EXHIBIT 10.41

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, made and entered into effective as of May 1,
2004, is by and among M&S IMAGING PARTNERS, L.P., a Delaware limited partnership
(“Seller”), VHS SAN ANTONIO IMAGING PARTNERS, L.P., a Delaware limited
partnership (“Buyer”), RADIOLOGIX, INC., a Delaware corporation (“Radiologix”),
and VANGUARD HEALTH SYSTEMS, INC., a Delaware corporation (“Vanguard”).

 

RECITALS:

 

WHEREAS, as more particularly described herein, this Agreement provides for the
sale by Seller to Buyer of all of Seller’s right, title and interest to the
assets, real, personal and mixed, tangible and intangible, owned or leased by
Seller and used by Seller in the operation of M & S Imaging and P.E.T. Center, a
single diagnostic imaging center located in San Antonio, Texas (the “Center”);
and

 

WHEREAS, pursuant to the terms of that certain Purchase and Contribution
Agreement, dated of even date herewith, among Buyer, Seller, Radiologix,
Vanguard and San Antonio Partners, L.P., a Delaware limited partnership, Buyer
is also acquiring the partnership interests owned by Seller of certain
partnerships (the “Related Agreement”).

 

NOW, THEREFORE, for and in consideration of the premises, and the agreements,
covenants, representations and warranties hereinafter set forth, and other good
and valuable consideration, the receipt and adequacy of which are forever
acknowledged and confessed, the Parties, intending to be legally bound, agree as
follows:

 

AGREEMENT:

 

1. DEFINITIONS AND REFERENCES

 

1.01. Definitions. As used in this Agreement, and unless the context requires a
different meaning, the following terms have the meanings given:

 

Accounts Receivable: all accounts receivable of the Center for patient services
provided by the Center through the close of business on the day immediately
prior to the Closing Date, accrued and unaccrued, including Government Payment
Program receivables and accounts that have been written off;

 

Affiliate: any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
another Person and includes the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
securities, election or appointment of directors, by Contract or otherwise;

 

Agreement: this Asset Purchase Agreement and all Exhibits and Schedules attached
hereto, as amended, consolidated, supplemented, novated or replaced by the
Parties from time to time;

 

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Annual Financial Statements: the unaudited balance sheet of Seller as of
December 31, 2002 and December 31, 2003, and the unaudited statement of earnings
for each of the years then ended;

 

Assets: all assets, real, personal and mixed, tangible and intangible, other
than the Excluded Assets, owned or leased by Seller and its Affiliates and used
by Seller in the operation of the Center;

 

Assumed Contracts: the Contracts listed or described on Schedule 2.01(e) and the
Immaterial Contracts;

 

Assumed Liabilities: (i) all obligations of Seller arising on or after the
Closing Date with respect to any period commencing on the Closing Date under the
Assumed Contracts, (ii) vacation, holiday, sick and other leave accumulations of
the Hired Employees (whether in such form or in the form of so-called paid time
off), and estimated Taxes thereon, and (iii) the other liabilities and
obligations, if any, described on Schedule 2.03; provided that the Assumed
Liabilities shall only include those liabilities and obligations described in
clauses (ii) and (iii) above with respect to which Buyer has received a credit
against the Purchase Price as provided in Section 2.05(b);

 

Buyer: VHS San Antonio Imaging Partners, L.P., a Delaware limited partnership
and an Affiliate of Vanguard;

 

Buyer’s Indemnified Persons: Buyer, Vanguard, and Buyer’s and Vanguard’s
partners, stockholders, Affiliates, successors and assigns from time to time,
and their respective stockholders, partners, Affiliates, directors, trustees,
officers, employees, agents and representatives;

 

Cash Portion of the Purchase Price: defined in Section 2.05(b);

 

Center: the single diagnostic imaging center located in San Antonio, Texas and
operated by Seller under the name “M & S Imaging and P.E.T Center”, together
with the business office and call center operated in connection therewith;

 

Center Employees: those non-physician employees of Seller or any Affiliate of
Seller who are employed at the Center, the Centers (as defined in the Related
Agreement) and/or the business office or call center operated in connection
therewith and whose primary responsibilities are to perform services for the
Center and/or for the Centers, provided that Center Employees shall expressly
exclude employees whose primary responsibilities are to perform services for the
practice management business of Seller;

 

Claim Notice: written notification of a Third Party Claim by an Indemnified
Party to an Indemnifying Party under Article 9, including a Revenue Agent’s
Report, Statutory Notice of Deficiency, Notice of Proposed Assessment, or any
other official written notice from a Taxing authority that Taxes are due or that
a Tax audit will be conducted;

 

Closing: defined in Section 8.01;

 

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Closing Date: the date as of which the Closing occurs;

 

Closing Documents: all instruments, agreements, certificates or other documents
executed or delivered by any Party to another Party at Closing;

 

Code: the Internal Revenue Code of 1986, as amended;

 

Contract: each commitment, contract, lease, license, agreement and
understanding, written or oral, to which Seller is a party relating to the
Center or by which it or any of the Assets are bound, including agreements with
physicians, managed care plans and other payers, management, employment,
retention and severance agreements, vendor agreements, real and personal
property leases and schedules, maintenance agreements and schedules, agreements
with municipalities and labor organizations, and bonds, mortgages and other loan
agreements;

 

Controlled Group: with respect to Seller, a group consisting of each trade or
business (whether or not incorporated) which, together with Seller, would be
deemed a “single employer” within the meaning of section 4001(a)(14) of ERISA;

 

Effective Date: the date as of which this Agreement was entered into by the
Parties, as set forth on the first page of this Agreement;

 

Employee Benefit Plan: any (1) nonqualified deferred compensation or retirement
plan or arrangement which is an Employee Pension Benefit Plan, (2) qualified
defined contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), (3) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (4) Employee Welfare Benefit Plan or
material fringe benefit plan or program;

 

Employee Pension Benefit Plan: defined in section 3(2) of ERISA;

 

Employee Welfare Benefit Plan: defined in section 3(1) of ERISA;

 

Encumbrances: liabilities, levies, claims, charges, assessments, mortgages,
security interests, liens, pledges, conditional sales agreements, title
retention contracts, leases, subleases, rights of first refusal, options to
purchase, restrictions (including those on transferring, pledging and
mortgaging) and other encumbrances, and Contracts to create or suffer any of the
foregoing;

 

ERISA: the Employee Retirement Income Security Act of 1974, as amended;

 

ERISA Fiduciary: defined in section 3(21) of ERISA;

 

Excluded Assets: defined in Section 2.02;

 

Excluded Liabilities: any and all liabilities of Seller, other than the Assumed
Liabilities, whether known or unknown, fixed or contingent, recorded or
unrecorded, and whether arising prior to or after Closing;

 

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Financial Statements: the Annual Financial Statements, Interim Financial
Statements, and the financial statements described in Section 5.04(b)(i);

 

Governmental Authorities: all agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures and offices of any nature
whatsoever of any federal, state, county, district, municipal, city, foreign or
other government or quasi-government unit or political subdivision, and private
arbitration panels or dispute resolution makers;

 

Government Payment Programs: federal and state Medicare, Medicaid and TRICARE
programs, and similar or successor programs with or for the benefit of
Governmental Authorities;

 

Hired Employees: those Center Employees who accept the offer of employment made
by Buyer or Buyer’s Affiliates pursuant to Section 5.03;

 

Immaterial Contracts: Contracts that (i) require the future payment by the
Center of $15,000 or less or the future performance by the Center of services
having a value of $15,000 or less, or (ii) are terminable by the Center at any
time without cause upon notice of 90 days or less, and that require during the
period prior to termination the payment of $15,000 or less or the future
performance of services having a value of $15,000, provided that Immaterial
Contracts shall not include any Contracts described in paragraphs (a) through
(g) of Section 3.15;

 

Indemnified Party: any Person entitled to indemnification under Article 9;

 

Indemnifying Party: any Person obligated to indemnify another Person under
Article 9;

 

Indemnity Notice: written notification of a claim for indemnity under Article 9,
other than a Third Party Claim, made by an Indemnified Party to an Indemnifying
Party pursuant to Section 9.05(b);

 

Intellectual Properties: all marks, names, trademarks, service marks, patents,
patent rights, assumed names, logos, copyrights, trade secrets and similar
intangibles (including variants of and applications for the foregoing);

 

Interim Financial Statements: the balance sheets and statements of earnings of
the Seller as of and for the two months ended February 29, 2004;

 

Investments: shares of capital stock of any corporation, interests in
partnerships or limited liability companies, or other equity or debt instruments
in any other Person, and proceeds from the sale thereof;

 

Legal Requirements: with respect to any Person, all statutes, ordinances,
by-laws, codes, rules, regulations, restrictions, orders, judgments, writs,
injunctions, decrees, determinations or awards of any Governmental Authority
having jurisdiction over such Person or any of such Person’s assets or
businesses;

 

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Losses: any and all damages, claims, costs, losses (including any diminution in
value), liabilities, expenses or obligations (including Taxes, interest,
penalties, court costs, costs of preparation and investigation, and attorneys’,
accountants’ and other professional advisors’ fees and expenses);

 

Material Adverse Effect: a material adverse effect, either individually or in
the aggregate, on the business, Assets, liabilities, financial condition or
results of operations of the Center, but excluding the effect of (i) matters
described in any Schedule, (ii) changes in the economy of the United States in
general, and (iii) changes in Legal Requirements or Government Payment Programs
generally applicable to owners or operators of diagnostic imaging centers in the
city where the Center is located;

 

Multiemployer Plan: defined in section 3(37) of ERISA or section 4001(a)(3) of
ERISA;

 

Multiple Employer Plan: an Employee Pension Benefit Plan which is not a
Multiemployer Plan and for which a Person who is not a member of a Controlled
Group that includes Seller is or has been a contributing sponsor;

 

Notice Period: defined in Section 9.05(a)(i);

 

Other Plan: any Contract, program or arrangement which provides cash or non-cash
benefits or perquisites to current or former Center Employees, but which is not
an Employee Benefit Plan;

 

Party: any party to this Agreement, its successors and assigns;

 

Party in Interest: a “party in interest” as defined in section 3(14) of ERISA,
and a “disqualified person” as defined in the Code;

 

PBGC: the Pension Benefit Guaranty Corporation;

 

Permitted Encumbrances: (i) each Encumbrance identified as such on the Interim
Financial Statement or on any Schedule, (ii) liens for Taxes that are not yet
due or delinquent, (iii) mechanics’ and landlord liens arising in the ordinary
course of business under the Center lease, and (iv) such other Encumbrances
accepted in writing by Buyer to which the Assets may be subject at Closing;

 

Person: any individual, company, body corporate, association, partnership, firm,
joint venture, trust, trustee or Governmental Authority;

 

Physician Group: M & S Imaging Associates, P.A., a Texas professional
association;

 

Prohibited Transaction: defined in section 406 of ERISA and section 4975 of the
Code;

 

Purchase Price: defined in Section 2.05;

 

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Radiologix: Radiologix, Inc., a Delaware corporation;

 

Reportable Event: defined in section 4043 of ERISA;

 

Schedule: One or more of the schedules prepared and delivered to Buyer by Seller
or prepared and delivered to Seller by Buyer, in which a Party sets forth
certain exceptions to the representations, warranties or covenants of such Party
in this Agreement and other information specified in this Agreement as being
included in such Schedule or Schedules;

 

Seller: M & S Imaging Partners, L.P., a Delaware limited partnership, an
Affiliate of Radiologix;

 

Seller’s Indemnified Persons: Seller and Radiologix and Seller’s and
Radiologix’s stockholders, Affiliates, successors and assigns, and their
respective partners, stockholders, directors, trustees, officers, employees,
agents and representatives;

 

Tax: any income, unrelated business income, gross receipts, license, payroll,
employment, excise, severance, occupation, privilege, premium, net worth,
windfall profits, environmental (including taxes under section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, recording, stamp,
sales, use, service, service use, transfer, registration, escheat, unclaimed
property, value added, alternative or add-on minimum, estimated or other tax,
assessment, charge, levy or fee of any kind whatsoever, including payments or
services in lieu of Taxes, interest or penalties on and additions to all of the
foregoing, which are due or alleged to be due to any Governmental Authority,
whether disputed or not;

 

Tax Return: any return, declaration, report, claim for refund, information
return or statement, including schedules and attachments thereto and amendments,
relating to Taxes;

 

Third Party Claim: defined in Section 9.05(a)(i);

 

Vanguard: Vanguard Health Systems, Inc., a Delaware corporation; and

 

1.02. Certain References. As used in this Agreement, and unless the context
requires otherwise:

 

(a) references to “include” or “including” mean including without limitation;

 

(b) references to “partners” include general and limited partners of
partnerships and members of limited liability companies;

 

(c) references to “partnerships” include general and limited partnerships, joint
ventures and limited liability companies;

 

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(d) references to any document are references to that document as amended,
consolidated, supplemented, novated or replaced by the parties thereto from time
to time;

 

(e) references to any law are references to that law as amended, consolidated,
supplemented or replaced from time to time and all rules and regulations
promulgated thereunder;

 

(f) references to time are references to San Antonio, Texas time;

 

(g) references in this Agreement to the “knowledge” of a Party or variants
thereof mean the actual knowledge of each of the Persons whose names or titles
are set forth in Schedule 1.02, after the reasonable inquiry by such Persons,
but no further inquiry by such Persons;

 

(h) the gender of all words includes the masculine, feminine and neuter, and the
number of all words includes the singular and plural;

 

(i) references to articles or sections are references to articles or sections of
this Agreement, unless otherwise expressly stated; and

 

(j) the table of contents, the division of this Agreement into articles and
sections, and the use of captions and headings in connection therewith are
solely for convenience and shall have no legal effect in construing the
provisions of this Agreement.

