CONTRIBUTION AGREEMENT
Among
BARNET XXXXXXX EYE CENTER, P.L.L.C.
XXXXX X. XXXXXXX, M.D.,
XXXXXX X. XXXXXX, M.D.,
XXXX XXXXXXXXX,
PRIME MEDICAL SERVICES, INC.,
PRIME MEDICAL OPERATING, INC.,
LASIK INVESTORS, L.L.C.,
PRIME/BDR ACQUISITION, L.L.C.,
And
PRIME/BDEC ACQUISITION, L.L.C.
Dated September 1, 1999
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement") is entered into to be
effective as of September 1, 1999 (the "Effective Time"), among Prime Medical
Operating, Inc., a Delaware corporation ("Prime"), Prime Medical Services, Inc.
a Delaware corporation ("PMSI"), Barnet Xxxxxxx Eye Center, P.L.L.C., an Arizona
professional limited liability company ("BDEC"), LASIK Investors, L.L.C., a
Delaware limited liability company ("LASIK"), Xxxxx X. Xxxxxxx, M.D.
("Xxxxxxx"), Xxxxxx X. Xxxxxx, M.D. ("Barnet"), Xxxx Xxxxxxxxx ("Xxxxxxxxx"),
Prime/BDR Acquisition, L.L.C., a Delaware limited liability company ("Newco I")
and Prime/BDEC Acquisition, L.L.C., a Delaware limited liability company ("Newco
II"). BDEC, LASIK, Xxxxxxx, Barnet and Xxxxxxxxx are also sometimes referred to
collectively herein as the "Sellers" and individually as a "Seller."
The parties hereto agree as follows:
ARTICLE I
Agreement of Purchase and Sale
1.1 Agreement. Upon the basis of the representations and warranties,
for the consideration, and subject to the terms and conditions set forth in this
Agreement, (a) Prime agrees to purchase, as of the Effective Time, from BDEC, an
undivided sixty percent (60%) interest in (i) the Assets (as hereinafter
defined) and (ii) the business conducted using the Assets, excluding the
practice of medicine in all cases (the "Business"), for $8,807,000 in cash (the
"Purchase Price), together with warrants, in substantially the form attached
hereto as Exhibit A (the "Primary Warrants"), entitling BDEC to purchase 29,356
shares of $0.01 par value common stock of PMSI, at one hundred ten percent
(110%) of PMSI's closing share price as quoted by NASDAQ on the Closing Date;
(b) Prime agrees to contribute to Newco II, as of the Effective Time, the
undivided sixty percent (60%) interest in the Assets and Business purchased by
Prime, and will receive a sixty percent (60%) ownership interest in Newco II;
(c) BDEC agrees to contribute, as of the Effective Time, the remaining undivided
forty percent (40%) interest in the Assets and Business to Newco II; (d) Prime
shall acquire, as of the Effective Time, a sixty percent (60%) ownership
interest in Newco I; and (e) LASIK shall acquire, as of the Effective Time, a
forty percent (40%) interest in Newco I. The Purchase Price will be allocated to
the Assets in accordance with Schedule 1.1 attached hereto. The parties agree
that:
(w) immediately prior to the Closing, all of the outstanding membership
interests of Newco I shall be owned by LASIK, and, immediately after the
Closing, Prime shall own sixty percent (60%) of all of the outstanding
membership interests of Newco I, and LASIK shall own forty percent (40%) of all
of the outstanding membership interests of Newco I;
(x) immediately prior to the Closing, all of the outstanding membership
interests of Newco II shall be owned by BDEC, and, immediately after the
Closing, Prime shall own sixty percent (60%) of all of the outstanding
membership interests of Newco II, and BDEC shall own forty percent (40%) of all
of the outstanding membership interests of Newco II;
(y) prior to the Effective Time, Prime and LASIK shall have executed the
limited liability company agreement, in the form attached hereto as Exhibit B,
and any other organizational documents of Newco I. ---------
(z) prior to the Effective Time, Prime and BDEC shall have executed the
limited liability company agreement, in the form attached hereto as Exhibit C,
and any other organizational documents of Newco II; and ---------
The organizational documents of Newco I and Newco II are hereinafter
collectively referred to as the "Organizational Documents."
