Exhibit 10.37

MEMBERSHIP INTEREST PURCHASE AGREEMENT

BY AND AMONG

NIGHTHAWK RADIOLOGY HOLDINGS, INC.

AND

MIDWEST PHYSICIANS SERVICES, LLC

AND

EMERGENCY RADIOLOGY SERVICES, LLC

AND

SPR HOLDINGS II, LLC

JULY 16, 2007

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TABLE OF CONTENTS

 

     Page ARTICLE I DEFINITIONS    1         1.1   

Capitalized Terms

   1         1.2   

Construction

   10 ARTICLE II SALE AND PURCHASE OF INTERESTS; CLOSING    10         2.1   

Interests

   10         2.2   

Consideration

   10         2.3   

Closing

   10         2.4   

Purchase Price Allocation

   11 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND ACQUIRED
COMPANIES    11         3.1   

Organization

   11         3.2   

Authority

   12         3.3   

Capital Structure

   12         3.4   

Conflict

   13         3.5   

Financial Statements

   13         3.6   

Indebtedness; Guaranties

   15         3.7   

Accounts Receivable

   15         3.8   

Cash Equivalents/Bank Accounts

   15         3.9   

Absence of Changes

   16         3.10   

Legal and Other Compliance

   18         3.11   

Contracts

   19         3.12   

Restrictions on Business Activities

   21         3.13   

Governmental Approvals

   21         3.14   

Title to Properties, Absence of Liens, Condition of Equipment

   21         3.15   

Intellectual Property

   22         3.16   

Litigation

   25         13.17   

Insurance

   25         3.18   

Tax Matters

   26         3.19   

Environmental Matters

   28         13.20   

Brokers’ and Finders’ Fees

   29         3.21   

Employee and Contractor Matters

   29         3.22   

Employee Plans

   31         3.23   

Consents

   33         3.24   

Government Contracts

   33         3.25   

Books and Records

   34         3.26   

Medical Liability

   34         3.27   

Complete Copies of Materials

   34         3.28   

Affiliate Transactions

   34

 

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        3.29   

Customers and Suppliers

   35         3.30   

Reorganization

   35         3.31   

Representations Complete

   35

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

   36         4.1   

Authority

   36         4.2   

No Conflict

   36         4.3   

Investment Representation

   36         4.4   

Organization

   36         4.5   

HSR Act

   36

ARTICLE V ADDITIONAL AGREEMENTS

   36         5.1   

Access Pending the Closing

   36         5.2   

Satisfaction of Conditions

   37         5.3   

Intentionally Omitted

   37         5.4   

Operation of the Business by the Acquired Companies

   37         5.5   

Conduct Prior to Closing

   38         5.6   

Confidentiality

   40         5.7   

No Solicitation

   40         5.8   

Notification of Certain Matters

   40         5.9   

Public Disclosure

   41         5.10   

Consents

   41         5.11   

Legal Requirements

   41         5.12   

Additional Documents and Further Assurances

   41         5.13   

Tax Matters

   42         5.14   

Non-Competition

   42         5.15   

Employee and Employee Plan Matters

   43

ARTICLE VI CLOSING CONDITIONS

   45         6.1   

Conditions to Obligations of Each Party

   45         6.2   

Additional Conditions to the Obligations of Buyer

   45         6.3   

Additional Conditions to Obligations of Acquired Companies and Seller

   47

ARTICLE VII ESCROW

   48         7.1   

Escrow Fund

   48

ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

   48         8.1   

Survival of Representations and Warranties

   48         8.2   

General Indemnification

   49         8.3   

Limitation on Claims

   50         8.4   

Tax Indemnification

   50         8.5   

Order of Claims

   51

 

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        8.6   

Indemnification Procedure

   51         8.7   

Resolution of Conflicts

   52         8.8   

Third-Party Claims

   52         8.9   

Subrogation

   53         8.10   

Exclusive Remedy

   53

ARTICLE IX TERM AND TERMINATION

   54         9.1   

Termination

   54         9.2   

Effect of Termination

   55         9.3   

Amendment

   55         9.4   

Extension; Waiver

   55

ARTICLE X GENERAL PROVISIONS

   55         10.1   

Notices

   55         10.2   

Expenses

   56         10.3   

Entire Agreement; Assignment

   56         10.4   

Severability

   56         10.5   

Rights Reservation

   56         10.6   

Governing Law

   57         10.7   

Specific Performance

   57         10.8   

Waiver of Jury Trial

   57         10.9   

Counterparts

   57         10.10   

Representation by Counsel

   57         10.11   

Amendment

   57         10.12   

No Third Party Beneficiaries

   58         10.13   

Disclosure Letter

   58

 

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

This MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”) is made and
entered into as of July 16, 2007 among Nighthawk Radiology Holdings, Inc., a
Delaware corporation (“Buyer”); Midwest Physicians Services, LLC, a Minnesota
limited liability company (“Support Services Company”); Emergency Radiology
Services, LLC, a Minnesota limited liability company (“ERS”); SPR Holdings II,
LLC, a Minnesota limited liability company (“Seller”). Support Services Company
and ERS are together referred to herein as the “Acquired Companies.”

RECITALS

Seller owns all of the outstanding equity interests in the Acquired Companies,
and the Acquired Companies are each considered to be an entity “disregarded as
an entity separate from its owner” pursuant to Treasury Regulations
§301.7701-3(b)(1)(ii) (a “Disregarded Entity”). Buyer desires to purchase from
Seller, and Seller desires to sell to Buyer, all of the membership interests,
including all financial, voting and equity interests (the “Interests”) of the
Acquired Companies for the consideration and on the terms and subject to the
conditions set forth in this Agreement. As the acquisition of Disregarded
Entities, the parties will treat the transactions contemplated hereunder as the
acquisition of all of the assets and liabilities of the Acquired Companies for
federal and state income tax purposes.

NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Capitalized Terms. The following capitalized terms shall have the meanings
set forth below:

(a) “Accounts Receivable” shall have the meaning set forth in Section 3.7.

(b) “Acquired Companies” shall have the meaning set forth in the preamble above.

(c) “Acquired Company Contracts” shall have the meaning set forth in
Section 3.11.

(d) “Acquired Company Audited Year-End Financials” shall have the meaning set
forth in Section 3.5.

(e) “Acquired Company Financial Statements” shall have the meaning set forth in
Section 3.5.

 

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(f) “Acquired Company Intellectual Property” shall mean Technology and
Intellectual Property Rights, including Acquired Company Registered Intellectual
Property Rights, that are owned or licensed by any of the Acquired Companies.

(g) “Acquired Company Interim Financials” shall have the meaning set forth in
Section 3.5.

(h) “Acquired Company Registered Intellectual Property Rights” shall mean all
Registered Intellectual Property Rights owned or otherwise held by or for the
benefit of either of the Acquired Companies.

(i) “Acquired Company Tax Return” shall mean any Tax Return filed by or on
behalf of either of the Acquired Companies or a Tax Return of Seller in which
operations of the Acquired Companies are included.

(j) “Acquisition Proposal” shall have the meaning set forth in Section 5.7.

(k) “Administrative Support Services Agreement” shall have the meaning set forth
in Section 6.2.

(l) “Agreement” shall have the meaning set forth in the preamble above, together
with all exhibits and schedules hereto.

(m) “Audited Financial Statements” shall mean the consolidated balance sheets as
of December 31, 2005 and December 31, 2006 and the related statements of income,
changes in member equity and cash flows for the respective twelve-month periods
then ended (the “Acquired Company Audited Year-End Financials”) for the Acquired
Companies that have been audited by Deloitte & Touche LLP and for which such
accounting firm has issued an unqualified opinion that each of such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis and present fairly the financial condition and operating results of the
Acquired Companies as of the respective dates and for the periods indicated
therein.

(n) “Basket Amount” shall have the meaning set forth in Section 8.3.

(o) “Books and Records” shall mean all papers and records (in paper or
electronic format) in the care, custody or control of the Acquired Companies
pertaining to the Acquired Companies including, without limitation, all
purchasing and sales records, stock records, minutes of meetings and other
actions of the board of directors and shareholders of the Acquired Companies,
customer and vendor lists, accounting and financial records, product
documentation and specifications, and marketing documents.

(p) “Business” shall mean all of the operations, activities, services and
products of the Acquired Companies and the other SPR Companies as currently
conducted, including without limitation the marketing and performance of
professional teleradiology services.

 

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(q) “Buyer” means Nighthawk Radiology Holdings, Inc., a Delaware corporation.

(r) “Charter Documents” shall have the meaning set forth in Section 3.1(b).

(s) “Chemical Substance” shall mean any chemical substance which is identified
or regulated under any Environmental Law.

(t) “Closing” shall have the meaning set forth in Section 2.3.

(u) “Closing Date” shall have the meaning set forth in Section 2.3.

(v) “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and as codified in Section 4980B of the Code and Section 601
et. seq. of ERISA.

(w) “Code” shall mean the United States Internal Revenue Code of 1986, as
amended.

(x) “Collateral Agreements” shall mean the Escrow Agreement, the Non-Competition
Affirmation Agreement, the Administrative Support Services Agreements, the
Professional Services Agreements, the Data License Agreement and the lease and
sublease agreements referred to in Section 6.2(f)(ix).

(y) “Confidential Information” shall mean all Trade Secrets and other
confidential or proprietary information of a Person that such Person desires
remain secret or confidential, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales programs,
financial projections, cost summaries, pricing formulas, contract analyses,
financial information, projections, confidential filings with any state or
federal agency, and all other confidential concepts, methods of doing business,
ideas, materials or information prepared or performed for, by or on behalf of
such Person by its employees, officers, directors, agents, representatives, or
consultants. Confidential Information shall not include information pertaining
to the Acquired Companies and/or the Business that is publicly available or that
becomes publicly available other than through a wrongful act by Seller or one of
its Affiliates.

(z) “Conflict” shall mean any event that would constitute a conflict, breach,
violation or default (with or without notice or lapse of time, or both) or give
rise to a right of termination, cancellation, modification or acceleration of
any obligation or loss of any benefit.

(aa) “Contract” shall mean any mortgage, indenture, lease, contract, covenant or
other agreement, instrument or commitment, permit, concession, franchise or
license, including any amendment or modifications made thereto.

(bb) “Customer Information” shall have the meaning set forth in Section 3.14(f).

(cc) “Data License Agreement” shall have the meaning set forth in Section 6.2.

 

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(dd) “Development Tools” shall mean development software, development
documentation, compilers, interpreters, system build software, test suites,
testing tools and documentation, support tools, revision control systems and
environments and other materials used in or necessary to the use, development,
testing, maintenance, support, modification or implementation of the products or
other development activities of the Business.

(ee) “Disregarded Entity” has the meaning set forth in Recital A.

(ff) “Disclosure Letter” shall have the meaning set forth in the preamble to
Article III.

(gg) “Employee” shall mean any current employee, director or governor of an
Acquired Company.

(hh) “Employee Contract” shall mean each management, employment, severance,
consulting, relocation, repatriation, expatriation, visas, work permit or other
agreement, contract or understanding between any Employee or former employee of
either of the Acquired Companies and either of the Acquired Companies or any
ERISA Affiliate.

(ii) “Employee Plan” shall mean any Pension Plan, Welfare Plan or any other
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits, retention
payments, incentive compensation or other employee benefits or remuneration of
any kind, whether written or unwritten or otherwise, funded or unfunded,
including, without limitation, each “employee benefit plan” within the meaning
of Section 3(3) of ERISA, which, in each case, is or has been maintained,
contributed to, or required to be contributed to, by any Acquired Company or any
ERISA Affiliate for the benefit of any Employee (or their spouses, dependents or
beneficiaries) or any former employee of either of the Acquired Companies, or
with respect to which the Acquired Companies may have any Liability.

(jj) “Environment” shall mean real property and any improvements thereon, and
also includes, but is not limited to, ambient air, surface water, drinking
water, groundwater, land surface, subsurface strata and water body sediments.

(kk) “Environmental Laws” shall mean any applicable law, regulation or legal
requirement relating to pollution or protection or cleanup of the Environment.

(ll) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

(mm) “ERISA Affiliate” shall mean the Seller or any other “person,” within the
meaning of Section 7701(a)(1) of the Code, that together with an Acquired
Company is considered a single employer pursuant to Section 414(b), (c), (m) or
(o) of the Code or Section 3(5) or 4001(b)(1) of ERISA.

(nn) “ERS” means Emergency Radiology Services, LLC, a Minnesota limited
liability company.

 

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(oo) “Escrow Agent” means U.S. Bank National Association, a national banking
association.

(pp) “Escrow Agreement” means the Escrow Agreement between the Buyer, Seller and
the Escrow Agent in the form attached hereto as Exhibit A.

(qq) “Escrow Amount” shall mean $5,000,000 in cash.

(rr) “Escrow Fund” shall have the meaning set forth in Section 7.1.

(ss) “Escrow Period” shall have the meaning set forth in Section 7.2.

(tt) “Extremely Hazardous Substance” shall have the meaning set forth in
Section 302 of the United States Emergency Planning and Community Right-to-Know
Act of 1986, as amended.

(uu) “Federal Health Care Program” shall mean any plan or program that provides
health benefits, whether directly, through insurance, or otherwise, which is
funded directly, in whole or in part, by the United States Government, or any
state health care program either approved under the Social Security Act or
receiving federal funds.

(vv) “GAAP” shall mean United States generally accepted accounting principles.

(ww) “Governmental Approval” shall mean any: (i) permit, license, certificate,
concession, approval, consent, ratification, permission, clearance, exemption,
waiver, certification, designation, registration, variance, qualification,
accreditation or authorization issued, granted, given, required by or otherwise
made available by or under the authority of any Governmental Entity or pursuant
to any Legal Requirement; or (ii) pending application or request for any of the
foregoing in (i) above.

(xx) “Governmental Entity” or “Government Authority” shall mean any court,
administrative agency or commission or other federal, state, county, local or
foreign governmental authority, instrumentality, agency or commission.

(yy) “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, Pub. L. No. 94-435, 90 Stat. 1390, and rules promulgated thereunder.

(zz) “Interests” shall have the meaning set forth in Recital A.

(aaa) “Intellectual Property Rights” shall mean any or all of the following and
all statutory and/or common law rights throughout the world in, arising out of,
or associated therewith: (i) all patents and applications therefore, inventor’s
certificates and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof (collectively, “Patents”);
(ii) all trade secrets, proprietary information, and know how (collectively,
“Trade Secrets”); (iii) copyrights, copyright registrations and applications,
including moral rights and rights in Software, (“Copyrights”); (iv) all trade
names, logos, trademarks and service marks; trademark and service mark
registrations and applications

 

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(collectively, “Trademarks”); (v) all rights to Uniform Resource Locators, world
wide web site addresses and domain names (collectively, “Domain Rights”);
(vi) databases and data collections (including patient and billing data,
knowledge databases, customer lists and customer databases); (vii) any similar,
corresponding or equivalent rights to any of the foregoing; and (viii) all
goodwill associated with any of the foregoing.

(bbb) “Interim Balance Sheet” shall have the meaning set forth in
Section 3.5(c).

(ccc) “Legal Requirement” shall mean any federal, state, local, municipal,
foreign or other law, statute, legislation, constitution, ordinance, code,
order, edict, decree, proclamation, treaty, convention, rule, regulation,
permit, ruling, directive, requirement (licensing or otherwise), specification,
determination, decision, opinion or interpretation that is or has been issued,
enacted, adopted, passed, approved, promulgated, made, implemented or otherwise
put into effect by or under the authority of any Governmental Entity.

(ddd) “Liability” shall mean any debt, liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, whether incurred or
consequential and whether due or to become due), including any liability for
Taxes.

(eee) “Lien” shall mean any mortgage, pledge, lien, security interest, charge,
encumbrance, restriction on transfer, conditional sale or other title retention
device or arrangement (including, without limitation, a capital lease), transfer
for the purpose of subjection to the payment of any indebtedness, or restriction
on the creation of any of the foregoing, whether relating to any property or
right or the income or profits therefrom; provided that the rights of parties
under equipment leases, consignment arrangements and licenses shall not
constitute Liens.

(fff) “Loss” and “Losses” shall have the meanings set forth in Section 8.2.

(ggg) “Material Adverse Effect” shall mean any (i) change, event, inaccuracy,
circumstance or effect, individually or when aggregated with other changes,
events, violations, inaccuracies, circumstances or effects, that is materially
adverse to the Business, assets, products, liabilities, financial condition,
results of operations or prospects of any of the SPR Companies, or
(ii) circumstance, change or event that materially impairs Buyer’s ability to
use, sell, license, market, modify, and operate the assets of the Acquired
Companies or operate the Business of the Acquired Companies in substantially the
same manner as the Acquired Companies prior to the date of this Agreement.

(hhh) “Multiemployer Plan” shall mean any “Pension Plan” which is a
“multiemployer plan,” as defined in Section 3(37) of ERISA.

(iii) “MWR” shall mean Midwest Radiology LLC, an affiliate of Seller.

(jjj) “Nondisclosure Agreement” shall have the meaning set forth in Section 5.1.

 

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(kkk) “Noncompetition Affirmation Agreement” shall have the meaning set forth in
Section 6.2.

(lll) “Object Code” shall mean computer software, substantially or entirely in
binary form, which is intended to be directly executable by a computer after
suitable processing and linking but without the intervening steps of compilation
or assembly.

(mmm) “Officer’s Certificate” shall have the meaning set forth in
Section 8.6(a).

(nnn) “Ordinary Course of Business” shall mean the ordinary course of business,
consistent with past practice (including with respect to quantity and
frequency).

(ooo) “Other SPR Companies Interim Financials” has the meaning set forth in
Section 3.5(b).

(ppp) “Other SPR Companies Unaudited Financial Statements” has the meaning set
forth in Section 3.5(b).

(qqq) “Other SPR Companies Unaudited Year-End Financials” has the meaning set
forth in Section 3.5(b).

(rrr) “PBGC” shall mean the Pension Benefit Guaranty Corporation.

(sss) “Pension Plan” means each Employee Plan that is an “employee pension
benefit plan,” within the meaning of Section 3(2) of ERISA.

(ttt) “Person” shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group of any of the foregoing.

(uuu) “Physician Members” shall mean each of the persons listed on Schedule A,
each of whom holds an equity, profits or other ownership interest in the Seller
and SPRPA.