 

2. SALE OF ASSETS AND RELATED MATTERS

 

2.01. Sale of Assets. Subject to the terms and conditions of this Agreement, at
Closing Seller shall sell, assign, convey, transfer and deliver to Buyer, or
cause to be sold, assigned, conveyed, transferred and delivered to Buyer, and
Buyer shall purchase, all right, title and interest in and to the Assets, free
and clear of all Encumbrances other than the Permitted Encumbrances, including
the following:

 

(a) all major, minor or other equipment (including medical and computer
equipment at the Center), vehicles, furniture and furnishings and other tangible
personal properties located at the Center, including those listed in Schedule
2.01(a);

 

(b) all supplies of the Center;

 

(c) such other current assets, if any, of the Center that Seller and Buyer agree
Buyer shall purchase at Closing;

 

(d) all financial, patient, medical staff, personnel and other records of the
Center (including equipment records, medical/administrative libraries, medical
records, documents, catalogs, books, records, files and operating manuals);

 

(e) Seller’s right, title and interest in the Assumed Contracts;

 

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(f) all licenses, permits and other approvals (including pending approvals) of
Governmental Authorities, to the extent assignable, relating to the ownership,
development and operation of the Center, including the licenses and permits
described on Schedule 2.01(f);

 

(g) all Intellectual Properties used in connection with the ownership and
operation of the Center, and all software, hardware, application programs and
similar systems licensed for use in the Center, including those described in
Schedule 2.01(g);

 

(h) all property, real, personal or mixed, tangible or intangible, arising or
acquired between the Effective Date and the Closing Date, other than the
Excluded Assets;

 

(i) all insurance proceeds (including applicable deductibles, co-payments or
self insured requirements) arising in connection with damage to the Assets
occurring prior to the Closing Date, to the extent not expended for the repair
or restoration of the Assets;

 

(j) general intangibles of the Center, including goodwill;

 

(k) claims of Seller against third parties relating to the Assets, choate or
inchoate, known or unknown, contingent or otherwise, but excluding such claims
relating to Excluded Assets; and

 

(l) all other property of every kind, character or description, tangible and
intangible, known or unknown, wherever located and whether or not reflected in
the Financial Statements or similar to the properties described above.

 

2.02. Excluded Assets. Notwithstanding the generality of Section 2.01, the
following assets (the “Excluded Assets”) are not a part of the sale and purchase
contemplated by this Agreement and are excluded from the Assets:

 

(a) records of the Center which by law Seller is required to retain in its
possession, which records are more particularly described on Schedule 2.02(a);

 

(b) all cash, cash equivalents, Accounts Receivable and other current assets of
Seller at the Closing, except the supplies and other current assets that Seller
and Buyer agree that Buyer shall purchase at Closing;

 

(c) supplies disposed of or exhausted after the Effective Date and prior to the
Closing Date in the ordinary course of business of the Center, and Assets
transferred or disposed of in accordance with Section 5.02(d);

 

(d) all physician loans and receivables;

 

(e) all assets used solely in the conduct of Seller’s physician practice
management business, as more particularly described on Schedule 2.02(e);

 

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(f) the tele-radiology system of Seller;

 

(g) computer hardware and software owned or leased by Seller that is primarily
utilized to conduct patient satisfaction surveys;

 

(h) the name “M & S”;

 

(i) the Partnership Interests (as defined in the Related Agreement) of Seller,
the sale and transfer of which shall be governed solely by the Related
Agreement;

 

(j) all insurance polices owned by Seller or covering the business or Assets of
Seller; and

 

(k) any other assets identified in this Agreement as Excluded Assets or excluded
by mutual written agreement of the Parties.

 

2.03. Assumed Liabilities. As of the Closing Date, Buyer shall assume, and agree
to satisfy and discharge as the same shall become due, the Assumed Liabilities.

 

2.04. Excluded Liabilities. Notwithstanding anything to the contrary set forth
herein, under no circumstance shall Buyer assume or be obligated to pay, and
none of the Assets shall be or become liable for or subject to, any of the
Excluded Liabilities, including the following, which shall be and remain
liabilities of Seller:

 

(a) liabilities or obligations of Seller for Taxes in respect of periods ending
prior to the Closing Date or resulting from the consummation of the transactions
contemplated herein;

 

(b) liabilities or obligations associated with any Excluded Assets;

 

(c) liabilities or obligations associated with any and all indebtedness of
Seller for borrowed money;

 

(d) liabilities or obligations under any Assumed Contract arising prior to the
Closing Date;

 

(e) liabilities or obligations under any Assumed Contract arising from any
breach or default prior to the Closing Date of any Assumed Contracts or other
Assumed Liabilities, liabilities arising out of the assignment to Buyer at
Closing of any Assumed Contract, and liabilities arising under any Contracts not
assumed by Buyer;

 

(f) liabilities or obligations arising out of or in connection with claims,
litigation or proceedings described in Schedule 3.20, and claims, litigation and
proceedings (whether instituted prior to or after Closing) for acts or omissions
which allegedly occurred prior to the Closing Date, including litigation and
other actions relating to peer review activities at the Center prior to the
Closing Date;

 

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(g) except to the extent assumed by Buyer with a Purchase Price credit pursuant
to Section 2.05(b), liabilities or obligations to Center Employees, the Internal
Revenue Service, PBGC or any other Governmental Authority, arising from or
relating to periods prior to Closing (whether or not triggered by the
transactions contemplated by this Agreement and whether or not imposed by Legal
Requirements directly on Buyer as the transferee of the Assets), including
liabilities or obligations arising under any Employee Benefit Plan or Other
Plan, EEOC claim, unfair labor practice, and wage and hour practice, and
liabilities or obligations for COBRA continuation coverage or arising under the
WARN Act, as a result of acts of Seller prior to Closing;

 

(h) liabilities or obligations of Seller in respect of periods ending on or
prior to the Closing Date arising under the terms of any third-party payor
programs or Government Payment Programs, including any recoupment rights for
Medicare & Medicaid Services or the Texas Department of Health, and any
liability arising pursuant to any third-party payor program or Government
Payment Programs as a result of the consummation of the transactions
contemplated herein, including recapture of previously reimbursed expenses; and

 

(i) penalties, fines, settlements, interest, costs and expenses arising out of
or incurred as a result of any actual or alleged violation by Seller of any
Legal Requirement.

 

2.05. Purchase Price.

 

(a) Subject to the terms and conditions of this Agreement, in reliance upon the
representations, warranties and covenants of Seller herein set forth, and as
consideration for the sale and purchase of the Assets at Closing, Buyer shall
assume the Assumed Liabilities and shall tender to Seller as the purchase price
$5,200,000 (the “Purchase Price”).

 

(b) Subject to the prorations described in Section 2.06 and to any other
appropriate adjustments for the fees and expenses of the transaction, Buyer
shall pay to Seller at Closing an amount (the “Cash Portion of the Purchase
Price”) equal to the Purchase Price minus (i) the net book value as of the
Closing Date of any long-term indebtedness or capitalized lease obligations of
Seller (including the current portions thereof) that Seller and Buyer may agree
to assume at Closing, (ii) all vacation, holiday, sick and other leave
accumulations of the Hired Employees (whether in such form or in the form of
so-called paid time off) and estimated Taxes thereon. The Cash Portion of the
Purchase Price shall be paid by wire transfer of immediately available funds to
an account or accounts designated by Seller and Seller shall execute such
receipts or other acknowledgments as are reasonably requested by Buyer to
evidence payment and receipt of the Purchase Price.

 

2.06. Prorations. At Closing, Buyer and Seller shall prorate real estate and
personal property lease payments, real estate and personal property Taxes and
other assessments, and all other income and expenses (including utilities) with
respect to the Center which are normally prorated upon a sale of assets of a
going concern. If any payment in lieu of Taxes made by

 

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Seller prior to Closing is credited against real estate Taxes for which Buyer
will be liable, the amount of such credit will be paid to Seller upon its
receipt by Buyer.

 

3. REPRESENTATIONS AND WARRANTIES OF SELLER

 

Subject to the exceptions described in the Schedules attached to this Agreement
and made a part hereof, Seller makes the following representations and
warranties to Buyer and Vanguard on and as of the Effective Date and shall be
deemed to make them again at and as of the Closing.

 

3.01. Organization. Seller is duly organized and validly existing in good
standing under the laws of the State of Delaware. Seller is qualified to do
business in the State of Texas and there is no other jurisdiction in which the
ownership, use or leasing of any of Seller’s assets or properties, or the
conduct or nature of its business, makes such licensing, qualification or
admission necessary.

 

3.02. Powers; Consents; Absence of Conflicts, Etc. Seller has the requisite
power and authority to conduct its businesses as now being conducted, to enter
into this Agreement and to perform its obligations hereunder, and the execution,
delivery and performance by Seller of this Agreement and the Closing Documents
and the consummation of the transactions contemplated herein:

 

(a) are within Seller’s partnership powers, are not in contravention of any of
the terms of its governing documents, as amended to date, and have been duly
authorized by all appropriate partnership and member action;

 

(b) do not conflict with, result in any breach or contravention of, or permit
the acceleration of the maturity of, any liabilities of Seller, and do not
create or permit the creation of any Encumbrance on or affecting any of the
Assets;

 

(c) do not violate any Legal Requirement to which Seller may be subject; and

 

(d) do not conflict with or result in a breach or violation of any material
Contract to which Seller is a party or by which it is bound.

 

3.03. Binding Agreement. This Agreement and each of the Closing Documents to
which Seller is or becomes a party are (or upon execution will be) valid and
legally binding obligations of Seller, enforceable against Seller in accordance
with the respective terms hereof or thereof, except as enforceability may be
restricted, limited or delayed by applicable bankruptcy or other laws affecting
creditors’ rights generally and except as enforceability may be subject to
general principles of equity.

 

3.04. Subsidiaries, Investments and Third Party Rights. No Affiliate of Seller
owns any assets or properties used in the conduct of the Center’s business,
Seller has no subsidiaries or other interests in any Persons that conduct any
Center business, and Seller holds no Investments that are recorded as Assets.
There are no Contracts with, or rights of, any Person to acquire, directly or
indirectly, any material Assets, or any interest therein.

 

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3.05. Legal and Regulatory Compliance. Seller has complied with all Legal
Requirements, and has timely filed all reports, data and other information
required to be filed with Governmental Authorities, except where a failure to so
comply or timely file would not have a Material Adverse Effect. Seller has not
received notice from any Person of any proceeding or investigation by
Governmental Authorities alleging or based upon a violation of any Legal
Requirements that (i) is currently pending or (ii) if not currently pending,
would not otherwise have a Material Adverse Effect on the Center. Seller has not
been threatened, to its knowledge, by any Person with any proceeding or
investigation by Governmental Authorities alleging a violation of any Legal
Requirements by Seller. There is no (i) corporate integrity agreement with the
Office of Inspector General of the United States Department of Health and Human
Services or written agreement with such Governmental Authority to establish or
maintain a corporate integrity program applicable to the Center or (ii)
settlement or similar agreement with any other Governmental Authority which
imposes any continuing obligations on the Center or contains obligations which
have not been fully discharged.

 

3.06. Financial Statements. Attached as Schedule 3.06 are true and complete
copies of the Annual Financial Statements and the Interim Financial Statements.
The Financial Statements fairly present, in all material respects, the financial
condition and results of operations of Seller as of the respective dates thereof
and for the periods therein referred to, all in accordance with generally
accepted accounting principles, subject to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes, and the Financial Statements reflect the
consistent application of such accounting principles throughout the periods
involved.

 

3.07. Undisclosed Liabilities. Schedule 3.07 contains a summary of (i) all
guarantees by Seller of third party obligations relating to the Center,
including contingent or conditional guarantees, and (ii) all other obligations
or liabilities of Seller relating to the Center incurred or accrued subsequent
to the date of the Interim Financial Statements, which would be required by
generally accepted accounting principles to be included in audited financial
statements (or the notes thereto), except liabilities incurred in the ordinary
course of business consistent with past practices since the date of the Interim
Financial Statements.

 

3.08. Recent Activities. Since February 29, 2004:

 

(a) no damage, destruction or loss (whether or not covered by insurance) has
occurred affecting the Assets, except damage, destruction or loss to Assets
suffered in the ordinary course of the business of the Center, which
individually or in the aggregate have not had or are not reasonably expected to
have a Material Adverse Effect;

 

(b) no labor dispute, enactment of state or local law, promulgation of state or
local regulation, or other event or condition has occurred materially adversely
affecting the Center;

 

(c) Seller has not sold, assigned, transferred, distributed or otherwise
disposed of any Assets, except in the ordinary course of business of the Center
consistent with past practices;

 

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(d) Seller has not canceled or waived any material rights in respect of the
Assets, except in the ordinary course of business of the Center consistent with
past practices;

 

(e) Seller has not created, incurred, assumed, guaranteed or otherwise become
liable for any indebtedness or capitalized lease obligations relating to the
Center and, except in the ordinary course of business of the Center consistent
with past practices, incurred any other liability;

 

(f) there has been no change in any accounting method, policy or practice of
Seller with respect to the Center;

 

(g) other than compensation paid in the ordinary course of employment, Seller
(on behalf of the Center) has not paid any amount to, sold any Assets to, or
entered into any Contract with, any partner, officer or agent of Seller, or any
Affiliate of Seller;

 

(h) Seller has not paid or agreed to pay to any Person damages, fines, penalties
or other amounts in respect of actual or alleged violation of any Legal
Requirement relating to the Center;

 

(i) Seller has not instituted any new Employee Benefit Plan or Other Plan, or
terminated, amended or otherwise modified any existing Employee Benefit Plan or
Other Plan, except for amendments required to comply with applicable Legal
Requirements;

 

(j) Seller has not entered into or agreed to enter into any transaction outside
the ordinary course of business relating to the Center which may cause a
liability or obligation in excess of $15,000; and

 

(k) no event, occurrence or development of a state of circumstances or facts has
occurred which has had or reasonably could be expected to have a Material
Adverse Effect on the Center.

