EXHIBIT 10.42

 

PURCHASE AND CONTRIBUTION AGREEMENT

 

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

 

RECITALS:

 

WHEREAS, Seller and San Antonio Partners are owners and holders of 100% of the
economic and beneficial interests in and to the following partnerships:

 

  (i) Baptist Imaging Center, a Texas joint venture,

 

  (ii) North Central Baptist Imaging Center, a Texas joint venture,

 

  (iii) Southeast Baptist Imaging Center, a Texas joint venture,

 

  (iv) Northeast Baptist MRI Center, a Texas joint venture, and

 

  (v) Lexington MR, Ltd., a Texas limited partnership; and

 

WHEREAS, this Agreement provides for the sale by Seller to Buyer of all right,
title and interest of Seller in and to the Partnerships and for the contribution
by San Antonio Partners to Buyer of all right, title and interest of San Antonio
Partners in and to the Partnerships; and

 

WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement, dated
of even date herewith, among Buyer, Seller, Vanguard and Radiologix, Buyer is
also purchasing from Seller substantially all of the assets of the Wholly-Owned
Center (the “Related Agreement”).

 

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

 

AGREEMENT:

 

1. DEFINITIONS AND REFERENCES

 

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

 

Accounts Receivable: all accounts receivable of the Partnerships for patient
services provided by the Partnerships through the close of business on the day
immediately prior to the Closing Date (including the MRI and CT owned by North
Central Baptist Imaging Center), accrued and unaccrued, including Government
Payment

 

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Program receivables and accounts that have been written off and accounts
receivable due to the Partnerships from Seller, but excluding any receivables
that are owed from one Partnership to another Partnership or are owed to the
Partnerships by the Seller;

 

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

 

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

 

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

 

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

 

Buyer’s Indemnified Persons: Buyer, Vanguard, and Buyer’s and Vanguard’s
partners, stockholders, Affiliates, successors and assigns from time to time,
and their respective stockholders, partners, Affiliates, directors, trustees,
officers, employees, agents and representatives, provided that Buyer’s
Indemnified Persons shall expressly exclude San Antonio Partners with respect to
any claim for indemnification or contribution made pursuant to the terms of this
Agreement or otherwise;

 

Center: each of the diagnostic imaging centers owned by the Partnerships;

 

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

 

Closing: defined in Section 8.01;

 

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

 

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

 

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

 

Contract: each commitment, contract, lease, license, agreement and
understanding, written or oral, to which any of the Partnerships is a party or
by which it or any of its assets or properties are bound, including agreements
with physicians, managed care plans and other payers, management, employment,
retention and severance

 

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agreements, vendor agreements, real and personal property leases and schedules,
maintenance agreements and schedules, agreements with municipalities and labor
organizations, and bonds, mortgages and other loan agreements;

 

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

 

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

 

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

 

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

 

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

 

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

 

Environmental Claim: any written notice (or oral notice reduced to writing by
Seller or a Partnership) by a Person alleging potential liability (including
potential liability for investigatory costs, cleanup costs, Governmental
Authority response costs, natural resource damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (1) the
presence, or release into the environment, of any Materials of Environmental
Concern at any location, whether or not owned by a Partnership, or (2)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Laws;

 

Environmental Laws: any and all Legal Requirements relating to pollution or
protection of human health or the environment (including ground water, land
surface or subsurface strata), including Legal Requirements relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, recycling, reporting
or handling of Materials of Environmental Concern;

 

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

 

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

 

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Financial Statements: the Annual Financial Statements, Interim Financial
Statements, the balance sheet described in Section 2.04(d), and the financial
statements described in Section 5.04(b)(i);

 

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

 

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

 

Immaterial Contracts: Contracts that (i) require the future payment by a
Partnership of $15,000 or less or the future performance by a Partnership of
services having a value of $15,000 or less, or (ii) are terminable by a
Partnership at any time without cause upon notice of 90 days or less, and that
require during the period prior to termination the payment of $15,000 or less or
the future performance of services having a value of $15,000, provided that
notwithstanding the foregoing, Immaterial Contracts shall not include any
Contracts described in paragraphs (a) through (g) of Section 3.16;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Losses: any and all damages, claims, costs, losses (including any diminution in
value), liabilities, expenses or obligations (including Taxes, interest,
penalties, court

 

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costs, costs of preparation and investigation, and attorneys’, accountants’ and
other professional advisors’ fees and expenses);

 

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

 

Materials of Environmental Concern: chemicals, pollutants, contaminants, wastes
(including medical waste), toxic substances, petroleum and petroleum products,
including hazardous wastes under the Resource, Conservation and Recovery Act, 42
U.S.C. § 6903 et seq., hazardous substances under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601
et seq., asbestos, polychlorinated biphenyls and urea formaldehyde, and
low-level nuclear materials, special nuclear materials or nuclear-byproduct
materials, all within the meaning of the Atomic Energy Act of 1954 as amended,
and any rules, regulations or policies promulgated thereunder;

 

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

 

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

 

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

 

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

 

Partnership: each of Baptist Imaging Center, a Texas joint venture, North
Central Baptist Imaging Center, a Texas joint venture, Southeast Baptist Imaging
Center, a Texas joint venture, Northeast Baptist MRI Center, a Texas joint
venture, and Lexington MR, Ltd., a Texas limited partnership;

 

Partnership Agreement: each of the following agreements, to which Seller and San
Antonio Partners are parties: (i) the amended and restated joint venture
agreement of Baptist Imaging Center effective November 23, 1998, as amended by
amendment effective May 30, 1998 and amendment no. 1 dated effective January 1,
2003; (ii) the joint venture agreement of North Central Baptist Imaging Center
effective January 1, 1998, as amended by amendment no. 1 effective January 1,
2003; (iii) the joint venture agreement of Southeast Baptist Imaging Center
effective January 1, 1998, as amended by amendment effective May 30, 1998 and
amendment no. 1 effective January 1, 2003; (iv) the joint venture agreement of
Northeast Baptist MRI Center effective January 1, 1998,

 