(vvv) “Pre-Closing Period” shall have the meaning set forth in Section 8.4.

(www) “Proceeding” shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), prosecution, contest, hearing, inquiry, inquest, audit,
examination or investigation that is, has been or may in the future be
commenced, brought, conducted or heard at law or in equity before any
Governmental Entity or properly convened arbitration panel.

(xxx) “Professional Services Agreement” means the Professional Services
Agreement referred to in Section 6.2(e)(viii).

(yyy) “Property Taxes” shall have the meaning set forth in Section 8.4.

(zzz) “PTO” shall mean the United States Patent and Trademark Office.

 

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(aaaa) “Registered Intellectual Property Rights” shall mean all United States,
international and foreign: (i) Patents and Patent applications (including
provisional applications); (ii) registered Trademarks and applications for
Trademarks, including intent-to-use applications, or other registrations or
applications related to Trademarks; (iii) registered Copyrights and applications
for Copyrights; (iv) domain name registrations; and (v) any other Intellectual
Property Rights that are the subject of an application, certificate, filing,
registration or other document issued, filed with or recorded by any
Governmental Entity.

(bbbb) “Release” shall mean any actual spilling, leaking, pumping, pouring,
emitting, dispersing, emptying, discharging, injecting, leaching, dumping or
disposing of any Chemical Substance or Extremely Hazardous Substance into the
Environment that would cause an Environmental Liability or Costs (including the
abandonment or discarding of barrels, containers, tanks or other receptacles
containing or previously containing any Chemical Substance).

(cccc) “Rep Indemnity Cap” shall have the meaning set forth in Section 8.3.

(dddd) “Seller” means SPR Holdings, LLC, a Minnesota limited liability company.

(eeee) “Seller Indemnifying Party” shall have the meaning set forth in
Section 8.2.

(ffff) “Software” shall mean any and all computer software and code, including
assemblers, applets, compilers, Source Code, Object Code, data (including image
and sound data), Development Tools, design tools and user interfaces, in any
form or format, however fixed. Software shall include Source Code listings, file
listings, functionality descriptions and documentation.

(gggg) “Source Code” shall mean computer software and code, in form other than
Object Code form, including related programmer comments and annotations, help
text, data and data structures, instructions and procedural, object-oriented and
other code, which may be printed out or displayed in human readable form.

(hhhh) “SPR Companies” means each of Seller, MWR, ERS, Support Services Company
and SPRPA.

(iiii) “SPR Company Customers” shall have the meaning set forth in Section
3.29(a).

(jjjj) “SPR Company Customer Contracts” shall have the meaning set forth in
Section 3.11.

(kkkk) “SPRPA” shall mean St. Paul Radiology, P.A, an affiliate of Seller.

(llll) “Straddle Period” shall have the meaning set forth in Section 8.4.

 

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(mmmm) “Subsidiary” shall mean, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.

(nnnn) “Support Services Company” means Midwest Physicians Services, LLC, a
Minnesota limited liability company.

(oooo) “Tax” or “Taxes” shall mean (i) any and all U.S. federal, state, local
and non-U.S. taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts, (ii) any liability for the payment of any amounts of
the type described in clause (i) of this Section 1.1(oooo) as a result of being
a member of an affiliated, consolidated, combined or unitary group for any
period (including any arrangement for group or consortium relief or similar
arrangement), and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) of this Section 1.1(oooo) as a result of any
express or implied obligation to indemnify any other person or as a result of
any obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.

(pppp) “Tax Return” shall mean any U.S. federal, state, local or non-U.S.
return, estimate, declaration, report, claim for refund or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.

(qqqq) “Technology” shall mean all technology, technical and business
information and all tangible embodiments of Intellectual Property Rights,
including Software, Development Tools, systems, files, records, databases,
drawings, artwork, designs, displays, audio-visual works, devices, hardware,
apparatuses, documentation, manuals, specifications, flow charts, web pages,
customer lists, electronic and other data, and other tangible embodiments of, or
materials describing or disclosing, technical or business data, concepts,
know-how, show-how, techniques, Trade Secrets, inventions (whether patentable or
unpatentable), algorithms, formulae, processes, routines, databases, works of
authorship and the like.

(rrrr) “Transaction Expenses” shall have the meaning set forth in Section 9.2.

(ssss) “Treasury Regulations” means the Treasury Regulations promulgated under
the Code.

(tttt) “Unlimited Representations” shall have the meaning set forth in
Section 8.1.

(uuuu) “Welfare Plan” means each Employee Plan that is an “employee welfare
benefit plan,” as such term is defined in Section 3(1) of ERISA.

 

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1.2 Construction.

(a) For purposes of this Agreement, whenever the context requires: the singular
number will include the plural, and vice versa; the masculine gender will
include the feminine and neuter genders; the feminine gender will include the
masculine and neuter genders; and the neuter gender will include the masculine
and feminine genders.

(b) As used in this Agreement, the words “include” and “including” and
variations thereof will not be deemed to be terms of limitation, but rather will
be deemed to be followed by the words “without limitation.”

(c) Except as otherwise indicated, all references in this Agreement to
“Articles,” “Schedules,” “Sections” and “Exhibits” are intended to refer to
Articles, Schedules, Sections and Exhibits to this Agreement.

(d) The headings in this Agreement are for convenience of reference only, will
not be deemed to be a part of this Agreement, and will not be referred to in
connection with the construction or interpretation of this Agreement.

(e) For purposes of this Agreement, the term “knowledge” means with respect to
the Acquired Companies and the Seller, (i) the actual knowledge of any of the
following individuals: Mark Kleinschmidt, Joseph Tashjian, Jerry Gehling and
Barry Lindo and (ii) knowledge as would have or should have come to the
attention of any of such named individuals in the course of preparing and
negotiating this Agreement and the related Schedules, Exhibits, documents,
certificates or other writings or in the course of discharging such individual’s
duties with respect to Seller, SPRPA or the Acquired Companies in a reasonable
and prudent manner consistent with sound business practice.

ARTICLE II

SALE AND PURCHASE OF INTERESTS; CLOSING

2.1 Interests. On the terms and subject to the conditions contained in this
Agreement, Seller shall, at the Closing, sell and transfer the Interests to
Buyer, and Buyer shall, at the Closing, purchase the Interests from Seller.

2.2 Consideration. Subject to the escrow provisions of Article VII, the
aggregate purchase price for the Interests will be Sixty Two Million Four
Hundred Sixty Thousand Dollars ($62,460,000) (the “Cash Consideration”).

2.3 Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) will take place at the offices of the Seller or at such other place
as the parties may agree commencing at 12:00 p.m., Pacific time, two business
days following the satisfaction or written waiver of the last of the conditions
of Closing as set forth in Article VI hereof, or on such other date as the
parties may determine (the “Closing Date”). At the Closing, (i) Seller will
deliver to Buyer executed transfer forms evidencing transfer of the Interests to
Buyer and (ii) Buyer will deliver to Seller by wire transfer pursuant to wire
transfer instructions provided to Buyer at least two business days prior to the
Closing Date, an amount of cash equal to the Cash Consideration less the Escrow
Amount.

 

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2.4 Purchase Price Allocation. The Parties agree that the transaction
contemplated hereunder will be treated for federal and state income Tax purposes
in the manner described in Section 5.13(c). Accordingly, the parties agree that
consideration paid pursuant to Section 2.2, plus assumed liabilities will be
allocated to all of the assets of the Acquired Companies in the manner required
by Section 1060 of the Code (with the Escrow Amount being included as
consideration and being allocated when, and to the extent that, such amounts of
the Escrow Amount are released to Seller, exclusive of any imputed interest with
respect to any such release).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER AND ACQUIRED COMPANIES

The Acquired Companies and the Seller hereby represent and warrant to Buyer,
subject to the specific exceptions disclosed in the disclosure letter and
schedules thereto dated as of the date hereof (the “Disclosure Letter”), on the
date hereof, and as of the Closing as though made at the Closing, as follows
below. The Disclosure Letter shall be deemed to qualify and to be a part of the
representations and warranties in this Article III, shall be arranged in
sections corresponding to the numbered sections of this Article III, and each
disclosure item in the Disclosure Letter shall reference the specific section
and paragraph numbers of this Agreement to which such disclosure applies.

3.1 Organization.

(a) The Support Services Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
ERS is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Minnesota. Each of the SPR Companies has
the power and authority to own, lease and operate its assets and properties and
to carry on its business as currently conducted. Each of the SPR Companies is
duly qualified or licensed to do business, to perform its obligations under all
Contracts by which it is bound and each is in good standing in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary.

(b) Each of the Acquired Companies has made available to Buyer true and correct
copies of its articles or certificate of organization and operating agreement or
similar agreement and any member control agreement or other agreement that sets
forth rights or obligations of members of such company, in each case as amended
through the date hereof (collectively, the “Charter Documents”), and each such
instrument is in full force and effect. None of the Acquired Companies is in
violation of any of the provisions of its respective Charter Documents. The
operations now being conducted by each of the Acquired Companies have not now
and have never been conducted under any other name.

(c) Section 3.1(c) of the Disclosure Letter lists the directors or governors and
officers of each Acquired Company and the Seller as of the date hereof.

 

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(d) Section 3.1(d) of the Disclosure Letter lists every state or foreign
jurisdiction in which each of the SPR Companies has employees or facilities or
is required to be qualified to conduct business.

(e) The Acquired Companies have no Subsidiaries and neither has ever owned any
shares of capital stock or any interest in, or had the power to direct the
business and policies of, directly or indirectly, any other corporation, limited
liability company, partnership, association, joint venture or other business
entity.

(f) The Seller has no, and has never had any, operations and its sole business
is and has been owning the equity or other ownership interests of each of its
Subsidiaries which are listed on Section 3.1(f) of the Disclosure Letter.

3.2 Authority. Each of the Acquired Companies and Seller has all requisite
company or other legal power and authority to enter into this Agreement and the
Collateral Agreements required to be executed by it and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and each of the Collateral Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary company action on the part of each of the Acquired
Companies and the Seller, and no further action is required on the part of
either Acquired Company or the Seller, its board of directors or governors or
its members to approve the Agreement and the transactions contemplated hereby.
This Agreement and the Collateral Agreements required to be executed by it has
been, or at Closing will be as the case may be, duly executed and delivered by
each of the Acquired Companies and Seller and constitute, or when executed and
delivered at the Closing will constitute as the case may be, legal, valid and
binding obligations of such Acquired Company or Seller, enforceable against such
Acquired Company or Seller in accordance with its terms. The Administrative
Support Services Agreement and Professional Services Agreement to which it is a
party has been duly executed and delivered by SPRPA and constitutes legal, valid
and binding obligations of SPRPA enforceable against it in accordance with its
terms. The Administrative Support Services Agreement to which it is a party has
been duly executed and delivered by MWR and constitutes legal, valid and binding
obligations of MWR enforceable against it in accordance with its terms except
(i) as may be limited by state and federal laws, rulings and court decisions and
principles of equity and public policy, and (ii) as may be subject to the
discretion of a court asked to interpret this Agreement and/or the Collateral
Agreements. Each other Collateral Agreement to which SPRPA is a party, and each
Collateral Agreement to which any of the other SPR Companies is a party, has
been duly executed and delivered by SPRPA or such other SPR Company, as the case
may be, and constitutes the legal, binding and valid obligations of SPRPA or
such other SPR Company, as the case may be, enforceable against it in accordance
with its terms except (i) as may be limited by state and federal laws, rulings
and court decisions and principles of equity and public policy, and (ii) as may
be subject to the discretion of a court asked to interpret this Agreement and/or
the Collateral Agreements.

3.3 Capital Structure. The entire authorized membership interests or other
financial, voting or equity interests of each of the Acquired Companies is set
forth in Section 3.3 of the Disclosure Letter. Seller owns all of the membership
interests (which such term includes all financial, voting, equity and other
ownership interests) of each of the Acquired Companies. All

 

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issued and outstanding membership interests of each Acquired Company have been
duly authorized and validly issued, are fully paid and nonassessable, and have
been issued in compliance with all applicable laws. There are no options,
warrants or rights of conversion or other rights, agreements, arrangements or
commitments obligating the Acquired Companies to purchase, issue, sell, deliver
or transfer any of its voting, financial, equity or other membership interests.
There are no outstanding or authorized membership interest appreciation, phantom
stock, profit participation, or other similar rights with respect to the
Acquired Companies. There are no voting trusts, member control agreements,
proxies or other agreements in effect with respect to the voting or transfer of
the voting, financial, equity or other membership interests of the Acquired
Companies.

3.4 Conflict. Except as identified in Section 3.4 of the Disclosure Letter, the
execution and delivery of this Agreement and the Collateral Agreements to which
it is party by each Acquired Company and Seller does not or when executed and
delivered at the Closing will not, as the case may be, and the performance by
each Acquired Company and Seller of its obligations hereunder and thereunder
will not (with or without the lapse of time), and the execution of each
Collateral Agreement to which any other SPR Company is a party does not or will
not when executed at the Closing, as the case may be, and the performance by
each such other SPR Company of its obligations thereunder will not, (a) conflict
with or violate the Charter Documents of such Acquired Company, Seller or such
other SPR Company, as the case may be, (b) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to such Acquired Company,
Seller or such other SPR Company, as the case may be, or by which any of its
assets or properties are bound or affected or give any Governmental Entity or
other person the right to challenge the transactions contemplated hereby,
(c) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair the
rights of any of the SPR Companies or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the assets or properties of any of the SPR Companies pursuant to, any note,
bond, mortgage, indenture, Contract, agreement, lease, license, permit,
franchise, concession or other instrument or obligation to which such Acquired
Company, Seller or such other SPR Company is a party or by which the Business or
the assets or properties of any of the SPR Companies are bound or affected,
(d) cause any of the SPR Companies or Buyer to become subject to, or to become
liable for the payment of, any Tax, or (e) give any third party the right to any
payment by any of the SPR Companies or the Buyer unless agreed to by the Buyer
or give rise to any acceleration or change in the award, grant, vesting or
determination of options, warrants, rights, bonuses, severance payments or other
contingent obligations of any nature whatsoever of any of the Acquired
Companies. Section 3.4 of the Disclosure Letter lists all consents, waivers and
approvals under any Contracts to which any of the SPR Companies is a party that
are required to be obtained in connection with the consummation of the
transactions contemplated hereby or under any of the Collateral Agreements.

3.5 Financial Statements.

(a) Section 3.5(a) of the Disclosure Letter sets forth true and correct copies
of (a) Acquired Companies’ audited balance sheets as of December 31, 2005 and
December 31, 2006 and the related audited statements of income and cash flows
for the respective twelve-month periods then ended (the “Acquired Company
Audited Year-End Financials”) and

 

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(b) Acquired Companies’ unaudited balance sheet as of May 31, 2007 and the
related unaudited statements of income, cash-flows and changes in equity for the
five-month period ending May 31, 2007 (the “Acquired Company Interim
Financials”). The Acquired Company Audited Year-End Financials and the Acquired
Company Interim Financials are collectively referred to herein as the “Acquired
Company Financial Statements.” The Acquired Company Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated, and consistent with each other, except for the absence of footnotes
in the case of the Acquired Company Interim Financials. The Acquired Company
Financial Statements present fairly in all material respects the financial
condition and operating results of the Acquired Companies as of the respective
dates and for the periods indicated therein, subject in the case of the Acquired
Company Interim Financials to normal year-end adjustments, which will not in any
event be material in amount or significance in any individual case or in the
aggregate. The financial statements of Support Services Company included in the
Acquired Company Financial Statements reflect the provision by the Support
Services Company during the time periods covered by such financial statements of
each of the services that Support Services Company will be required to provide
pursuant to the Administrative Support Services Agreements except to the extent
those agreements require Support Services Company to perform services that are
in addition to the services performed by Support Services Company during such
time periods.

(b) Section 3.5(b) of the Disclosure Letter sets forth true and correct copies
of (a) each SPR Company’s (other than the Acquired Companies) unaudited
unconsolidated balance sheets as of December 31, 2005 and December 31, 2006 and
the related unaudited unconsolidated statements of income for the respective
twelve-month periods then ended (the “Other SPR Companies Unaudited Year-End
Financials”) and (b) each SPR Company’s (other than the Acquired Companies)
Companies’ unaudited unconsolidated balance sheet as of May 31, 2007 and the
related unaudited unconsolidated statements of income for the five-month period
ending May 31, 2007 (the “Other SPR Companies Interim Financials”). The Other
SPR Companies Unaudited Year-End Financials and the Other SPR Companies Interim
Financials are collectively referred to herein as the “Other SPR Companies
Unaudited Financial Statements.” The Other SPR Companies Unaudited Financial
Statements are complete and correct in all material respects and have been
prepared on a cash/income tax basis applied on a consistent basis throughout the
periods indicated, and consistent with each other, except for the absence of
footnotes in the case of the Other SPR Companies Interim Financials. The Other
SPR Companies Unaudited Financial Statements present accurately in all material
respects on a cash/income tax basis, the financial condition and operating
results of the applicable SPR Company as of the respective dates and for the
periods indicated therein, subject in the case of the Other SPR Companies
Interim Financials to normal year-end adjustments, which will not in any event
be material in amount or significance in any individual case or in the
aggregate, which will not in any event be material in amount or significant in
any individual case on in the aggregate.

(c) The unaudited unconsolidated balance sheet as of May 31, 2007 of each
Acquired Company is referred to herein as such company’s “Interim Balance
Sheet.” Except as set forth on its Interim Balance Sheet or Section 3(b) of the
Disclosure Letter, neither of the Acquired Companies have any Liabilities
greater than $25,000 individually or $100,000 in the aggregate (whether or not
required to be reflected in financial statements in accordance with GAAP) except
for obligations under Contracts to which it is a party that, by the terms of the
Contracts, first arise after the date hereof.

 

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3.6 Indebtedness; Guaranties. Except as set forth in Section 3.6 of the
Disclosure Letter, (a) the Acquired Companies have no indebtedness for money
borrowed or for the deferred purchase price of property or services, capital
lease obligations, conditional sale or other title retention agreements, and
(b) the Acquired Companies are not guarantors or otherwise liable for any
Liability or obligation of any other person or entity for any matter.