 

3.09. Supplies. All supplies on hand at the Center consist of items of a quality
usable in the ordinary course of business of the Center, except for those items
which are obsolete, below standard quality or in the process of repair, are
carried at the lower of cost or market on a first-in, first-out basis, and are
properly stated in the Interim Financial Statements as of the date thereof.

 

3.10. Equipment. Schedule 2.01(a) consists of or includes a depreciation
schedule as of the date set forth therein that, to Seller’s knowledge, takes
into consideration all the material equipment owned or leased by Seller relating
to the Center. All material equipment used in the operations of the Center,
whether reflected in the Financial Statements or otherwise, is maintained in
good operating condition, except for reasonable wear and tear. All material
medical and leased equipment has been maintained in accordance with manufacturer
and lessor requirements, and complete and accurate maintenance logs or journals
have been maintained at all times.

 

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3.11. Title to Assets. Seller holds good and valid title to all of the Assets,
free and clear of any Encumbrances, except for Permitted Encumbrances. At
Closing, Buyer will own the Assets, free and clear of any Encumbrances, except
for Permitted Encumbrances.

 

3.12. Real Property. Neither Seller nor any Affiliate of Seller owns or holds
fee title to any real property used in the conduct of the business of the
Center.

 

3.13. Insurance. Schedule 3.13 summarizes all insurance arrangements, including
self-insurance, in place for the benefit of the Assets and the operation of the
business of the Center, including, the name of each insurer, whether such
insurer is an Affiliate of Seller, and the coverage for each such policy of
insurance. All of such policies are now and until Closing will remain valid,
outstanding, in full force and effect, and enforceable with no premium
arrearages, except with respect to any such policy which has been replaced by a
comparable policy.

 

3.14. Licenses and Permits. Schedule 2.01(f) contains a summary of all material
licenses and permits held by Seller relating to the ownership of the Assets and
the business of the Center, all of which, to Seller’s knowledge, are in good
standing and not subject to meritorious challenge. The Center is duly and
properly licensed to conduct its business by all appropriate state agencies and
is in material compliance with all licensing requirements and conditions of
issuance.

 

3.15. Agreements and Commitments. Schedule 3.15 sets forth certain information
regarding, among other Contracts, all Contracts of Seller relating to the Center
described in paragraphs (a) through (g) below. Seller has delivered to Buyer
true and correct copies of such Contracts. Except for Contracts described on
Schedule 3.15:

 

(a) there are no Contracts with referral sources to the Center and no Contracts
between Seller, on the one hand, and any Affiliate of Seller, any physician or
physician group who is (or any of whose members is) an employee of Seller or of
any Affiliate of Seller, on the other hand;

 

(b) there are no Contracts with respect to Intellectual Properties;

 

(c) there are no Contracts relating to information and data processing systems,
hardware and software utilized in connection with the Center;

 

(d) there are no collective bargaining agreements or other Contracts relating to
the Center with labor unions or other employee representatives or groups;

 

(e) there are no requirements or exclusive Contracts or Contracts prohibiting or
limiting competition or the conduct of any lawful business by the Center;

 

(f) there are no Contracts providing for payments based in any manner on the
revenues, purchases or profits of the Center or any part thereof;

 

(g) there are no Contracts for the administration, operation or funding of any
Employee Benefit Plan relating to the Hired Employees; and

 

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(h) there are no other Contracts relating to the Center, other than Immaterial
Contracts.

 

3.16. The Contracts. Except as described in Schedule 3.16 and except for
Immaterial Contracts:

 

(a) the Contracts constitute lawful, valid and legally binding obligations of
the parties thereto and are enforceable in accordance with their terms;

 

(b) each Contract is in full force and effect and constitutes the entire
agreement by and between the parties thereto;

 

(c) in all material respects, all obligations required to be performed prior to
the date hereof under the Contracts by the parties thereto have been performed,
and no event has occurred or failed to occur which constitutes, or with the
giving of notice, the lapse of time or both would constitute, a default by
Seller under one of the Contracts;

 

(d) no Contract prohibits or requires the consent of any Person to the
assignment to and assumption by Buyer of the Contract;

 

(e) no Contract will prohibit competition or restrict the ability of Buyer to
engage in any lawful business after Closing (including diagnostic imaging
centers); and

 

(f) the assignment by Seller and assumption by Buyer of the Assumed Contract
will not give a third party the right to terminate such Contract, or result in
any penalty or premium to, or adverse change in the rights, remedies, benefits
or obligations of, any party thereunder.

 

3.17. Related-Party Transactions. Schedule 3.17 describes all goods or services
purchased, acquired or leased from, or sold, transferred or leased to, any
Affiliate of Seller, or any partner, Affiliate, officer, employee or other agent
of Seller or of any Affiliate of Seller, since December 31, 2002.

 

3.18. Employees and Employee Relations.

 

(a) Schedule 3.18 sets forth a complete list (as of the date set forth therein)
of name, position, current annual salary or wage rate, and bonus and other
compensation arrangements of each full-time and part-time Center Employee
(indicating whether such employee is part-time or full-time, whether such
employee is employed under written Contract, and, if such employee is not
actively at work, the reason therefor). Schedule 3.18 also sets forth the name
of each Center Employee whose employment was terminated during the 90 day period
ending on the Effective Date and the reason for the termination.

 

(b) To Seller’s knowledge, Seller’s relations with its employees are good. There
is no pending or, to Seller’s knowledge, threatened employee strike, work
stoppage or slowdown, labor dispute or unfair labor practices at the Center. No
Center Employees are represented by, or have made demand for recognition of, a
labor union or employee

 

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organization, and no other union organizing or collective bargaining activities
by or with respect to any Center Employees are taking place.

 

(c) No present or former Center Employee has or will have as a result of the
consummation of the transactions contemplated by this Agreement any claim
against Buyer on the account of or for (i) overtime pay for any period on or
before the Closing Date, (ii) wages, salary, bonuses or amounts due under any
Employee Benefit Plan or Other Plan, or (iii) sick pay, severance pay, claim for
unlawful discharge, holiday or vacation pay or paid or personal time off.

 

3.19. Employee Benefit Plans.

 

(a) Schedule 3.19 lists each Employee Benefit Plan and Other Plan that Seller or
any member of the Controlled Group that includes Seller maintains or has
maintained since January 1, 2002 or to which it contributes (including employee
elective deferrals), has contributed since January 1, 2002 or has been required
to contribute since January 1, 2002.

 

(b) Each Employee Benefit Plan (and related trust, insurance contract or fund)
complies in form and in operation in all material respects with applicable Legal
Requirements, and has been administered and operated in all material respects in
accordance with the terms of the Plan and applicable Legal Requirements. All
required reports and descriptions (including Form 5500 Annual Reports, Summary
Annual Reports, PBGC-1’s and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each Employee Benefit Plan. Seller has
delivered to Buyer complete and genuine copies of the plan documents and summary
plan descriptions, most recent determination letters received from the Internal
Revenue Service, most recent Form 5500 Annual Report, and all related trust,
insurance and funding Contracts which implement each Employee Benefit Plan.
Since January 1, 1993, no Governmental Authority has audited any Employee
Benefit Plan and Seller has not received any notice that such an audit will or
may be conducted.

 

(c) Each Employee Pension Benefit Plan meets the requirements of a qualified
plan under section 401(a) of the Code, a tax sheltered annuity plan under
section 403(b) of the Code, or a qualified employee pension plan under section
408 of the Code, and each qualified plan has received a favorable determination
letter from the Internal Revenue Service reflecting compliance at least through
the requirements imposed by the Tax Reform Act of 1986. All contributions
(including employer contributions and employee salary reduction contributions)
to each Employee Pension Benefit Plan that are required to be paid have been
paid. The market value of all assets under each Employee Pension Benefit Plan
and the present value of all vested and unvested liabilities thereunder have
been determined as of a date not less than six months prior to the Effective
Date and, with respect to each such Employee Pension Benefit Plan, as of such
date of determination the market value of such assets equals or exceeds the
present value of all vested and unvested liabilities thereunder determined in
accordance with PBGC immediate and deferred factors and assumptions applicable
to an Employee Pension Benefit Plan terminating on the date for determination.

 

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(d) The requirements of Part 6 of Subtitle B to Title I of ERISA and of section
4980B of the Code have been met with respect to each Employee Welfare Benefit
Plan; all premiums or other payments for all periods ending on or before the
Closing Date have been paid with respect to each Employee Welfare Benefit Plan.

 

(e) Except as set forth in Schedule 3.19, to Seller’s knowledge, there have been
no Prohibited Transactions with respect to any Employee Benefit Plan that would
subject Seller or any member of the Controlled Group that includes Seller to any
liability; no ERISA Fiduciary has any material liability for breach of fiduciary
duty or any other failure to act or comply in connection with the administration
or investment of the assets of any Employee Benefit Plan; no action, suit,
proceeding, hearing or investigation with respect to the administration or the
investment of the assets of any Employee Benefit Plan (other than routine claims
for benefits) is pending or to Seller’s knowledge threatened; and to Seller’s
knowledge there exists no basis for any such action, suit, proceeding, hearing
or investigation. No Party in Interest has any interest in any assets of any
Employee Benefit Pension Plan other than as a beneficiary by virtue of such
Person’s participation in such plan.

 

(f) No Employee Benefit Plan which is an Employee Pension Benefit Plan has been
completely or partially terminated or the subject of a Reportable Event and no
proceeding by the PBGC to terminate any Employee Pension Benefit Plan has been
instituted or to Seller’s knowledge threatened; and Seller has not incurred, and
to Seller’s knowledge there is no reason to expect that Seller will incur or be
responsible for, any material liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
liability) or under the Code with respect to any Employee Pension Benefit Plan.

 

(g) Neither Seller nor any member of the Controlled Group that includes Seller,
contributes to, ever has contributed to, or ever has been required to contribute
to any Multiple Employer Plan or any Multiemployer Plan or has any liability
(including withdrawal liability) under any Multiple Employer Plan or any
Multiemployer Plan. Neither Seller nor any member of the Controlled Group that
includes Seller, maintains or contributes, ever has maintained or contributed,
or ever has been required to maintain or contribute to any Employee Welfare
Benefit Plan providing medical, health or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their spouses or
their dependents (other than in accordance with section 4980B of the Code).

 

(h) No Employee Benefit Plan is a Defined Benefit Plan as defined in section
3(35) of ERISA.

 

3.20. Litigation and Proceedings. Schedule 3.20 contains a summary of all
litigation, arbitration, mediations, investigations and other material claims,
actions or proceedings pending against Seller relating to the Center, and in the
case of uninsured matters, Schedule 3.20 also sets forth the reserves therefor
included in the Financial Statements. All such litigation, arbitration,
mediations, investigations and other material claims, actions or proceedings
pending against Seller relating to the Center are fully insured (except for
applicable deductibles and other policy

 

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limits) and no insurer has issued a “reservation of rights” letter or otherwise
qualified its obligation to insure and defend Seller against losses arising
therefrom. Except as set forth on Schedule 3.20, there are no litigation,
arbitration, mediations, investigations, or other material claims, actions or
proceedings (including qui tam actions) pending or, to Seller’s knowledge
threatened, against Seller relating to the Center. To Seller’s knowledge, there
exist no facts that might reasonably be expected to form the basis of any such
litigation, arbitration, mediation, investigation, or other material claim,
action or proceeding.

 

3.21. Taxes.

 

(a) Seller has filed all material Tax Returns required to be filed by or on
behalf of it, all such Tax Returns are correct and complete in all material
respects, and Seller has duly paid or made provision in the Financial Statements
for the payment of all Taxes; no claim has ever been made by a Governmental
Authority in a jurisdiction where Seller does not file Tax Returns that it is or
may be subject to Tax by that jurisdiction; and there are no Encumbrances on any
of the Assets that arose in connection with any failure (or alleged failure) to
pay any Tax.

 

(b) Seller has withheld proper and accurate amounts from its employees’
compensation in full and complete compliance with all withholding and similar
provisions of the Code and any and all other applicable Legal Requirements, and
has withheld and paid, or caused to be withheld and paid, all Taxes on monies
paid by Seller to independent contractors, creditors and other Persons for which
withholding or payment is required by law.

 

(c) To Seller’s knowledge, no Governmental Authority intends to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax liability of Seller either claimed or
raised by any Governmental Authority in writing, or as to which Seller has
notice or knowledge based upon personal contact with any agent of such
authority; Schedule 3.21 lists all federal, state, local and foreign income Tax
Returns filed with respect to Seller for the last three complete fiscal years of
Seller and for the current year-to-date, and indicates those Tax Returns that
have been audited and those that currently are the subject of audit or that have
not been audited.

 

(d) There is not currently in effect any waiver of a statute of limitations in
respect of Taxes by Seller or any Contract to extend the time with respect to a
Tax assessment or deficiency.

 

(e) Seller is not a party to any Tax allocation or sharing Contract; Seller is
not or has not been a member of any affiliated group (within the meaning of
section 1504 of the Code or any similar group defined under a similar provision
of state, local or foreign law) for filing a consolidated federal income Tax
Return.

 

(f) Seller has not or will not have any liability for the Taxes of any Person
(other than under Internal Revenue Service regulation 1.1502-6 or any similar
provision of state, local or foreign law), as a transferee or successor, by
Contract or otherwise.

 

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(g) No Person has (i) provided tax advice to Seller or Radiologix in connection
with the transactions contemplated by this Agreement, and (ii) limited
(expressly or otherwise) Seller’s or Radiologix’s ability to disclose the tax
treatment or tax structure of, and such advisor’s tax strategies with respect
to, the transactions contemplated by this Agreement, and (iii) received (or is
expected to receive) a fee of at least $200,000.