1.2 Closing. The closing of the transactions contemplated by Section 1.1
(the "Closing") shall take place at the offices of Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P., 1900 Frost Bank Plaza, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000,
or at such other location as the parties may agree. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date." -------
1.3 Assets. The term "Assets" shall mean the items listed on Schedule
1.3 attached hereto, all Permits (as hereinafter defined), all business records
of Refractive Surgery (as hereinafter defined) and the Business (as hereinafter
defined), all contract rights of BDEC under leases (including rights to receive
returns of deposits under such leases) or contracts listed on Schedule 1.3 and
all of the business and goodwill of Refractive Surgery and the Business. Each of
the Sellers hereby represents and warrants that the Assets include all of the
equipment, instruments, computer software used in connection with the equipment,
Permits, personal property, furniture, business records and other assets of BDEC
that are used primarily in or are materially relied on for the conduct of
Refractive Surgery and the Business, except for those items that are part of the
ambulatory surgery center. As used in this Agreement, "Refractive Surgery" shall
mean, collectively, any current and/or future surgical procedures intended to
correct myopia, hyperopia or astigmatism of the eye, excluding procedures aimed
only at restoring accommodation (presbyopia) and procedures to treat only
cataracts, glaucoma, oculoplastics or retinal abnormality. Notwithstanding the
foregoing, the following shall not be "Assets" and shall be retained by BDEC:
(a) all activities that constitute the practice of medicine;
(b) the books of account and record books of BDEC (complete and accurate
copies of which, insofar as they relate to the Business during the calendar
years 1997, 1998 and 1999, shall be provided to Prime on or before the Closing
Date);
(c) BDEC's rights under this Agreement;
(d) assets that are neither used primarily in, nor materially relied on
for, the conduct of Refractive Surgery;
(e) that single certain laser currently being leased to a physician group
in Memphis, Tennessee, and any interest existing on the Closing Date that BDEC
may have in the current or future profits of the facility utilizing such laser;
and
(f) BDEC's ownership interest in Newco II.
1.4 Assumed Liabilities. At the Closing, Newco II shall only assume, as
of the Effective Time, lease or contract obligations of BDEC arising under lease
agreements assigned to Newco II pursuant to Section 1.3 and those liabilities
set forth on Schedule 1.4 by item and amount. Such limited assumption shall be
pursuant to that certain general conveyance, assignment and transfer of assets
and assumption of lease obligations, attached hereto as Exhibit D (the
"Assignment and Assumption Agreemen ) to be executed by Newco II, Prime and BDEC
at the Closing, effective as of the Effective Time. With respect to any lease or
other contract obligations reflected on Schedule 1.3 and assumed by Newco II, it
is agreed that Newco II will only be assuming obligations thereunder which
accrue after the Effective Time, and will have no responsibility whatsoever for
any breaches or defaults which occurred prior to the later of the Effective Time
or the Closing Date, or for obligations accruing prior to the Effective Time.
Except for those liabilities and contract and lease obligations specifically
assumed by Newco II as provided above, any and all debts, liabilities, and
obligations of BDEC, whether known or unknown, absolute, contingent or otherwise
(including, but not limited to, federal, state, and local taxes, any sales
taxes, use taxes and property taxes, any taxes arising from the transactions
contemplated by this Agreement and any liabilities arising from any litigation
or civil, criminal or regulatory proceeding involving or related to BDEC or its
business) shall remain the sole responsibility of BDEC. Notwithstanding any
provision of this Agreement, Newco I, Newco II and Prime do not assume any
debts, obligations or liabilities of BDEC whatsoever, except for those
liabilities and contract and lease obligations described in the first sentence
of this Section.