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as amended by amendment effective May 30, 1998 and amendment no. 1 effective
January 1, 2003; and (v) the amended and restated agreement of limited
partnership of Lexington MR, Ltd. effective January 1, 1998, as amended by
amendment dated as of May 30, 1998 and amendment no. 1 effective January 1,
2003;

 

Partnership Interest: all right, title and interest of a Person in and to a
Partnership;

 

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

 

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

 

PBGC: the Pension Benefit Guaranty Corporation;

 

Permitted Encumbrances: (i) each of the Partnership Agreements, (ii) each
Encumbrance related to a liability or obligation identified on the Interim
Financial Statement or on any Schedule, (iii) liens for Taxes that are not yet
due or delinquent, (iv) mechanics’ and landlord liens arising in the ordinary
course of business under the Centers’ leases, and (v) such other Encumbrances
accepted in writing by Buyer to which the Partnership Interests or the assets or
properties of the Partnerships may be subject at Closing;

 

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

 

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

 

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

 

Purchase Price: defined in Section 2.05;

 

Radiologix: Radiologix, Inc., a Delaware corporation;

 

Reportable Event: defined in section 4043 of ERISA;

 

San Antonio Partners: San Antonio Partners, L.P., a Delaware limited
partnership, one of the partners in the Partnerships and an Affiliate of
Vanguard;

 

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

 

Seller: M & S Imaging Partners, L.P., a Delaware limited partnership, one of the
partners in the Partnerships and an Affiliate of Radiologix;

 

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

 

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

 

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

 

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

 

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

 

Wholly-Owned Center: the M & S Imaging and P.E.T. Center, a single diagnostic
imaging center located in San Antonio, Texas.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g) references in this Agreement to the “knowledge” of a Party or variants
thereof mean the actual knowledge of each of the Persons whose names or titles
are set

 

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forth in Schedule 1.02, after the reasonable inquiry by such Persons, but no
further inquiry by such Persons;

 

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

 

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

 

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

 

2. SALE OF PARTNERSHIP INTERESTS; CONTRIBUTION OF PARTNERSHIP INTERESTS

 

2.01. Sale of Partnership Interests. Subject to the terms and conditions of this
Agreement, at Closing Seller shall sell, assign, convey, transfer and deliver to
Buyer, or cause to be sold, assigned, conveyed, transferred and delivered to
Buyer, and Buyer shall purchase the Partnership Interests owned by Seller, free
and clear of all Encumbrances other than the Permitted Encumbrances.

 

2.02. Contribution of Partnership Interests; Dissolution of Partnerships.
Subject to the terms and conditions of this Agreement, at Closing San Antonio
Partners shall contribute, assign, convey, transfer and deliver to Buyer the
Partnership Interests owned by San Antonio Partners, subject to any and all
Encumbrances to which such Partnership Interests may be subject at Closing. Such
contribution shall be effective immediately after the sale of Seller’s
Partnership Interests pursuant to this Agreement. Promptly after San Antonio
Partners contributes its Partnership Interests to Buyer, Buyer will cause the
Partnerships to be dissolved in accordance with the terms of their respective
Partnership Agreements and applicable Legal Requirements.

 

2.03. Accounts Receivable. Subject to the terms and conditions of this
Agreement, at Closing, Buyer, San Antonio Partners and Seller shall cause the
Partnerships to transfer and distribute to Seller all right, title and interest
of the Partnerships in and to the Accounts Receivable of the Partnerships.

 

2.04. Purchase Price; Issuance of Shares.

 

(a) Subject to the terms and conditions of this Agreement, in reliance upon the
representations, warranties and covenants of Seller herein set forth, and as
consideration for the sale and purchase of Seller’s Partnership Interests, at
Closing Buyer shall tender to Seller as the purchase price (collectively, the
“Purchase Price”) (1) $5,300,000 less (2) the aggregate amount that is due to
the Partnerships from Seller as of the close of business on the day immediately
prior to the Closing Date, plus (3) the aggregate amount that is due to Seller
from the Partnerships as of the close of business on the day immediately prior
to the Closing Date. Any amounts due Seller or the Partnerships that are
included in the calculation of the Purchase Price shall be deemed to be paid in
full as of the Closing Date by Seller or by the Partnerships, as the case may
be.

 

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(b) As consideration for the contribution of San Antonio Partners’ Partnership
Interests, at Closing Buyer shall issue and deliver to San Antonio Partners one
or more certificates evidencing an ownership interest in Buyer.

 

(c) Buyer shall pay the Purchase Price by wire transfer of immediately available
funds to an account or accounts designated by Seller and Seller shall execute
such receipts or other acknowledgments as are reasonably requested by Buyer to
evidence payment and receipt of the Purchase Price.

 

(d) The amounts due to the Partnerships from Seller, or to Seller from the
Partnerships, shall be initially determined at Closing from the most recently
available balance sheet delivered to Buyer pursuant to Section 5.04(b). As soon
as practical (and in no event later than 30 days after the Closing Date), Seller
shall prepare and deliver to Buyer a calculation of the (1) aggregate amount
that was due to the Partnerships from Seller as of the close of business on the
day immediately prior to the Closing Date and (2) the aggregate amount that was
due to Seller from the Partnerships as of the close of business on the day
immediately prior to the Closing Date. Seller shall prepare the above balance
sheet using the same methodologies, policies and practices used by Seller in
preparing the other Financial Statements and in a consistent manner. The
Purchase Price shall be reduced or increased, as the case may be, to reflect the
differences between the amounts included in the determination of the Purchase
Price at the Closing compared to the actual amounts set forth in the calculation
delivered by Seller to Buyer. The adjustment to the Purchase Price, if any, will
be paid by Seller or Buyer, as the case may be, within five business days after
the Seller delivers the actual amounts to Buyer pursuant to the provisions of
this paragraph.

 

3. REPRESENTATIONS AND WARRANTIES OF SELLER

 

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

 

3.01. Organization.

 

(a) Seller is duly organized and validly existing in good standing under the
laws of the State of Delaware.

