 requirements.

 

13

 

XIV.            WITHHOLDING

 

Except as otherwise provided by the
Committee,

 

A.                                    the
Company shall have the power and right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy the
minimum federal, state, and local taxes required by law to be withheld with
respect to any grant, exercise, or payment made under or as a result of this
Plan; and

 

B.                                    in
the case of any taxable event hereunder, a Participant may elect, subject to
the approval in advance by the Committee, to satisfy the withholding
requirement, if any, in whole or in part, by having the Company withhold Shares
of Common Stock that would otherwise be transferred to the Participant having a
fair market value, on the date the tax is to be determined, equal to the
minimum marginal tax that could be imposed on the transaction.  All elections shall be made in writing and
signed by the Participant.

 

XV.              EFFECTIVE DATE

 

This Plan shall become effective upon
adoption by the Board, provided that the adoption of the Plan shall be subject
to the approval of the stockholders of the Company if such stockholder approval
is required by the Code, any federal or state law or regulations, the rules of
any stock exchange or automated quotation system on which the Shares may be
listed or quoted, or if the Board, in its discretion, desires to submit the
Plan to its stockholders for approval.

 

XVI.            INFORMATION

 

The Company shall provide to each
Participant, during the period for which such Participant has one or more
Options outstanding, copies of financial statements at least annually, if
necessary to comply with California Corporate Securities Rule 260.140.46.

 

XVII.          FOREIGN JURISDICTIONS

 

To the extent the Committee determines that
the restrictions imposed by the Plan preclude the achievement of the material
purposes of the Plan in jurisdictions outside the United States of America, the
Committee in its discretion may modify those restrictions as it determines to
be necessary or appropriate to conform to applicable requirements or practices
of jurisdictions outside of the United States of America.

 

14

 

XVIII.     GOVERNING
LAW

 

This Plan shall be governed by the laws of
the State of Delaware and construed in accordance therewith.

 

Adopted this 14th day of April, 2008.

 

15Exhibit
10.16

 

Final
Version

 

INSIGHT HEALTH SERVICES HOLDINGS CORP.

2008 EMPLOYEE STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION GRANT AGREEMENT

 

THIS AGREEMENT is made
this          day of           ,
2008 (the “Grant Date”)
between InSight Health Services Holdings Corp., a Delaware corporation (the “Company”), and                     
(the “Optionee”).

 

WHEREAS, the Company
desires to grant to the Optionee an option to purchase shares of common capital
stock (the “Shares”)
under the Company’s 2008 Employee Stock Option Plan (the “Plan”); and

 

WHEREAS, the Company and
the Optionee understand and agree that any terms used herein have the same
meanings as in the Plan (the Optionee being referred to in the Plan as a “Participant”).

 

NOW, THEREFORE, in
consideration of the following mutual covenants and for other good and valuable
consideration, the parties agree as follows:

 

1.             GRANT OF OPTION

 

The Company grants
to the Optionee the right and option to purchase all or any part of an
aggregate of               
Shares (the “Option”) on the terms
and conditions and subject to all the limitations set forth herein and in the
Plan, which is incorporated herein by reference.  The Optionee acknowledges receipt of a copy
of the Plan and acknowledges that the definitive records pertaining to the
grant of this Option, and exercises of rights hereunder, shall be retained by
the Company.  The Option granted herein
is intended to be a Nonstatutory Option as defined in the Plan.

 

2.             PURCHASE PRICE

 

The purchase price
of the Shares subject to the Option shall be $         per
Share.

 

3.             EXERCISE OF OPTION

 

(a)           Vesting.  Subject to the Plan and the terms of this
paragraph and the other provisions of this Agreement, the Option shall fully
vest and be exercisable if, and only if, the Refinancing Event (as defined
below) is achieved prior to the expiration of this Option.  There will not be any pro-rata vesting.

 

(b)           Refinancing
Event.  “Refinancing Event”
shall mean that the currently outstanding InSight Health Services Corp. Senior
Secured Floating Rate Notes Due 2011, in aggregate principal amount of
$315,000,000 (the “FRNs”), issued pursuant to the Indenture dated as of September 22,
2005, among InSight Health Services Corp., the Guarantors signatory thereto,
and U.S. Bank National Association, as Trustee, as supplemented by the First
Supplemental Indenture dated May 18, 2006, the Second Supplemental
Indenture dated May 29, 2007, and the Third Supplemental Indenture dated
as of July 9, 2007, as the same may be further supplemented or amended,
shall have been repaid in full and 

 

 

refinanced or replaced with a new issue or issues of
indebtedness of InSight Health Services Corp. or its affiliates (“Replacement
Debt”); provided, that such Replacement Debt is approved by the
Board of Directors of the Company and  (i) must
have a maturity of at least 5 years from the date of original issuance, and
(ii), the then-existing stockholders must not suffer any dilution in connection
with the refinancing or replacement, whether as a result of an issuance of
equity or equity-related securities (a) to the holders of the FRNs, (b) to
the potential investors in the new issuance or issuances of Replacement Debt or
(c) by the Company or its affiliates. 
Any determination of whether a refinancing transaction constitutes a
Refinancing Event shall be made by the Compensation Committee in its sole
discretion, taking into account the factors set forth above and the purpose and
intent of this provision.