1.5 Payment of Purchase Price. The Purchase Price shall be paid in
immediately available funds at the Closing. -------------------------
ARTICLE II t"
Representations and Warranties of Prime and PMSI t"
Prime and PMSI each, jointly and severally, represents and warrants to
BDEC, LASIK, Xxxxxxx, Barnet and Xxxxxxxxx that each of the following matters is
true and correct in all respects as of the Closing (with the understanding that
BDEC, LASIK, Xxxxxxx, Barnet and Xxxxxxxxx are relying materially on such
representations and warranties in entering into and performing this Agreement):
2.1 Due Organization and Principal Executive Office. PMSI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to carry on
its business as now conducted and as proposed to be conducted. Prime is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. Prime is
a wholly-owned subsidiary of PMSI. The principal executive offices of PMSI and
Prime are located at 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000. No
other person or entity has any right to acquire any ownership interest in Prime.
Complete and accurate copies of the Articles of Incorporation, Bylaws, and all
amendments thereto, of PMSI and of Prime, have been delivered to Sellers. PMSI
and Prime are qualified to do business and are in good standing in each state
where such qualification is required for the conduct of its business as
conducted on the Closing Date.
2.2 Due Authorization. PMSI and Prime each have full power and
authority to enter into and perform this Agreement and each Transaction Document
(as hereinafter defined) required to be executed by it in connection herewith.
The execution, delivery, and performance of this Agreement and such Transaction
Documents have been duly authorized by all necessary action of PMSI, Prime and
their respective directors and shareholders. This Agreement has been duly and
validly executed and delivered by PMSI and Prime and constitutes a valid and
binding obligation of each enforceable against it in accordance with its terms.
The execution, delivery, and performance of this Agreement, and each Transaction
Document required herein to be executed by PMSI or Prime does not (a) violate
any federal, state, county, or local law, rule, or regulation applicable to it
or its business (with the understanding and agreement that this representation
does not apply to matters relating to the operation of Newco II or the Business
on and after the Closing), (b) violate or conflict with, or permit the
cancellation of, any agreement to which it is a party, or by which it or its
properties are bound, or result in the creation of any lien, security interest,
charge, or encumbrance upon any of such properties, (c) permit the acceleration
of the maturity of any indebtedness of, or any indebtedness secured by the
property of, PMSI or Prime, or (d) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of either. No action, consent, waiver or
approval of, or filing with, any federal, state, county or local governmental
authority is required by PMSI or Prime in connection with the execution,
delivery, or performance of this Agreement (or any Transaction Document).
2.3 Financial Statements. The audited balance sheet and income
statement for PMSI as of and for each of the years ended December 31, 1997 and
1998, and the unaudited balance sheets and income statements for PMSI as of and
for the six (6) months ended June 30, 1999 (collectively, the "PMSI Financial
Statements") are attached hereto as Exhibit E. The PMSI Financial Statements
have been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP") (except as specifically noted therein or in
Schedule 2.3) and fairly present the financial position and results of
operations of PMSI, as of the indicated dates and for the indicated periods.
Except as disclosed in Schedule 2.3 and except to the extent specifically and
fully reflected in the PMSI Financial Statements (including the notes thereto),
PMSI does not have any liabilities of a type that would be required by GAAP to
be reflected as such in the PMSI Financial Statements (including the notes
thereto) other than current liabilities on open account incurred in the ordinary
course of business consistent with past practices. Except as set forth in
Schedule 2.3 hereto, since June 30, 1999 there has been no material adverse
change in the financial position, assets or results of operations of PMSI.
2.4 Permits, etc. To the best of PMSI's knowledge, PMSI, and each
subsidiary or other entity for which greater than fifty percent (50%) of the
outstanding voting equity interests are controlled by PMSI, directly or
indirectly (collectively, the "PMSI Controlled Parties"), has complied in all
material respects, and is in compliance in all material respects, with the terms
and conditions of all issued or pending federal, state, county, and local
governmental licenses, certificates, certificates of need, permits, waivers,
filings and orders (collectively, "Permits") held or applied for by it in the
conduct of its business. To PMSI's knowledge, no additional Permit is required
from any federal, state, county, or local governmental agency or body thereof in
connection with the conduct of the business (as such business has been
conducted) of PMSI or any PMSI Controlled Party. No claim has been made by any
governmental authority (and, to the knowledge of PMSI, no such claim has been
threatened) to the effect that a Permit not possessed by PMSI or any PMSI
Controlled Party is necessary in respect of the business of PMSI or such PMSI
Controlled Party.