 

(b) Each of Baptist Imaging Center, Northeast Baptist Imaging Center, Southeast
Baptist Imaging Center and Northeast Baptist MRI Center is a joint venture
partnership duly organized and validly existing under the laws of the State of
Texas, and Lexington MR, Ltd., is a limited partnership duly organized and
validly existing under the laws of the State of Texas. No Partnership is
licensed, qualified or admitted to do business in any other jurisdiction and
there is no other jurisdiction in which the ownership, use or leasing of a
Partnership’s assets or properties, or the conduct or nature of its business,
makes such licensing, qualification or admission necessary.

 

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

 

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

 

(b) do not conflict with, result in any breach or contravention of, or permit
the acceleration of the maturity of, any liabilities of Seller;

 

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

 

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

 

3.03. Powers; Consents; Absence of Conflicts, Etc of the Partnerships. Each of
the Partnerships has the requisite power and authority to conduct its businesses
as now being conducted, and the consummation of the transactions contemplated
herein:

 

(a) are not in contravention of any of the terms of its governing documents, as
amended to date;

 

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

 

(c) do not violate any Legal Requirement to which the Partnership’s assets may
be subject; and

 

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

 

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

 

3.05. Capitalization of Partnerships; Subsidiaries; Partnership Records.

 

(a) The Seller owns of record and holds the percentage interests in each of the
Partnerships set forth on Schedule 3.05, free and clear of all Encumbrances and
no Person other than San Antonio Partners owns or holds any legal or beneficial
interest in

 

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or to any of the Partnership Interests. Seller has full voting power over the
Partnership Interests owned by it, subject to no proxy, shareholders’ agreement,
voting trust or other agreement relating to the voting of any of the Partnership
Interests. Neither Seller nor any of the Partnerships has issued or granted any
outstanding securities, rights, subscriptions, warrants, calls, options,
“phantom” stock rights or other Contracts of any kind that give any Person the
right to purchase or otherwise receive or be issued any economic or beneficial
interest in any of the Partnerships or in any of the Partnership Interests owned
by Seller. Other than this Agreement and the Partnership Agreements, there is no
Contract between Seller and any other Person with respect to the disposition of
the Partnership Interests owned by Seller. At the Closing, Seller will transfer
to Buyer good and valid title to all Partnership Interests owned by Seller, free
and clear of all Encumbrances.

 

(b) None of the Partnerships owns any capital stock of any corporation, any
interest in any general or limited partnership or joint venture, or any other
investment interest (whether equity or debt) in any Person. Neither Seller nor
any of the Partnerships has entered into any outstanding Contracts with any
Person to acquire, directly or indirectly, any of the Partnership’s assets
(other than in the ordinary course of business) or any interest therein.

 

(c) Seller has delivered to Buyer true and complete copies of the minute books
and other partnership records of the Partnerships, and the minute books contain
a complete and accurate summary of all material actions taken at all meetings,
and by all written consents in lieu of meetings, of the partners.

 

3.06. Legal and Regulatory Compliance. Each of the Partnerships has complied
with all Legal Requirements, and has timely filed all reports, data and other
information required to be filed with Governmental Authorities, except where a
failure to so comply or timely file would not have a Material Adverse Effect.
Neither Seller nor, to the knowledge of Seller, any Partnership has received
notice from any Person of any proceeding or investigation by Governmental
Authorities alleging or based upon a violation of any Legal Requirements that
(i) is currently pending or (ii) if not currently pending, would not otherwise
have a Material Adverse Effect on any of the Partnerships. Neither Seller nor,
to the knowledge of Seller, any Partnership has been threatened by any Person
with any proceeding or investigation by Governmental Authorities alleging a
violation of any Legal Requirements by the Partnerships. There is no (i)
corporate integrity agreement with the Office of Inspector General of the United
States Department of Health and Human Services or written agreement with such
Governmental Authority to establish or maintain a corporate integrity program
applicable to any of the Centers or (ii) settlement or similar agreement with
any other Governmental Authority which imposes any continuing obligations on any
of the Centers or contains obligations which have not been fully discharged.

 

3.07. Financial Statements. Attached as Schedule 3.07 are true and complete
copies of the Annual Financial Statements and the Interim Financial Statements.
The Financial Statements fairly present, in all material respects, the financial
condition and results of operations of each of the Centers and the Wholly-Owned
Center as of the respective dates thereof and for the periods therein referred
to, all in accordance with generally accepted accounting principles, subject to

 

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normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the absence of
notes, and the Financial Statements reflect the consistent application of such
accounting principles throughout the periods involved.

 

3.08. Undisclosed Liabilities. Schedule 3.08 contains a summary of (i) all
guarantees by the Partnerships of third party obligations, including contingent
or conditional guarantees, and (ii) all other obligations or liabilities of the
Partnerships incurred or accrued subsequent to the date of the Interim Financial
Statements, which would be required by generally accepted accounting principles
to be included in audited financial statements (or the notes thereto), except
liabilities incurred in the ordinary course of business consistent with past
practices since the date of the Interim Financial Statements.

 

3.09. Recent Activities. Since February 29, 2004:

 

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

 

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

 

(c) none of the Partnerships has sold, assigned, transferred, distributed or
otherwise disposed of any of its assets, except in the ordinary course of
business of the Centers consistent with past practices;

 

(d) none of the Partnerships has canceled or waived any material rights in
respect of its assets, except in the ordinary course of business of the Centers
consistent with past practices;

 

(e) none of the Partnerships has created, incurred, assumed, guaranteed or
otherwise become liable for any indebtedness or capitalized lease obligations
or, except in the ordinary course of business of the Centers consistent with
past practices, incurred any other liability;

 

(f) none of the Partnerships has made any distribution or other payment in
respect of its Partnership Interests;

 

(g) there has been no change in any accounting method, policy or practice of the
Partnerships;

 

(h) other than compensation paid in the ordinary course of employment, no
Partnership has paid any amount to, sold any Partnership assets to, or entered
into any Contract with, any partner, officer or agent of the Partnership, or any
Affiliate of any such Person;

 

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(i) no Partnership has paid or agreed to pay to any Person damages, fines,
penalties or other amounts in respect of actual or alleged violation of any
Legal Requirement;

 

(j) no Partnership has entered into or agreed to enter into any transaction
outside the ordinary course of business of its Center which may cause a
liability or obligation in excess of $15,000; and

 

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

 

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

 

3.11. Equipment. Schedule 3.11 consists of or includes a depreciation schedule
as of the date set forth therein that, to Seller’s knowledge, takes into
consideration all the material equipment owned or leased by the Partnerships.
All material equipment used in the operations of the Centers, whether reflected
in the Financial Statements or otherwise, is maintained in good operating
condition, except for reasonable wear and tear. All material medical and leased
equipment has been maintained in accordance with manufacturer and lessor
requirements, and complete and accurate maintenance logs or journals have been
maintained at all times.