 

3.22. Brokers and Finders. Neither Seller nor any Affiliate of Seller, nor any
officer, trustee, director, employee or agent thereof, has engaged any finder or
broker in connection with the transactions contemplated hereunder.

 

3.23. Solvency. Seller, after Closing as a result of the transactions
contemplated hereby, will not be rendered insolvent or otherwise unable to pay
its debts as they become due; Seller has no intention of filing in any court
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or any portion of Seller’s property; and, to Seller’s
knowledge, no other Person has filed or threatened to file such a petition
against Seller. The Purchase Price, as adjusted, constitutes the fair market
value of and adequate consideration for the Assets sold by Seller to Buyer.

 

3.24. Operation of the Center. The Assets being transferred to Seller at Closing
constitute all assets, properties, goodwill and businesses necessary to operate
the Center in all material respects in the manner in which it has been operated
since December 31, 2002. Schedule 3.24 sets forth a list of the ten largest
non-governmental payors of the Center, determined on the basis of gross revenues
from services provided for the fiscal year ended December 31, 2003. No
non-governmental payor has terminated or curtailed its business relationship
with or reduced reimbursement rates to the Center which has resulted in a
Material Adverse Effect on the Center, and Seller has not received any notice to
the effect that any such non-governmental payor intends to terminate or curtail
its business relationship with or reduce reimbursement rates to the Center which
could reasonably be expected to result in a Material Adverse Effect on the
Center.

 

4. REPRESENTATIONS AND WARRANTIES OF BUYER

 

Subject to the exceptions described in the Schedules attached to this Agreement
and made a part hereof, Buyer makes the following representations and warranties
to Seller and Radiologix on and as of the Effective Date and shall be deemed to
make them again at and as of the Closing Date:

 

4.01. Organization. Buyer is a limited partnership duly organized and validly
existing in good standing under the laws of the State of Delaware and by Closing
will be qualified to do business in the State of Texas.

 

4.02. Corporate Powers; Consents; Absence of Conflicts, Etc. Buyer has the
requisite power and authority to conduct its business as now being conducted, to
enter into this Agreement, and to perform its obligations hereunder. The
execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated herein by it:

 

(a) are within its partnership powers and are not in contravention of the terms
of its governing documents, as amended to date, and have been approved by all
requisite partnership action;

 

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(b) do not conflict with or result in any breach or contravention of, any
material agreement to which Buyer is a party or by which it is bound; and

 

(c) do not violate any Legal Requirement to which Buyer may be subject.

 

4.03. Binding Agreement. This Agreement and each of the Closing Documents to
which Buyer is or becomes a party are (or upon execution will be) valid and
legally binding obligations of Buyer, enforceable against it in accordance with
the respective terms hereof and thereof, except as enforceability against it may
be restricted, limited or delayed by applicable bankruptcy or other laws
affecting creditors’ rights generally and except as enforceability may be
subject to general principles of equity.

 

4.04. Tax Advice. No Person has (i) provided tax advice to Buyer or Vanguard in
connection with the transactions contemplated by this Agreement, and (ii)
limited (expressly or otherwise) Buyer’s or Vanguard’s ability to disclose the
tax treatment or tax structure of, and such advisor’s tax strategies with
respect to, the transactions contemplated by this Agreement, and (iii) received
(or is expected to receive) a fee of at least $250,000.

 

4.05. Brokers and Finders. Neither Buyer, nor any Affiliate of Buyer (including
Vanguard), nor any officer, director, employee or agent thereof, has engaged any
finder or broker in connection with the transactions contemplated hereunder.

 

5. COVENANTS AND AGREEMENTS OF THE PARTIES

 

5.01. Operations. From the Effective Date until the Closing Date and except as
otherwise expressly provided in this Agreement, or agreed to in writing by
Buyer, Seller will:

 

(a) carry on the business of the Center in the ordinary course, in substantially
the same manner as it has heretofore;

 

(b) maintain the Assets in as good working order and condition as at present,
ordinary wear and tear excepted and make all normal, planned and budgeted
capital expenditures related to the Assets and/or the Center;

 

(c) maintain and preserve its business organizations and operations intact;
retain the present Center Employees (subject to the right of Seller to discharge
any Center Employee in the ordinary course of business of the Center); maintain
its relationships with physicians, suppliers, patients and other Persons doing
business with Seller at the Center; and take such actions as are reasonably
necessary and achievable to cause the smooth, efficient and successful
transition to Buyer of the Center at Closing;

 

(d) prepare for any and all licensure or accreditation surveys and inspections
that will or may take place in connection with the transactions contemplated by
this Agreement, whether the same are scheduled to take place prior to or after
Closing, in the

 

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same manner that Seller would prepare for such surveys or inspections if this
Agreement had not been executed by the Parties;

 

(e) permit and allow reasonable access by Buyer to discuss and make offers of
post-Closing employment with any of Seller’s personnel working at the Center, to
advertise for post-Closing employment at the Center, and to establish
relationships with physicians, payors and other Persons having business
relations with Seller in respect of the Center.

 

5.02. Negative Covenants. From the Effective Date until the Closing Date and
except as otherwise expressly provided in this Agreement or agreed to by Buyer
in writing, Seller will not:

 

(a) amend or terminate any Assumed Contract, or enter into any Contract except
Immaterial Contracts entered into, terminated or amended in the ordinary course
of business of the Center consistent with past practices;

 

(b) make offers for employment after Closing to any Center Employees;

 

(c) increase compensation payable or to become payable to, make a bonus or
severance payment to, or otherwise enter into one or more bonus or severance
Contracts with, any Center Employee except in the ordinary course of business of
the Center consistent with past practices and existing personnel policies;

 

(d) sell, assign, transfer, distribute or otherwise transfer or dispose of any
item of property, plant or equipment of Seller having an original cost in excess
of $1,000 except in the ordinary course of business of the Center consistent
with past practices with comparable replacement thereof;

 

(e) create, incur, assume, guarantee or otherwise become liable for any
liability, or agree to do any of the foregoing, except in the ordinary course of
business of the Center consistent with past practices;

 

(f) cancel, forgive, release, discharge or waive any Asset or right with respect
to the Center, or agree to do any of the foregoing, except in the ordinary
course of business of the Center consistent with past practices;

 

(g) change any accounting method, policy or practice or reduce any reserves in
the Financial Statements;

 

(h) terminate, amend or otherwise modify any Employee Benefit Plan or Other
Plan, except for amendments required to comply with this Agreement or applicable
Legal Requirements; or

 

(i) amend or agree to amend the partnership agreement of Seller or otherwise
take any action relating to any liquidation or dissolution of Seller.

 

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5.03. Employee Matters.

 

(a) Subject to the exclusions set forth in this Section and in reliance upon the
representations and warranties of Seller in Sections 3.19 and 3.20, Buyer will
offer, or cause its Affiliates to offer, to employ as of the Closing Date (i)
all active Center Employees who are located at the Center and/or the Centers (as
defined in the Related Agreement), and (ii) such other active Center Employees
who are physically located at the business office or call center as Buyer or its
Affiliates may in its discretion choose, in either case upon substantially the
same terms and conditions (i.e., salaries, wages, job duties, titles and
responsibilities) which are applicable to such employees on the Effective Date.
In addition, the Employee Benefit Plans offered to the Hired Employees by Buyer
or its Affiliates will be the same as those generally provided to employees of
the hospitals operated by Vanguard’s Affiliates in San Antonio, Texas. Seller
acknowledges that all employment offers are subject to the satisfactory
completion by Buyer of its customary employee background checks. Center
Employees employed under written Contracts will not be offered employment
pursuant to this Section; instead, employment of such Center Employees shall be
governed by the terms of the Assumed Contracts, if any, relating to such
employees.

 

(b) Nothing contained in this Section or elsewhere in this Agreement shall be
deemed to limit or otherwise affect in any manner the right of Buyer or any
Affiliate of Buyer to terminate at will the employment of any Hired Employee
(except as otherwise provided in Assumed Contracts with such employees), or to
change individual features or plans in the employment compensation and benefits
package of the Hired Employees.

 

(c) With respect to the Hired Employees and their eligible dependents, Buyer
will waive the “pre-existing condition” exclusions under Buyer’s applicable
Employee Welfare Benefit Plan for the Hired Employees, subject to the
pre-existing condition limitations provided by Seller’s Employee Welfare Benefit
Plan as of the Closing Date. Buyer shall give all Hired Employees credit for
their vacation, holiday, sick and other leave pay (whether in such form or in
the form of so-called paid time off) to the extent the same constitute Assumed
Liabilities. Buyer shall give all Hired Employees credit after Closing for their
years of service with Seller for the purpose of determining how much vacation,
holiday, sick and other leave pay the Hired Employees are entitled to under the
applicable Employee Welfare Benefit Plan of Buyer and for purposes of
determining eligibility to participate and vesting percentages in Buyer’s
Employee Pension Benefit Plans, subject to the limitations provided under the
Employee Pension Benefit Plans of Seller as of the Closing Date. Buyer will not
assume or otherwise become liable for (i) Seller’s Employee Welfare Plans, (ii)
obligations of Seller under the Consolidated Omnibus Budget Reconciliation Act,
(iii) payment of health care expenses of Hired Employees and their beneficiaries
who are in a “continuum of care” on the Closing Date, (iv) long-term disability
payments to any former Center Employee who does not actively work for Buyer
after Closing or (v) other obligations to former or currently retired Center
Employees, and will not make any contributions to Seller’s pension plans. A
person is in the “continuum of care” on the Closing Date if that person (x) is
an inpatient of any hospital on the Closing Date, (y) is receiving medical care
on an outpatient basis or in a sub-acute care facility (e.g., skilled nursing
facility, long term care facility or mental health facility) on the Closing
Date, or (z) is admitted to any hospital

 

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within 72 hours after receiving any outpatient or sub-acute care services prior
to the Closing Date.

 

(d) As of the Closing Date, Seller shall freeze and/or terminate the
participation of all Hired Employees in any Employee Pension Benefit Plan of
Seller, and subject to Section 5.03(e), provide for distributions consistent
with the terms of the applicable plans, ERISA and the Code. Seller will maintain
for at least 24 months after the Closing Date a group health plan pursuant to
which it will continue to offer COBRA continuation coverage to (i) its
terminated employees (not hired by Buyer or its Affiliate on the Closing Date)
whose employment by Seller immediately before the Closing was associated with
the Assets, (ii) the spouse or dependent children of such a terminated employee
who were covered under a group health plan of Seller immediately before the
Closing, and (iii) those persons receiving COBRA continuation coverage under a
Seller group health plan immediately prior to Closing related to the termination
of a Center Employee prior to Closing whose last employment prior to the Closing
was associated with the Assets.

 

(e) Within six months after Closing, Buyer’s retirement plan qualified under
section 401(a) of the Code that is sponsored by Buyer or one of its controlled
group or affiliated service group members, as defined in section 414 of the Code
shall (i) be amended to provide for a plan-to-plan transfer from Seller’s (or
its Affiliate’s) plan with respect to the Hired Employees that is qualified
under section 401(a) and 401(k) of the Code, (ii) accept a transfer of assets
(both vested and unvested) from the above plan, (iii) file any required returns
relating to the transfer with the Internal Revenue Service, and (iv) be amended
to provide protected withdrawal and distribution rights relating to the
transferred assets in accordance with section 411(d)(6) of the Code. Upon
completion of the above steps, Seller shall cause the administrator of Seller’s
(or its Affiliate’s) plan to cooperate with Buyer in conducting the plan-to-plan
transfer of the above assets.

 

(f) Between the Effective Date and Closing, Buyer may run newspaper
advertisements in the name of the Center to recruit employees for and in the
name of the Center, such employment to commence as of the Closing or any time
thereafter.

 

(g) At Closing, Seller shall deliver to Buyer a list as of Closing setting forth
the name of each Center Employee whose employment was terminated during the
ninety (90) day period ending on the Closing Date and the reason for such
termination.

 

(h) Some of the Center Employees to whom Buyer has agreed to offer employment
pursuant to this Section are also employees of Buyer or one or Buyer’s
Affiliates in San Antonio, Texas. With respect to such employees, nothing in
this Agreement is intended to restrict or limit any rights, privileges or
benefits such employees enjoy as employees of Buyer or Buyer’s Affiliate, and
nothing in this Agreement is intended to grant to such employees rights,
privileges or benefits greater than those enjoyed by employees of Buyer or
Buyer’s Affiliates generally.

 

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5.04. Access to and Provision of Additional Information.

 

(a) From the Effective Date until the Closing Date, Seller (i) shall provide to
Buyer full and complete access to and the right to inspect the Assets, books and
records of Seller relating to the Center, (ii) shall provide to Buyer full and
complete access to Center Employees and medical staff members providing services
at or for the Center, (iii) shall furnish to Buyer all material information
concerning the Center not otherwise disclosed pursuant to this Agreement, and
(iv) shall furnish to Buyer such additional financial, operating and other data
and information (including auditors’ work papers) regarding the Center as Buyer
may from time to time reasonably request, without regard to where such
information may be located.

 

(b) Seller will deliver to Buyer complete and genuine copies of:

 

(i) within 20 days following the end of each calendar month prior to the Closing
Date, the unaudited balance sheet and the related unaudited statement of income
and cash flows of the Center for each such month then ended and for the
year-to-date then ended, in consolidating and consolidated format, and

 

(ii) promptly after prepared, any other financial statements or reports prepared
by or for management relating to the Center, together with any notes thereto.

 

(c) From the Effective Date until the Closing Date, Seller shall cause its
officers and employees and medical staff members to confer on a regular and
frequent basis with one or more representatives of Buyer and to answer Buyer’s
questions regarding matters relating to the conduct of the business of the
Center and the status of transactions contemplated by this Agreement. Seller
shall notify Buyer in writing of any material changes in the operations,
financial condition or prospects of the Center and of any complaints,
investigations, hearings or adjudicatory proceedings (or communications
indicating that the same may be contemplated) of any Person and shall keep Buyer
reasonably informed of such matters.