2.5 Environmental Issues.
(a) For purposes of this Section, the term "environmental laws" shall
mean all laws and regulations relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge, or release, of any pollutant, contaminant,
chemical, or industrial toxic or hazardous substance or waste, and any
order related thereto.
(b) PMSI, and each PMSI Controlled Party, has complied in all material
respects with and obtained all authorizations and made all filings required
by all environmental laws applicable to its business.
(c) Neither PMSI nor any PMSI Controlled Party has received
any notice from the United States Environmental Protection Agency that it is a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund Notice"), any citation from any
federal, state or local governmental authority for non-compliance with its
requirements with respect to air, water or environmental pollution, or the
improper storage, use or discharge of any hazardous waste, other waste or other
substance or other material ("Citations") pertaining to its business or any
written notice from any private party alleging any such non-compliance; and
there are no pending or unresolved Superfund Notices, Citations or written
notices from private parties alleging any such non-compliance.
2.6 Claims and Proceedings. Attached hereto as Schedule 2.6 is a list
and description of all claims, actions, suits, proceedings, and investigations
pending against PMSI or any PMSI Controlled Party, at law or in equity, or
before or by any court, municipal or other governmental department, commission,
board, agency, or instrumentality. Except as set forth on Schedule 2.6 attached
hereto, none of such claims, actions, suits, proceedings, or investigations will
result in any liability or loss to PMSI or such PMSI Controlled Party which
(individually or in the aggregate) is material, and neither PMSI nor any PMSI
Controlled Party has been, or is now, subject to any order, judgment, decree,
stipulation, or consent of any court, governmental body, or agency. No inquiry,
action, or proceeding has been asserted, instituted or threatened against either
PMSI or Prime to restrain or prohibit the carrying out of the transactions
contemplated by this Agreement or to challenge the validity of such transactions
or any part thereof or seeking damages on account thereof.
2.7 Taxes. All federal, foreign, state, county, and local income, gross
receipts, excise, property, franchise, license, sales, use, withholding, and
other tax (collectively, "Taxes") returns, reports, and declarations of
estimated tax (collectively, "Returns") which were required to be filed by PMSI
or any PMSI Controlled Party on or before the date hereof have been filed within
the time (including any applicable extensions) and in the manner provided by
law, and all such Returns are true and correct in all material respects and
accurately reflect the Tax liabilities of PMSI or such PMSI Controlled Party.
All Taxes, assessments, penalties, and interest which have become due by PMSI
pursuant to such Returns have been paid or adequately accrued in the PMSI
Financial Statements. The provisions for Taxes reflected on the balance sheet
contained in the PMSI Financial Statements are adequate to cover all of PMSI's
estimated Tax liabilities for the respective periods then ended and all prior
periods. As of the Closing Date, PMSI will not owe any Taxes for any period
prior to the Closing which are not reflected on the PMSI Financial Statements,
except for Taxes attributable to the operations of PMSI between the date of the
PMSI Financial Statements and the Closing Date. PMSI has not executed any
presently effective waiver or extension of any statute of limitations against
assessments and collection of Taxes. There are no pending or threatened claims,
assessments, notices, proposals to assess, deficiencies, or audits
(collectively, "Tax Actions") against PMSI or any PMSI Controlled Party with
respect to any Taxes owed or allegedly owed by such party. There are no tax
liens on any of the assets of PMSI or any PMSI Controlled Party. Proper and
accurate amounts have been withheld and remitted by PMSI and each PMSI
Controlled Party from and in respect of all persons from whom either is required
by applicable law to withhold for all periods in compliance with the tax
withholding provisions of all applicable laws and regulations. PMSI is not a
party to any tax sharing agreement.
2.8 Certain Consents. Except as set forth on Schedule 2.8 attached
hereto, there are no consents, waivers, or approvals required to be executed
and/or obtained by PMSI or Prime from third parties in connection with the
execution, delivery, and performance of this Agreement or any of the other
contracts, documents, instruments and agreements to be executed and delivered at
the Closing, including, without limitation, those set forth in, or delivered
pursuant to, ARTICLE V hereof and the Target Center Loan Documents (all of which
are collectively referred to as the "Transaction Documents").