 

3.12. Title to Partnership Assets. Each Partnership owns all of its assets and
properties free and clear of any Encumbrances, except the Encumbrances
identified as such on the Interim Financial Statements or on the Schedules. At
Closing each Partnership will own all of its assets and properties free and
clear of any Encumbrances, except for Permitted Encumbrances.

 

3.13. Environmental Matters. To Seller’s knowledge, there are no circumstances
in existence that may prevent or interfere with compliance by the Partnerships
in all material respects with Environmental Laws. Neither Seller nor any
Partnership has received any written communication (or reduced to writing any
oral communication) from any Person alleging that any of the Partnerships is not
in material compliance with Environmental Laws. Each Partnership has all
material permits, licenses and approvals required under applicable Environmental
Laws to own its assets and properties and to conduct the business of the
Centers. No actions, activities, circumstances, conditions, events or incidents,
including the release, emission, discharge or disposal of any Materials of
Environmental Concern, have occurred at the Centers that could reasonably be
expected to form the basis of any Environmental Claim against any Person whose
liability for any Environmental Claim Seller has or may have retained or assumed
either contractually or by operation of law.

 

3.14. Insurance. Schedule 3.14 summarizes all insurance arrangements, including
self-insurance, in place for the benefit of the assets of the Partnerships and
the operation of the business of the Centers, including, the name of each
insurer, whether such insurer is an Affiliate of Seller, and the coverage for
each such policy of insurance. All of such policies are now and

 

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until Closing will remain valid, outstanding, in full force and effect, and
enforceable with no premium arrearages, except with respect to any such policy
which has been replaced by a comparable policy.

 

3.15. Licenses and Permits. Schedule 3.15 contains a summary of all material
licenses and permits held by the Partnerships relating to the ownership of the
Partnerships’ assets and the business of the Centers, all of which, to Seller’s
knowledge, are in good standing and not subject to meritorious challenge. Each
Center is duly and properly licensed to conduct its business by all appropriate
state agencies and is in material compliance with all licensing requirements and
conditions of issuance.

 

3.16. Agreements and Commitments. Schedule 3.16 sets forth certain information
regarding, among other Contracts, all Contracts of the Partnerships described in
paragraphs (a) through (g) below. Seller has delivered to Buyer true and correct
copies of such Contracts. Except for Contracts described on Schedule 3.16:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h) there are no other Contracts other than Immaterial Contracts.

 

3.17. The Contracts. Except as described in Schedule 3.17 and except for
Immaterial Contracts:

 

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

 

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

 

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

 

(d) no Contract prohibits or requires the consent of any Person to the transfer
of the Partnership Interests by Seller to Buyer;

 

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

 

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

 

3.18. Related-Party Transactions. Schedule 3.18 describes all goods or services
purchased, acquired or leased from, or sold, transferred or leased to, any
Affiliate of Seller, or any partner, Affiliate, officer, employee or other agent
of Seller or of any Affiliate of Seller, since December 31, 2002.

 

3.19. Employees and Employee Relations. The Partnerships do not currently employ
and have never employed any Persons. All Persons who perform services for the
Partnerships are employed directly by Seller.

 

3.20. Employee Benefit Plans. None of the Partnerships participates in or has
any Employee Benefit Plan or Other Plan. All Employee Benefit Plans in which
Persons who perform services for the Partnerships participate are offered by
Seller.

 

3.21. Litigation and Proceedings. Schedule 3.21 contains a summary of all
litigation, arbitration, mediations, investigations and other material claims,
actions or proceedings pending against the Partnerships, and in the case of
uninsured matters, Schedule 3.21 also sets forth the reserves therefor included
in the Financial Statements. All such litigation, arbitration, mediations,
investigations and other material claims, actions or proceedings pending against
the Partnerships are fully insured (except for applicable deductibles and other
policy limits) and no insurer has issued a “reservation of rights” letter or
otherwise qualified its obligation to insure and defend the Partnerships against
losses arising therefrom. Except as set forth on Schedule 3.21, there are no
litigation, arbitration, mediations, investigations, or other material claims,
actions or proceedings (including qui tam actions) pending or, to Seller’s
knowledge threatened, against the Partnerships. To Seller’s knowledge, there
exist no facts that might reasonably be expected to form the basis of any such
litigation, arbitration, mediation, investigation, or other material claim,
action or proceeding.

 

3.22. Taxes.

 

(a) Each Partnership has filed all material Tax Returns required to be filed by
or on behalf of it, all such Tax Returns are correct and complete in all
material respects,

 

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

 

(b) Each Partnership has withheld and paid, or caused to be withheld and paid,
all Taxes on monies paid by the Partnership to independent contractors,
creditors and other Persons for which withholding or payment is required by law.

 

(c) To Seller’s knowledge, no Governmental Authority intends to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax liability of any Partnership either
claimed or raised by any Governmental Authority in writing, or as to which
Seller has notice or knowledge based upon personal contact with any agent of
such authority; Schedule 3.22 lists all federal, state, local and foreign income
Tax Returns filed with respect to the Partnerships for the last three complete
fiscal years of the Partnerships and for the current year-to-date, and indicates
those Tax Returns that have been audited and those that currently are the
subject of audit or that have not been audited.

 

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

 

(e) No Partnership is a party to any Tax allocation or sharing Contract; no
Partnership is or has been a member of any affiliated group (within the meaning
of section 1504 of the Code or any similar group defined under a similar
provision of state, local or foreign law) for filing a consolidated federal
income Tax Return.