3.7 Accounts Receivable.

(a) Section 3.7 of the Disclosure Letter sets forth an accurate and complete
breakdown and aging of all accounts receivable, notes receivable and other
receivables of the Acquired Companies (collectively, “Accounts Receivable”) as
of the date of the Interim Balance Sheet of each Acquired Company.

(b) All Accounts Receivable of the Acquired Companies (including those Accounts
Receivable reflected on the Interim Balance Sheet of each Acquired Company that
have not yet been collected and those Accounts Receivable that have arisen since
the date of such Interim Balance Sheet and have not yet been collected)
(i) represent valid and enforceable obligations of customers of the Acquired
Companies arising from bona fide transactions entered into in the Ordinary
Course of Business; (ii) will be collected in accordance with their terms at
their recorded amounts less any applicable bad debt allowances, and (iii) except
as indicated in Section 3.7 of the Disclosure Schedule, are free and clear of
all Liens.

3.8 Cash Equivalents/Bank Accounts.

(a) Section 3.8 of the Disclosure Letter accurately sets forth, with respect to
each account maintained by or for the benefit of the Acquired Companies at any
bank or other financial institution:

(i) the name and location of the institution at which such account is
maintained;

(ii) the name in which such account is maintained and the account number of such
account; and

(iii) the names of all individuals authorized to draw on or make withdrawals
from such account.

(b) Except as indicated in Section 3.8 of the Disclosure Schedule, Acquired
Companies have full legal and beneficial interest in all cash, cash equivalents
and other financial assets deposited in such accounts, free and clear of any
Liens.

 

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3.9 Absence of Changes. Since January 1, 2007, except as identified on
Section 3.9 of the Disclosure Letter, and except as contemplated by this
Agreement, each SPR Company has conducted its Business only in the Ordinary
Course of Business and there has been no occurrence, event, incident, action,
failure to act or transaction outside the Ordinary Course of Business of any SPR
Company. Without limiting the generality of the foregoing:

(a) There have been no events or changes in the condition (financial or
otherwise), business, net worth, assets, properties, operations, obligations,
authority or liabilities of any of the SPR Companies which, individually or in
the aggregate, have had or would be reasonably expected to have a Material
Adverse Effect;

(b) None of the Acquired Companies have mortgaged, pledged or otherwise
encumbered any of their assets or properties;

(c) None of the Acquired Companies have sold, assigned, licensed, leased,
transferred or conveyed, or committed themselves to sell, assign, license,
lease, transfer or convey, any of their assets or properties;

(d) There has been no destruction of, damage to or loss of any of the assets or
properties of any of the SPR Companies;

(e) None of the SPR Companies have accelerated, terminated, modified or
cancelled any Contract, lease or license (or series of related Contracts,
leases, and licenses);

(f) None of the SPR Companies have delayed or postponed the payment of material
accounts payable or other Liabilities;

(g) None of the SPR Companies have cancelled, compromised, waived or released
any right or claim (or series of related rights and claims);

(h) None of the SPR Companies have entered into any capital commitments;

(i) No litigation has been commenced or threatened and, to the knowledge of the
Seller and the Acquired Companies, no reasonable basis exists for any
litigation, proceeding or investigation against any of the SPR Companies, any
officer, director, employee or contractor of any of the SPR Companies or the
assets or properties of any of the SPR Companies;

(j) The Acquired Companies have not (i) sold or otherwise issued (or granted any
warrants, options or other rights to purchase) any membership interests or other
equity securities, (ii) declared, accrued, set aside or paid any dividend or
made any other distribution in respect of any membership interests, or
(iii) repurchased, redeemed or otherwise reacquired any membership interests or
other securities, or split, combined or reclassified any of their membership
interests or issued or authorized the issuance of any other securities in
respect of, in lieu of or in substitution for membership interests;

(k) None of the SPR Companies have violated in any material respect any Legal
Requirement applicable to it;

(l) There has not been any change by any of the SPR Companies in their
accounting principles, practices or methods, in their Tax principles or
practices or in the practices and standards used to maintain the Books and
Records;

 

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(m) None of the SPR Companies have violated, entered into, terminated or
modified any of the Acquired Company Contracts or any SPR Company Customer
Contract or approvals or permits of Governmental Entities, and no Governmental
Entity or other Person has amended, accelerated, terminated or modified any such
Contracts, approvals or permits;

(n) None of the SPR Companies have (i) failed to maintain its assets or
properties in good repair, order or condition, reasonable wear and tear
excepted, (ii) accelerated the collection of any of its accounts receivable or
any accrual of liabilities, written off any accounts receivable or established
any extraordinary reserve with respect thereto;

(o) None of the SPR Companies have assigned, or granted, any license or
sublicense of any rights under or with respect to, any of the Intellectual
Property Rights of such Company;

(p) None of the SPR Companies have made any material gifts or sold, transferred
or exchanged any material property on a non-arm’s length basis;

(q) None of the Acquired Companies have forgiven any debt or otherwise released
or waived any right or claim nor discharged any lien nor paid any obligation or
Liability other than in the Ordinary Course of Business;

(r) To the knowledge of the Seller and the Acquired Companies, none of the SPR
Companies have suffered any loss or harm to any relationship with any Person
material to the Business or to any customer;

(s) None of the Acquired Companies have received notice of any claim or
potential claim, and to the knowledge of the Seller and the Acquired Companies
no basis exists for any claim or potential claim that any of the Acquired
Companies have infringed the Intellectual Property Rights of any Person;

(t) Other than in the Ordinary Course of Business, there has been no
(i) increase in or other change to the salary or other compensation (including
equity based compensation) payable or to become payable by the Acquired
Companies to any of their respective officers, directors, employees or
consultants, or (ii) declaration, payment or commitment or obligation of any
kind for the payment (whether in cash, equity or otherwise) by the Acquired
Companies of a severance payment, termination payment, bonus, special
remuneration or other additional salary or compensation (including equity based
compensation), in each case to any of their respective officers, directors,
employees or consultants;

(u) Whether or not in the Ordinary Course of Business, there has been no
declaration, setting aside or payment to Seller or any member of Seller of any
dividend, redemption or other distribution with respect to the membership
interests of either of the Acquired Companies; and

(v) There has been no agreement by any of the SPR Companies, or any employees,
contractors, agents or affiliates of any of the SPR Companies, to do any of the
things described in the preceding clauses (a) through (u).

 

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3.10 Legal and Other Compliance. Except for matters covered by Section 3.18
(taxes), Section 3.19 (environmental) and Section 3.22 (employee benefit
matters):

(a) Each of the SPR Companies is in compliance in all material respects with all
Legal Requirements that are applicable to it or to the conduct of the Business
or the ownership or use of any of its assets or properties.

(b) No event has occurred, and no condition or circumstance exists, that (with
or without notice or lapse of time) constitutes or is reasonably likely to
result directly or indirectly in any material violation by any of the SPR
Companies, or a failure on the part of any of the SPR Companies to materially
comply with, any Legal Requirement.

(c) No action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed or commenced or, to the knowledge of the
Seller and the Acquired Companies threatened against any of the SPR Companies
alleging any failure to comply with any Legal Requirement, nor, to the knowledge
of the Seller and the Acquired Companies is there any reasonable basis therefor.

(d) To the knowledge of the Seller and the Acquired Companies, no Governmental
Entity is considering any Legal Requirement that, if adopted or otherwise put
into effect, would prevent, delay, make illegal or otherwise interfere with the
transactions contemplated by this Agreement or any of the Collateral Agreements.

(e) Other than SPRPA and MWR, none of the SPR Companies is a “covered entity” as
that term is defined by 45 C.F.R. § 160.103. Each of SPRPA and MWR are in
compliance in all respects with all applicable privacy and security rules
promulgated under the Health Insurance Portability and Accountability Act of
1996. To the extent that the Acquired Companies obtain protected health
information subject to the Standards for Privacy of Individually Identifiable
Health Information promulgated by the U.S. Department of Health and Human
Services in accordance with the Administration Simplification provisions of the
Health Insurance Portability and Accountability Act of 1996 in the conduct of
the Business, the Acquired Companies are in compliance in all respects with all
applicable privacy and security rules. The Acquired Companies are either not
subject to or are in compliance in all respects with any similar privacy laws in
existence in any state or foreign jurisdiction.

(f) Each of the SPR Companies (and each of the physicians that provides
radiology or other services on behalf of each of the SPR Companies in connection
with the Business) holds all permits, licenses, certificates, accreditations and
other authorizations of foreign, federal, state and local governmental agencies
required for the conduct of the Business, and Section 3.10(f) of the Disclosure
Letter sets forth a list of all such permits, licenses, certificates,
accreditations, and other authorizations applicable to each of the Acquired
Companies and Seller has provided Buyer with access to all of such permits,
licenses, etc. applicable to each of the other SPR Companies, and each of the
SPR Companies, and each of the physicians that provides teleradiology or other
services on behalf of any of the SPR Companies, is in compliance with all terms
and conditions of any such required permits, licenses, certificates,
accreditations and authorizations.

 

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(g) Intentionally Omitted.

(h) Except as set forth in Section 3.10(h) of the Disclosure Schedule, each of
the physicians who provide reading services under a professional services
agreement between SPRPA and one or more of the other SPR Companies or who
otherwise provides such services in connection with the Business of one or more
of the SPR Companies (a) meets all qualifications for readers under any
agreement for services pursuant to which such physician provides services in
connection with the Business, (b) is licensed to practice medicine in each of
the states in which the patients are located for which such physician provides
radiology interpretations, (c) has obtained medical staff privileges at any
hospitals at which such physician provides radiology interpretations, (d) is an
independent contractor or is employed by SPRPA, which is an independent
contractor of one or more of the SPR Companies, and is an independent licensed
practitioner for all purposes including, without limitation, all tax purposes
and for the Joint Commission, formerly known as the Joint Commission on
Accreditation of Health Organizations (“JCAHO”) standards set forth in the 2004
JCAHO Comprehensive Accreditation Manual for Hospitals and (e) has never been
excluded or sanctioned by any third party payor or Federal Health Care Program.

(i) Other than SPRPA and MWR, none of the SPR Companies nor any physician who
provides readings in connection with the Business submits any claims for
reimbursement for such readings to any third-party payor, including, without
limitation, Medicare, Medicaid or any private insurance plan.

(j) All billings, reimbursement claims and billing practices of each of the SPR
Companies to all patients and third party payors, including Federal Health Care
Programs, private insurance companies and other customers, are and have been in
compliance with all applicable laws and all policies of such third party payors
and Federal Health Care Programs in all material respects, and none of the SPR
Companies have billed or received any payment or reimbursement in excess of
amounts allowed by law or by applicable contracts which would have a Material
Adverse Effect. To the knowledge of the Seller and the Acquired Companies, all
of the SPR Companies’ billings and claims have been made on a timely basis and
were, when filed, complete and correct except where the failure to do so would
not have a Material Adverse Effect.

3.11 Contracts.

(a) The Contracts listed on Section 3.11 of the Disclosure Letter are all of the
Contracts between either of the Acquired Companies and any third party,
including amendments thereto (the “Acquired Company Contracts”). Except as set
forth under Section 3.11 of the Disclosure Letter, there are no obligations due
or owing by either of the Acquired Companies under such Acquired Company
Contracts. Section 3.11 of the Disclosure Letter also sets forth any Contract
under which any of the other SPR Companies currently derives revenues or derived
revenue in 2006 (the “SPR Company Customer Contracts”) and any other Contract to
which an SPR Company (other than an Acquired Company) is a party which is
material to the Business.

 

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(b) Neither of the Acquired Companies is nor, with respect to any Employee
Plans, Employee compensation arrangements or employment arrangements is any
ERISA Affiliate, a party to any unwritten commitment, understanding, contract,
covenant or agreement with any third party (including any Employee or former
employee), including with respect to any matter related to the Business, assets
or properties of the Acquired Companies, Acquired Company Intellectual Property,
Acquired Company Contracts, Employee Plans, Employee compensation arrangements
or employment arrangements.

(c) Each Acquired Company Contract and each SPR Company Customer Contract is in
full force and effect and is valid and enforceable in accordance with its terms.
None of the Acquired Companies or any other SPR Company has breached, violated
or defaulted under, nor received notice that it has or may have breached,
violated or defaulted under, any of the terms or conditions of any Acquired
Company Contract or SPR Company Customer Contract to which it is a party. To the
knowledge of the Seller and the Acquired Companies, no third party obligated to
the Acquired Companies or any other SPR Company pursuant to any Acquired Company
Contract or any SPR Company Customer Contract has breached, violated or
defaulted under any of the terms or conditions of any Acquired Company Contract
or any SPR Company Customer Contract. The Acquired Companies have obtained, or
will obtain prior to the Closing, all necessary consents, waivers or approvals
of parties to any Acquired Company Contract in order for such Acquired Company
Contract to remain in full force and effect without limitation, modification or
alteration after the Closing. Following the Closing, the Acquired Companies and
the other SPR Companies will continue to be permitted to exercise all of their
rights under the Acquired Company Contracts and each SPR Company Customer
Contract (without the payment of any additional amounts or consideration other
than ongoing fees, royalties or payments which the Acquired Companies would
otherwise be required to pay pursuant to the terms of such Acquired Company
Contracts or any SPR Company Customer Contract) had the transactions
contemplated by this Agreement and the Collateral Agreements not occurred. There
does not exist any agreement, contract, or other arrangement entered into by or
on behalf of any SPR Company that alters the term of an any Acquired Company
Contract or any SPR Company Customer Contract. The Seller and the Acquired
Companies do not have knowledge of (i) any notice of intent, negotiations,
discussions or other indications of interest on the part of the third parties to
the Acquired Company Contracts or the SPR Company Customer Contracts to
terminate, modify, amend, waive or alter any of the terms and conditions of the
Acquired Company Contracts or the SPR Company Customer Contracts, or (ii) any
change of control transactions or insolvency events pending with respect to the
third parties to the Acquired Company Contracts or the SPR Company Customer
Contracts.

(d) The Seller and the Acquired Companies have provided Buyer true, accurate and
complete copies of all Acquired Company Contracts, and there are no oral or
written amendments, modifications, side letters, supplements or other
arrangements or agreements in existence with respect to any Acquired Company
Contract which have not been provided to Buyer.

(e) To the knowledge of the Seller and the Acquired Companies, no audit or
similar review or investigation has been or is being conducted by any party to
any Acquired Company Contract or SPR Company Customer Contract. The Seller and
the Acquired Companies have no knowledge of, and have not received any written
notice or written request with respect to, any such audit, review or
investigation, and the Seller and the Acquired Companies have no knowledge of
any facts that are reasonably likely to lead to the

 

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commencement of any such audit, review or investigation. No party to any
Acquired Company Contract or SPR Company Customer Contract (i) is renegotiating,
or (ii) has requested a renegotiation of any amount paid or payable or other
term or provision of any Acquired Company Contract or SPR Company Customer
Contract. None of the SPR Companies have waived any of their rights under any
Acquired Company Contract or SPR Company Customer Contract. Performance by the
Acquired Companies and the other SPR Companies of their respective obligations
under the Acquired Company Contracts and the SPR Company Customer Contracts and
the SPR Company Customer Contracts will not result in any violation of or
failure to comply with any Legal Requirement.

3.12 Restrictions on Business Activities. There is no agreement
(non-competition, non-solicitation, field of use, most favored nation or
otherwise), commitment, judgment, injunction, order or decree to which any SPR
Company is a party or which is otherwise binding upon any SPR Company which has
or would reasonably be expected to have the effect of prohibiting, restricting
or impairing (a) the conduct of the Business, (b) any acquisition of assets or
property (tangible or intangible) by Buyer, (c) any disposition of the Acquired
Companies’ assets or properties by Buyer following the Closing Date, or (d) the
transactions contemplated by this Agreement and the Collateral Agreements.

3.13 Governmental Approvals.

(a) There are no Governmental Approvals required to be obtained or held by any
SPR Company in connection with the Business.

3.14 Title to Properties, Absence of Liens, Condition of Equipment.

(a) Neither of the Acquired Companies owns, and neither has ever owned, any real
property. Section 3.14(a) of the Disclosure Letter sets forth a list of all real
property currently leased by the Acquired Companies, the name of the lessor, the
date of the lease and each amendment thereto and the aggregate annual rental
and/or other fees payable under any such lease. The Acquired Companies have
delivered or otherwise made available to Buyer a true and correct copy of each
lease of real property. Such leases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default). The business
operations of the Acquired Companies conducted on the real property subject to
such leases do not violate any applicable law, building code, zoning requirement
or classification, or pollution control ordinance or statute relating to the
particular property or such operations, and such non-violation is not dependent,
in any instance, on so-called non-conforming use exceptions. The Acquired
Companies have not caused any damage to the leased premises. All approvals of
Governmental Entities (including licenses and permits) required in connection
with the operation of the Business on such real property have been obtained.

(b) Except as set forth on Section 3.14(b) of the Disclosure Letter, the
Acquired Companies have good and valid title to, or, in the case of leased or
licensed properties and assets, valid leasehold interests or licenses in, all of
the assets and properties purported to be owned by them or used in the Business,
free and clear of any Liens (including any Liens created

 

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as a result of the consummation of the transactions contemplated hereby). Except
as disclosed in Section 3.14(b) of the Disclosure Letter, to the knowledge of
the Acquired Companies, no basis exists for the assertion of any claim that, if
adversely determined, would result in a Lien on any asset or property of the
Acquired Companies or otherwise affect the Business, any asset or property of
the Acquired Companies, Buyer’s conduct of the Business subsequent to the
Closing or Buyer’s use of any of the Acquired Companies’ assets or properties.

(c) Seller or one of its Affiliates is the sole and rightful owner of all data
and information that it has generated, directly or indirectly, in connection
with the conduct of the Business, and none of the SPR Companies is a party to
any contract, agreement or understanding that would restrict the use of such
data and information in the future and each of MWR and SPRPA has the right to
license such data to Buyer pursuant to the Data License Agreement.

(d) Section 3.14(d) of the Disclosure Letter lists all equipment, furniture,
fixtures, improvements and other tangible assets owned or leased by the Acquired
Companies, and such assets are (i) all the tangible assets required for the
conduct of the Business by the Acquired Companies as currently conducted,
(ii) in good operating condition, regularly and properly maintained, subject to
normal wear and tear and (iii) adequate for the uses to which they are being
put. Section 3.14(d) of the Disclosure Letter identifies where each of such
tangible assets is located and whether such tangible assets are leased to the
Acquired Companies (and, if so, by which lessor). The Acquired Companies are in
custody and control of all of such tangible assets, except as disclosed in
Section 3.14(d) of the Disclosure Letter.