2.9 Brokers. Neither PMSI nor Prime has engaged, or caused any liability to
be incurred to, any finder, broker, or sales agent (or has paid, or will pay,
any finders fee or similar fee or commission to any person) in connection with
the execution, delivery, or performance of this Agreement or the transactions
contemplated hereby. ------- 2.10 Interest in Competitors, Suppliers, and
Customers. Except as set forth on Schedule
2.10 attached hereto, neither PMSI nor any PMSI Controlled Party, and to
the knowledge of PMSI no officer, director or employee of PMSI or any PMSI
Controlled Party, has any ownership interest (other than ownership of securities
of a publicly held corporation or other entity constituting less than five
percent (5%) of that class of outstanding securities) in any competitor,
customer or supplier of the -------------------------------------------------
------------- Refractive Surgery business.
2.11 Warranties. Except as set forth on Schedule 2.11 attached hereto, no
claims for breach of product or service warranties have been made against PMSI
or any PMSI Controlled Party since January 1, 1996. ---------- -------------
2.12 No Defaults. Neither PMSI nor Prime is aware of any breach or default
by the other of any of the representations, warranties, covenants or agreements
contained herein. -----------
2.13 Investment Representations. Each of PMSI and Prime:
(a) Is an "accredited investor," and has not retained or consulted with any
"purchaser representative" (as such terms are defined in Rule 501 of Regulation
D promulgated under the Securities Act of 1933, as amended (the "Securities
Act")) in connection with its execution of this Agreement and the consummation
of the transactions contemplated hereby;
(b) Has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in Newco
I and Newco II;
(c) Will acquire any Newco I or Newco II interests for its own
account for investment and not with the view toward resale or redistribution in
a manner which would require registration under the Securities Act, the Texas
Securities Act, as amended, or the securities laws of any other state, and has
no reason to anticipate any change in its circumstances or other particular
occasion or event which would cause it to sell its Newco I or Newco II
interests, or any part thereof or interest therein, and has no present intention
of dividing the Newco I and Newco II interests with others or reselling or
otherwise disposing of the Newco I and Newco II interests or any part thereof or
interest therein either currently or after the passage of a fixed or
determinable amount of time or upon the occurrence or nonoccurrence of any
predetermined event or circumstance;
(d) In connection with entering into this Agreement and the
Transaction Documents to which each is a party, and in making the investment
decisions associated therewith, has neither received nor relied on any
representations or warranties from Newco I, Newco II, Sellers, the affiliates of
the foregoing or the officers, directors, shareholders, employees, partners,
members, agents, consultants, personnel or similarly related parties of any of
the foregoing, other than those representations and warranties contained in this
Agreement;
(e) Is able to bear the economic risk of an investment in the Newco I and
Newco II interests and it has sufficient net worth to sustain a loss of its
entire investment without material economic hardship if such a loss should
occur; and
(f) Acknowledges that the Newco I and Newco II interests have not been
registered under the Securities Act, or the securities laws of any of the states
of the United States, that an investment in the Newco I and Newco II interests
involves a high degree of risk, and that the Newco I and Newco II interests are
an illiquid investment.
ARTICLE III "
Representations and Warranties of BDEC, LASIK, Xxxxxxx, Barnet and Xxxxxxxxx "
Each of BDEC and LASIK, jointly and severally, hereby represents and
warrants to Prime and PMSI that each of the following matters is true and
correct in all respects. With respect to representations and warranties by the
Sellers, each of Xxxxxxx, Barnet and Xxxxxxxxx, severally, and not jointly,
hereby makes such representations or warranties only about or with respect to
himself. Each representation and warranty contained in this ARTICLE shall
survive the Closing and shall be deemed made as of both the Closing Date and the
Effective Time (with the understanding that Prime and PMSI are relying
materially on each such representation and warranty in entering into and
performing this Agreement).
