EXHIBIT 10.42
 
REDEMPTION AGREEMENT
 
THIS REDEMPTION AGREEMENT (“Agreement”) is made and entered into as of July 31,
2002 (“Effective Date”), by Mobile PET Systems, Inc. (“MBPT”) and York, LLC
(“York”), in accordance with the terms and conditions set forth below. MBPT and
York are referred to in this Agreement collectively as “Parties” and
individually as a “Party.”
 
Recitals
 
A.  On or about March 3, 2000, York entered into a Securities Purchase Agreement
with MBPT, as amended on December 7, 2000 (the “March Purchase Agreement”), and
several agreements concurrently therewith (collectively the “March Contracts”),
pursuant to which it purchased 60 shares of 8% Cumulative Convertible Redeemable
Preferred Stock, Series A, $50,000 liquidation value per share from MBPT for
$3,000,000.
 
B.  On or about September 21, 2000, York entered into another Securities
Purchase Agreement with MBPT (the “September Purchase Agreement”), and several
agreements concurrently therewith (collectively the “September Contracts”) (the
March Contracts and September Contracts are sometimes collectively referred to
as the “Preferred Documents”), pursuant to which it purchased 30 shares of 8%
Cumulative Convertible Redeemable Preferred Stock, Series B, $50,000 liquidation
value per share from MBPT for $1,500,000.
 
C.  The Parties commenced litigation in connection with the Preferred Documents,
which was settled pursuant to the Settlement Agreement and Conditional Release
dated as of May 30, 2001 (the “Settlement Agreement”).
 
D.  York holds, as of the Effective Date, Twenty-Three (23) Shares of Series A
Preferred Stock (the “Series A Preferred Shares”), with a stated value of
$1,150,000, plus approximately $214,497.54 accrued dividends as of June 30,
2002.
 
E.  York holds, as of the Effective Date, Twenty-Seven (27) Shares of Series B
Preferred Stock (the “Series B Preferred Shares”), with a stated value of
$1,350,000, plus approximately $191,441.09 accrued dividends as of June 30,
2002.
 
F.  Pursuant to Section 2(a) of the Settlement Agreement, MBPT delivered to
York’s counsel (to be held by him in escrow) 2,010,000 shares of MBPT, of which
838,000 and 772,000 shares were disbursed to York. York represents that its
counsel holds in escrow 400,000 MBPT Common shares, of which York is owed 26,000
shares, leaving a balance due MBPT of 374,000 shares of MBPT Common Stock.
 
G.  The Parties have agreed to enter into this Agreement to repurchase all of
York’s remaining interest in the Series A Preferred Shares and the Series B
Preferred Shares of MBPT (“York’s Preferred Shares”).
 
Now, therefore, in consideration for the mutual covenants, agreements,
representations and warranties herein contained, to avoid further risks and
uncertainty of litigation, and for other good and sufficient consideration, MBPT
and York agree as follows:
 
1.  York Representation.    York represents and warrants to MBPT that, as of the
Effective Date and as of its receipt of the Purchase Price (defined below), all
MBPT securities held by York and the sources and the dates acquired (“York’s
MBPT Holdings”), are set forth on Exhibit A to this Agreement, incorporated by
reference herein. This representation and warranty shall survive the execution
of and performance under this Agreement, including

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payment of the Purchase Price. York acknowledges that MBPT and third parties are
relying on this representation and warranty, including the data on Exhibit A.
 
2.  Redemption.    In consideration for York’s agreements contained in this
Agreement, on the Effective Date MBPT will repurchase all York’s Preferred
Shares for an aggregate sum of Three Million Seven Hundred Eighty-Four Thousand
Seventy-One and 97/100 Dollars ($3,784,071.97) (“Purchase Price”). York
acknowledges receipt of Five Hundred Thousand Dollars ($500,000) paid by MBPT as
an installment on or about March 19, 2002, leaving a balance due of
$3,284,071.97. On execution of this Agreement, York shall immediately cause its
counsel to deliver the 400,000 Common shares referenced in Recital F above to
MBPT, and MBPT shall immediately cause to be delivered to York’s counsel
certificates for 26,000 Common shares without legend pursuant to a side
agreement executed by York’s counsel concurrently with this Agreement.
 
3.  Removal of Restrictive Legends.    Within five (5) business days after MBPT
is notified by its transfer agent that York has submitted to MBPT’s transfer
agent certificates evidencing MBPT Common shares (and bearing restrictive
legends), accompanied by a legal opinion (the form of which is attached as
Exhibit B) to the effect that such shares can then be sold by York pursuant to
Rule 144(k), MBPT shall instruct its transfer agent to issue new certificates in
York’s name free of restrictive legends. Removal of the legend(s) pursuant to
the preceding sentence will not limit York’s ability to sell shares pursuant to
an effective Registration Statement to the extent provided for in the
Registration Rights Agreements.
 