 

(f) No Partnership has or will have any liability for the Taxes of any Person
(other than under Internal Revenue Service regulation 1.1502-6 or any similar
provision of state, local or foreign law), as a transferee or successor, by
Contract or otherwise.

 

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

 

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

 

3.24. Solvency. Seller, after Closing as a result of the transactions
contemplated hereby, will not be rendered insolvent or otherwise unable to pay
its debts as they become due; Seller has no intention of filing in any court
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency or for reorganization or for the appointment of

 

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a receiver or trustee of all or any portion of Seller’s property; and, to
Seller’s knowledge, no other Person has filed or threatened to file such a
petition against Seller. The Purchase Price, as adjusted, constitutes the fair
market value of and adequate consideration for the Partnership Interests sold by
Seller to Buyer.

 

3.25. Operation of the Centers. Except for the Accounts Receivable which are
being transferred to Seller at Closing, and except for the assets described in
the last sentence of this Section, the assets and properties owned by each
Partnership constitute all assets, properties, goodwill and businesses necessary
to operate each Center in all material respects in the manner in which it has
been operated since December 31, 2002. Schedule 3.25 sets forth a list of the
ten largest non-governmental payors of the Centers, determined on the basis of
gross revenues from services provided for the fiscal year ended December 31,
2003. No non-governmental payor has terminated or curtailed its business
relationship with or reduced reimbursement rates to the Centers which has
resulted in a Material Adverse Effect on the Centers, and neither Seller nor any
Partnership has received any notice to the effect that any such non-governmental
payor intends to terminate or curtail its business relationship with or reduce
reimbursement rates to the Centers which could reasonably be expected to result
in a Material Adverse Effect on the Centers. Buyer acknowledges that, as more
particularly described in the Related Agreement, the following assets used in
the conduct of Seller’s business are not assets of the Partnerships to be
acquired by Buyer: all assets used solely in the conduct of Seller’s physician
practice management business; the tele-radiology system of Seller; and computer
hardware and software owned or leased by Seller that is primarily utilized to
conduct patient satisfaction surveys.

 

3.26. Bank Accounts. Schedule 3.26 sets forth a complete list of all Partnership
bank accounts and the names of all authorized signatories on each such account.

 

4. REPRESENTATIONS AND WARRANTIES OF BUYER

 

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

 

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

 

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

 

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

 

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

 

(c) do not violate any Legal Requirement to which Buyer, Vanguard or San Antonio
Partners may be subject.

 

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

 

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

 

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

 

4.06. Brokers and Finders. Neither Buyer, Vanguard nor any of their respective
Affiliates, nor any officer, director, employee or agent thereof, has engaged
any finder or broker in connection with the transactions contemplated hereunder.

 

5. COVENANTS AND AGREEMENTS OF THE PARTIES

 

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

 

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

 

(b) maintain the Partnership’s assets and properties in as good working order
and condition as at present, ordinary wear and tear excepted, and make all
normal, planned and budgeted capital expenditures related to its Center;

 

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(c) maintain and preserve the business organizations and operations of the
Partnerships intact; maintain the relationships of the Partnerships with
physicians, suppliers, patients and other Persons doing business with the
Partnerships; and take such actions as are reasonably necessary and achievable
to assist Buyer in the transition to Buyer of the business of the Centers at
Closing;

 

(d) prepare for any and all licensure or accreditation surveys and inspections
that will or may take place in connection with the transactions contemplated by
this Agreement, whether the same are scheduled to take place prior to or after
Closing, in the same manner that the Partnership would prepare for such surveys
or inspections if this Agreement had not been executed by the Parties;

 

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

 

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

 

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

 

(b) sell, assign, transfer, distribute or otherwise transfer or dispose of any
item of property, plant or equipment of the Partnership having an original cost
in excess of $15,000 except in the ordinary course of business of its Center
consistent with past practices with comparable replacement thereof;

 

(c) make any distribution or other payment in respect of its Partnership
Interests;

 

(d) create, incur, assume, guarantee or otherwise become liable for any
indebtedness or capitalized lease obligation or, except in the ordinary course
of business of its Center consistent with past practices, incur any other
liability;

 

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

 

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

 

(g) amend or agree to amend the Partnership’s Partnership Agreement or otherwise
take any action relating to any liquidation or dissolution of the Partnership.

 

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5.03. Employee Matters. All terms and conditions relating to employment and
Employee Benefit Plans shall be governed by the Related Agreement.

 

5.04. Access to and Provision of Additional Information.

 

(a) From the Effective Date until the Closing Date, Seller (i) shall provide to
Buyer full and complete access to and the right to inspect the assets, books and
records of the Partnerships, (ii) shall provide to Buyer full and complete
access to medical staff members providing services at or for the Centers, (iii)
shall furnish to Buyer all material information concerning the Centers not
otherwise disclosed pursuant to this Agreement, and (iv) shall furnish to Buyer
such additional financial, operating and other data and information (including
auditors’ workpapers) regarding the Centers as Buyer may from time to time
reasonably request, which Seller has in its possession or may obtain without
unreasonable expense or effort, without regard to where such information may be
located.

 

(b) Seller will deliver to Buyer true and correct copies of:

 

(i) within 20 days following the end of each calendar month prior to the Closing
Date, the unaudited balance sheets and the related unaudited statements of
earnings of each of the Centers for each such month then ended and for the
year-to-date then ended, and

 

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

 

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

 

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

 

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

 

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Portability and Accountability Act, 42 U.S.C. 1320d et seq.) and record
retention policies.

 

(b) Each Party shall cooperate fully with, and make available for inspection and
copying by, the other Party, its employees, agents, counsel and accountants
and/or Governmental Authorities, upon written request and at the expense of the
requesting Party, such books, records documents and other information to the
extent reasonably necessary to facilitate the foregoing purposes. In addition,
each Party shall cooperate with, and shall permit and use its best efforts to
cause its former and present directors, officers and employees to cooperate
with, the other Party on and after Closing in furnishing information, evidence,
testimony and other assistance in connection with any action, proceeding,
arrangement or dispute of any nature with respect to the subject matters of this
Agreement.