3.1 Due Organization. BDEC is an Arizona professional limited liability
company, and LASIK is a Delaware limited liability company. Each of BDEC and
LASIK is duly organized, validly existing, and in good standing under the laws
of its state of formation, and each has full power and authority to carry on its
business as now conducted and as proposed to be conducted. Dulaney, Barnet,
Xxxxx X. Xxxxxxx, M.D. ("Xxxxxxx"), and Xxxxxx X. Xxxxxxx, O.D. ("Xxxxxxx") are
the only members of BDEC, and each owns that percentage of BDEC set forth
opposite his name on Schedule 3.1(a). Dulaney, Barnet, Xxxxxxxxx, Xxxxxxx and
Xxxxxxx are the only members of LASIK, and each owns that percentage of LASIK
set forth opposite his name on Schedule 3.1(a). Immediately prior to the
Closing, BDEC is the sole, one hundred percent (100%) owner of all of the
outstanding ownership interests in Newco II, and LASIK is the sole, one hundred
percent (100%) owner of all of the outstanding ownership interests in Newco I.
Except as expressly provided in this Agreement, as of the Closing Date, no other
person or entity has any right to acquire any ownership interest in BDEC or
LASIK. As of the Closing Date, there is only one class or designation of
membership interests in each of BDEC and LASIK. Complete and correct copies of
the organizational documents, and all amendments thereto, of BDEC and LASIK have
been delivered to Prime. BDEC is qualified to do business and is in good
standing in the states set forth on Schedule 3.1(b) attached hereto, which
states represent every jurisdiction where such qualification is required for the
conduct of BDEC's business as conducted on the Closing Date.
3.2 Subsidiaries. Except as set forth on Schedule 3.2, neither BDEC nor
LASIK directly or indirectly has (or possesses any options or other rights to
acquire) any subsidiaries or any direct or indirect ownership interests in any
person, business, corporation, partnership, limited liability company,
association, joint venture, trust, or other entity. ------------ ------------
3.3 Due Authorization. Each Seller has full power and authority to
enter into and perform this Agreement and each other Transaction Document
required to be executed by such Seller in connection herewith. The execution,
delivery, and performance of this Agreement and such Transaction Documents have
been duly authorized by all necessary action of BDEC, LASIK, and all of their
respective managers and members. This Agreement has been duly and validly
executed and delivered by the Sellers and constitutes a valid and binding
obligation of the Sellers enforceable against them in accordance with its terms.
The execution, delivery, and performance of this Agreement, and each other
Transaction Document required herein to be executed by the Sellers does not (a)
violate any federal, state, county, or local law, rule, or regulation applicable
to the Sellers, the Sellers' business or the Assets (with the understanding and
agreement that this representation does not apply to matters relating to the
operation of Newco II or the Business on and after the Closing), (b) violate or
conflict with, or permit the cancellation of, any agreement to which any of the
Sellers is a party, or by which any Seller or its properties are bound, or
result in the creation of any lien, security interest, charge, or encumbrance
upon any of such properties, (c) permit the acceleration of the maturity of any
indebtedness of, or any indebtedness secured by the property of, BDEC, or (d)
violate or conflict with any provision of the organizational documents of either
BDEC or LASIK. No action, consent, waiver or approval of, or filing with, any
federal, state, county or local governmental authority is required by any of the
Sellers in connection with the execution, delivery, or performance of this
Agreement (or any Transaction Document).
3.4 Financial Statements. The unaudited income statement for the
Business for the six months ended June 30, 1999 (the "BDEC Financial
Statements") is attached hereto as Exhibit F. The BDEC Financial Statements have
been prepared on the accrual basis of accounting and fairly and accurately
represent the results of operations of the Business for such six month period.
Except as set forth in Schedule 3.4 hereto, since June 30, 1999, there has been
no material adverse change in the financial position, assets or results of
operations of the Business. For each of the calendar years 1997 and 1998, and
for the six months ended June 30, 1999, Exhibit F also contains a list of the
total number of Refractive Surgery procedures performed by BDEC, and related
charges, adjustments, collections and procedures, during the respective periods,
including subtotals reflecting the numbers of each type of procedure, and a
separate listing of the percentage of procedures done at any location other than
at 0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000. Each of the Sellers
represents and warrants that Exhibit F fairly represents the number and location
of Refractive Surgery procedures performed by BDEC, and related charges,
adjustments, collections and procedures, for the indicated periods.