4.  Release.    Except for the performance by MBPT and York of the provisions of
this Agreement:
 
(a)  Each Party, for itself and on behalf of its Representatives, releases and
discharges the other Party and its Representatives of and from all claims,
demands, actions and causes of action, whether known or unknown, fixed or
contingent, that each Party may have had, may now have or may hereafter acquire
with respect to any matters whatsoever arising under or in any way related to
(i) any act or omission, occurring on or before the Effective Date, including
anything that may constitute a defense to the performance of this Agreement and
the Preferred Documents, and (ii) any claims either Party may have against the
other with respect to or in connection with any alleged violation of any state
or Federal securities laws, prior to the Effective Date, including the
Securities Act and the Exchange Act (defined in the Preferred Documents). For
purposes of this Agreement, “Representatives” means a Party’s direct and
indirect partners, officers, directors, employees, affiliates (individuals and
entities), representatives, agents, attorneys, servants, trustees,
beneficiaries, predecessors and successors in interest, assigns, nominees and
insurers.
 
(b)  Each Party represents, warrants and covenants that it has not, and at the
time this release becomes effective will not have, sold, assigned, transferred
or otherwise conveyed to any other person or entity all or any portion of its
rights, claims, demands, actions or causes of action herein released.
 
(c)  Each Party represents and warrants that it: (i) has relied wholly on its
own judgment, belief and knowledge of the existence, nature, extent or duration
of any claim, demand, debt, damage, liability, account, reckoning, obligation,
cost, expense, cause of action, chosen action, right of indemnity, agreement or
promise that it may have against the released persons/entities, (ii) has made a
full investigation with respect to potential rights and claims released, (iii)
has not been influenced to any extent whatsoever in making the releases
contemplated by this Agreement by any representation or statement regarding any
such matter,

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and (iv) is executing and delivering this Agreement after having received full
legal advice as to its rights hereunder and the legal effect thereof from its
legal counsel. Notwithstanding the above, this Agreement is not intended to, and
does not, release or extinguish the rights of any of the parties to enforce this
Agreement or the rights of any of the parties to enforce any of their continuing
obligations under the Preferred Documents.
 
(d)  Each Party acknowledges that it is familiar with Section 1542 of the
California Civil Code, which provides:
 
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”
 
Each Party waives all rights and benefits that it now has or in the future may
have under this Section 1542 (and under the comparable provisions of any other
applicable law) and agrees and acknowledges that this Agreement contains a full
and final release applying to unknown and unanticipated claims, injuries or
damages arising out of the subject matter of the released claims.
 
5.  Reprice of Outstanding Warrants.    In consideration for York’s agreements
contained in this Agreement, the exercise price for all Common Stock Purchase
Warrants (“Warrants”) held by York pursuant to the March Contracts and/or the
September Contracts are hereby reset to One Dollar ($1.00) (and the Warrants are
hereby amended to the full extent necessary to reflect such reset). Within ten
(10) business days after the Effective Date, York shall deliver the outstanding
Warrant certificates marked “void;” and within (not more than five (5) business
days) thereafter, MBPT shall deliver amended and restated Warrant certificates
reflecting said reset. Repricing of the Warrants pursuant to this Section 5 will
not change the beginning of the Rule 144 holding period from the original
issuance date to a later date if such is consistent with the position being
taken by the SEC at the applicable time of determination. With regard thereto,
MBPT shall accept an opinion letter, in reasonable form, from York’s attorney,
Krieger & Prager LLP, that the holding period commenced on the original issuance
date of the Warrants.
 
6.  General Provisions
 
(a)  Entire Agreement.    This Agreement, the warrants described on Exhibit A,
the Registration Rights Agreements included in the Preferred Documents and the
Settlement Agreement, which, subject to the releases contained in Section 4
above, remain in full force and effect, and the Stipulation of the parties filed
with the U.S. District Court for the Central District of California, constitute
the entire understanding, arrangement and agreement between the Parties with
respect to the subject matter hereof, and supersede all prior agreements,
arrangements, understandings, negotiations and discussions, written or oral,
between the Parties. York will dismiss the litigation pending between the
Parties in the District Court for the Central District of California on removal
of the legends as specified in Section 3, above.
 
(b)  Successors and Assigns.    This Agreement shall be binding on and shall
inure to the benefit of the Parties and their respective successors and assigns.
 
(c)  Modifications in Writing.    No provisions of this Agreement may be
amended, supplemented or waived except by a writing signed by the Party to be
bound thereby.
 
(d) Execution in Counterparts.    This Agreement may be executed in two or more
counterparts, all of which taken together shall be considered one and the same
agreement and each of which shall be deemed an original.