 

(c)           Expiration.  Once an Option has vested, it shall expire on
            , 2018,
subject to earlier termination or forfeiture as provided in the Plan.  If an Option has not vested on or prior to
such date, the Option shall immediately thereafter expire.

 

4.                                       ISSUANCE OF STOCK

 

The Option may be
exercised in whole or in part (to the extent that it is exercisable in
accordance with its terms) for a whole number of Shares by giving written
notice (or any other approved form of notice) to the Company.  Such written notice shall be signed by the
person exercising the Option, shall state the number of Shares with respect to
which the Option is being exercised, shall contain the warranty, if any,
required under the Plan and shall specify a date (other than a Saturday, Sunday
or legal holiday) not less than five (5) nor more than ten (10) days
after the date of such written notice, as the date on which the Shares will be
purchased, at the principal office of the Company during ordinary business
hours, or at such other hour and place agreed upon by the Company and the person
or persons exercising the Option, and shall otherwise comply with the terms and
conditions of this Agreement and the Plan. 
On the date specified in such written notice (which date may be extended
by the Company if any law or regulation requires the Company to take any action
with respect to the Option Shares prior to the issuance thereof), the Company
shall accept payment for the Option Shares and shall deliver to the Optionee as
soon as practicable thereafter an appropriate certificate or certificates or
book-entry notation for the Shares as to which the Option was exercised.

 

The Option price
of any Shares shall be payable at the time of exercise as determined by the
Company in its sole discretion either:

 

(a)           in cash, by certified
check or bank check, or by wire transfer;

 

(b)                                  in whole shares of the Company’s common stock,
provided, however, that (i) if such shares were acquired pursuant to an
incentive stock option plan (as defined in Code Section 422) of the
Company or Affiliate, then the applicable holding period requirements of said Section 422
have been met with respect to such shares, (ii) if the Optionee is subject
to the reporting requirements of Section 16 of the Securities Exchange Act
of 1934, as amended from time to time, and if such shares were granted pursuant
to an option, then such option must have been granted at least six (6) months
prior to the exercise of the Option 

 

2

 

hereunder, and (iii) such shares were owned by
the Optionee for six (6) or more months prior to the exercise of the
Option hereunder;

 

(c)                                   through the delivery of cash or the extension of
credit by a broker-dealer to whom the Optionee has submitted notice of exercise
or otherwise indicated an intent to exercise an Option (a so-called “cashless”
exercise); or

 

(d)                                 in
any combination of (a), (b) or (c) above.

 

The fair market
value of the stock to be applied toward the purchase price shall be determined
as of the date of exercise of the Option in a manner consistent with the
determination of fair market value with respect to the grant of an Option under
the Plan.  Any certificate for shares of
outstanding stock of the Company used to pay the purchase price shall be
accompanied by a stock power duly endorsed in blank by the registered holder of
the certificate, with signature guaranteed in the event the certificate shall
also be accompanied by instructions from the Optionee to the Company’s transfer
agent with respect to disposition of the balance of the shares covered thereby.

 

The Company shall
pay all original issue taxes with respect to the issuance of Shares pursuant
hereto and all other fees and expenses necessarily incurred by the Company in
connection therewith.  The holder of this
Option shall have the rights of a stockholder only with respect to those Shares
covered by the Option which have been registered in the holder’s name in the
share register of the Company upon the due exercise of the Option.

 

5.               NON-ASSIGNABILITY

 

This Option shall
not be transferable by the Optionee and shall be exercisable only by the
Optionee, except as the Plan or this Agreement may otherwise provide.

 

6.               NOTICES

 

Any notices
required or permitted by the terms of this Agreement or the Plan shall be given
by registered or certified mail, return receipt requested, addressed as
follows:

 

To the Company:                 InSight Health
Services Holdings Corp.

26250 Enterprise Court, Suite 100

Lake Forest, CA 92630

Attention: General
Counsel

 

To the Optionee:

 

or to such other
address or addresses of which notice in the same manner has previously been
given.  Any such notice shall be deemed
to have been given when mailed in accordance with the foregoing provisions.

 

3

 

7.               GOVERNING LAW

 

This Agreement
shall be construed and enforced in accordance with the laws of the State of
Delaware.

 

8.               BINDING EFFECT

 

This Agreement
shall (subject to the provisions of Paragraph 5 hereof) be binding upon the
heirs, executors, administrators, successors and assigns of the parties hereto.

 

IN
WITNESS WHEREOF, the Company and the Optionee have caused
this Agreement to be executed on their behalf, by their duly authorized
representatives, all on the day and year first above written.

 

	
  INSIGHT HEALTH SERVICES
  HOLDINGS

  	
   

  	
  OPTIONEE:

  
	
  CORP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  

 

4

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