 

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

 

(d) San Antonio Partners and Buyer shall take all actions reasonably necessary
or desirable to assist Seller in Seller’s efforts to collect the Accounts
Receivable, including promptly forwarding telephone calls, written
correspondence and other communications regarding the Accounts Receivable of the
Partnerships transferred to Seller that are directed or addressed to the
Partnerships, Seller or its collection agent, provided that neither San Antonio
Partners nor Buyer shall act as Seller’s agent in connection with the collection
of the Accounts Receivable nor be required to commence or prosecute any legal
action in any forum to assist in their collection. Buyer shall also provide to
Seller access to Buyer’s offices, telephone and other customary office resources
to enable Seller or Seller’s agents to collect such Accounts Receivable and to
operate its practice management business. Seller shall indemnify and hold
harmless San Antonio Partners and Buyer from and against any liability, loss or
other damage, and shall reimburse San Antonio Partners and Buyer for all
out-of-pocket costs and expenses, suffered or incurred by any of them in
providing the assistance and cooperation described in this Section.

 

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

 

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5.06. Governmental Authority Approvals; Consents to Assignment.

 

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

 

(b) The Parties acknowledge that they are not required to file a Notification
and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, concerning the transactions contemplated by this Agreement.

 

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

 

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5.07. Noncompetition.

 

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

 

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

 

(ii) induce, cause or attempt to induce or cause any Person (including any
physician employee or medical staff member) to replace or terminate any Contract
for the provision or arrangement of health care services from the Centers with
products or services of any other Person at any time after the Closing Date.

 

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

 

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

 

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

 

5.08. Allocation of Purchase Price. The Purchase Price shall be allocated among
the Partnership Interests as set forth on Schedule 5.08, and such allocation
shall be binding upon the Parties for all applicable federal, state, local and
foreign Tax purposes. Seller and Buyer shall report gain or loss or cost basis,
as the case may be, in a manner consistent with such allocation on all Tax
Returns filed by any of them after Closing and not voluntarily take any
inconsistent position therewith in any administrative or judicial proceeding
relating to such returns. Seller will treat the sale of the Partnership
Interests for federal income tax purposes as a sale of partnership interests.
Seller will prepare and file the Partnership’s final tax returns.

 

5.09. Further Assurances. At any time and from time to time at and after the
Closing, upon request of Buyer, Seller shall do, execute, acknowledge and
deliver, or cause to be done,

 

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

 

5.10. Casualty. If prior to the Closing Date one or more of the Centers is
destroyed or damaged by fire, theft, vandalism or other cause or casualty and,
as a result thereof, any material part of that Center is rendered prior to the
Closing Date unsuitable for its primary intended use, Buyer may terminate this
Agreement in its entirety without penalty. Otherwise, Buyer may elect at its
option to (i) reduce the Purchase Price by the fair market value of the assets
destroyed or damaged (determined as of the date immediately prior to the
destruction or damage) or, if greater, by the estimated cost to restore, repair
or replace such assets, in which event Seller shall retain all right, title and
interest in and to any insurance proceeds payable on account of such destruction
or damage, or (ii) consummate the transaction notwithstanding such destruction
or damage, in which event Seller shall transfer and assign to Buyer at Closing
the insurance proceeds (or the right to receive the insurance proceeds) of any
applicable insurance policy plus Seller shall pay to Buyer any deductibles or
copayments required under the applicable insurance policy. In the absence of an
agreement among the Parties, any reduction in Purchase Price pursuant to this
Section shall be determined by an MAI appraiser mutually selected and paid
equally by Seller, on the one hand, and Buyer, on the other hand.
Notwithstanding the foregoing, to the extent that the Purchase Price is reduced
as a result of any cause or casualty described in this Section or Seller is
obligated to pay to Buyer any deductible or copayment required under the
applicable insurance policies, the amount of such Purchase Price reduction or
deductible or copayment payment shall be determined by multiplying (i) the total
amount otherwise owed by Seller pursuant to the first sentence of this Section
times (ii) the percentage interest of Seller in the Partnership in respect of
which the fire, theft, vandalism or other cause or casualty loss occurred.

 

5.11. Costs and Expenses.

 

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

 

(b) Seller shall pay all sales and use Taxes arising out of the transfer of the
Partnership Interests by Seller to Buyer, the cost of removing any Encumbrances
that are not Permitted Encumbrances and all fees and charges charged by third
parties to consent to (i) the assignment of the Partnership Interests from
Seller to Buyer, (ii) any “deemed”

 

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assignment or transfer of any Contracts or assets of the Partnerships resulting
solely from the assignment of the Partnership Interests from Seller to Buyer,
and (iii) the assignment of any other Contracts or assets from Seller or any
Affiliate of Seller to Buyer. Buyer shall pay the cost of all environmental,
engineering and other professional studies undertaken by Buyer and all fees and
charges charged by third parties to consent to any “deemed” assignment or
transfer of any Contracts or assets of the Partnerships resulting from the
dissolution of the Partnerships, as contemplated by Section 2.02. The cost of
the insurance described in Section 5.14 shall be $30,000 and shall be borne
equally by Seller and Buyer at Closing.

 

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

 

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

 

5.13. Release of Encumbrances. Seller shall cause all Encumbrances that are not
Permitted Encumbrances to be transferred by Seller to Buyer to be released and
discharged at or prior to Closing.

 

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

 

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

 

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

 

6.01. Representations and Warranties; Covenants.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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to authorize the performance of its obligations herein and therein, have all
been duly and properly taken.

 

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

 

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

 

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

 

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

 

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

 

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

 

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

 

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

 

7.01. Representations and Warranties; Covenants.

 

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

 

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

 

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

 

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

 

(a) The Partnerships, Seller and Buyer have received all consents, permits,
approvals, authorizations and clearances of Governmental Authorities required to
consummate the transactions contemplated by this Agreement;

 

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

 

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

 

(d) the Partnerships and Seller have obtained consents to assignment of all
Contracts (other than Immaterial Contracts) (or replacement Contracts in lieu
thereof) for which such consents are required as a result of the transactions
contemplated by this Agreement; and

 

(e) Buyer has obtained such other consents and approvals as are legally required
for Buyer’s consummation of the transactions contemplated by this Agreement.