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(e)  Severability.    In case any provision of this Agreement shall be held
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
 
(f)  Construction.    The Parties acknowledge that each Party and its counsel
have reviewed and revised this Agreement and that no rule of construction to the
effect that any ambiguities are to be construed against the drafting Party shall
be employed in the interpretation of this Agreement or any amendments or
exhibits to it or any document executed and delivered by either Party in
connection with this Agreement. All captions in this Agreement are for reference
only and shall not be used in the interpretation of this Agreement or any
related document. All Exhibits attached hereto are incorporated herein by
reference.
 
(g)  Attorneys’ Fees and Costs.    Each Party will bear its own attorneys’ fees
and costs incurred in the preparation and execution of this Agreement. In the
event any dispute between the Parties should result in litigation or other
proceeding, the prevailing Party shall be reimbursed by the non-prevailing Party
for all reasonable attorneys’ fees and costs incurred by the prevailing Party in
connection with such litigation or other proceeding and any appeal thereof. Such
costs, expenses and fees shall be included in and made a part of the judgment
recovered by the prevailing Party, if any.
 
(h)  Informed Consent.    The Parties admit, acknowledge and declare that each
has given mature and careful thought and consideration to the making of this
Agreement and to all the obligations hereby undertaken and the rights hereby
extinguished or created; that this Agreement is entered into voluntarily, after
advice of counsel, free of undue influence, coercion, duress, menace or fraud of
any kind; that this Agreement and each paragraph and part hereof has been
carefully read and explained; and, that each Party fully and completely
understands and is cognizant of all terms and conditions in this Agreement.
 
(i)  Governing Law.    Except to the extent that Delaware law is applicable by
virtue of MBPT being a corporation organized and existing under Delaware law,
this Agreement shall be governed by and interpreted in accordance with
California law for contracts to be wholly performed in California and without
giving effect to the principles thereof regarding the conflict of laws. Any
litigation based thereon, or arising out of, under, or in connection with, this
Agreement or any course of conduct, course of dealing, statements (whether oral
or written) or actions of the Parties shall be brought and maintained
exclusively in the California or Federal courts sitting in Los Angeles County.
The Parties expressly and irrevocably: (i) submit to the jurisdiction of the
California and federal Courts for the purpose of any such litigation as set
forth above, (ii) agree to be bound by any final judgment rendered thereby in
connection with such litigation, (iii) waive their right to a jury trial for the
purpose of any such litigation, (iv) consent to the service of process by
registered mail, postage prepaid, or by personal service in or outside
California, and (v) waive, to the fullest extent permitted by law, any objection
they now may have or hereafter may obtain to the venue of any such litigation
brought in any such court referred to above and any claim that any such
litigation has been brought in any inconvenient forum. To the extent a Party has
or later may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, the Party irrevocably waives such immunity with respect to its
obligations under this Agreement.
 
(j)  Signatures.    A facsimile transmission of this signed Agreement shall be
legal and binding on the Parties. Each Party warrants that it has the legal
capacity to enter into this Agreement and its execution has been duly approved.
Each person signing on behalf of a

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Party warrants that he has been authorized to sign on behalf of the Party and
that no other person’s signature is required to bind the Party.
 
(k)  Miscellaneous.    Time is of the essence for each party’s obligations under
this Agreement. York and its counsel will contemporaneously copy MBPT’s counsel
on any notice sent to MBPT’s transfer agent.
 
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
 
MOBILE PET SYSTEMS, INC.
By:
 
/s/    PAUL J. CROWE        

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Its:
 
CEO

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YORK, LLC
By:
 
/s/    [ILLEGIBLE]        

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Its:
 
Navigator Management, Ltd.
Director

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REDEMPTION AGREEMENT
 
Exhibit A
 
York represents that all York’s MBPT Holdings (including York’s Preferred Shares
to be repurchased) are:
 
Description of Securities

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Transaction Description
(Purchase, Put or
Conversion (specify
Series A or B))

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Transaction
Date

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# of
Securities

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Name of
Record
Owner

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Name of Beneficial Owner

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Series A Preferred
    
Purchase
  
3/00
  
23
  
York
    
York
Series B Preferred
    
Purchase
  
9/00
  
27
  
York
    
York
Series A Warrants
    
Purchase
  
3/3/00
  
120,000
shares @
$5/share
  
York
    
York
Series B Warrants
    
Purchase
  
11/9/00
  
29,851 shares
@
$2.5125/share
  
York
    
York
Series B Warrants
    
Purchase
  
9/00
  
50,000 shares
@ $3/share
  
York
    
York
Settlement Warrants
    
Purchase
  
5/17/01
(subsequently
amended)
  
400,000
shares @
$.70/share
  
York
    
York
Common
    
Put
  
N/A
  
26,000 shares
  
York
    
York
Common (as of 7/29/02)
    
Converted
  
N/A
  
1,460,483
shares
(+ 19,400
shares sold,
legend not yet
removed)
  
York
    
York

 
end exhibit

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REDEMPTION AGREEMENT
 
Exhibit B
 
[Form of opinion letter].
 
end exhibit

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