(e) Section 3.14(e) of the Disclosure Letter lists or describes all intangible
assets owned or licensed by either of the Acquired Companies except for the
Acquired Company Intellectual Property, and such intangible assets, together
with the Acquired Company Intellectual Property, are all of the intangible
assets used in the Business of the Acquired Companies as presently conducted.
Following the Closing, the Acquired Companies shall continue to be able to use,
and enjoy the benefits of, all of the intangible assets (including the licensed
rights and the Acquired Company Intellectual Property), in substantially the
same manner as the Acquired Companies prior to the Closing, without infringing
the rights of any third party.

(f) The Acquired Companies have sole and exclusive ownership, free and clear of
any Liens, of all customer lists, customer contact information, customer
correspondence and customer licensing and purchasing and service histories
relating to their current and former customers (the “Customer Information”). No
Person other than the Acquired Companies possesses any claims or rights with
respect to use of the Customer Information.

3.15 Intellectual Property.

(a) There are no Acquired Company Registered Intellectual Property Rights owned
or controlled by or for, filed in the name of or for, or otherwise held by or
for the benefit of the Acquired Companies.

 

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(b) Section 3.15(b) of the Disclosure Letter lists all Acquired Company
Intellectual Property. The Acquired Company Intellectual Property constitutes
all the Technology and Intellectual Property Rights used in the conduct of
and/or necessary to conduct the business of the Acquired Companies as currently
conducted and to perform any services it may be required to perform under a
Collateral Agreement and as it is currently planned to be conducted. The
Intellectual Property Rights owned or to which an SPR Company has a valid
license are all of the Intellectual Property Rights used in and/or necessary to
conduct the conduct of its Business as it is currently conducted and as it is
currently planned to be conducted.

(c) Except as noted on Section 3.15 of the Disclosure Letter, each item of
Acquired Company Intellectual Property (i) is free and clear of any Liens, and
(ii) is exclusively owned by one of the Acquired Companies, and no third party
owns or has any rights to any such Acquired Company Intellectual Property except
for the Technology and Intellectual Property Rights that are licensed by an
Acquired Company pursuant to valid license agreements that are listed on
Section 3.15(c) of the Disclosure Letter.

(d) Neither of the Acquired Companies has made, nor has any person or entity
acting on behalf of either of the Acquired Companies made, any material
improvements to any Technology or Intellectual Property Rights licensed by
either of the Acquired Companies. The Acquired Companies have not transferred
ownership of, or granted any exclusive license of or right to use, or authorized
the retention of any exclusive rights to use or joint ownership of, any
Technology or Intellectual Property Rights that are or were Acquired Company
Intellectual Property to any Person.

(e) The Seller and the Acquired Companies have no knowledge of any facts,
circumstances or information that (i) would render any Acquired Company
Intellectual Property invalid or unenforceable, (ii) would constitute prior art
or that would adversely affect any pending application for any Acquired Company
Registered Intellectual Property Right, or (iii) would adversely affect or
impede the ability of the Acquired Companies to use any Acquired Company
Intellectual Property in the conduct of the Business as it is currently
conducted The Acquired Companies have not misrepresented, or failed to disclose,
and have no knowledge of any misrepresentation or failure to disclose, any fact
or circumstances in any application for any Acquired Company Registered
Intellectual Property Right that would constitute fraud or a misrepresentation
with respect to such application or that would otherwise affect the validity or
enforceability of any Acquired Company Registered Intellectual Property Right.
The Seller and the Acquired Companies have no knowledge of any facts,
circumstances or information that would render any Company Intellectual Property
Rights used in connection with the Business by any other SPR Company invalid or
unenforceable.

(f) Each of the Acquired Companies has taken all necessary action to maintain
and protect (i) the Intellectual Property Rights of such company, and (ii) the
Confidential Information of such company. The Seller and the Acquired Companies
have no knowledge of any violation or unauthorized disclosure of any Trade
Secret or Confidential Information related to the Business or obligations of
confidentiality with respect to the Business.

(g) The operation of the Business does not violate, infringe or misappropriate
any Intellectual Property Rights of any Person. No SPR Company has received
notice of any claim, or any basis for any claims, that the operation of the
Business infringes or misappropriates any Intellectual Property Right of any
Person or constitutes unfair competition or trade practices under the laws of
any jurisdiction.

 

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(h) To the knowledge of the Seller and the Acquired Companies, no Person is
violating, infringing or misappropriating any Intellectual Property Right of any
of the SPR Companies.

(i) To the knowledge of the Seller and the Acquired Companies, there are no
Proceedings before any Governmental Entity (including before the PTO) anywhere
in the world related to any of the Intellectual Property Rights, including any
Acquired Company Registered Intellectual Property Rights, of any of the SPR
Companies that would impair the ability of the Acquired Companies to use such
rights or increase the cost of using such rights.

(j) To the knowledge of the Seller and the Acquired Companies, no Intellectual
Property Rights owned or licensed by any Acquired Company and used in the
Business, including any Acquired Company Intellectual Property Right, is subject
to any Proceeding or any outstanding decree, order, judgment, office action or
settlement agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Acquired Companies or, to the knowledge of
the Seller and the Acquired Companies, that may affect the validity, use or
enforceability of such Company Intellectual Property Right.

(k) There are no Contracts under which the Acquired Companies have agreed to, or
assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless,
guaranty or otherwise assume or incur any obligation or liability, or provide a
right of rescission, with respect to the infringement or misappropriation by the
Acquired Companies or such other person of the Intellectual Property Rights of
any Person other than the Acquired Companies.

(l) There is no Contract affecting any Company Intellectual Property Rights
owned or licensed by any Acquired Company and used in the Business, including
any Acquired Company Intellectual Property Right, under which there is any
dispute regarding the scope of such Contract, or performance under such
Contract, including with respect to any payments to be made or received by any
of the Acquired Companies thereunder.

(m) All Company Intellectual Property Rights owned by the Acquired Companies
will be fully transferable, alienable or licensable by Buyer without restriction
(other than restrictions on sublicensing that exist as of the Closing) and
without payment of any kind to any third party. The consummation of the
transaction as contemplated hereby and by the Collateral Agreements will not
result in any loss of any Company Intellectual Property Rights owned or licensed
by any Acquired Company and used in the Business, including any Acquired Company
Intellectual Property Right, or the right to use any such Company Intellectual
Property Rights in the same manner as used as of the date hereof.

(n) Subject to the terms of applicable Intellectual Property Agreements, neither
this Agreement nor the transactions contemplated herein, including the
assignment to Buyer, by operation of law or otherwise, of any Contracts will
result in (i) Buyer granting to any third party any right to, or with respect
to, any Acquired Company Intellectual Property; (ii) Buyer being bound by, or
subject to, any non-compete or other restriction on the operation or scope of
its businesses; or (iii) Buyer being obligated to pay any royalties or other
amounts to any third party.

 

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(o) Except as listed in Section 3.15(o) of the Disclosure Letter, no “open
source software” is used by the Acquired Companies in the conduct of the
Business or has been incorporated or combined with any Acquired Company
Intellectual Property.

3.16 Litigation. Except as listed in Section 3.16 of the Disclosure Letter,
there is no action, suit, claim, arbitration or other Proceeding or any
investigation pending before any court or administrative agency or, to the
knowledge of the Seller and the Acquired Companies, threatened, against any of
the SPR Companies (or any officer, director or member of the SPR Companies in
their capacity as such), any assets or properties of the Acquired Companies or
any Employee, and the Acquired Companies have no knowledge of any reasonable
basis for any such action, suit, proceeding, claim, arbitration or
investigation. There are no judgments, orders, decrees, citations, fines or
penalties heretofore assessed against the Acquired Companies, any assets or
properties of the Acquired Companies or any Employee under any federal, state,
local or foreign law. No Governmental Entity has at any time challenged or
questioned in writing or otherwise challenged or questioned, the legal right of
any of the SPR Companies to conduct the Business as currently conducted or as
proposed to be conducted. None of the SPR Companies has initiated or threatened
to initiate any action, suit, proceeding, claim, arbitration or any
investigation against any Third Party and the Acquired Companies have no
knowledge of any reasonable basis for any such action, suit, proceeding, claim,
arbitration or investigation.

3.17 Insurance.

(a) Section 3.17 of the Disclosure Letter sets forth, with respect to each
insurance policy maintained by or at the expense of, or for the direct or
indirect benefit of, the Acquired Companies: the name of the insurance carrier
that issued such policy and the policy number of such policy; a description of
the coverage provided by such policy; and a description of any claims pending,
and any claims that have been asserted in the past, with respect to such policy.

(b) The Acquired Companies have delivered to Buyer accurate and complete copies
of a summary of each of the insurance policies identified in Section 3.17 of
Disclosure Letter (including all renewals thereof and endorsements thereto) and
binders relating thereto, and all of the pending applications identified in
Section 3.17 of Disclosure Letter. Except for health and dental insurance for
Employees, the Acquired Companies do not have any self-insurance or risk sharing
arrangement affecting the Acquired Companies or any of its assets.

(c) Each of the policies identified in Section 3.17 of Disclosure Letter is, to
Seller’s knowledge, valid, enforceable and in full force and effect. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate and
complete in all material respects, and all premiums and other amounts owing with
respect to said policies have been paid in full. Each of the policies identified
in Section 3.17 of Disclosure Letter will continue in full force and effect
following the Closing, until the end of the month in which the Closing occurs,
and the Acquired Companies have paid all premiums due, and have otherwise
performed in all material respects all of their respective obligations, under
each policy to which it is a party or that provides coverage to it or any of its
directors, officers or contractors in connection with their performance of
services to the Acquired Companies.

 

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(d) There is no pending claim under or based upon any of the policies identified
in Section 3.17 of the Disclosure Letter, and, to the knowledge of the Acquired
Companies, no event has occurred and no condition or circumstance exists that
would (with or without notice or lapse of time) directly or indirectly give rise
to or serve as a reasonable basis for any such claim.

(e) The Acquired Companies have not received: (i) any notice regarding the
actual or possible cancellation or invalidation of any of the policies
identified in Section 3.17 of Disclosure Letter or regarding any actual or
possible adjustment in the amount of the premiums payable with respect to any of
said policies; or (ii) any notice regarding any actual or possible refusal of
coverage under, or any actual or possible rejection of any claim under, any of
the policies identified in Section 3.17 of Disclosure Letter.

3.18 Tax Matters.

(a) All material Taxes required to have been paid by the Seller or the Acquired
Companies on or before the date hereof (whether pursuant to any Tax Returns or
otherwise) have been duly paid in full on a timely basis, other than Taxes which
are adequately reserved for on the Interim Balance Sheet. The Seller and each
Acquired Company have properly classified service providers as Employees, where
appropriate, and have timely paid or withheld with respect to their Employees
(and paid any withheld amounts over to the appropriate Taxing authority) all
federal and state income Taxes, Federal Insurance Contribution Act, Federal
Unemployment Tax Act and other Taxes required to be paid or withheld.

(b) The Seller and the Acquired Companies have filed all material Tax Returns
required to be filed on or before the date hereof. All material Acquired Company
Tax Return to be due on or before the Closing Date (i) have been, or will be,
filed when due, and (ii) were, and will be, correct and complete in all material
respects. All amounts shown on the Acquired Company Tax Returns to be due on or
before the Closing Date, and all material amounts otherwise required to be paid
in connection with the Acquired Company Tax Returns on or before the Closing
Date, have been or will be paid on or before the Closing Date. The Company has
delivered to Buyer accurate and complete copies of all Acquired Company Tax
Returns pertaining to state and federal income Taxes and payroll Taxes filed for
the fiscal periods ended December 31, 2005, 2004 and 2003.

(c) Seller and the Acquired Companies’ Liability for unpaid Taxes for all
periods ending on or before the date of the Interim Balance Sheet, including any
Liability for Taxes assumed under contract, does not, in the aggregate, exceed
the amount of the current Liability accruals for Taxes (excluding reserves for
deferred Taxes established to reflect timing differences between book and Tax
treatment) reported on the Interim Balance Sheet. The Seller and the Acquired
Companies have incurred no liability for Taxes since the date of the Interim
Balance Sheet other than in the Ordinary Course of Business. Seller will be
responsible for and will pay all Taxes attributable to or arising from the
business and operations of the Seller and the

 

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Acquired Companies for all taxable periods or portions thereof ending on or
before the Closing Date and will be responsible for its own income and franchise
Taxes, if any, arising from the Seller’s sale of the Interests of the Acquired
Companies pursuant to this Agreement.

(d) The Acquired Companies have delivered to Buyer accurate and complete copies
of all audit reports and similar documents relating to material Acquired Company
Tax Returns. No extension or waiver of the limitation period applicable to any
of the Acquired Company Tax Returns has been granted (by the Seller, the
Acquired Companies or any other Person), and no such extension or waiver has
been requested from the Seller or the Acquired Companies.

(e) No Tax Returns of the Acquired Companies have been subject to an audit or
administrative proceeding by the Internal Revenue Service or any similar state
or local or foreign taxing authority, and no such audit or other proceeding is
pending or, to the knowledge of the Seller or the Acquired Companies, threatened
in writing, except for sales Tax audits conducted by the Minnesota Department of
Revenue, which audits are closed. No claim or other Proceeding is pending or, to
the knowledge of the Seller or the Acquired Companies, has been threatened in
writing against or with respect to the Acquired Companies in respect of any
material Tax. There are no unsatisfied Liabilities for Taxes (including
liabilities for interest, additions to tax and penalties thereon and related
expenses) with respect to any notice of deficiency or similar document received
by the Acquired Companies or Seller with respect to the Acquired Companies. The
Acquired Companies have not been, and will not be, required to include any
material adjustment in taxable income for any tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions or events occurring, or
accounting methods employed, prior to the Closing. No claim has ever been made
in writing by an authority in a jurisdiction where the Acquired Companies do not
file Tax Returns that they are or may be subject to taxation by that
jurisdiction

(f) Neither the Seller nor the Acquired Companies have ever been in a
“consolidated group” within the meaning of Treasury Regulations
Section 1.1502-1(h), and they are not liable for Taxes incurred by any
individual, trust, corporation, partnership or other Entity whether as a
transferee, pursuant to Treasury Regulations Section 1.1502-6, or pursuant to
any other provision of federal, territorial, state, local or foreign law or
regulations. The Acquired Companies are not a party to any joint venture,
partnership or other arrangement or contract that to the knowledge of the
Acquired Companies, could be treated as a partnership for United States Federal
income Tax purposes, except that the Acquired Companies are treated as divisions
of a partnership for income Tax purposes as a result of being Disregarded
Entities and the Seller being a limited liability company. The Acquired
Companies are not, and have never been, a party to or bound by any Tax indemnity
agreement, Tax sharing agreement, Tax allocation agreement or similar contract,
and have not otherwise assumed the Tax Liability of any other Person under
contract.

(g) Each of the Acquired Companies is a Disregarded Entity, has been a
Disregarded Entity since its formation and will be Disregarded Entity through
the Closing Date for federal and state income Tax purposes. No election to alter
the federal or state income Tax classification of either of the Acquired
Companies has been made by the Seller or any other person.

 

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(h) There is no agreement, plan, arrangement or other contract covering any
employee or independent contractor or former employee or independent contractor
of the Acquired Companies that, individually or collectively, could give rise
directly or indirectly to the payment of any amount that would not be deductible
pursuant to Section 280G of the Code. The Seller and the Acquired Companies have
withheld and paid over all material Taxes required to have been paid and/or
withheld and paid over, and complied with all material information reporting and
back-up withholding requirements, including maintenance of required records with
respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or third party.

(i) Neither the Seller nor the Acquired Companies are United States real
property holding corporations within the meaning of Section 897(c)(2) of the
Code and they have not been a United States real property holding corporations
within the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(j) Neither the Seller nor the Acquired Companies has been a “distributing
corporation” or a “controlled corporation” in a transaction intended to qualify
under Section 355 of the Code.

(k) The Seller and the Acquired Companies have disclosed on their federal income
Tax Returns, in accordance with applicable disclosure procedures under Sections
6662 and 6664 of the Code, all positions taken thereon that could give rise to a
substantial understatement penalty within the meaning of Section 6662 of the
Code. The Seller and the Acquired Companies have not filed, and are not required
to file, a disclosure statement under Treasury Regulation Section 1.6011-4,
Treasury Regulation Section 1.6011-4T, or under any similar provision of state
law, with respect to participation in a reportable transaction (as defined in
such Treasury Regulations or similar provision of state law).

(l) There are (and immediately following the Closing Date there will be) no
Liens on the assets of the Acquired Companies relating to or attributable to
Taxes, other than Liens for Taxes not yet due and payable. To Seller’s
knowledge, there is no basis for the assertion of any claim relating or
attributable to Taxes which, if adversely determined, would result in any Lien
for Taxes on the assets of the Acquired Companies.

(m) The Seller and Acquired Companies are not subject to Tax in any jurisdiction
other than their state of incorporation or formation by virtue of having a
permanent establishment or other place of business or by virtue of having a
source of income in that jurisdiction.

3.19 Environmental Matters. To the knowledge of the Seller and the Acquired
Companies, the Acquired Companies are in compliance in all material respects
with all Environmental Laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, or approved
thereunder and which relate to the Acquired Companies, the operation of the
Business or any assets or properties of the Acquired Companies.

 

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The Acquired Companies have not received any written notice and, to the
knowledge of the Seller and the Acquired Companies, there is no past or present
condition or practice of the Business which forms or would be reasonably
expected to form the basis of any material claim, action, suit, proceeding,
hearing or investigation against the Acquired Companies or any assets or
properties of the Acquired Companies, arising out of the manufacture,
processing, distribution, use, treatment, storage, transport, or handling, or
the Release into the Environment, of any Chemical Substance or Extremely
Hazardous Substance by the Acquired Companies or any assets or properties of the
Acquired Companies.

3.20 Brokers’ and Finders’ Fees. The Acquired Companies have not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders’
fees or agents’ commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.