 

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

 

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

 

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or (f) have entered into any Contract to do or permit the doing of any of the
foregoing on or after the Closing Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

7.07 Lien Searches and Termination Statements. Seller shall have delivered to
Buyer UCC lien, litigation and tax searches showing all Encumbrances on the
Partnership’s assets and properties and the Partnership Interests of the Seller,
accompanied by fully executed UCC termination statements or other releases or
conveyances relating to all Encumbrances that are not Permitted Encumbrances.

 

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

 

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7.09 Certain Agreements.

 

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

 

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

 

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

 

(d) Each of the Contracts between any of the Partnerships, on the one hand, and
Seller or any of Seller’s Affiliates, on the other hand, shall have been
terminated as of the Closing Date, and, except for any provisions of the
Contract which survive the expiration or termination of the Contract, each of
the parties thereto shall have released all claims against the other arising out
of such Contract, pursuant to one or more agreements reasonably acceptable to
Buyer and Seller.

 

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

 

8. CLOSING; TERMINATION OF AGREEMENT

 

8.01. Closing.

 

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

 

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

 

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shall benefit each such designee, subject to the terms, covenants and conditions
of this Agreement, with respect to the Partnership Interests acquired by it.

 

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

 

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

 

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

 

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

 

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

 

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

 

(f) One or more certificates evidencing the insurance policy requirements
described in Section 5.14; and

 

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

 

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

 

(a) The Purchase Price;

 

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

 

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

 

(d) Certificates of incumbency for the officers of Buyer’s general partner, San
Antonio Partners, and Vanguard executing this Agreement and the Closing
Documents;

 

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

 

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

 

8.04. Termination Prior to Closing.

 

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

 

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

 

(ii) by Buyer in accordance with Section 5.11;

 

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

 

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

 

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

 

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

 

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

 

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

 

9. INDEMNIFICATION

 

9.01. Indemnification by Seller and San Antonio Partners. Subject to and to the
extent provided in this Article, from and after the Closing, Seller and San
Antonio Partners shall severally (but not jointly) indemnify, defend and hold
harmless Buyer’s Indemnified Persons, and each of them, from and against any
Losses incurred or suffered by Buyer’s Indemnified Persons, directly or
indirectly, as a result of or arising from:

 

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

 

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

 

9.02. Seller’s and San Antonio Partners’ Limitations. San Antonio Partners shall
have no liability under Section 9.01(a). Seller shall have no liability under
Section 9.01(a) and no claim shall accrue against Seller under Section 9.01(a)
(i) if Seller proves that prior to the Effective Date Buyer had actual knowledge
of the inaccuracy of such representation or warranty, and (ii) unless and until
the total liability of Seller in respect of claims arising under Section 9.01(a)
exceeds $100,000 in the aggregate, provided that there shall be no minimum
Losses requirement, and liability of Seller shall arise from and after $1.00 of
Losses, in respect of Losses resulting from Seller’s intentional
misrepresentation or fraud.

 

9.03. Indemnification by Buyer. Subject to and to the extent provided in this
Article, from and after the Closing Date, Buyer shall indemnify, defend and hold
harmless Seller’s

 

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Indemnified Persons, and each of them, from and against any Losses incurred or
suffered by Seller’s Indemnified Persons, directly or indirectly, as a result of
or arising from:

 

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

 

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

 

9.04. Buyer’s Limitations. Buyer shall have no liability under Section 9.03(a)
and no claim shall accrue against Buyer under Section 9.03(a) (i) if Buyer
proves that prior to Closing Seller had actual knowledge of the inaccuracy of
such representation or warranty, and (ii) unless and until the total liability
of Buyer in respect of claims arising under Section 9.03(a) exceeds $100,000 in
the aggregate, provided that there shall be no minimum Losses requirement, and
liability of Buyer shall arise from and after $1.00 of Losses, in respect of
Losses resulting from Buyer’s intentional misrepresentation or fraud.

 

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

 

(a)(i) If any claim or demand for which an Indemnifying Party would be liable
for Losses to an Indemnified Party is alleged or asserted by a Person other than
any Buyer’s Indemnified Person or Seller’s Indemnified Person (a “Third Party
Claim”), the Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party, together with a copy of all papers served,
if any, and specifying the nature of and alleged basis for the Third Party Claim
and, to the extent then feasible, the alleged amount or the estimated amount of
the Third Party Claim. If the Indemnified Party fails to deliver the Claim
Notice to the Indemnifying Party within 30 days after the Indemnified Party
receives notice of such Third Party Claim, the Indemnifying Party will not be
obligated to indemnify the Indemnified Party with respect to such Third Party
Claim if and only to the extent that the Indemnifying Party’s ability to defend
the Third Party Claim has been irreparably prejudiced by such failure. The
Indemnifying Party will notify the Indemnified Party within 10 days after
receipt of the Claim Notice (the “Notice Period”) whether the Indemnifying Party
intends, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against the Third Party Claim. The assumption by the
Indemnifying Party of the defense of the Third Party Claim constitutes an
admission by the Indemnifying Party that the claim is one for which the
Indemnifying Party is ultimately liable under this Article.

 

(ii) If the Indemnifying Party notifies the Indemnified Party within the Notice
Period that the Indemnifying Party intends to defend the Indemnified Party
against the Third Party Claim, then the Indemnifying Party will have the right
to

 

34

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

 

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

 

35

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Indemnified Party is contesting, or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim or cross claim against any
Person (other than the Indemnifying Party).

 

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

 

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

 

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

 

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

 

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Party, the Indemnified Party shall have the right to set-off the unpaid amount
of such claim against any amounts owed by it to the Indemnifying Party.