 

5.05. Post-Closing Maintenance of and Access to Information.

 

(a) The Parties acknowledge that after Closing each Party may need access to
information or documents in the control or possession of another Party for the
purposes of concluding the transactions herein contemplated, billing and
collecting Accounts Receivable, preparing Tax Returns or conducting Tax audits,
obtaining insurance, complying with the Government Payment Programs and other
Legal Requirements, and prosecuting or defending third party claims.
Accordingly, each Party shall maintain in the ordinary course of business and
release all books, records (including patient medical records), documents and
other information in the possession or control of such Party in accordance with
all applicable Legal Requirements (including the Health Insurance Portability
and Accountability Act, 42 USC 1320d et seq.) and record retention policies.

 

(b) Each Party shall cooperate fully with, and make available for inspection and
copying by, the other Party, its employees, agents, counsel and accountants
and/or Governmental Authorities, upon written request and at the expense of the
requesting

 

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Party, such books, records documents and other information to the extent
reasonably necessary to facilitate the foregoing purposes. In addition, each
Party shall cooperate with, and shall permit and use its best efforts to cause
its former and present directors, officers and employees to cooperate with, the
other Party on and after Closing in furnishing information, evidence, testimony
and other assistance in connection with any action, proceeding, arrangement or
dispute of any nature with respect to the subject matters of this Agreement.

 

(c) Upon Buyer’s receipt of any required consents and authorizations, Seller
shall be entitled to remove from the Center, at Seller’s sole risk and expense,
any patient or other records that relate to events or periods prior to Closing
for purposes of pending litigation involving matters to which such records
refer, as certified in writing prior to removal by counsel retained by Seller in
connection with such litigation. Any records so removed from the Center shall be
promptly returned to Buyer following their use by Seller.

 

(d) To facilitate Seller’s collection of the Accounts Receivables after Closing
and Seller’s conduct of its physician practice management business, Buyer shall
prepare and deliver to Seller on or before the fifth business day of each month
activity reports for the immediately preceding calendar month in the same manner
and format as such reports had been prepared prior to Closing. Such reports have
included and will continue to include “post-through dates”, total charge amounts
and a breakdown of services. Such reports are delivered without warranty of any
kind, except that the information contained therein was input in the ordinary
course of business. The reports described in this paragraph shall be provided in
respect of all activities for all months after Closing through June 30, 2004.

 

(e) The exercise by any Party of any right of access granted herein shall not
materially interfere with the business operations of the other Party and nothing
in this Section shall require any Party to maintain or release to any other
Persons any medical or other records except in accordance with applicable Legal
Requirements and record retention policies.

 

5.06. Governmental Authority Approvals; Consents to Assignment.

 

(a) From the Effective Date until the Closing Date, each of Seller and Buyer
shall (i) promptly apply for and use its reasonable best efforts to obtain prior
to Closing all consents, approvals, authorizations and clearances of
Governmental Authorities required of it to consummate the transactions
contemplated hereby, (ii) provide such information and communications to
Governmental Authorities as the other Party or such Persons may reasonably
request, and (iii) assist and cooperate with other Parties to obtain all
consents, licenses, permits, approvals, authorizations and clearances of
Governmental Authorities that the other Parties reasonably deem necessary or
appropriate, and to prepare any document or other information reasonably
required of it by any such Persons to consummate the transactions contemplated
herein, provided that, notwithstanding the foregoing, no Party shall have any
obligation under such provisions (x) to pay any cash

 

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amounts to Governmental Authorities other than filing fees, or (y) to agree to
divest assets or limit the operations of its businesses.

 

(b) The Parties acknowledge that they are not required to file a Notification
and Report Form under the HSR Act concerning the transactions contemplated by
this Agreement.

 

(c) From the Effective Date, Seller shall promptly apply for and use its
reasonable best efforts to obtain prior to Closing all consents required to
assign the Assumed Contracts to Buyer at Closing.

 

(d) In order to obtain any one or more of the consents and approvals described
in this Section, Buyer may be required by applicable Legal Requirement or
practical necessity to enter into a new Contract with the Governmental Authority
or other party to an Assumed Contract that supercedes the existing Contract
between Seller and such other Person. Such new Contract may require Buyer to
assume for the benefit of such Person certain obligations and liabilities of
Seller that are Excluded Liabilities or against which Seller is to indemnify or
otherwise reimburse Buyer. Alternatively, Buyer may be required by Legal
Requirement to assume, or be deemed by Legal Requirement to have assumed,
obligations and liabilities of Seller that are Excluded Liabilities. If Buyer
enters into any such Contract with any such Person or by Legal Requirement
assumes such obligations or liabilities of Seller, such Contract or assumption
shall not in any manner whatsoever be deemed to amend or modify this Agreement
or to impair Buyer’s rights to indemnification against Seller or diminish
Seller’s indemnity obligations to Buyer under this Agreement and shall under no
circumstances be claimed by Seller as a defense (whether of waiver, estoppel,
consent, operation of law, or otherwise) against Buyer’s assertion of any claim
under this Agreement against Seller, and the rights and obligations of the
Parties to each other under this Agreement shall be determined as if such
Contract with such Governmental Authority or other party to an Assumed Contract
did not exist or such assumption was not required. For all other purposes in
this Agreement, the requirement that Buyer enter into a new Contract shall be
treated the same as an assignment of the existing Contract.

 

5.07. Non-competition.

 

(a) For a period of five years from and after the Closing Date, neither
Radiologix nor any direct or indirect subsidiary of Radiologix shall, directly
or indirectly, in any capacity:

 

(i) own lease, manage, operate, control, participate in the management or
control of, be employed by, or maintain or continue any interest whatsoever in
any Person engaged in the business of providing diagnostic imaging services
within a 25-mile radius of any of the Center; or

 

(ii) induce, cause or attempt to induce or cause any Person (including any
physician employee or medical staff member) to replace or terminate any

 

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Contract for the provision or arrangement of health care services from the
Center with products or services of any other Person at any time after the
Closing Date.

 

(b) Notwithstanding the foregoing, it shall not be a violation of paragraph
(a)(i) of this Section for Radiologix, or any direct or indirect subsidiary of
Radiologix to acquire one or more Persons engaged in the business of providing
diagnostic imaging services within the 25-mile radii described above so long as
such Persons were acquired as a part of a larger transaction in which (i) the
consideration allocated to the Persons engaged in the business of providing
diagnostic imaging services within the 25-mile radii is less than ten percent of
the total consideration necessary to consummate the larger transaction and (ii)
the net revenues of the Persons engaged in the business of providing diagnostic
imaging services within the 25-mile radii are less than ten percent of the
consolidated net revenues of all Persons acquired in the larger transaction.

 

(c) Seller acknowledges that any remedy at law for any breach of this Section
would be inadequate and consent to the granting by any court of an injunction or
other equitable relief, without the necessity of actual monetary loss being
proved, in order that a breach or threatened breach of this Section may be
effectively enjoined.

 

(d) For purposes of this Section, a direct or indirect subsidiary of Radiologix
shall include any Person whose financial results are, or are required by
generally accepted accounting principles to be, consolidated with the financial
results of Radiologix.

 

5.08. Allocation of Purchase Price. The Purchase Price shall be allocated among
the Assets as Buyer and Seller may agree at or prior to Closing in accordance
with their fair market values consistent with section 1060 of the Code, and such
allocation shall be binding upon the Parties for all applicable federal, state,
local and foreign Tax purposes. Seller and Buyer shall report gain or loss or
cost basis, as the case may be, in a manner consistent with such allocation on
all Tax Returns filed by any of them after Closing and not voluntarily take any
inconsistent position therewith in any administrative or judicial proceeding
relating to such returns. Seller and Buyer shall exchange mutually acceptable
and completed Internal Revenue Service Forms 8594 (including supplemental forms,
if required), which they shall use to report the transaction contemplated
hereunder to the Internal Revenue Service in accordance with such allocation.

 

5.09. Further Assurances. At any time and from time to time at and after the
Closing, upon request of Buyer, Seller shall do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, such further
acts, deeds, assignments, transfers, conveyances, powers-of-attorney,
confirmations and assurances as Buyer may reasonably request to more effectively
convey, assign and transfer to and vest in Buyer, its successors and assigns,
full legal right, title and interest in and actual possession of the Assets, to
confirm Seller’s capacity and ability to perform its post-Closing covenants and
agreements under this Agreement and the Closing Documents, and to generally
carry out the purposes and intent of this Agreement. Seller shall also furnish
Buyer with such information and documents in its possession or under its
control, or which Seller can execute or cause to be executed, as will enable
Buyer to prosecute any and all petitions, applications, claims and demands
relating to or constituting a part of the Assets.

 

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5.10. Casualty. If prior to the Closing Date the Center is destroyed or damaged
by fire, theft, vandalism or other cause or casualty and, as a result thereof,
any material part of the Center is rendered prior to the Closing Date unsuitable
for its primary intended use, Buyer may terminate this Agreement in its entirety
without penalty. Otherwise, Buyer may elect at its option to (i) reduce the
Purchase Price by the fair market value of the Assets destroyed or damaged
(determined as of the date immediately prior to the destruction or damage) or,
if greater, by the estimated cost to restore, repair or replace such Assets, in
which event Seller shall retain all right, title and interest in and to any
insurance proceeds payable on account of such destruction or damage, or (ii)
consummate the transaction notwithstanding such destruction or damage, in which
event Seller shall transfer and assign to Buyer at Closing the insurance
proceeds (or the right to receive the insurance proceeds) of any applicable
insurance policy plus Seller shall pay to Buyer any deductibles or co-payments
required under the applicable insurance policy. In the absence of an agreement
among the Parties, any reduction in Purchase Price pursuant to this Section
shall be determined by an MAI appraiser mutually selected and paid equally by
Seller, on the one hand, and Buyer, on the other hand.

 

5.11. Costs and Expenses.

 

(a) Except as otherwise expressly set forth in this Agreement, all expenses of
the preparation of this Agreement and of the purchase of the Assets set forth
herein, including counsel, accounting, brokerage and investment advisor fees and
disbursements, shall be borne by the respective Party incurring such expenses,
whether or not such transactions are consummated.

 

(b) Seller shall pay all sales and use Taxes arising out of the transfer of the
Assets by Seller to Buyer, the cost of removing any Encumbrances on the Assets
other than Permitted Encumbrances, and all fees and charges charged by third
parties to consent to the assignment of the Assets from Seller to Buyer. Buyer
shall pay the cost of all environmental, engineering and other professional
studies undertaken by Buyer.

 

(c) If either Party incurs legal fees or expenses to enforce or interpret any
provision of this Agreement, the prevailing Party will be entitled to recover
such legal fees and expenses, including attorney’s fees, costs and necessary
disbursements, in addition to any other relief to which such Party shall be
entitled.

 

5.12. Fulfillment of Conditions. Each Party will execute and deliver at Closing
each Closing Document that such Party is required by this Agreement to execute
and deliver as a condition to Closing, and will take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of the Parties contained in this
Agreement, to the extent that satisfaction of such condition is within the
control of such Party.

 

5.13. Release of Encumbrances. Seller shall cause all Encumbrances on the Assets
other than Permitted Encumbrances to be released and discharged at or prior to
Closing.

 

5.14. Professional and General Liability Insurance. For five years from and
after the Closing Date, Seller will purchase and/or maintain, for the benefit of
Seller and Buyer, all

 

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primary and excess insurance policies in force on the Effective Date which cover
the conduct of the business at the Centers prior to the Closing and which are
written on a claims-made insuring basis. If at any time during the five-year
period described above, any one or more of the foregoing insurance policies is
cancelled or not renewed for any reason, Seller will purchase a replacement
policy with similar coverage and policy limits as the insurance policies in
force on the Effective Date. Each policy of insurance described in this Section
shall name Buyer as an additional insured, shall provide that Buyer will be
given not less than 30 days’ prior notice of cancellation, non-renewal or
reduction in limits of such insurance, and shall otherwise be in form reasonably
acceptable to Buyer.

 

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

 

The obligations of Seller hereunder are subject to the satisfaction on or prior
to the Closing Date of the following conditions unless waived in writing by
Seller:

 

6.01. Representations and Warranties; Covenants.

 

(a) Each of the representations and warranties of Buyer contained in this
Agreement shall be true and correct on and as of the Effective Date; each of the
representations and warranties of Buyer contained in this Agreement that are
qualified as to materiality shall be true and correct on and as of the Closing
Date; and each of the other representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date.

 

(b) Each and all of the terms, covenants and agreements to be complied with or
performed by Buyer on or before the Closing Date shall have been complied with
and performed, including the obligations of Buyer in Section 8.03.

 

6.02. Adverse Action or Proceeding. No action or proceeding before any
Governmental Authority shall have been instituted to restrain or prohibit the
transactions herein contemplated, and no Governmental Authority shall have taken
any other action or made any request of Seller or Buyer as a result of which
Seller reasonably and in good faith deems it inadvisable to proceed with the
transactions hereunder; and there shall not be in effect any order restraining,
enjoining or otherwise preventing consummation of the sale of the Assets by
Seller to Buyer.

 

6.03. Pre-Closing Confirmations. Seller shall have obtained documentation or
other evidence reasonably satisfactory to Seller that Seller has received or
will receive all consents, approvals, authorizations and clearances of
Governmental Authorities required of them to consummate the transactions
contemplated hereby.

 

6.04. Extraordinary Events. Neither Buyer nor Vanguard shall (a) be in
receivership or dissolution, (b) have made any assignment for the benefit of
creditors, (c) have admitted in writing its inability to pay its debts as they
mature, (d) have been adjudicated a bankrupt, (e) have filed a petition in
voluntary bankruptcy, a petition or answer seeking reorganization, or an
arrangement with creditors under the federal bankruptcy law or any other similar
law or statute of the United States or any state, nor shall any such petition
have been filed against Buyer or Vanguard, or (f) have entered into any Contract
to do or permit the doing of any of the foregoing on or after the Closing Date.