3.21 Employee and Contractor Matters.

(a) Section 3.21(a) of the Disclosure Letter contains a complete and accurate
list of each of the Employees of the Acquired Companies showing for each such
Employee: (i) all remuneration payable and other benefits provided that the
Acquired Companies are bound to provide (whether at present or in the future) to
such individual, or any person connected with any such Employee, and includes,
if any, aggregate annual compensation and particulars of all profit sharing,
incentive and bonus arrangements to which the Acquired Companies are party,
whether legally binding or not, (ii) the date of hire, (iii) leave status
(including type of leave), (iv) visa status, (v) the number of hours per week
worked by such Employee. Except as listed in Section 3.21(a) of the Disclosure
Letter, the employment of each of the Acquired Companies’ Employees is
terminable by the Acquired Companies at will, and no Employee has any agreement
or contract, written or verbal, regarding his or her employment (other than an
employment offer letter in the Acquired Companies’ standard form, a copy of
which has been provided to Buyer. The Acquired Companies have delivered to Buyer
accurate and complete copies of all employee manuals and handbooks, disclosure
materials, policy statements, employment agreements and other materials relating
to the employment of their Employees. To the knowledge of the Acquired Companies
and other than in the Ordinary Course of Business, no Employee is in violation
of any term of any employment contract, proprietary information agreement or
other agreement relating to the right of such individual to be employed by or
contract with the Acquired Companies, and the continued employment with or
service to the Acquired Companies by such Employees will not result in any such
violation. The Acquired Companies have not received any notice alleging that any
such violation has occurred. Except for the chief executive officer of the
Acquired Companies, no Employee has been granted the right to continued
employment with or service to the Acquired Companies or to any compensation
following termination of employment or service. To the knowledge of the Acquired
Companies, no officer or present Employee intends to terminate his or her
employment with or service to the Acquired Companies. The Acquired Companies do
not have any present intention to terminate the employment or service of any
present Employee other than in the Ordinary Course of Business.

 

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(b) Section 3.21(b) of the Disclosure Letter contains a list of each independent
contractor, consultant or leased employee providing services to an Acquired
Company (other than an Employee or a physician contractor listed on
Section 3.21(c) of the Disclosure Letter). The Acquired Companies have provided
the Buyer with a copy of all contracts or agreements relating to each such
independent contractor, consultant or leased employee.

(c) Section 3.21(b) of the Disclosure Letter contains a list of (i) each
physician who is currently providing radiological interpretations in connection
with the Business of the SPR Companies, (ii) the states in which each such
physician is licensed to practice medicine, by physician and (iii) the hospitals
at which each such physician has staff privileges, by physician. Each physician
providing services in connection with the Business of the SPR Companies is doing
so under an “independent contractor” arrangement between SPRPA and another of
the SPR Companies or has otherwise been properly classified as an independent
contractor under applicable law and regulations.

(d) Each of the Acquired Companies and ERISA Affiliates (i) is in compliance in
all respects with all applicable foreign, federal, state and local laws, rules
and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or any Taxes
or any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). The Acquired Companies have no
obligation to pay, and have not paid or agreed to pay, any bonus or other amount
to any Employee or independent contractor in connection with or as a result of
the transactions contemplated by this Agreement. There are no pending,
threatened or reasonably anticipated claims or actions against the Acquired
Companies or any ERISA Affiliates under any worker’s compensation policy or
long-term disability policy.

(e) Section 3.21(e) of the Disclosure Letter contains an accurate and complete
list of each Employee Contract. The Acquired Companies do not have any plan or
commitment to establish any new Employee Contract or to modify any existing
Employee Contract. The Acquired Companies have provided to Buyer correct and
complete copies of each Employee Contract.

(f) The Acquired Companies have no collective bargaining agreements, union
contracts or similar contracts with any Employees. To Seller’s knowledge, there
is no labor union organizing activity pending or threatened with respect to the
Acquired Companies and no work stoppage or labor strike against the Acquired
Companies or any ERISA Affiliate is pending, threatened or reasonably
anticipated. There are no actions, suits, claims, labor disputes or grievances
pending or threatened or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in any
material liability to the Acquired Companies or any ERISA Affiliate.

 

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3.22 Employee Plans.

(a) Section 3.22(a) of the Disclosure Letter lists each Employee Plan. The
Seller or an Acquired Company has provided to Buyer the current summary plan
description (and all summaries of material modifications) or other descriptive
materials provided to plan participants describing each Employee Plan.

(b) Except as set forth in Section 3.22(b) of the Disclosure Letter, the
Acquired Companies do not have any liability of any nature, whether known or
unknown, direct or indirect, fixed or contingent, to any Pension Plan, the PBGC
or any other person, arising directly or indirectly under Title IV of ERISA
other than liability pursuant to Section 4007 for premiums which are not yet due
(without regard to any waiver). No “reportable event,” within the meaning of
Section 4043 of ERISA, has occurred with respect to any Pension Plan subject to
Title IV of ERISA. Neither the Acquired Companies nor any ERISA Affiliate has
ceased operations at any facility or withdrawn from any Pension Plan in a manner
that could subject an Acquired Company or an ERISA Affiliate to liability under
Sections 4062(e), 4063 or 4064 of ERISA.

(c) Neither the Acquired Companies nor any ERISA Affiliate maintains,
contributes to, participates in, has participated in or has agreed to
participate in or has any liability (whether known or unknown, direct or
indirect) with respect to any Multiemployer Plan.

(d) Except as set forth in Section 3.22(d) of the Disclosure Letter, each
Acquired Company may terminate or discontinue its participation in any Employee
Plan in accordance with its terms, without liability to the Acquired Company,
the Buyer or any affiliate of the Buyer.

(e) Section 3.22(e) of the Disclosure Letter lists each Employee Plan, Employee
Contract or other agreement, practice or arrangement that an Acquired Company is
a party to or has any obligation under that is subject to Section 409A of the
Code.

(f) Except as set forth in Section 3.22(f) of the Disclosure Letter, the
Acquired Companies do not maintain, contribute to, have or could have any
liability of any nature, whether known or unknown, direct or indirect, fixed or
contingent, with respect to retiree medical coverage or any other medical,
health, life or other welfare benefits for present or future terminated
employees of the Acquired Companies or their spouses or dependents other than as
required by COBRA or any comparable state law.

(g) Except as set forth in Section 3.22(g) of the Disclosure Letter, the
Acquired Companies and ERISA Affiliates have complied in all material respects
with the health care continuation requirements of COBRA and the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereunder will not result in any obligation or liability to the Acquired
Companies, the Buyer or any affiliate of the Buyer, to any Employee (or spouse
or dependent of such Employee) of the Acquired Companies pursuant to the health
care continuation requirements of COBRA. The Seller has confirmed that SPRPA
(and/or any other ERISA Affiliate that provides group health plan coverage to
employees of the Acquired Companies) has no present intention to terminate its
“group health plans” as defined in Section 4980B(g) of the Code and Section 607
of ERISA, except that group health plans applicable to Employees of the Acquired
Companies may be terminated at the end of the month in which the Closing occurs.

 

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(h) Full payment has been made of all amounts that each Acquired Company is
required, under applicable Law, the terms of any Employee Plan, or any agreement
relating to any Employee Plan, to have paid as a contribution, premium or other
remittance thereto or benefit thereunder as of the Closing Date, except for
liability for the self insured portion of the group health plans provided to
Employees in which claims may be received after the closing and contributions
under any Employee Plan accruing prior to closing but not paid until after
Closing.

(i) The Acquired Companies have performed all material obligations required to
be performed by each of them under each Employee Plan. Each Employee Plan has
been established and maintained in accordance with its terms and in compliance
with the applicable provisions of ERISA, the Code and all other applicable Law.
Each Pension Plan that is operated as a plan that is qualified under the
provisions of Section 401(a) of the Code satisfies in form and operation all
applicable qualification requirements and has received a favorable determination
letter or opinion letter from the IRS with respect to such Pension Plan as to
its qualified status under the Code.

(j) There are no facts or circumstances which could, directly or indirectly,
subject the Acquired Companies to any (i) excise Tax or other liability under
Chapters 43, 46 or 47 of Subtitle D of the Code, (ii) penalty Tax or other
liability under Chapter 68 of Subtitle F of the Code or (iii) civil penalty,
damages or other liabilities arising under Section 502 of ERISA.

(k) There are no pending or, to the knowledge of the Seller and the Acquired
Companies threatened, claims, suits or proceedings against the Acquired
Companies, any ERISA Affiliate or any other party by present or former employees
of the Acquired Companies, Employee Plan participants, beneficiaries or spouses
of any of the above, including, without limitation, claims against the assets of
any trust, involving any Employee Plan, or any rights or benefits thereunder,
other than the ordinary and usual claims for benefits by participants or
beneficiaries.

(l) Except as set forth in Section 3.22(l) of the Disclosure Letter, the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Employee
Contract, trust or loan that will or may result in any payment (whether of
severance pay or otherwise) or the acceleration of accrual, vesting, funding or
payment of any contribution or benefit under any Employee Plan or any
forgiveness of indebtedness, increase in benefits or obligation to fund benefits
with respect to any Employee. No amount that could be received (whether in cash
or property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any Employee, officer, or director of the
Acquired Companies or any of their ERISA Affiliates who is a “disqualified
individual” (as defined in Code Section 280G and the regulations thereunder)
would be an “excess parachute payment,” within the meaning of Section 280G of
the Code.

 

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3.23 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity or any third
party, including a party to any agreement with the Acquired Companies (so as not
to trigger a Conflict), is required by or with respect to the SPR Companies in
connection with the execution and delivery of this Agreement or any of the
Collateral Agreements or the consummation of the transactions contemplated
hereby or thereby, except for the consents, waivers, approvals, orders,
authorizations, registrations, declarations or filings listed on Section 3.4 of
the Disclosure Letter.

3.24 Government Contracts.

(a) None of the SPR Companies have been excluded from Federal Health Care
Program participation, or suspended or debarred from bidding on contracts or
subcontracts for any Government Authority, nor, to the knowledge of the Seller
and the Acquired Companies, has any such exclusion, suspension or debarment
action been commenced or notice of such action to be commenced been given by any
Governmental Entity. There is no valid basis, and none of the SPR Companies or
any Person acting on behalf of any SPR Company has taken any action or failed to
take any action that could provide a valid basis, for the exclusion of any of
the SPR Companies from Federal Health Care Program participation, or suspension
or debarment from bidding on contracts or subcontracts for any Governmental
Entity.

(b) Except for sales Tax audits by the Minnesota Department of Revenue described
in Section 3.18(e) which have been closed and pursuant to which no Liability was
assessed against an Acquired Company which remains unpaid, none of the SPR
Companies have within the preceding three (3) years been, nor are they now
being, audited or, to the knowledge of the Seller and the Acquired Companies,
investigated by any Government Authority, including without limitation the
Government Accountability Office, the Defense Contract Audit Agency, the Defense
Contract Administrative Service, the Department of Labor, the Department of
Health and Human Services, the Environmental Protection Agency, the General
Services Administration, or the inspector general or auditor general or similar
functionary of any agency or instrumentality, nor, to the knowledge of the
Acquired Companies, is any such audit or investigation threatened.

(c) No material cost incurred by any of the SPR Companies pertaining to any
contracts or subcontracts for any Government Authority has been questioned or
challenged by representatives of a Government Authority, or is, to the knowledge
of Seller and the Acquired Companies, the subject of any investigation, or have
been disallowed by the United States Government, and no amount of money due to
any of the SPR Companies pertaining to any contracts or subcontracts for any
Government Authority has been withheld or set off nor has any claim been made to
withhold or set off money and each of the SPR Companies is entitled to all
progress payments received with respect thereto; and all amounts previously
charged or at present carried as chargeable by any of the SPR Companies to any
contracts or subcontracts for any Government Authority have been or will be
reasonable, allowable and allocable to each such contracts or subcontracts for
any Government Authority. Each of MWR (including, for purposes of this
Section 3.24(c) and Section 3.24(d), its diagnostic imaging centers) and SPRPA
is eligible to receive Medicare and Medicaid reimbursement without restriction
and each is a “provider” with valid and current provider agreements and with one
or more provider numbers with Medicare and all applicable Medicaid programs and
successor programs either directly or

 

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through intermediaries. Each of MWR and SPRPA is compliance with the conditions
of participation for the Federal Health Care Programs and have received all
licenses, certifications or other approvals or qualifications necessary for
reimbursement or payment by each Federal Health Care Program identified on
Section 3.24(c) of the Disclosure Letter, and there is not pending, nor to the
knowledge of the Seller and the Acquired Companies threatened, any proceeding or
investigation under any Federal Health Care Program involving either of MWR or
SPRPA. Any forms or reports required to be filed with governmental authorities
on or before the date hereof by any SPR Company have been properly filed and are
complete and correct.

(d) All billings, reimbursement claims and billing practices of MWR and SPRPA to
all patients and to third party payors, including Federal Health Care Programs
and private insurance companies, are and have been in compliance in all material
respects with all applicable laws and all policies of such third party payors
and Federal Health Care Programs in all material respects, and neither MWR nor
SPRPA, nor any person or entity acting on their behalf, have billed or received
any payment or reimbursement in excess of amounts allowed by law or by
applicable contract which would have a Material Adverse Effect. All of MWR’s and
SPRPA’s billings and claims have been made on a timely basis and were, when
filed, complete and correct except where the failure to do so would not have a
Material Adverse Effect.

3.25 Books and Records. The Books and Records (a) are complete, up-to-date and
accurate in all material respects, (b) have been maintained in accordance with
applicable laws and with generally accepted practices and standards in the
jurisdiction(s) in which the Acquired Companies operate and (c) are in the
Acquired Companies’ possession or under their control.

3.26 Medical Liability. The Acquired Companies are not subject to any Liability
arising from any injury to Person or property or as a result of any claim of
medical malpractice or similar circumstance. Except as set forth in Section 3.26
of the Disclosure Letter, there are no pending claims, and within the last three
(3) years there have not been any claims involving any of the physicians
providing services in connection with the Business.

3.27 Complete Copies of Materials. To Seller’s knowledge, the Acquired Companies
have delivered true and complete copies of each existing document that has been
requested by Buyer or its counsel pursuant to Buyer’s due diligence requests,
this Agreement and the transactions contemplated hereby.

3.28 Affiliate Transactions. Except for physicians that may hold equity
interests, profit interests or other ownership interests of SPRPA and/or Seller
with respect to such entities, no director or officer or former director or
officer or persons performing equivalent functions of the Acquired Companies
(a) owns, directly or indirectly, on an individual or joint basis (i) any
interest in any assets or properties of the Acquired Companies or (ii) any claim
or right against or interest (other than a passive investment in less than one
percent (1%) of the outstanding voting securities of a company that is required
to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended) in any Person that is a supplier, customer or competitor of
the Acquired Companies, (b) serves as an officer, director or employee of any
person that is a supplier, customer or competitor of the Acquired Companies or
(c) has received any loan from or is otherwise a debtor of or has made any loan
to or is otherwise a creditor of, the Acquired Companies.

 

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3.29 Customers and Suppliers.

(a) Section 3.29 of the Disclosure Letter contains an accurate and complete list
of each hospital and clinic customer of any of the SPR Companies as of the date
hereof (the “SPR Company Customers”).

(b) Except as set forth in Section 3.29 of the Disclosure Letter, since
January 1, 2007, none of the customers of the SPR Companies have given notice or
otherwise indicated to the SPR Companies that (i) it will or intends to
terminate or not renew its Contract with the applicable SPR Company, (ii) it
will reduce the volume of business transacted with the applicable SPR Company
below historical levels, (iii) it is otherwise dissatisfied with the services
that the applicable SPR Company provides such Person or with its relationship
with the applicable SPR Company or (iv) is threatened with bankruptcy or
insolvency; and no customer has made a complaint to the applicable SPR Company
in connection with the provision of the applicable SPR Company’s services. The
relationship of each of the SPR Companies with its customers is currently on a
good and normal basis, and the SPR Companies have not experienced any problems
with customers or suppliers since January 1, 2007. Except as set forth in
Section 3.28 of the Disclosure Letter, the transactions contemplated hereby and
the Collateral Agreements will not adversely affect the relationships between
Buyer and the Acquired Companies’ suppliers or Buyer and the SPR Companies with
the customers of the SPR Companies. The relationship between the Acquired
Companies and its suppliers is currently on a good and normal basis and no
supplier has given any indication to the Acquired Companies that it intends to
terminate or not renew its Contracts with the Acquired Companies, except as
disclosed in Section 3.29 of the Disclosure Letter.

(c) Except as set forth on Section 3.29 of the Disclosure Letter, other than in
the Ordinary Course of Business, there are no currently outstanding proposals or
offers submitted by the Acquired Companies to any customer, prospect, supplier
or other person which, if accepted, would result in a legally binding Contract
involving an amount or commitment exceeding $10,000 in any single case or an
aggregate amount or commitment exceeding $25,000 in the aggregate.

3.30 Reorganization. Effective on May 1, 2007, the SPR Companies completed a
reorganization which is described on Section 3.30 of the Disclosure Letter.

3.31 Representations Complete. None of the representations or warranties made by
the Acquired Companies or Seller (as modified by the Disclosure Letter), nor any
statement made in any Schedule, Collateral Agreement or certificate furnished by
the Acquired Companies or Seller or any other SPRA Company pursuant to this
Agreement contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which made, not misleading.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller that on the date hereof and as of
the Closing, as though made at the Closing, as follows:

4.1 Authority. Buyer has all requisite corporate power and authority to enter
into this Agreement and the Collateral Agreements required to be executed by it
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each of the Collateral Agreements
to which Buyer is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement and each of the Collateral Agreements to
which Buyer is a party has been duly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms.

4.2 No Conflict. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with or
result in any violation of, or default under (with or without notice or lapse of
time, or both) (a) any provision of the Certificate of Incorporation and Bylaws,
each as amended through the date hereof, of Buyer or (b) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Buyer or their
properties or assets, except in each case where such conflict, violation or
default will not have a material adverse effect on the legality, validity or
enforceability of Buyer’s obligations under this Agreement.