 

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

 

9.06. Contribution. In recognition of the fact that Buyer and San Antonio
Partners are Affiliates, the obligations of Seller and San Antonio Partners to
indemnify any Indemnified Persons pursuant to Section 9.01 is a several
obligation and not a joint, or a joint and several, obligation. As a result,
Buyer’s Indemnified Persons may seek indemnification against Seller without also
being required to join San Antonio Partners in the claim, but Buyer’s
Indemnified Persons may not seek indemnification solely against San Antonio
Partners. Furthermore, the extent to which Seller or San Antonio Partners shall
be liable to any Indemnified Party for Losses in respect of any particular claim
shall be determined by multiplying (i) the total Losses suffered by the
Indemnified Party in respect of which the claim was made times (ii) the
percentage interest of Seller or San Antonio Partners, as the case may be, in
the Partnership in respect of which the claim arose. If Seller is held by a
court of competent jurisdiction to be liable to any Indemnified Party for Losses
that exceed Seller’s percentage share of such Losses, as determined by the
immediately preceding sentence, Buyer and San Antonio Partners shall jointly and
severally be obligated to contribute to the amount paid or payable by Seller as
a result of such claim in such proportion as is appropriate to reflect the
relative percentage interest of Seller and of San Antonio Partners in connection
with the Partnership in respect of which the claim arose. Notwithstanding
anything in this Agreement to the contrary, Seller shall not have any obligation
to make any contribution or to indemnify or hold harmless San Antonio Partners
for any Loss incurred or suffered by Buyer, except in connection with a Third
Party Claim in which Seller was a defendant.

 

9.07. Survival of Representations; Indemnity Periods.

 

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

 

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and (Y) until two years after the Closing Date in the case of all other
representations and warranties, except that

 

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

 

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

 

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

 

10. GENERAL

 

10.01. Schedules.

 

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

 

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

 

10.02. Tax and Government Payment Program Effect. None of the Parties (nor such
Parties’ counsel or accountants) has made or is making in this Agreement any
representation to

 

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any other Party (or such Party’s counsel or accountants) concerning any of the
Tax or Government Payment Program effects or consequences on the other Party of
the transactions provided for in this Agreement. Each Party represents that it
has obtained, or may obtain, independent Tax and Government Payment Program
advice with respect thereto and upon which it, if so obtained, has solely
relied.

 

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

 

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

 

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

 

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

 

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

 

39

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

 

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

 

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

 

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

 

If to Buyer or Vanguard:

  

Vanguard Health Systems, Inc.

    

20 Burton Hills Boulevard, Suite 100

    

Nashville, Tennessee 37215

    

Attn: General Counsel

    

Facsimile: 615.665.6197

 

40

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If to Seller:

  

Radiologix, Inc.

    

3600 Chase Tower

    

2200 Ross Avenue

    

Dallas, TX 75201-2776

    

Attn: President & Chief Executive Officer

    

Facsimile: 214.303.2778

 

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

 

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

 

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

 

10.14. Entire Agreement; Amendment. This Agreement supersedes all previous
contracts, agreements and understandings and constitutes the entire agreement of
whatsoever kind or nature existing between or among the Parties representing the
within subject matter and no Party shall be entitled to benefits other than
those specified herein. As between or among the Parties, any oral or written
representation, agreement or statement not expressly incorporated herein,
whether given prior to or on the Effective Date, shall be of no force and effect
unless and until made in writing and signed by the Parties on or after the
Effective Date. The representations and warranties set forth in this Agreement
shall survive the Closing and remain in full force and effect as provided in
Article 9, and shall survive the execution and delivery of all other agreements,
instruments or other documents described, referenced or contemplated herein and
shall not be merged herewith or therewith. Each representation, warranty and
covenant contained in this Agreement has independent significance and if any
Party has breached any representation, warranty or covenant contained herein in
any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative level
of specificity) that such Party has not breached shall not detract

 

41

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from or mitigate the fact that the Party is in breach of the first
representation, warranty or covenant. This Agreement may be executed in two or
more counterparts, each and all of which shall be deemed an original and all of
which together shall constitute but one and the same instrument. This Agreement
may not be amended except in a written instrument executed the Parties.

 

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

 

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

 

10.17. Confidentiality; Public Announcements.

 

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

 

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

 

11. GUARANTEES

 

11.01. Guarantee of Buyer’s and San Antonio Partners’ Obligations. Vanguard, as
principal obligor and not merely as a surety, hereby unconditionally guarantees
full, punctual and complete performance by Buyer and San Antonio Partners of all
of their respective obligations under this Agreement and each of the Closing
Documents subject to the terms hereof and thereof

 

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and so undertakes to Seller that, if and whenever Buyer or San Antonio Partners
is in default, Vanguard will on demand duly and promptly perform or procure the
performance of their respective obligations. The foregoing guarantee is a
continuing guarantee and will remain in full force and effect until the
obligations of Buyer and San Antonio Partners under this Agreement have been
duly performed or discharged and will continue to be effective or will be
reinstated, as the case may be, if at any time any sum paid to Seller must be
restored by Seller upon the bankruptcy, liquidation or reorganization of Buyer
or San Antonio Partners. Vanguard’s obligations under this Section shall not be
affected or discharged in any way by any proceeding with respect to Buyer or San
Antonio Partners under any federal or state bankruptcy, insolvency or debtor
relief laws.

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

M & S IMAGING PARTNERS, L.P.

     

RADIOLOGIX, INC.

By:  

M & S Imaging Partners, I, Inc.,

General Partner

      By:   Sami S. Abbasi                

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

           

Title:

  Executive Vice President                

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

 

   

By:

  Sami S. Abbasi        

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

   

Title:

  Executive Vice President        

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

 

VHS SAN ANTONIO PARTNERS, L.P.

     

VHS SAN ANTONIO IMAGING PARTNERS, L.P.

By:  

VHS Acquisition Subsidiary Number 5,

Inc., General Partner

      By:  

VHS Acquisition Subsidiary Number 5,

Inc., General Partner

                 

 

   

    By:

             

        By:

           

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

             

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

   

    Title:

             

        Title:

           

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

             

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

 

VANGUARD HEALTH SYSTEMS, INC.

       

By:

                   

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

           

Title:

                   

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

           

 

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