 

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6.05. Opinion of Buyer’s Counsel. Seller shall have received an opinion from
counsel to Buyer (who may be in-house counsel) dated as of the Closing Date and
addressed to Seller, in form and substance satisfactory to Seller, to
substantially the following effect:

 

(a) Buyer is a limited partnership validly existing under the laws of the State
of Delaware with full partnership power to carry on its business as it is now
being conducted. Vanguard is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with full
corporate power to carry on its business as it is now being conducted. Each of
Buyer and Vanguard has full power and authority to execute and deliver this
Agreement and each of the Closing Documents to which it is a party and to
perform its obligations therein. All partnership and corporate proceedings
required to be taken by Buyer or Vanguard to authorize the execution and
delivery of this Agreement and each of the Closing Documents to which it is a
party and to authorize the performance of its obligations herein and therein,
have all been duly and properly taken.

 

(b) The execution, delivery and performance of this Agreement and each of the
Closing Documents to which Buyer or Vanguard is a party does not violate any
provision of its limited partnership agreement or articles of incorporation and
bylaws, as the case may be.

 

(c) This Agreement and each of the Closing Documents to which Buyer or Vanguard
is a party constitutes a valid and binding obligation of such Party, enforceable
against Buyer and Vanguard in accordance with its terms, subject, as to
enforcement of remedies, to (i) applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors’ rights generally from
time to time in effect, (ii) limitations on the enforcement of equitable
remedies, and (iii) such other qualifications as counsel to the Parties may
mutually agree upon.

 

(d) To such counsel’s knowledge, the consummation of the transactions described
in this Agreement will not result in a material violation, breach or default by
Buyer or Vanguard under any material Legal Requirements.

 

In rendering such opinion, such counsel may rely upon certificates of
governmental officials and may place reasonable reliance upon certificates of
officers of Buyer and Vanguard.

 

6.06. Delivery of Closing Documents. Buyer shall have delivered at Closing (to
the Person or Persons designated therein) the Closing Documents required by, and
otherwise have fully complied with, the provisions of Section 8.03.

 

6.07. Certain Agreements. Buyer and Seller shall have entered into an agreement,
in a form acceptable to Seller, pursuant to which Seller shall provide to Buyer
certain data processing and information system services for a period of time
sufficient to permit Buyer to migrate off the existing applications and system
to independent applications and systems.

 

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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

 

The obligations of Buyer hereunder are subject to the satisfaction on or prior
to the Closing Date of the following conditions, unless waived in writing by
Buyer:

 

7.01. Representations and Warranties; Covenants.

 

(a) Each of the representations and warranties of Seller contained in this
Agreement shall be true and correct on and as of the Effective Date; each of the
representations and warranties of Seller contained in this Agreement that are
qualified as to materiality shall be true and correct on and as of the Closing
Date; and each of the other representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects on and as
of the Closing Date.

 

(b) Each and all of the terms, covenants and agreements to be complied with or
performed by Seller on or before the Closing Date shall have been complied with
and performed, including the obligations of Seller in Section 8.02.

 

7.02. Adverse Action or Proceeding. No action or proceeding before any
Governmental Authority shall have been instituted to restrain or prohibit the
transactions herein contemplated, and no Governmental Authority shall have taken
any other action or made any request of Seller or Buyer as a result of which
Buyer reasonably and in good faith deems it inadvisable to proceed with the
transactions hereunder; and there shall not be in effect any order restraining,
enjoining or otherwise preventing consummation of the sale of the Assets by
Seller to Buyer and other transactions contemplated hereunder.

 

7.03. Pre-Closing Confirmations and Contractual Consents. Buyer shall have
obtained documentation or other evidence reasonably satisfactory to Buyer that:

 

(a) Seller and Buyer have received all consents, permits, approvals,
authorizations and clearances of Governmental Authorities required to consummate
the sale of the Assets from Seller to Buyer as contemplated by this Agreement;

 

(b) Buyer has received confirmation from the Texas Department of Health and
other applicable licensure agencies that upon Closing all licenses required by
law to operate the Center will be transferred to or issued in the name of Buyer;

 

(c) Buyer has obtained reasonable assurances that all Government Payment
Programs have certified or will certify the operation of the Center by Buyer as
of the Closing Date and that Buyer may participate in and receive payment from
such programs effective as of the Closing Date;

 

(d) Seller has obtained consents to assignment of all Contracts (other than
Immaterial Contracts) for which such consents are required as a result of the
sale of the Assets from Seller to Buyer as contemplated by this Agreement; and

 

(e) Buyer has obtained such other consents and approvals as are legally required
for Buyer’s consummation of the sale of the Assets from Seller to Buyer as
described herein.

 

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7.04 No Material Adverse Change. Since February 29, 2004, no event, occurrence
or development of a state of circumstances or facts shall have occurred which
has had or reasonably could be expected to have a Material Adverse Effect.

 

7.05 Extraordinary Events. Neither Seller nor Radiologix shall (a) be in
receivership or dissolution, (b) have made any assignment for the benefit of
creditors, (c) have admitted in writing its inability to pay its debts as they
mature, (d) have been adjudicated a bankrupt, (e) have filed a petition in
voluntary bankruptcy, a petition or answer seeking reorganization, or an
arrangement with creditors under the federal bankruptcy law or any other similar
law or statute of the United States or any state, nor shall any such petition
have been filed against any of them, or (f) have entered into any Contract to do
or permit the doing of any of the foregoing on or after the Closing Date.

 

7.06 Opinion of Seller’s Counsel. Buyer shall have received an opinion from
counsel to Seller (who may be in-house counsel) dated as of the Closing Date and
addressed to Buyer, in form and substance satisfactory to Buyer, to
substantially the following effect:

 

(a) Seller is a limited partnership validly existing under the laws of the State
of Delaware with full partnership power to carry on its business as it is now
being conducted. Radiologix is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with full
corporate power to carry on its business as it is now being conducted. Each of
Seller and Radiologix has full power and authority to execute and deliver this
Agreement and each of the Closing Documents to which it is a party and to
perform its obligations therein. All partnership and corporate proceedings
required to be taken by Seller and Radiologix to authorize the execution and
delivery of this Agreement and each of the Closing Documents to which it is a
party and to authorize the performance of its obligations herein and therein,
have all been duly and properly taken.

 

(b) The execution, delivery and performance of this Agreement and each of the
Closing Documents to which Seller or Radiologix is a party does not violate any
provision of its limited partnership agreement or articles of incorporation and
bylaws, as the case may be.

 

(c) This Agreement and each of the Closing Documents to which Seller or
Radiologix is a party constitutes a valid and binding obligation of such Party,
enforceable against Seller or Radiologix in accordance with its terms, subject,
as to enforcement of remedies, to (i) applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors’ rights generally from
time to time in effect, (ii) limitations on the enforcement of equitable
remedies and (iii) such other qualifications as counsel to the Parties may
mutually agree upon.

 

(d) To such counsel’s knowledge, the consummation of the transactions described
in this Agreement will not result in a material violation, breach or default by
Seller or Radiologix under any material Legal Requirements.

 

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In rendering such opinion, such counsel may rely upon certificates of
governmental officials and may place reasonable reliance upon certificates of
officers of Seller and Radiologix.

 

7.07 Lien Searches and Termination Statements. Seller shall have delivered to
Buyer UCC lien, litigation and tax searches showing all Encumbrances on the
Assets, accompanied by fully executed UCC termination statements or other
releases or conveyances relating to all Encumbrances (other than Permitted
Encumbrances) on the Assets.

 

7.08 Delivery of Closing Documents. Seller shall have delivered at Closing (to
the Person or Persons designated therein) the Closing Documents required by, and
otherwise have fully complied with, the provisions of Section 8.02.

 

7.09 Certain Agreements.

 

(a) Buyer shall have entered into one or more professional service agreements
with the Physician Group, in substantially the form attached hereto as Exhibit
A, pursuant to which the Physician Group agrees to provide reading and
interpretative services at the Centers and the Wholly-Owned Center.

 

(b) Buyer and Seller shall have entered into an agreement, in substantially the
form attached hereto as Exhibit B, pursuant to which Seller shall provide to
Buyer certain data processing and information system services for a period of
time sufficient to permit Buyer to migrate off the existing applications and
system to independent applications and systems.

 

(c) Buyer and the Physician Group shall have entered into an agreement, in a
form acceptable to Buyer, pursuant to which the Physician Group shall grant to
Buyer the right to use the name “M & S” royalty free in the conduct of the
business of the Centers.

 

(d) From the Closing through July 31, 2004, Buyer will provide, at no cost to
Seller, office space, telephones and office furniture for up to four employees
of Seller.

 

7.10 Closing under the Related Agreement. All of the conditions precedent to the
consummation of the transactions contemplated by the Related Agreement shall
have been satisfied or waived so that the transactions contemplated by this
Agreement and by the Related Agreement may be consummated simultaneously.

 

8. CLOSING; TERMINATION OF AGREEMENT

 

8.01. Closing.

 

(a) Consummation of the sale of the Assets and the other transactions
contemplated by and described in this Agreement (the “Closing”) shall take place
at the office of Seller at 10:00 a.m. on the fifth business day following
satisfaction or waiver of the conditions set forth in Articles 6 and 7, or at
such time or place as the Parties may mutually agree. Unless otherwise agreed in
writing by the Parties at Closing, the Closing shall be effective for accounting
purposes as of 12:01 a.m. on the Closing Date.

 

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(b) At the Closing, Buyer may designate one or more Affiliates to take title to
the Assets for regulatory or other reasons and references to instruments or
agreements to be executed and delivered to or by Buyer in this Agreement at
Closing shall apply to each such designee with respect to the Assets acquired by
it. Buyer shall notify Seller prior to Closing of the names of such designees
and, from and after Closing, the rights, privileges and benefits of this
Agreement applicable to Buyer shall benefit each such designee, subject to the
terms, covenants and conditions of this Agreement, with respect to the Assets
acquired by it.

 

8.02. Action of Seller at Closing. At the Closing and unless otherwise waived in
writing by Buyer, Seller shall deliver to Buyer:

 

(a) A bill of sale and assignment, fully executed by Seller, in form and
substance acceptable to Buyer, conveying to Buyer good and valid title to the
Assets free and clear of all Encumbrances (other than Permitted Encumbrances);

 

(b) assignments, fully executed by Seller, in form and substance acceptable to
Buyer, conveying to Buyer Seller’s interests in the Assumed Contracts;

 

(c) Copies of resolutions duly adopted by the partners of Seller authorizing and
approving the execution and delivery of this Agreement and the Closing Documents
and the consummation of the transactions contemplated hereby, certified as true
and in full force and effect as of the Closing Date by appropriate officers of
Seller’s general partner;

 

(d) A certificate of the duly authorized President or Vice President of Seller’s
general partner certifying that each of the representations and warranties of
Seller contained in this Agreement that is qualified as to materiality is true
and correct on and as of the Closing Date, that each of the other
representations and warranties of Seller contained in this Agreement is true and
correct in all material respects on and as of the Closing Date, and that each
and all of the terms, covenants and agreements to be complied with or performed
by Seller on or before the Closing Date have been complied with and performed;

 

(e) Certificates of incumbency for the respective officers of Seller’s general
partner executing the Agreement and the Closing Documents;

 

(f) Certificates of existence and good standing for Seller and Seller’s general
partner from the states of Delaware and Texas and for Radiologix from the state
of Delaware, in each case dated the most recent practical date prior to Closing;
and

 

(g) Such other Closing Documents as Buyer reasonably deems necessary to effect
the transactions contemplated hereby.

 

8.03. Action of Buyer at Closing. At the Closing and unless otherwise waived in
writing by Seller, Buyer shall deliver to Seller:

 

(a) The Purchase Price;

 

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(b) an assumption agreement, fully executed by Buyer, in form and substance
acceptable to Seller, pursuant to which Buyer shall assume the future payment
and performance of the Assumed Liabilities;

 

(c) Copies of resolutions duly adopted by the partners of Buyer authorizing and
approving the execution and delivery of this Agreement by Buyer and the Closing
Documents and the consummation of the transactions contemplated hereby,
certified as true and in full force and effect as of the Closing Date by
appropriate officers of Buyer’s general partner;

 

(d) A certificate of the duly authorized President or a Vice President of
Buyer’s general partner certifying that each of the representations and
warranties of Buyer contained in this Agreement that is qualified as to
materiality is true and correct on and as of the Closing Date, that each of the
other representations and warranties of Buyer contained in this Agreement is
true and correct in all material respects on and as of the Closing Date, and
that each and all of the terms, covenants and agreements to be complied with or
performed by Buyer on or before the Closing Date have been complied with and
performed;

 

(e) Certificates of incumbency for the officers of Buyer’s general partner and
Vanguard executing this Agreement and the Closing Documents;

 

(f) Certificates of existence and good standing for Buyer and Buyer’s general
partner from the states of Delaware and Texas, and for Vanguard from the state
of Delaware, in each case dated the most recent practical date prior to Closing;
and

 

(g) Such other Closing Documents as Seller reasonably deem necessary to effect
the transactions contemplated hereby.