4.3 Investment Representation. Buyer is acquiring the Interests for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof. Buyer understands that the Interests
have not been registered under the Securities Act of 1933 by reason of such
issuance being done in a transaction exempt from the registration requirements
of such act. Buyer acknowledges and agrees that (i) it has made its own inquiry
and investigation into the material information relating to its investment in
the Acquired Companies and (ii) it has been furnished with or given access to
such information as it requested about the Acquired Companies.

4.4 Organization. Buyer is a corporation duly organized, validly existing and in
good standing under the laws of State of Delaware. Buyer has the power and
authority to own, lease and operate its assets and properties and to carry on
its business as currently conducted. Buyer is duly qualified or licensed to do
business, to perform its obligations under all contracts by which it is bound.
Buyer is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary.

4.5 Governmental Consents. Buyer has made any and all filings it is required to
make prior to the date hereof with any Governmental Entity with respect to the
transactions contemplated by this Agreement.

ARTICLE V

ADDITIONAL AGREEMENTS

5.1 Access Pending the Closing. During the period commencing on the date of this
Agreement and continuing through the Closing Date, the Acquired Companies, upon
reasonable prior notice from Buyer to the Acquired Companies, will, and Seller
will cause the Acquired Companies to, (a) afford to Buyer and its
representatives, at all reasonable times during normal business hours, full and
complete access to the SPR Companies’ personnel, professional

 

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advisors, properties, contracts, Books and Records and other documents and data;
provided, however, that Buyer will not be given access to any compensation data
paid to any Physician Member, (b) furnish Buyer and its representatives with
copies of all such Contracts, Books and Records, and other existing documents
and data as Buyer may request, (c) furnish Buyer and their representatives with
such additional financial, operating, and other data and information as Buyer
may request and (d) otherwise cooperate with Buyer’s investigation into the SPR
Companies and the Business. No information or knowledge obtained in any
investigation pursuant to this Section 5.1 or otherwise shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties hereto to consummate the
transactions contemplated hereby.

5.2 Satisfaction of Conditions. Buyer shall take all commercially reasonable
actions necessary or desirable to cause the conditions set forth in Section 6.1
and 6.3 to be satisfied as soon as practicable after the date hereof. Seller
shall take all commercially reasonable actions necessary or desirable to cause
the conditions set forth in Section 6.1 and 6.2 to be satisfied as soon as
practicable after the date hereof. Without limiting the generality of the
foregoing, each of Seller and Buyer covenant that they will, and Seller will
cause each of the SPR Companies to, execute at the Closing each of the
Collateral Agreements to which it (or the applicable SPR Company) is a party in
the form required by this Agreement.

5.3 Intentionally Omitted.

5.4 Operation of the Business by the Acquired Companies. Between the date of
this Agreement and the Closing Date, unless otherwise agreed in writing by
Buyer, the Acquired Companies covenant and agree that they, and the other SPR
Companies, will and Seller will cause the Acquired Companies and the other SPR
Companies to:

(a) conduct the Business in the Ordinary Course of Business (including
maintaining all Acquired Company Contracts and SPR Company Customer Contracts in
full force and effect);

(b) pay their Liabilities when due;

(c) pay or perform their other obligations when due;

(d) use commercially reasonable efforts to preserve intact the current business
organization of the SPR Companies, keep available the services of the Employees,
and maintain the relations and goodwill with the suppliers, customers,
licensors, landlords, employees, contractors, and others having business
relationships with the SPR Companies, with the goal of preserving unimpaired the
goodwill and ongoing business of the SPR Companies as of the Closing;

(e) confer with Buyer concerning business or operational matters of a material
nature;

(f) use commercially reasonable efforts to maintain the assets or properties of
the Acquired Companies in their current condition, ordinary wear and tear
excepted;

 

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(g) maintain the Books and Records in the usual, regular and ordinary manner, on
a basis consistent with prior years;

(h) continue to sell the services of the SPR Companies consistent with past
practice in the Ordinary Course of Business;

(i) introduce Buyer to customers of the SPR Companies and cooperate with Buyer’s
efforts to retain such customers at a mutually acceptable time;

(j) report to Buyer concerning any event or occurrence not in the Ordinary
Course of Business or any material event involving the SPR Companies not in the
Ordinary Course of Business, the assets or properties of the SPR Companies or
any Employee;

(k) not declare, set aside or pay to Seller or any member of Seller any
dividend, redemption or other distribution with respect to the membership
interests of either of the Acquired Companies; and

(l) maintain insurance coverage that each Acquired Company has maintained
consistent with past practice.

5.5 Conduct Prior to Closing. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, the Acquired
Companies and the Seller will not take any action, or fail to take any action,
or allow any other SPR Company to take any action or fail to take any action, as
a result of which any of the changes or events described in Section 3.9 of this
Agreement would occur. In addition, the Acquired Companies and the Seller will
not, and Seller will cause the other SPR Companies not to, without the prior
written consent of Buyer, which will not be unreasonably withheld, delayed or
conditioned, except to the extent required by this Agreement:

(a) take any action to impair, encumber, create a Lien against or otherwise
adversely affect the assets or properties of the Acquired Companies;

(b) enter into, amend or violate the terms of any Acquired Company Contract or
any SPR Company Customer Contract;

(c) change pricing charged to customers of the Business;

(d) enter into any strategic arrangement or relationship, joint venture,
development or joint marketing arrangement or agreement;

(e) terminate, or give notice of termination to, any customer or Employee;

(f) hire any Employees except in the Ordinary Course of Business;

(g) change, increase or amend the rate of remuneration or amount of bonuses or
other benefits or any other terms of employment of any Employee (whether payable
in cash, equity compensation or otherwise) except in the Ordinary Course of
Business;

 

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(h) grant any severance or termination pay to any Employee (whether payable in
cash, equity compensation or otherwise), or adopt any new severance plan, amend
or modify or alter in any manner any severance plan, agreement or arrangement
relating to any Employee on the date hereof;

(i) adopt or amend or enter into any Employee Plan or Employee Contract;

(j) revalue any of the assets or properties of the Acquired Companies;

(k) make or change any election in respect of Taxes of the Acquired Companies or
Seller, adopt or change any accounting method in respect of Taxes of the
Acquired Companies or Seller, enter into any closing agreement, settle any claim
or assessment in respect of Taxes of the Acquired Companies or Seller, consent
to any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes of the Acquired Companies or Seller or file any
Tax Return of the Acquired Companies unless such Tax Return has been provided to
Buyer for review within a reasonable period prior to the due date for filing and
Parent has consented to such filing;

(l) commence or settle any action, suit, claim, arbitration, investigation or
other Proceeding before any court or administrative agency or obtain any
releases of any such action, suit, claim, arbitration, investigation or other
Proceeding that is threatened;

(m) take any action, or fail to take any action, which would result in any of
the representations and warranties set forth in Article III not being true and
correct on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date;

(n) issue, grant, deliver or sell or authorize, pledge or otherwise encumber, or
propose the issuance, grant, delivery, sale, pledge or encumbrance of, or
purchase or propose the purchase of, any membership interests of the Acquired
Companies or securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any character
obligating either entity to issue any such membership interests or other
convertible securities;

(o) declare, set aside or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its membership
interests, or split, combine or reclassify any of its membership interests or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for membership interests, or repurchase, redeem or
otherwise acquire, directly or indirectly, any membership interests (or options,
warrants or other rights exercisable therefor); or

(p) take, or agree in writing or otherwise to take, any of the actions described
in Sections 5.5(a) through (o) above, or any other action that would prevent the
Acquired Companies from performing or cause the Seller or the Acquired Companies
not to perform its covenants hereunder.

 

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5.6 Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to the negotiation and
execution of this Agreement or the effectuation of the transactions contemplated
hereby, shall be governed by the terms of the Nondisclosure Agreement between
Buyer and Seller dated May 25, 2006 (the “Nondisclosure Agreement”).

5.7 No Solicitation. From and after the date of this Agreement until the earlier
to occur of the Closing or termination of this Agreement pursuant to its terms,
the Seller and the Acquired Companies will not, and the Seller and the Acquired
Companies will cause its respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly or
indirectly (a) solicit or encourage submission of any Acquisition Proposal (as
defined herein) by any person, entity, or group (other than Buyer and its
affiliates, agents and representatives) or (b) participate in any discussions or
negotiations with, or disclose any information concerning any of the SPR
Companies to, or afford access to the properties, books or records of any of the
SPR Companies, or otherwise assist or facilitate, or enter into any agreement or
understanding with, any person, entity or group (other than Buyer and its
affiliates, agents, and representatives) in connection with any Acquisition
Proposal with respect to any of the SPR Companies. For purposes of this
Agreement, an “Acquisition Proposal” means any proposal or offer relating to
(i) the acquisition of any of the assets or properties of any of the SPR
Companies, (ii) any merger, consolidation, sale or license of substantial assets
or similar transactions involving any of the SPR Companies or (iii) sales by any
of the SPR Companies of any membership or other equity interests of the SPR
Companies. The Acquired Companies and Seller will immediately cease and cause
each of their affiliates to immediately cease any and all existing activities,
discussion, or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Each of the Acquired Companies and Seller will promptly
(A) notify Buyer if it or any affiliate receives or becomes aware of any
proposal or written inquiry or written request for information in connection
with an Acquisition Proposal or potential Acquisition Proposal and (B) notify
Buyer of the terms and conditions of any such Acquisition Proposal including the
identity of the party making an Acquisition Proposal. In addition, from and
after the date of this Agreement, until the earlier to occur of the Closing Date
or termination of this Agreement pursuant to its terms, the Acquired Companies
and Seller will not, and the Acquired Companies and Seller will cause its
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any Acquisition Proposal
made by any person, entity or group (other than Buyer).

5.8 Notification of Certain Matters. The Acquired Companies and Seller shall
give prompt notice to Buyer of (a) the Acquired Companies or Seller becoming
aware of the occurrence or non-occurrence of any event that is likely to cause
any representation or warranty of the Acquired Companies or Seller contained in
this Agreement to be untrue or inaccurate at or prior to the Closing, (b) any
failure of the Acquired Companies or Seller to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, and (c) any action taken by any of the SPR Companies not in the
Ordinary Course of Business and any circumstance or effect that would reasonably
be expected to have a Material Adverse Effect on any of the SPR Companies;
provided, however, that the delivery of any notice pursuant to this Section 5.8,
shall not (i) limit or otherwise affect any remedies available to the party
receiving such notice, (ii) constitute an acknowledgment or admission of a
breach of this Agreement, or (iii) be deemed to amend or supplement the
Disclosure Letter or prevent or cure any misrepresentations, breach of warranty
or breach of covenant.

 

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5.9 Public Disclosure. Except as may be required by Applicable Law or the rules
of NASDAQ, neither the Seller nor the Acquired Companies nor any of the other
SPR Companies shall issue any statement or communication to any third party
(whether or not in response to an inquiry) regarding, or discuss with any third
party, the subject matter of this Agreement or the transactions contemplated
hereby, including, if applicable, the negotiation, execution or termination of
this Agreement and the reasons therefor, without the written consent of Buyer.
From time to time following the execution of this Agreement and the Closing,
Buyer may or as required by Applicable Law or the rules of NASDAQ, issue a press
release or otherwise make public announcements or communications pertaining to
the Agreement and the transactions contemplated hereby. Before making any public
announcement or issuing any press release, regardless of whether or not required
by Applicable Law or the rules of NASDAQ, Buyer will use commercially reasonable
efforts to provide the Seller with a copy of such announcement or release at a
reasonable time prior to release and consider any reasonable requests made by
the Seller with respect thereto to the extent such comments are received in a
reasonable time before the announcement is made or the release is issued.

5.10 Consents. The Acquired Companies shall use all commercially reasonable
efforts to obtain (to the extent not obtained prior to the date hereof) the
consents, waivers and approvals under any of the Acquired Company Contracts
under any contractual restrictions relating to the assets or properties of the
Acquired Companies that are necessary or advisable to permit the transactions
contemplated by this Agreement and to permit the Acquired Companies to be able
to operate after the Closing in the same manner as prior to the Closing.

5.11 Legal Requirements. Each of Buyer, the Seller and the Acquired Companies
will take, and Seller will cause the other SPR Companies to take, all
commercially reasonable actions necessary to comply promptly with all Legal
Requirements which may be imposed on such party with respect to this Agreement
and the Collateral Agreements and the transactions contemplated hereby and
thereby and will promptly cooperate with and furnish information to any other
party hereto in connection with any such requirements imposed upon such other
party in connection herewith or therewith. Each party will take, and Seller will
cause the other SPR Companies to take, all reasonable actions to obtain (and
will cooperate with the other parties in obtaining), to the extent not obtained
prior to the Closing, any consent, authorization, order or approval of, or any
registration, declaration, or filing with, or an exemption by, any Governmental
Entity, or other third party, required to be obtained or made by such party (or
any of the SPR Companies) in connection with this Agreement and the Collateral
Agreements and consummating the transactions contemplated hereby and thereby or
the taking of any action contemplated by this Agreement or the Collateral
Agreements.

5.12 Additional Documents and Further Assurances. At any time or from time to
time after the Closing, at Buyer’s request and without any further
consideration, the Acquired Companies and the Seller shall take, and Seller
shall cause the SPR Companies to take, such other actions as Buyer may deem
reasonably necessary or desirable in order to effect the transactions
contemplated by this Agreement and the Collateral Agreements, to confirm Buyer’s
title to, and, to the full extent permitted by law, to put Buyer in actual
possession and operating control of, the Interests and the assets and properties
of the Acquired Companies and to reasonably assist Buyer, at Buyer’s cost and
expense, in exercising all rights with respect thereto, and otherwise to cause
the Acquired Companies and the other SPR Companies to fulfill its obligations
under this Agreement and the Collateral Agreements.

 

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5.13 Tax Matters.

(a) The Seller shall prepare or cause to be prepared and file or cause to be
filed (i) any Tax Returns of the Acquired Companies that are required to be
filed on or before the Closing Date and (ii) any Tax Returns of Seller required
to be filed by Seller relating to the Acquired Companies, which shall include
all Taxes arising from the Seller’s sale of the Interests of the Acquired
Companies which shall be treated as provided in Section 5.13(c). The Buyer shall
prepare, or cause to be prepared, and shall file, or cause to be filed, any Tax
Returns of the Acquired Companies that are not described in the preceding
sentence. As to any such Tax Return that is described in the preceding sentence
and that is for a Tax period that (i) ends on or before the Closing Date, or
(ii) begins on or before the Closing Date and with respect to which there may be
Seller Straddle Period Taxes (as defined in Section 8.4), the Buyer shall
provide a draft copy of such Tax Return to the Seller at least five (5) business
days prior to the filing of such Tax Return to allow the Seller to review and to
comment in writing on such Tax Return. If the Seller provides any written
comments to Buyer, the Seller and the Buyer shall cooperate to resolve such
comments prior to the due date for filing such Tax Return. Pursuant to
Section 8.4(a) Seller shall promptly remit to Buyer (x) any Seller Straddle
Period Taxes paid with any Tax Return filed by Buyer pursuant to this
Section 5.13(a) and (y) any other Taxes paid by Buyer for a Tax period ending on
or before the Closing Date with respect to any Tax Return filed by Buyer
pursuant to this Section 5.13(a).

(b) Buyer, the Acquired Companies and the Seller shall cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of any Tax Returns pursuant to this Section 5.13 and any audit,
litigation or other proceeding with respect to Taxes of the Acquired Companies.
Such cooperation shall include the retention and (upon the other party’s
request) the provision of records and information that are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis.

(c) The Parties acknowledge and agree that the sale and purchase of the
Interests of the Acquired Companies will be treated as the sale of all of the
assets and liabilities of the Acquired Companies for federal and state income
Tax purposes, and agree to report the sale and purchase as a taxable asset
purchase transaction for all income Tax purposes.

(d) Seller shall be responsible for (i) any sales or use Tax, or any similar
transfer or transactional taxes attributable to Seller’s sale of the Interests
of the Acquired Companies, and (ii) any Taxes on income or gains recognized by
Seller attributable to Seller’s sale of the Interests of the Acquired Companies.

5.14 Non-Competition. For a Period commencing on the Closing Date and ending on
the date that is 60 months after the Closing Date, the Seller agrees that
neither it, nor any affiliate of Seller (including any SPR Company) nor any
entity which has a majority of its equity interest owned directly or indirectly
by the members of Seller who as of the date hereof own a majority of the
membership interests of Seller will (i) engage, either directly of indirectly,
in any capacity

 

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in, or have any ownership or economic interest in or control over, any business
which (A) is similar to or in competition with the business conducted by Support
Services Company or (B) primarily engages in the business of providing off-hours
preliminary imaging reads, or (ii) directly or indirectly encourage any customer
of the Business to cease doing business with any of the SPR Companies or
decrease the amount of business it is doing with any of the SPR Companies;
provided, however, that the provisions of clause A shall cease to apply if the
Administrative Support Services Agreements are terminated in accordance with
their terms.

5.15 Employee and Employee Plan Matters. Seller represents, warrants and
covenants to Buyer as follows:

(a) The Seller has taken (or caused to be taken) all necessary actions so that
coverage under any Employee Plan providing group medical coverage to Employees
and their covered spouses and dependents will not terminate until 11:59 p.m. on
the last day of the month during which the Closing Date occurs. Notwithstanding
the foregoing, the Seller has taken (or caused to be taken) all necessary
actions so that each Acquired Company’s status as a participating employer in
each Employee Plan of which the Acquired Company is not the plan sponsor will be
terminated effective on the day immediately after the Closing Date. The list of
such Employee Plans is set forth on Section 5.15 of the Disclosure Letter. The
Parties agree that, except as provided in Item #2 of Schedule B, the Seller and
its ERISA Affiliates (other than the Acquired Companies) retain all liabilities
with respect to each such Employee Plan and the Acquired Companies, the Buyer
and the Buyer’s affiliates will not have any obligations or liabilities under
such Employee Plans.

(b) The Seller has taken, or caused to be taken, all necessary action (i) so
that the benefits of each Employee who participates in any Employee Plan that is
a qualified retirement plan subject to Section 401(a) of the Code are fully
vested as of the Closing Date and (ii) to ensure that each Employee is eligible
to receive a distribution immediately after the Closing Date of his or her
account balance plan under any Employee Plan that is a qualified retirement
plan; provided, that Seller was not required to take any actions contemplated in
this Section 5.15(b) on behalf of any Employee who is a “highly compensated”
employee (as defined in Code Section 414(q)(1)) to the extent that doing so
could cause the qualified retirement plan to fail discrimination testing.

(c) The Parties agree that with respect to any Employee of an Acquired Company
who, as of the Closing Date, is disabled (within the meaning of the Employee
Plan providing long-term disability benefits) or is otherwise eligible (or
within the waiting periods) for disability benefits, the Seller and its ERISA
Affiliates (other than the Acquired Companies) retain all liabilities for
short-term and long-term disability benefits for such Employee, but only to the
extent the applicable Employee(s) is eligible for benefits under any of the
Employee Plans.

(d) The Parties agree that with respect to any former Employee of an Acquired
Company whose employment was terminated by the Acquired Company on or prior to
the Closing Date or whose employment was transferred from the Acquired Company
to the Seller or any affiliate of Seller on or prior to the Closing Date:

(i) the Seller and its ERISA Affiliates (other than the Acquired Companies)
retain responsibility for benefits including, but not limited to, severance
benefits, short-term disability, long-term disability, medical, dental and COBRA
continuation coverage and employment-related claims to which such Employee is
entitled, and

 

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(ii) the Acquired Companies, the Buyer and the Buyer’s affiliates will not have
any obligations or liabilities with respect to such Employee until such time (if
any) that the Employee returns to active employment with the Acquired Company.

(e) Nothing contained in this Agreement or in any other agreement or document
executed or delivered by Buyer in connection with the transactions contemplated
hereby will be deemed or construed to constitute a commitment of Buyer, or the
Acquired Companies to retain any employees of the Acquired Companies for any
particular period of time or at any particular rate of compensation on or after
the Closing Date or, except as provided in Section 5.16, to continue any plan,
arrangement or other commitment of any kind relating to any employee benefits,
welfare, insurance, incentive/bonus plans or compensation, perquisites or
similar matters of any kind or nature for any particular period of time or at
any particular level, on or after the Closing Date.

5.16 Buyer Benefit Plans. As of the Closing Date, Buyer will make the benefit
plans set forth on Schedule 5.16 available to the employees of the Acquired
Companies. Buyer will keep such plans in place in accordance with their present
terms at least until December 31, 2008. In addition, Buyer will institute for
the employees of the Acquired Companies, upon Closing, a special bonus program
whereby each employee of an Acquired Company will be paid a cash bonus at the
end of each calendar quarter that is equal to 10% of the wages or salary paid to
such employee during such calendar quarter. This bonus program will remain in
effect for one year such that the maximum payable to any employee under such
program will be 10% of such employee’s annual wages or salary. In order to
receive a bonus for a calendar quarter, an employee of an Acquired Company must
be employed by an Acquired Company on the date that the bonus is paid. Buyer
represents that its vacation plan is the only benefit plan it currently has in
place where disregarding an employee’s service time with an Acquired Company
would affect the benefits the employee would receive under Buyer’s benefit
plans. For purposes of Buyer’s vacation plan and any future plan of Buyer in
which Buyer is permitted to grant prior service credit and in which prior
service credit affects the benefits available under such plan, Buyer will give
each employee of the Acquired Companies prior service credit for such employee’s
period of employment with the Acquired Companies prior to the Closing Date.
Subject to Buyer’s commitment set forth in this Section 5.16, Buyer expressly
reserves the right to amend, modify and/or terminate any of its benefit plans
after the Closing Date, although it has no current plan to do so.

5.17 Life Insurance and Long-Term Disability Insurance. Buyer will research
whether it can make life insurance and long-term disability insurance available
to employees at no cost to Buyer and if so, will make such coverage available to
employees at the employees’ cost within a reasonable period of time.

5.18 Warrant. At the Closing, Buyer will grant to SPRPA a warrant in the form
attached hereto as Exhibit B which will entitle SPRPA to purchase 300,000 shares
of common stock of Buyer a price equal to the fair market value of a share of
Buyer’s common stock as of the close of business on the trading day prior to the
Closing Date and will have an expiration date that is ten (10) years after the
Closing Date.

 

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ARTICLE VI

CLOSING CONDITIONS

6.1 Conditions to Obligations of Each Party. The respective obligations of
Buyer, the Acquired Companies and Seller to effect the transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing, of the
following conditions, any of which may be waived in writing executed by each of
Buyer and the Seller:

(a) No Order or Proceedings. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the transactions
contemplated hereby illegal or otherwise prohibiting the consummation of the
transactions contemplated hereby and there shall not have been commenced any
litigation (other than by Buyer or Seller or an affiliate of either of them)
involving any challenge to, or seeking damages or other relief in connection
with, the transactions contemplated hereby or under any of the Collateral
Agreements or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the transactions contemplated hereby or
under any of the Collateral Agreements.

(b) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, nor
shall any proceeding brought by a Governmental Entity seeking any of the
foregoing be pending.

6.2 Additional Conditions to the Obligations of Buyer. The obligation of Buyer
to effect the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
of which may be waived in writing executed by Buyer:

(a) Representations, Warranties and Covenants. The representations and
warranties of Acquired Companies and Seller in this Agreement were true and
correct on the date they were made and shall be true and correct on and as of
the Closing Date as though such representations and warranties were made on and
as of such time, and the Acquired Companies and Seller shall have performed and
complied in all material respects with all covenants and obligations under this
Agreement required to be performed and complied with by the Acquired Companies
and Seller as of the Closing.

(b) Corporate Approval. All requisite approvals of the boards of directors or
governors and members of the Acquired Companies and Seller of this Agreement and
the transactions contemplated hereby shall have been obtained, and such
approvals shall be fully effective at Closing.

 

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(c) Governmental Approval. Approvals from any court, administrative agency,
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission (if any) deemed appropriate or
necessary by Buyer shall have been timely obtained.

(d) Intentionally Omitted.

(e) Intentionally Omitted.

(f) Seller Closing Deliverables. Buyer shall have received each of the
following, each in form and substance reasonably satisfactory to Buyer:

(i) Compliance Certificate. A certificate, validly executed by an officer of
Seller to the effect that, as of the Closing, each of the conditions to the
obligations of Buyer set forth under Sections 6.2(a) and (b) has been satisfied
(unless otherwise waived by Buyer in accordance with the terms hereof).

(ii) Third Party and Customer Consents. All consents, waivers, approvals,
licenses and assignments required by or with regard to all Acquired Company
Contracts and the SPR Company Customer Contracts in connection with the Acquired
Company’s performance under this Agreement and the Collateral Agreements and the
consummation of the transactions contemplated hereby or thereby.

(iii) Release of Liens. Duly and validly executed copy of all agreements,
instruments, certificates and other documents, in form and substance
satisfactory to Buyer, that are necessary or appropriate to evidence the release
of any Liens on any asset of an Acquired Company.

(iv) Termination of Guarantees and Reimbursement Arrangement. Evidence that
(i) the Guarantees executed by each of the Acquired Companies in favor of U.S.
Bank have been terminated, (ii) that the First Amendment to the Lease between
Physician Services Buildings LLC and Support Services Company, pursuant to which
Support Services Company is obligated to reimburse Physician Services Buildings
LLC under certain circumstances as referenced on Section 3.14 of the Disclosure
Letter has been terminated and (iii) any other instrument or agreement pursuant
to which either of the Acquired Companies has guaranteed the obligations of any
other person or entity has been terminated.

(v) Certificate of Secretaries of the Acquired Companies and the Seller. A
certificate, validly executed by the Secretaries of the Acquired Companies and
the Seller, certifying as to (i) the terms and effectiveness of the Charter
Documents, (ii) the valid adoption of resolutions of the Board of Governors of
the Acquired Companies and the Seller approving this Agreement and the
consummation of the transactions contemplated hereby, and (iii) the valid
receipt of approval by the members of the Acquired Companies (and Seller, if
required) of this Agreement and the transactions contemplated hereby;

(vi) Administrative Support Services Agreements. Two duly executed
Administrative Support Services Agreements, one duly executed by each of the
Support Services Company and SPRPA in the form attached hereto as Exhibit C-1
and the other duly executed by MWR and the Support Services Company in the form
attached hereto as Exhibit C-2 (each, an “Administrative Support Services
Agreement”).

 

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(vii) Noncompetition Affirmation Agreement. A duly executed Noncompetition
Affirmation Agreement in the form attached hereto as Exhibit D by SPRPA and each
of the physician members of Seller (each, a “Noncompetition Affirmation
Agreement”).

(viii) Professional Services Agreement. A Professional Services Agreement
between SPRPA and NightHawk Radiology Services LLC in the form attached hereto
as Exhibit E-1 and between SPRPA and ERS in the form attached hereto as Exhibit
E-2, duly executed by SPRPA and ERS, as applicable (the “Professional Services
Agreements”).

(ix) Lease and Sublease. A Lease Agreement duly executed by Physician Services
Building, LLC and Support Services Company in the form attached hereto as
Exhibit F-1, and a Sublease Agreement duly executed by MWR and ERS in the form
attached hereto as Exhibit F-2.

(x) Legal Opinion. A legal opinion from Winthrop and Weinstine, P.A., counsel to
Seller and the Acquired Companies, as to the substantive matters set forth on
Exhibit G-1.

(xi) License Agreement. A data license agreement between SPRPA and MWR on the
one hand and Buyer on the other hand, in the form attached hereto as Exhibit H,
duly executed by SPRPA (the “Data License Agreement”).

(xii) Escrow Agreement. The Escrow Agreement, duly executed by the Escrow Agent
and Seller.

(xiii) Audited Financial Statements. Such evidence as is reasonably requested by
Buyer that gives Buyer assurance that within thirty (30) days following the
Closing Date, it will have received the final Audited Financial Statements,
accompanied by an unqualified opinion of Deloitte & Touche LLP, the accounting
firm performing the audit, which will be of form and substance required to allow
Buyer to satisfy its filing requirements under the Securities Exchange Act of
1934.

(xiv) Recent Balance Sheet. A certificate setting forth a good faith estimate of
the working capital of each of the Acquired Companies as of the Closing Date,
duly executed by an officer of the Seller, which such written good faith
estimate shows that there is not been a material decline in the consolidated net
working capital of the Acquired Companies since May 31, 2007 other than in the
Ordinary Course of Business.

6.3 Additional Conditions to Obligations of Acquired Companies and Seller. The
obligations of the Acquired Companies and the Seller to consummate and effect
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by the Acquired Companies and Sellers:

(a) Representations, Warranties and Covenants. The representations and
warranties of Buyer in this Agreement were true and correct when made and shall
be true and correct on and as of the Closing Date as though such representations
and warranties were made on and as of such time, and Buyer shall have performed
and complied in all material respects with all covenants and obligations under
this Agreement required to be performed and complied with by Buyer as of the
Closing.

 

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(b) Collateral Agreements. Buyer shall have delivered to the Acquired Companies
executed copies of each Collateral Agreement required to be executed by it and
in the case of the Escrow Agreement by the Escrow Agent.

(c) Cash Consideration. The Cash Consideration less the Escrow Amount will,
simultaneously with the Closing, be sent by wire transfer to an account
identified by Seller and the Escrow Amount will be sent by wire transfer to the
Escrow Agent.

(d) Buyer Closing Deliverables. Seller shall have received each of the
following, each in form and substance reasonably satisfactory to Seller:

(i) Compliance Certificate. A certificate, validly executed by an officer of
Buyer to the effect that, as of the Closing, each of the conditions to the
obligations of Seller set forth under Section 6.3(a) has been satisfied (unless
otherwise waived by Buyer in accordance with the terms hereof).

(ii) Collateral Agreements. Duly executed copies of each Collateral Agreement
required to be executed by Buyer.

(iii) Legal Opinion. A legal opinion from Oppenheimer Wolff & Donnelly LLP,
counsel to Buyer, as to the substantive matters set forth on Exhibit G-2.

ARTICLE VII

ESCROW

7.1 Escrow Fund. At the Closing, by virtue of this Agreement and as partial
security for indemnity obligations provided for in Article VIII hereof, Buyer
shall pay to the Escrow Agent a portion of the Cash Consideration equal to the
Escrow Amount (together with interest or earnings thereon the “Escrow Fund”) to
be held in escrow pursuant to the Escrow Agreement. The Escrow Fund shall be
available as a non-exclusive source to compensate Buyer for Losses incurred by
Buyer, and/or each of Buyer’s officers, directors, employees, contractors,
agents, successors, stockholders, assigns and affiliates pursuant to the
indemnification provisions set forth in Article VIII hereof pursuant to the
Escrow Agreement.

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

8.1 Survival of Representations and Warranties. The representations and
warranties of the Acquired Companies and Seller contained in this Agreement, or
in any certificate or other instrument delivered pursuant to this Agreement,
shall terminate on the 24-month anniversary of the Closing Date, provided,
however, that the representations and warranties contained in

 

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Section 3.3 (Capitalization) and Section 3.18 (Tax Matters) (such
representations and warranties, the “Unlimited Representations”) shall survive
until 90 days after the expiration of the applicable statutes of limitation
period, and that any breach of a representation or warranty resulting from
fraud, intentional misrepresentation or knowing and willful misconduct shall
survive indefinitely. The representations and warranties of Buyer contained in
this Agreement, or in any certificate or other instrument delivered pursuant to
this Agreement, shall terminate on the 24 month anniversary of the Closing Date.
The covenants and agreements of the parties shall survive the Closing and any
investigation at any time made and the consummation of the transactions
contemplated hereby until fully performed, unless limited by their terms or
purposes.

8.2 General Indemnification.

(a) Seller (the “Seller Indemnifying Party”) hereby agrees to indemnify and hold
harmless Buyer, the Acquired Companies (following the Closing) and each of their
respective officers, directors, employees, contractors, agents, successors,
stockholders, assigns and affiliates (collectively, the “Buyer Indemnified
Parties”), against all claims, losses, liabilities, damages, deficiencies, costs
and expenses, including reasonable attorneys’ fees and expenses of investigation
and defense (hereinafter individually a “Loss” and collectively “Losses”)
incurred or sustained by such Buyer Indemnified Parties directly or indirectly
arising out of, relating to or resulting from (i) any breach or inaccuracy of a
representation or warranty of the Acquired Companies and Seller or any other SPR
Company contained in this Agreement or in any certificate delivered by the
Acquired Companies or Seller pursuant to this Agreement (without giving effect,
for purposes of determining the amount of any Losses related to any such breach
or inaccuracy, to any limitation as to “materiality,” “material adverse effect,”
“Material Adverse Effect” or similar qualifications set forth therein), (ii) any
failure by the Acquired Companies or Seller or any other SPR Company to perform
or comply with any covenant applicable to them contained in this Agreement,
(iii) any Transaction Expenses of the Acquired Companies not paid by the
Acquired Companies at or prior to the Closing, (iv) any actions, suits or
proceedings brought by third parties (including any Government Authority),
regardless if disclosed in the Disclosure Letter, related to the Business and
related events occurring or actions taken on or prior to the Closing Date,
(v) any of the liabilities expressly retained by Seller and its ERISA Affiliates
under Section 5.15, (vi) any action taken by Seller, any Subsidiary of Seller,
SPRPA or any Member of Seller that results in either of the Administrative
Support Services Agreements being declared unenforceable or unlawful, in whole
or in part or (vii) any of the matter set forth on Schedule B.

(b) Buyer hereby agrees to indemnify and hold harmless Seller and its officers,
directors, employees, members, agents, successors, assigns and affiliates
(collectively, the “Seller Indemnified Parties”), against all Losses incurred or
sustained by the Seller Indemnified Parties arising out of, relating to or
resulting from (i) any breach of a representation or warranty of Buyer contained
in this Agreement (without giving effect, for purposes of determining the amount
of any Losses relating to any such breach or inaccuracy, to any limitation as to
“materiality”, “material adverse effect”, “Material Adverse Effect” or similar
qualifications set forth therein), (ii) any failure of Buyer to perform or
comply with any obligation applicable to Buyer contained in this Agreement,
(iii) any Transaction Expenses of Buyer not paid by Buyer at or prior to the
Closing, (iv) any actions, suits or proceeding brought by third parties
(including any Government Authority), related to the business of the Acquired
Company to the extent related to events occurring or action taken after the
Closing Date, and (v) any liabilities assumed by Buyer related to the Business.

 

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8.3 Limitation on Claims. None of the Buyer Indemnified Parties shall be
entitled to seek recovery of Losses under clause (i) or clause (iv) of
Section 8.2(a) unless and until Buyer has paid or incurred Losses in excess of
$500,000 in the aggregate (the “Basket Amount”), in which case Buyer shall be
entitled to recover all Losses so identified including the Basket Amount up to a
maximum of Six Million Two Hundred Thousand Dollars ($6,200,000) (the “Rep
Indemnity Cap”); provided, however, that neither the Basket Amount nor the Rep
Indemnity Cap shall apply to any claims for Losses made by Buyer under clause
(i) of Section 8.2(a) with respect to any breaches or inaccuracies of an
Unlimited Representation and Buyer shall be entitled to indemnity for all of its
Losses resulting from any breach or inaccuracy of an Unlimited Representation
without regard to the Basket Amount or the Rep Indemnity Cap. For purposes of
clarity, in no event shall the Basket Amount or Rep Indemnity Cap limit any
party’s rights or obligations under any of the Collateral Agreements. All Losses
shall be determined net of any insurance proceeds actually recovered (so long as
recovered within three years after the applicable Losses are incurred) by the
Indemnified Party with respect to the matter for which the Losses relate, and
each Indemnified Party shall be obligated to use its commercially reasonable
efforts to collect the maximum amount of any such available insurance proceeds.
If any insurance recoveries are received by the Indemnified Party that are
related to a matter for which Losses have been paid to the Indemnified Party by
the Indemnifying Party (or from the escrow account referred to Article VII)
under this Agreement, the Indemnified Party will pay such proceeds to the
Indemnifying Party (or back into the escrow account) to the extent such proceeds
reduce the amount of Losses sustained by the Indemnified Party with respect to
such matter and for which the Indemnified Party has been indemnified by the
Indemnifying Party together with all remaining aggregate Losses of the
Indemnified Party if, after taking into consideration of the insurance recovery,
the Indemnified Party’s aggregate Losses for which it has been indemnified
hereunder plus any Losses for which it has asserted a claim for indemnity
hereunder but which have not been paid because such claim is in dispute (a
“Disputed Indemnity Claims”) are less than the Basket Amount; provided, however,
if such aggregate amount is above the Basket Amount but if the amount of the
Disputed Indemnity Claims were disregarded then the aggregate amount would be
below the Basket Amount, the amount of the aggregate Losses without the Disputed
Indemnity Claims shall be paid by Buyer into the escrow account established
under the Escrow Agreement and such funds shall be considered part of the
escrowed funds thereunder.