 

8.04. Termination Prior to Closing.

 

(a) Notwithstanding anything herein to the contrary, this Agreement may be
terminated by Seller and/or Buyer, and the transactions contemplated by this
Agreement abandoned, upon notice by the terminating Party to the other Parties:

 

(i) at any time before the Closing, by mutual consent of Buyer and Seller;

 

(ii) by Buyer in accordance with Section 5.11;

 

(iii) at any time before the Closing, by Buyer on the one hand, or Seller on the
other hand, in the event of material breach of this Agreement by the
non-terminating Party or if the satisfaction of any condition to such Party’s
obligations under this Agreement becomes impossible or impracticable with the
use of commercially reasonable efforts and the failure of such condition to be
satisfied is not caused by a breach by the terminating Party;

 

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(iv) at any time after June 1, 2004 by Seller if the transactions contemplated
by this Agreement have not been consummated on or before such date and such
failure to consummate is not caused by a breach of this Agreement by Seller;

 

(v) at any time after June 1, 2004 by Buyer if the transactions contemplated by
this Agreement have not been consummated on or before such date and such failure
to consummate is not caused by a breach of this Agreement by Buyer;

 

(vi) by Buyer if any supplement to a Schedule delivered by Seller pursuant to
Section 10.01(b) discloses any event or circumstance that Buyer, in its sole but
reasonable discretion, believes has had or will have a Material Adverse Effect;
or

 

(vii) by Buyer if, since February 29, 2004, any event, occurrence or development
of a state of circumstances or facts has occurred which has had or reasonably
could be expected to have a Material Adverse Effect, and Seller is not
reasonably likely to cure or remediate, prior to June 1, 2004, the consequences
of the Material Adverse Effect.

 

(b) If this Agreement is validly terminated pursuant to this Section, this
Agreement will be null and void, and there will be no liability on the part of
any Party (or any of their respective partners, officers, employees or other
agents) except that, upon termination of this Agreement pursuant to
subparagraphs (iii), (iv) or (v) above, Seller will remain liable to Buyer and
Buyer will remain liable to Seller for any breach of their respective
obligations under Section 5.14 existing at the time of such termination, and
each Party may seek such remedies or damages against the other with respect to
any such breach as are provided in this Agreement or as are otherwise available
at law or in equity.

 

9. INDEMNIFICATION

 

9.01. Indemnification by Seller. Subject to and to the extent provided in this
Article, from and after the Closing, Seller shall indemnify, defend and hold
harmless Buyer’s Indemnified Persons, and each of them, from and against any
Losses incurred or suffered by Buyer’s Indemnified Persons, directly or
indirectly, as a result of or arising from:

 

(a) any inaccuracy of any representation or warranty of Seller, whether or not
Buyer’s Indemnified Persons relied thereon or had knowledge thereof, provided
that in determining whether there has been any such inaccuracy, any
qualification as to materiality included in any representation or warranty shall
not be taken into account; and

 

(b) the non-fulfillment of any covenant, agreement or other obligation of Seller
set forth in this Agreement or in any other agreement or instrument delivered by
Seller pursuant to this Agreement.

 

9.02. Seller’s Limitations. Seller shall have no liability under Section 9.01(a)
and no claim shall accrue against Seller under Section 9.01(a): (i) if the Loss
arises from the inaccuracy

 

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of any representation or warranty made by Seller and Seller proves that prior to
the Effective Date Buyer had actual knowledge of the inaccuracy of such
representation or warranty, and (ii) unless and until the total liability of
Seller in respect of claims arising under Section 9.01(a), together with claims
arising under section 9.01(a) of the Related Agreement, exceeds $200,000 in the
aggregate, provided that there shall be no minimum Losses requirement, and
liability of Seller shall arise from and after $1.00 of Losses, in respect of
Losses resulting from Seller’s intentional misrepresentation or fraud.

 

9.03. Indemnification by Buyer. Subject to and to the extent provided in this
Article, from and after the Closing Date, Buyer shall indemnify, defend and hold
harmless Seller’s Indemnified Persons, and each of them, from and against any
Losses incurred or suffered by Seller’s Indemnified Persons, directly or
indirectly, as a result of or arising from:

 

(a) the inaccuracy in any representation or warranty of Buyer, whether or not
Seller’s Indemnified Persons relied thereon or had knowledge thereof, provided
that in determining whether there has been any such inaccuracy, any
qualification as to materiality included in any representation or warranty shall
not be taken into account; and

 

(b) the non-fulfillment of any covenant, agreement or other obligation of Buyer
set forth in this Agreement or in any other agreement or instrument delivered by
Buyer pursuant to this Agreement.

 

9.04. Buyer’s Limitations. Buyer shall have no liability under Section 9.03(a)
and no claim shall accrue against Buyer under Section 9.03(a): (i) if the Loss
arises from the inaccuracy of any representation or warranty made by Buyer and
Buyer proves that prior to the Effective Date Seller had actual knowledge of the
inaccuracy of such representation or warranty, and (ii) unless and until the
total liability of Buyer in respect of claims arising under Section 9.03(a),
together with claims arising under section 9.03(a) of the Related Agreement,
exceeds $200,000 in the aggregate, provided that there shall be no minimum
Losses requirement, and liability of Buyer shall arise from and after $1.00 of
Losses, in respect of Losses resulting from Buyer’s intentional
misrepresentation or fraud.

 

9.05. Notice and Procedure. All claims for indemnification by any Indemnified
Party against an Indemnifying Party under this Article shall be asserted and
resolved as follows:

 

(a) (i) If any claim or demand for which an Indemnifying Party would be liable
for Losses to an Indemnified Party is alleged or asserted by a Person other than
any Buyer’s Indemnified Person or Seller’s Indemnified Person (a “Third Party
Claim”), the Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party, together with a copy of all papers served,
if any, and specifying the nature of and alleged basis for the Third Party Claim
and, to the extent then feasible, the alleged amount or the estimated amount of
the Third Party Claim. If the Indemnified Party fails to deliver the Claim
Notice to the Indemnifying Party within 30 days after the Indemnified Party
receives notice of such Third Party Claim, the Indemnifying Party will not be
obligated to indemnify the Indemnified Party with respect to such Third Party
Claim if and only to the extent that the Indemnifying Party’s ability to defend
the Third Party Claim has been irreparably prejudiced by such failure. The
Indemnifying Party will

 

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notify the Indemnified Party within ten days after receipt of the Claim Notice
(the “Notice Period”) whether the Indemnifying Party intends, at the sole cost
and expense of the Indemnifying Party, to defend the Indemnified Party against
the Third Party Claim. The assumption by the Indemnifying Party of the defense
of the Third Party Claim constitutes an admission by the Indemnifying Party that
the claim is one for which the Indemnifying Party is ultimately liable under
this Article.

 

(ii) If the Indemnifying Party notifies the Indemnified Party within the Notice
Period that the Indemnifying Party intends to defend the Indemnified Party
against the Third Party Claim, then the Indemnifying Party will have the right
to defend, at its sole cost and expense, the Third Party Claim by all
appropriate proceedings, which proceedings will be diligently prosecuted by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party (with the consent of the Indemnified Party). The Indemnifying
Party will have full control of such defense and proceedings; provided that the
Indemnified Party may file during the Notice Period, at the sole cost and
expense of the Indemnified Party, any motion, answer or other pleading that the
Indemnified Party may deem necessary or appropriate to protect its interests and
not irrevocably prejudicial to the Indemnifying Party (it being understood and
agreed that, except as provided in Section 9.05(a)(iii), if an Indemnified Party
takes any such action that is irrevocably prejudicial and conclusively causes a
final adjudication that is materially adverse to the Indemnifying Party, the
Indemnifying Party will be relieved of its obligations hereunder with respect to
that portion of the Third Party Claim prejudiced by the Indemnified Party’s
action); and provided further that, if requested by the Indemnifying Party, the
Indemnified Party shall cooperate, at the sole cost and expense of the
Indemnifying Party, with the Indemnifying Party and its counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest or, if
appropriate in the judgment of the Indemnified Party and related to the Third
Party Claim, in making any counterclaim or cross-claim against any Person (other
than the Indemnified Party). The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim assumed by the
Indemnifying Party pursuant to this Section 9.05(a)(ii) and, except as provided
in the preceding sentence, the Indemnified Party will bear its own costs and
expenses with respect to such participation. Notwithstanding the foregoing, the
Indemnifying Party may not assume the defense of the Third Party Claim on behalf
of the Indemnified Party if (1) the Persons against whom the claim is made, or
any impleaded Persons, include both the Indemnifying Party and any Indemnified
Party, and (2) representation of both such Persons by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case any Indemnified Party shall have the right to defend the Third Party
Claim on its own behalf and to employ counsel at the expense of the Indemnifying
Party.

 

(iii) If the Indemnifying Party fails to notify the Indemnified Party within the
Notice Period that the Indemnifying Party intends to defend the Indemnified
Party against the Third Party Claim, or if the Indemnifying Party gives such
notice but fails to diligently prosecute or settle the Third Party Claim,

 

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or if the Indemnifying Party fails to give any notice whatsoever within the
Notice Period, then the Indemnified Party will have the right (but not the
obligation) to defend, at the sole cost and expense of the Indemnifying Party,
the Third Party Claim by all appropriate proceedings, which proceedings will be
diligently prosecuted by the Indemnified Party to a final conclusion or settled
at the discretion of the Indemnified Party. The Indemnified Party will have full
control of such defense and proceedings, including any compromise or settlement
thereof; provided that, if requested by the Indemnified Party, the Indemnifying
Party shall cooperate, at the sole cost and expense of the Indemnifying Party,
with the Indemnified Party and its counsel in contesting the Third Party Claim
which the Indemnified Party is contesting, or, if appropriate and related to the
Third Party Claim in question, in making any counterclaim or cross claim against
any Person (other than the Indemnifying Party).

 

(iv) Notwithstanding the foregoing provisions of Section 9.05(a)(iii), if the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
the Indemnifying Party disputes its obligation to indemnify the Indemnified
Party against the Third Party Claim, and if such dispute is resolved pursuant to
Section 9.05(c) in favor of the Indemnifying Party, the Indemnifying Party will
not be required to bear the costs and expenses of the Indemnified Party’s
defense pursuant to Section 9.05(a)(iii) or of the Indemnifying Party’s
participation therein at the Indemnified Party’s request, and the Indemnified
Party will reimburse the Indemnifying Party in full for all such costs and
expenses. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to Section
9.05(a)(iii), but the Indemnifying Party will bear its own costs and expenses
with respect thereto if such participation is not at the request of the
Indemnified Party.

 

(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that is not a Third Party Claim, the Indemnified Party shall
deliver an Indemnity Notice with reasonable promptness to the Indemnifying Party
specifying the nature of and specific basis for the claim and, to the extent
then feasible, the amount or the estimated amount of the claim. The failure by
any Indemnified Party to give timely notice referred to in the preceding
sentence shall not impair such Person’s rights hereunder except to the extent
that an Indemnifying Party demonstrates that it has been irreparably prejudiced
thereby. If the Indemnifying Party does not notify the Indemnified Party within
ten days following its receipt of the Indemnity Notice that the Indemnifying
Party disputes its obligation to indemnify the Indemnified Party hereunder, the
claim will be conclusively deemed a liability of the Indemnifying Party
hereunder.

 

(c) If the Indemnifying Party timely disputes its liability with respect to a
claim described in a Claim Notice or an Indemnity Notice, the Indemnifying Party
and the Indemnified Party shall proceed promptly and in good faith to negotiate
a resolution of such dispute within 60 days following receipt of the Claim
Notice or Indemnity Notice.

 

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(d) The Indemnifying Party shall pay the amount of any liability to the
Indemnified Party within 30 days following its receipt of a Claim Notice or an
Indemnity Notice, or on such later date (i) in the case of a Third Party Claim,
as the Indemnified Party suffers Losses in respect of the Third Party Claim, or
(ii) in the case of an Indemnity Notice in which the amount of the claim is
estimated, promptly after any Losses in respect of such claim are actually
incurred by the Indemnified Party. In the event the Indemnified Party is not
paid in full for its claim in a timely manner after the Indemnifying Party’s
obligation to indemnify and the amount thereof has been determined, the amount
due shall bear interest from the date that the Indemnifying Party received the
Claim Notice or the Indemnity Notice until paid at the interest rate provided in
Section 10.15, and in addition to any other rights it may have against the
Indemnifying Party, the Indemnified Party shall have the right to set-off the
unpaid amount of such claim against any amounts owed by it to the Indemnifying
Party.

 

(e) Any estimated amount of a claim submitted in a Claim Notice or an Indemnity
Notice shall not be conclusive of the final amount of such claim, and the giving
of a Claim Notice when an Indemnity Notice is properly due, or the giving of an
Indemnity Notice when a Claim Notice is properly due, shall not impair such
Indemnified Party’s rights hereunder except to the extent that an Indemnifying
Party demonstrates that it has been irreparably prejudiced thereby. Notice of
any claim comprised in part of Third Party Claims and claims that are not Third
Party Claims may be given pursuant to either Section 9.05(a) or 9.05(b).

 

9.06. Survival of Representations; Indemnity Periods.

 

(a) Notwithstanding the right of Buyer to investigate the Centers or any right
of any Party to investigate the accuracy of the representations and warranties
of another Party in this Agreement, or any actual investigation by or knowledge
of a Party, Seller has, on the one hand, and Buyer and Vanguard have, on the
other hand, the right to rely fully upon the representations, warranties,
covenants and agreements of the other contained in this Agreement, and except as
expressly provide otherwise in Section 9.02, Seller’s obligations in this
Agreement to indemnify Buyer’s Indemnified Persons for breaches of any
representation or warranty of Seller pursuant to this Article 9 will not be
affected by any investigation by or on behalf of Buyer or by Buyer’s knowledge
that any such representation is or might be untrue. The representations and
warranties contained in this Agreement made by Seller and Buyer, respectively,
will survive the Closing (X) indefinitely with respect to matters covered by
Sections 3.02 (a), 3.04, 4.02(a) and 4.03 and (Y) until two years after the
Closing Date in the case of all other representations and warranties, except
that:

 

(i) any representation or warranty that would otherwise terminate in accordance
with clause (b) above shall survive if a Claim Notice or an Indemnity Notice
shall have been given on or prior to such termination date, until the related
claim for indemnification has been satisfied or otherwise resolved as provided
in this Article, and

 

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(ii) in the event of intentional misrepresentation or fraud in the making of any
representation or warranty, all representations and warranties, that are the
subject of the intentional misrepresentation or fraud shall survive until 60
days after the expiration of all applicable statutes of limitations (including
all periods of extension, whether automatic or permissive) with respect to
matters covered thereby.