8.4 Tax Indemnification.

(a) The Seller Indemnifying Party shall be liable for, and shall indemnify and
hold Buyer and the other Indemnified Parties harmless from, (i) all Taxes,
including Seller Straddle Period Taxes (as defined below), of the Seller or the
Acquired Companies, or relating to either of the Acquired Company’s operations,
and attributable to any taxable period or portion of a period that ends on or
before the Closing Date, (ii) all sales or use or transfer or transactional
Taxes attributable to Seller’s sale of the Interests of the Acquired Companies,
and (iii) any Taxes imposed on Seller by reason of income or gain recognition of
Seller pursuant to the Seller’s sale of the Interests of the Acquired Companies.
The Seller Indemnifying Party shall be responsible for reimbursing Buyer for
such Taxes within 10 days of receipt of notice from Buyer of the amount of such
Taxes. For purposes hereof, Taxes with respect to any taxable period that

 

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includes (but does not end on) the Closing Date (a “Straddle Period”) shall be
apportioned to the period ending on or before the Closing Date (the “Pre-Closing
Period”) as follows: (i) the portion of any real, personal and intangible
property Taxes (“Property Taxes”) equal to the amount of such Property Taxes for
the entire Straddle Period multiplied by a fraction, the numerator of which is
the number of days during the Straddle Period that are in the Pre-Closing Period
and the denominator of which is the number of days in the Straddle Period; and
(ii) any Taxes other than Property Taxes computed as if such Straddle Period
ended on the Closing Date (the “Seller Straddle Period Taxes”).

(b) Buyer shall be liable for and shall indemnify and hold Seller and the other
Seller Indemnified Parties harmless from all Taxes payable by the Buyer or
Acquired Companies, or relating to either of the Acquired Company’s operations,
and attributable to any taxable period or portion of a period that ends after
the Closing Date (other than the amount of the Seller Straddle Period Taxes).

8.5 Order of Claims. The amount of any Losses (except in the case of fraud,
intentional misrepresentation or willful misconduct) shall be recoverable by
Buyer first through recourse to the Escrow Fund and, if the Escrow Fund is
exhausted, then with full recourse to the Seller Indemnifying Party. In the case
of fraud, intentional misrepresentation or willful misconduct, Buyer may seek
any remedy to which it is entitled under law or equity.

8.6 Indemnification Procedure.

(a) If Buyer seeks indemnification under this Article VIII unrelated to a third
party claim, Buyer shall deliver an Officer’s Certificate to the Seller. The
Seller will either object to such claim by delivering written notice to Buyer
specifying the basis for such objection within fifteen (15) days following
receipt by the Seller of notice from Buyer regarding such claim or pay the
Losses (either directly or by causing such amount to be released from the Escrow
Fund) specified in such notice within such fifteen (15) day period; provided,
however, that if Seller does neither, Buyer may treat such failure to act as an
objection to such claim by Seller.

(b) If Seller seeks indemnification under this Article VIII unrelated to a third
party claim, Seller shall deliver an Officer’s Certificate to Buyer. The Buyer
will either object to such claim by delivering written notice to Seller
specifying the basis for such objection within fifteen (15) days following
receipt by the Buyer of notice from Seller regarding such claim or pay the
Losses specified in such claim within such fifteen (15) day period; provided,
however, that if Buyer does neither, Seller may treat such failure to act as an
objection to such claim by Buyer.

(c) For the purposes hereof, “Officer’s Certificate” shall mean a certificate
signed by any officer of the applicable party (a) stating that such or other
Indemnified Party has paid, sustained, incurred, or properly accrued, or
reasonably anticipates that it will have to pay, sustain, incur, or accrue
Losses, and (b) specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid, sustained,
incurred or properly accrued, or the basis for such anticipated liability.

 

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8.7 Resolution of Conflicts.

(a) If Seller or Buyer shall object in writing to any claim or claims made in
any Officer’s Certificate to recover Losses within fifteen (15) days after
delivery of such Officer’s Certificate (or be deemed to have so objected),
Seller and Buyer shall attempt to resolve such claims through a mutually
agreeable mediation process with a third party mediator, the costs of which
mediation and mediator shall be shared equally. If the mediation is
unsuccessful, either party shall have the right to commence legal action against
the other party in connection with such claims.

8.8 Third-Party Claims.

(a) Notice of Third Party Claims. If any action, claim, suit, proceeding,
arbitration, order, or governmental investigation or audit is filed or initiated
by any third party (a “Third Party Claim”) against any Buyer Indemnified Parties
or Seller Indemnified Parties, written notice of such Third Party Claim will be
given to the party owing indemnity (an “Indemnifying Party”) as promptly as
reasonably practicable (and in any event within ten (10) days after the service
of the citation or summons); provided, however, that the failure of any
Indemnified Party to give timely notice will not affect any rights to
indemnification hereunder except to the extent that the Indemnifying Party is
prejudiced or damaged by such failure to receive notice.

(b) Defense and Settlement by Indemnifying Party.

(i) After notice of a Third Party Claim is given under Section 8.8(a) and in the
absence of a Conflict of Interest (as defined below), the Indemnifying Party
give notice that it wishes to control defense of such Third Party Claim (which
such notice must include an acceptance of indemnification responsibility for
such claim by the Indemnifying Party in favor of the Indemnified Party), in
which case the Indemnifying Party shall (A) take control of the defense and
investigation of the Third Party Claim, (B) employ and engage attorneys of its
own choice to handle and defend the Third Party Claim at the Indemnifying
Party’s cost, risk and expense, which attorneys must be reasonably satisfactory
to the indemnified party, and (C) subject to Section 8.8(b)(ii) below,
compromise or settle the Third Party Claim; provided, however, that the
Indemnified Party shall have the right to participate in the defense of any
Third Party Claim at its own expense.

(ii) Notwithstanding Section 8.8(b)(i)(C) above, no such compromise or
settlement of the Third Party Claim may be made without the written consent of
the Indemnified Party, which consent will not be unreasonably withheld,
conditioned or delayed. The Indemnified Party may withhold such consent if such
compromise or settlement would materially and adversely affect the Acquired
Companies or requires less than an unconditional release with respect to the
Third Party Claim.

(iii) The Indemnifying Party will provide the indemnified party access to all
records, documents and personnel of the Indemnifying Party and keep the
indemnified party informed relating to any Third Party Claim under this
Section 8.8.

 

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(iv) The term “Conflict of Interest” means that the named parties to a Third
Party Claim include both of the Indemnifying Party and the indemnified party and
the indemnified party has been advised in writing by counsel that there exist
one or more legal defenses available to the indemnified party that are different
from or additional to those available to the Indemnifying Party, and which, if
asserted, would create a conflict of interest with the Indemnifying Party.

(c) Defense and Settlement by Indemnified Party.

(i) If the Indemnifying Party fails to assume the defense of such Third Party
Claim within fifteen (15) days after receipt of notice thereof pursuant to this
Section 8.8 or there is a Conflict of Interest, the indemnified party may
(A) take control of the defense and investigation of the Third Party Claim,
(B) employ and engage attorneys of its own choice to handle and defend the Third
Party Claim at the indemnifying party’s cost, risk and expense, which attorneys
must be reasonably satisfactory to the Indemnifying Party, and (C) subject to
Section 8.8(c)(ii) below, compromise or settle the Third Party Claim.

(ii) Notwithstanding Section 8.8(c)(i)(C) above but also subject to
Section 8.8(e), no such compromise or settlement of the Third Party Claim may be
made without first seeking the written consent of the Indemnifying Party, which
consent will not be unreasonably withheld, conditioned or delayed; provided,
however, that if such consent is withheld, conditioned or delayed, then the
Indemnified Party shall nonetheless be entitled to compromise or settle such
Third Party Claim without prejudice to its rights to recover any Losses related
to such Third Party Claim (including the compromise or settlement thereof)
hereunder.

(iii) The indemnified party will provide the Indemnifying Party access to all
records, documents and personnel of the indemnified party and keep the
Indemnifying Party informed relating to any Third Party Claim under this
Section 8.8.

(d) Liability, Costs and Expenses. The Indemnifying Party will be liable for any
settlement of any action effected pursuant to and in accordance with this
Section 8.8 and for any final judgment (subject to any right of appeal), and the
Indemnifying Party agrees to indemnify and hold harmless the indemnified party
from and against any damages by reason of such settlement or judgment.
Regardless of whether the Indemnifying Party or the indemnified party takes up
the defense, the Indemnifying Party will pay the costs and expenses in
connection with the defense, compromise or settlement for any Third Party Claim
under this Section 8.8.

8.9 Subrogation. With respect to any Third Party Claim for which the
Indemnifying Party is obligated to indemnify the Indemnified Party, the
Indemnifying Party shall be subrogated to all rights and claims of the
Indemnified Party with respect to such Loss.

8.10 Exclusive Remedy. From and after the Closing Date, the indemnification
obligations pursuant this Article VIII shall constitute the sole and exclusive
remedies (other than a remedy for fraud) of Buyer (including the Indemnified
Parties) or Seller, respectively, for the breach of any representation or
warranty in this Agreement by Buyer, the Acquired Companies or Seller, as the
case may be, and Buyer, the Acquired Companies and Seller shall not be entitled
to rescission of this Agreement or to any further indemnification rights or
claims of any nature whatsoever in respect thereof, whether such claims or
rights are based on tort, contract or otherwise, all of which Buyer, the
Acquired Companies and Seller waive and agree not to pursue.

 

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ARTICLE IX

TERM AND TERMINATION

9.1 Termination. Except as provided in Section 9.2, this Agreement may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing:

(a) By the mutual written agreement of Buyer and the Seller;

(b) By either Buyer or the Seller, if (i) the Closing has not occurred by
July 31, 2007; provided, however, that the right to terminate this Agreement
under this Section 9.1(b)(i) shall not be available (A) to any party whose
willful failure to fulfill any obligation hereunder or other breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date, (B) to Seller if any of the conditions set forth
in Section 6.2 that are capable of being satisfied prior to the Closing are not
then satisfied or (C) to Buyer if any of the conditions set forth in Section 6.3
that are capable of being satisfied prior to the Closing are not then satisfied;
(ii) there shall be in effect a final nonappealable order of a federal or state
court preventing consummation of the transactions contemplated hereby; or
(iii) there shall be any legal requirement enacted, promulgated or issued or
deemed applicable to the transactions contemplated hereby by any Governmental
Entity that would make consummation of the transactions contemplated hereby
illegal;

(c) By Buyer, if Buyer is not in material breach of its obligations under this
Agreement and there has been a breach of any representation, warranty, covenant
or agreement contained in this Agreement on the part of the Acquired Companies
or the Seller and (i) the Acquired Companies or the Seller have not cured such
breach within 15 days after notice of such breach has been given by Buyer to the
Acquired Companies in accordance with Section 10.1; provided, however, that, no
cure period shall be required for any such breach which by its nature cannot be
cured and (ii) as a result of such breach, one or more of the conditions set
forth in Section 6.1 or Section 6.2 would not be satisfied at or prior to the
Closing;

(d) By the Acquired Companies and Seller, if they are not in material breach of
their obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Buyer and (i) Buyer has not cured such breach within 15 days after
notice of such breach has been given by the Acquired Companies to Buyer in
accordance with Section 10.1; provided, however, that, no cure period shall be
required for any such breach which by its nature cannot be cured and (ii) as a
result of such breach, one or more of the conditions set forth in Section 6.1 or
Section 6.3 would not be satisfied at or prior to the Closing;

(e) By Buyer, if there shall have occurred any event or condition of any
character that has had or is reasonably likely to have a Material Adverse
Effect; or

 

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(f) By Buyer, if there shall be any action taken, or any legal requirement
enacted, promulgated or issued after the date of this Agreement by any
Governmental Entity, which would (i) prohibit or materially and adversely
restrict Buyer’s ownership of the Acquired Companies or operation of any portion
of the Business or the assets or properties of the Acquired Companies,
(ii) materially and adversely effect the reasonably expected benefits that
Support Services Company will enjoy under the Administrative Services Agreements
or (iii) compel Buyer to dispose of all or any portion of the assets or
properties of the Acquired Companies as a result of the transactions
contemplated by this Agreement.

9.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of any party hereto, or its
affiliates, officers, directors or stockholders; provided that, the provisions
of Section 5.16 (confidentiality), Section 5.9 (public disclosure), Article X
and this Section 9.2 of this Agreement shall remain in full force and effect and
survive any termination of this Agreement. No termination of this Agreement
shall affect the obligations of the parties contained in the Nondisclosure
Agreement, all of which obligations shall survive termination of this Agreement.

9.3 Amendment. This Agreement may be amended by the parties hereto at any time
by execution of an instrument in writing signed on behalf of each of the parties
against whom enforcement is sought.

9.4 Extension; Waiver. At any time prior to the Closing, Buyer, on the one hand,
and the Acquired Companies, on the other hand, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations of
the other party hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of the party against whom
enforcement is sought.

ARTICLE X

GENERAL PROVISIONS

10.1 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given upon receipt if delivered personally, or upon receipt
or refusal of delivery if delivered by commercial delivery service or if mailed
by registered or certified mail (return receipt requested) or sent via facsimile
(with acknowledgment of complete transmission from the recipient of such
facsimile) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

(a) if to Buyer, to:

NightHawk Radiology Holdings, Inc.

250 Northwest Boulevard, Suite 202

Coeur d’Alene, Idaho 83814

Attention: General Counsel

Facsimile: (208) 292-2825

 

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(b) if to the Acquired Companies, to:

SPR Holdings II, LLC

166 4th Street East

St. Paul, Minnesota 55101-1421

Attention: Chief Manager

(c) with a copy to:

Mr. Mark T. Johnson, Esq.

Winthrop & Weinstine, P.A.

Suite 3500, 225 South 6th Street

Minneapolis, Minnesota 55402

Facsimile: 612-604-6807

10.2 Expenses. All fees and expenses incurred in connection with this Agreement
and the Collateral Agreements including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties incurred by a party hereto, in connection with the negotiation and
effectuation of the terms and conditions of this Agreement, the Collateral
Agreements and the transactions contemplated hereby and thereby (“Transaction
Expenses”), shall be the obligation of the respective party incurring such fees
and expenses.

10.3 Entire Agreement; Assignment. This Agreement, the Exhibits and Schedules
hereto, the Collateral Agreements, and the documents and instruments and other
agreements among the parties hereto referenced herein: (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings both written and
oral, among the parties with respect to the subject matter hereof and thereof;
(b) are not intended to confer upon any other person any rights or remedies
hereunder; and (c) shall not be assigned by operation of law or otherwise.

10.4 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.

10.5 Rights Reservation. Notwithstanding anything to the contrary set forth in
this Agreement, the representations and warranties made by the Seller and the
Acquired Companies under this Agreement or in any certificate, instrument, or
other document delivered by the Seller and the Acquired Companies pursuant to
this Agreement, and any obligation of the Seller to indemnify the Indemnified
Parties for breaches thereof under Sections 8.2 and 8.4 above, will not be
affected by any investigation of Buyer or by Buyer’s knowledge that any such
representation or warranty is or may be untrue or inaccurate. Furthermore and
without limiting the foregoing, any waiver of the rights of Buyer under this
Agreement must be express and in writing.

 

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10.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Minnesota, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within Ramsey or Hennepin County, Minnesota,
in connection with any matter based upon or arising out of this Agreement, and
agrees that process may be served upon them in any manner authorized by the laws
of the State of Minnesota for such persons and waives and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.

10.7 Specific Performance. The parties hereto agree that irreparable damage will
occur in the event that any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.

10.8 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.

10.9 Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart.

10.10 Representation by Counsel. Each party hereto represents and agrees that it
has been represented by counsel of its own choosing during the negotiation and
execution of this Agreement and, therefore, waives the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or documents. The authorized officers of each party have carefully
read and fully understand this Agreement in its entirety, have had it fully
explained to them by such party’s respective counsel, and are fully aware of the
contents and meaning, intent and legal effect of this Agreement.

10.11 Amendment. This Agreement may be amended by the parties hereto at any time
by execution of an instrument in writing signed on behalf of each of the parties
against whom enforcement is sought.

 

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10.12 No Third Party Beneficiaries. Nothing in this Agreement is intended to or
does confer any rights or remedies under, or by reason of, this Agreement on any
Persons other than the parties hereto and their respective successors and
permitted assigns.

10.13 Disclosure Letter. Seller and the Acquired Companies have included
references in the Disclosure Letter to the particular Section of this Agreement
that relates to each disclosure. The disclosures in the Disclosure Letter relate
only to the representations and warranties in the Section of this Agreement to
which they expressly relate and to such other Sections of this Agreement to
which the applicability of such disclosure is reasonably apparent from the face
of such disclosure, whether or not repeated under any section number where such
disclosure might be deemed appropriate. In the event of any inconsistency
between the statements in the body of this Agreement and those in the Disclosure
Letter (other than an exception expressly set forth as such in the Disclosure
Letter with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.

 

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IN WITNESS WHEREOF, the parties set forth below have caused this Membership
Interest Purchase Agreement to be signed as of the date first written above.

 

“BUYER”    

NIGHTHAWK RADIOLOGY HOLDINGS, INC.,

a Delaware corporation

    By:   /s/ Paul E. Berger, M.D.     President and Chief Executive Officer

 

“SUPPORT SERVICES COMPANY”    

MIDWEST PHYSICIANS SERVICES, LLC,

a Minnesota limited liability company

    By:   /s/ Joseph Tashjian    

Joseph Tashjian

Chief Manager

 

“ERS”    

EMERGENCY RADIOLOGY SERVICES, LLC,

a Minnesota limited liability company

    By:   /s/ Joseph Tashjian    

Joseph Tashjian

Chief Manager

 

“SELLER”    

SPR HOLDINGS II, LLC

a Minnesota limited liability company

    By:   /s/ Joseph Tashjian    

Joseph Tashjian

Chief Manager

 

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