 

(b) All covenants and agreements to be performed after the Closing Date will
survive the Closing for the term specified therein, or, if no term is specified,
indefinitely. Rights to indemnification under this Article will survive until
any claims brought hereunder shall have been satisfied or otherwise resolved as
provided herein.

 

10. GENERAL

 

10.01. Schedules.

 

(a) The Schedules and all exhibits and documents referred to in or attached to
this Agreement are integral parts of this Agreement as if fully set forth herein
and all statements appearing therein shall be deemed to be representations.
Nothing in the Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Schedule identifies the
exception with reasonable particularity and, without limiting the generality of
the foregoing, the mere listing of a document as an exception to any
representation or warranty shall not be deemed to disclose the contents of such
document as an exception to any representation or warranty.

 

(b) At or prior to Closing, Seller shall modify or amend the Schedules or
deliver to Buyer new Schedules as necessary to make each of the representations
and warranties of Seller contained in Article 3 true and correct in all material
respects on and as of the Closing Date, provided that without Buyer’s written
consent, (i) Seller may not modify or amend any Schedule to disclose any event
or circumstance that Seller knew had occurred prior to the Effective Date, (ii)
Seller may not modify or amend any Schedule to disclose any event or
circumstance attributable to the default or breach by Seller of any covenant or
agreement contained in this Agreement, (iii) Seller may not modify or amend any
Schedule relating to the representations and warranties in Section 3.05, 3.07 or
3.08, and (iv) no such modification or amendment may add any Encumbrances (other
than Permitted Encumbrances) or add any Assumed Liabilities.

 

10.02. Tax and Government Payment Program Effect. None of the Parties (nor such
Parties’ counsel or accountants) has made or is making in this Agreement any
representation to any other Party (or such Party’s counsel or accountants)
concerning any of the Tax or Government Payment Program effects or consequences
on the other Party of the transactions provided for in this Agreement. Each
Party represents that it has obtained, or may obtain, independent Tax and
Government Payment Program advice with respect thereto and upon which it, if so
obtained, has solely relied.

 

10.03. Reproduction of Documents. This Agreement and all documents relating
hereto, including consents, waivers and modifications which may hereafter be
executed, the Closing

 

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Documents, financial statements, certificates and other information previously
or hereafter furnished to any Party, may be reproduced by any Party by any
photographic, microfilm, electronic or similar process and the Parties may
destroy any original documents so reproduced. The Parties stipulate that any
such reproduction shall be admissible in evidence as the original itself in any
judicial, arbitral or administrative proceeding (whether or not the original is
in existence and whether or not such reproduction was made in the ordinary
course of business) and that any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.

 

10.04. Missing Consents to Assignment. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, claim or other right if the sale of the Assets would constitute an
assignment thereof and without the consent of another Person such assignment
would (i) constitute a breach thereof or in any material way affect the rights
of Buyer thereunder, (ii) be ineffective or render the Contract void or
voidable, or (iii) materially affect Buyer’s rights thereunder so that Buyer
would not in fact receive all such rights. In any such event, Seller shall
cooperate in any reasonable arrangement designed to provide for Buyer the
benefits under any such Contract, claim or right, including enforcement of any
and all rights of Seller against the other Person arising out of the breach or
cancellation by such other Person or otherwise. After Closing, the Parties shall
continue to use commercially reasonable efforts to obtain the consent of the
assignment of such Contract, claim or right.

 

10.05. Time of Essence. Time is of the essence in the performance of this
Agreement, provided that, if the day on or by which a notice must or may be
given, or the performance of any Party’s obligation is due, is a Saturday,
Sunday or holiday for banks in San Antonio, Texas, then the day on or by which
such notice must or may be given, or that such performance is due, shall
automatically be extended to the first business day thereafter. This Section may
be waived only in a writing expressly referring hereto.

 

10.06. Consents, Approvals and Discretion. Except as herein expressly provided
to the contrary, whenever this Agreement requires or permits any consent or
approval to be given by any Party or provides that any Party must or may
exercise discretion, such consent or approval shall not be unreasonably
withheld, conditioned or delayed and such discretion shall be reasonably
exercised.

 

10.07. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to such State’s
conflicts of laws rules.

 

10.08. Benefit; Assignment. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective legal representatives, successors
and assigns. No Party may assign its rights under this Agreement without the
prior written consent of the other Parties, provided that Buyer may assign this
Agreement, in whole or in part, to any Affiliate of Buyer, and to any other
Person who takes title to all or any portion of the Assets in connection with
Buyer’s financing (including a sale/leaseback) of the transactions described
herein.

 

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10.09. Third Party Beneficiary. The terms and provisions of this Agreement
(including provisions regarding employee and employee benefit matters) are
intended solely for the benefit of the Parties, Buyer’s Indemnified Persons,
Seller’s Indemnified Persons, and their respective successors and permitted
assigns, and are not intended to confer third-party beneficiary rights upon any
other Person. Any reference in this Agreement to one or more Employee Benefit
Plans of Buyer includes provisions, if any, in such plans permitting their
termination or amendment and any covenant in this Agreement to provide any
Employee Benefit Plan shall not be deemed or construed to limit Buyer’s right to
terminate or amend such plan of Buyer in accordance with its terms.

 

10.10. Waiver of Breach, Right or Remedy. The waiver by any Party of any breach
or violation by another Party of any provision of this Agreement or of any right
or remedy permitted the waiving Party in this Agreement (i) shall not waive or
be construed to waive any subsequent breach or violation of the same provision
(ii) shall not waive or be construed to waive a breach or violation of any other
provision, and (iii) must be express and must be in writing and may not be
presumed or inferred from any Party’s conduct. Except as expressly provided
otherwise in this Agreement, no remedy conferred by this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be in
addition to every other remedy granted in this Agreement or now or hereafter
existing at law or in equity, by statute or otherwise. The election of any one
or more remedies by a Party shall not constitute a waiver of the right to pursue
other available remedies. In addition to any other rights and remedies any Party
may have at law or in equity for breach of this Agreement, each Party shall be
entitled to seek an injunction to enforce the provisions of this Agreement.

 

10.11. Notices. Any notice, demand or communication required, permitted or
desired to be given hereunder shall be deemed effectively given if given in
writing (i) on the date tendered by personal delivery, (ii) on the date received
by facsimile or other electronic means, (iii) on the date tendered for delivery
by nationally recognized overnight courier, or (iv) on the date tendered for
delivery by United States mail, with postage prepaid thereon, certified or
registered mail, return receipt requested, in any event addressed as follows:

 

If to Buyer or Vanguard:

   Vanguard Health Systems, Inc.      20 Burton Hills Boulevard, Suite 100     
Nashville, Tennessee 37215      Attn: General Counsel      Facsimile:
615.665.6197

 

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If to Seller:

   Radiologix, Inc.      3600 Chase Tower      2200 Ross Avenue      Dallas, TX
75201-2776      Attn: President & Chief Executive Officer      Facsimile:
214.303.2778

 

or to such other address or number, and to the attention of such other Person,
as any Party may designate at any time in writing in conformity with this
Section.

 

10.12. Misdirected Payments; Offset. Each Party shall remit to the proper Party
with reasonable promptness any monies received by such Party that should have
been received by the other Party pursuant to the terms of this Agreement,
including any monies received by Buyer with respect to the Accounts Receivables.
If Buyer reasonably determines after Closing that funds previously paid or
credited to Seller in respect of services rendered prior to the Closing Date
have resulted in an overpayment or must be repaid, Seller shall be responsible
for the repayment of said monies (and the defense of such actions). If any Party
suffers any deduction to or offset or withhold against amounts due to such Party
as a result of amounts owed by another Party, the other Party shall promptly pay
to such Party the amounts so billed or offset upon demand. Any amounts due Buyer
by Seller or its Affiliate, or due Seller by Buyer or its Affiliate, may be
offset against monies or other funds held by the Party entitled to payment.

 

10.13. Severability. If any provision of this Agreement is held or determined to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any Party under this Agreement will not be materially
and adversely affected thereby: (a) such provision will be fully severable; (b)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement; (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement; and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.

 

10.14. Entire Agreement; Amendment. This Agreement supersedes all previous
contracts, agreements and understandings and constitutes the entire agreement of
whatsoever kind or nature existing between or among the Parties representing the
within subject matter and no Party shall be entitled to benefits other than
those specified herein. As between or among the Parties, any oral or written
representation, agreement or statement not expressly incorporated herein,
whether given prior to or on the Effective Date, shall be of no force and effect
unless and until made in writing and signed by the Parties on or after the
Effective Date. The representations and warranties set forth in this Agreement
shall survive the Closing and remain in full force and effect as provided in
Article 9, and shall survive the execution and delivery of all other agreements,
instruments or other documents described, referenced or contemplated

 

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herein and shall not be merged herewith or therewith. Each representation,
warranty and covenant contained in this Agreement has independent significance
and if any Party has breached any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative level of specificity) that such Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty or covenant. This Agreement may be executed in two or
more counterparts, each and all of which shall be deemed an original and all of
which together shall constitute but one and the same instrument. This Agreement
may not be amended except in a written instrument executed the Parties.

 

10.15. Interest. Unless otherwise provided herein to the contrary, any monies
required to be paid by any Party to another Party pursuant to this Agreement
shall be due two business days after demand therefor and if not paid when due
shall accrue interest from and after the due date to and including the date full
payment is made at an annual rate equal to the average prime rate of Citibank,
N.A., during such period plus three percent per annum.

 

10.16. Drafting. No provision of this Agreement shall be interpreted for or
against any Person on the basis that such Person was the draftsman of such
provision, and no presumption or burden of proof shall arise favoring or
disfavoring any Person by virtue of the authorship of any provision of this
Agreement.

 

10.17. Confidentiality; Public Announcements.

 

(a) Except as required by Legal Requirements, Seller and Radiologix, on the one
hand, and Buyer and Vanguard, on the other hand, shall keep this Agreement and
its contents confidential and not disclose the same to any Person (except the
Parties’ attorneys, accountants or other professional advisors and except to the
applicable Governmental Authorities in connection with any required notification
or application for approval or a license or exemption therefrom) without the
prior written consent of the other Party.

 

(b) At all times before the Closing, Seller, on the one hand, and Buyer, on the
other hand, will consult with the other before issuing or making any reports,
statements or releases to the public with respect to this Agreement or the
transactions contemplated hereby and will use good faith efforts to obtain the
other Party’s approval of the text of any public report, statement or release to
be made on behalf of such Party. If either Party is unable to obtain the
approval of its public report, statement or release from the other Party and
such report, statement or release is, in the opinion of legal counsel to such
Party, necessary to discharge such Party’s disclosure obligations under law,
then such Party may make or issue the legally required report, statement or
release and promptly furnish the other Party a copy thereof. Nothing herein
shall prohibit any Party from responding to questions presented by the press or
media without first obtaining prior written consent of the other Party.

 

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11. GUARANTEES

 

11.01. Guarantee of Buyer’s Obligations. Vanguard, as principal obligor and not
merely as a surety, hereby unconditionally guarantees full, punctual and
complete performance by Buyer of all of Buyer’s obligations under this Agreement
and each of the Closing Documents subject to the terms hereof and thereof and so
undertakes to Seller that, if and whenever Buyer is in default, Vanguard will on
demand duly and promptly perform or procure the performance of Buyer’s
obligations. The foregoing guarantee is a continuing guarantee and will remain
in full force and effect until the obligations of Buyer under this Agreement
have been duly performed or discharged and will continue to be effective or will
be reinstated, as the case may be, if at any time any sum paid to Seller must be
restored by Seller upon the bankruptcy, liquidation or reorganization of Buyer.
Vanguard’s obligations under this Section shall not be affected or discharged in
any way by any proceeding with respect to Buyer under any federal or state
bankruptcy, insolvency or debtor relief laws.

 

11.02. Guarantee of Seller’s Obligations. Radiologix, as principal obligor and
not merely as a surety, hereby unconditionally guarantees full, punctual and
complete performance by Seller of Seller’s obligations under this Agreement and
each of the Closing Documents subject to the terms hereof and thereof and so
undertakes to Buyer and Vanguard that, if and whenever Seller is in default, the
Foundation will on demand duly and promptly perform or procure the performance
of Seller’s obligations. The foregoing guarantee is a continuing guarantee and
will remain in full force and effect until the obligations of Seller under this
Agreement have been duly performed or discharged and will continue to be
effective or will be reinstated, as the case may be, if at any time any sum paid
to Buyer or Vanguard must be restored by Buyer or Vanguard upon the bankruptcy,
liquidation or reorganization of Seller. Radiologix’s obligations under this
Section shall not be affected or discharged in any way by any proceeding with
respect to Seller under any federal or state bankruptcy, insolvency or debtor
relief laws.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
multiple originals by their duly authorized officers as of the Effective Date.

 

M & S IMAGING PARTNERS, L.P.

     

RADIOLOGIX, INC.

By:

 

M & S Imaging Partners, I, Inc.

General Partner

     

By:

  Michael L. Silhol                

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Title:

  Senior Vice President                

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    By:   Michael L. Silhol        

--------------------------------------------------------------------------------

   

Title:

  Senior Vice President        

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VHS SAN ANTONIO IMAGING PARTNERS, L.P.

      VANGUARD HEALTH SYSTEMS, INC. By:  

VHS Acquisition Subsidiary Number 5, Inc.

General Partner

     

By:

                   

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Title:

                   

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    By:            

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Title:

           

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