3.5 Conduct of Business; Certain Actions. Except as set forth on
Schedule 3.5 attached hereto, since June 30, 1999, BDEC has conducted the
Business and operations of the Business in the ordinary course and consistent
with its past practices and has not, with respect to or in a manner affecting
the Business (a) purchased, retired, or redeemed any membership interest from
any Seller, (b) increased the compensation of any of the employees, agents,
contractors, vendors or other parties, except for wage and salary increases made
in the ordinary course of business and consistent with the past practices of
BDEC, (c) made capital expenditures exceeding $10,000 individually or $25,000 in
the aggregate, (d) sold any asset (or any group of related assets) in any
transaction (or series of related transactions) in which the purchase price or
book value for such asset (or group of related assets) exceeded $10,000, (e)
discharged or satisfied any lien or encumbrance or paid any obligation or
liability, absolute or contingent, other than current liabilities incurred and
paid in the ordinary course of business, (f) made or guaranteed any loans or
advances to any party whatsoever, (g) suffered or permitted any lien, security
interest, claim, charge, or other encumbrance to arise or be granted or created
against or upon any of its assets, real or personal, tangible or intangible, (h)
canceled, waived, or released any of BDEC's debts, rights, or claims against
third parties, (i) made any change in its method of accounting, (j) made,
entered into, amended, or terminated any written employment contract, created,
made, amended, or terminated any bonus, stock option, pension, retirement,
profit sharing, or other employee benefit plan or arrangement, or withdrawn from
any "multi-employer plan" (as defined in the Internal Revenue Code of 1986, as
amended (the "Code")) so as to create any liability under ERISA (as hereinafter
defined) to any person or entity, (k) amended, terminated or experienced a
termination of any material contract, agreement, lease, franchise, or license to
which it is a party, (l) entered into any other material transactions except in
the ordinary course of business, (m) entered into any contract, commitment,
agreement, or understanding to do any acts described in the foregoing clauses
(a)-(l) of this Section, (n) suffered any material damage, destruction, or loss
(whether or not covered by insurance) to any assets, (o) experienced any strike,
slowdown, or demand for recognition by a labor organization by or with respect
to any of its employees, or (p) experienced or effected any shutdown, slow-down,
or cessation of any operations conducted by, or constituting part of, it.
Each of LASIK, Newco I and Newco II were formed in contemplation of the
transactions described in this Agreement, and none of them has conducted any
business since its formation (except for the authorization of and entering into
this Agreement and the Transaction Documents).
3.6 Ownership of Assets; Licenses, Permits, etc. BDEC has good and
marketable title to, or lessee's interest in, all of the Assets free and clear
of all liens, security interests, claims and encumbrances of any kind
whatsoever, including, without limitation, the Assets specifically set out on
Schedule 1.3. The Assets include all property and assets, real, personal and
mixed, tangible and intangible, including leases and other contracts, which are,
on the Closing Date, used primarily in, or materially relied on for, the
operation of the Business as then conducted. The Assets are in good operating
condition and repair, subject to ordinary wear and tear, taking into account the
respective ages of the properties involved and are, on the Closing Date,
adequate for the conduct of the Business as then conducted. Attached hereto as
Schedule 3.6 is a list and description of all Permits held or applied for by
BDEC and used or relied on as of the Closing Date in connection with the Assets
or the Business. To the best of its knowledge, BDEC has complied in all material
respects, and BDEC is in compliance in all material respects, with the terms and
conditions of any such Permits. To BDEC's knowledge, no additional Permit is
required from any federal, state, county, or local governmental agency or body
thereof in connection with the conduct of the Business on the Closing Date. No
claim has been made by any governmental authority (and, to the knowledge of the
Sellers, no such claim has been threatened) to the effect that a Permit not
possessed by BDEC is necessary in respect of the Business on the Closing Date.
All of the Permits noted on the attached Schedule 3.6 are freely assignable to,
or may be acquired by, Prime and Newco II. In the event any such Permits are not
assigned to Prime or Newco II, BDEC agrees to fully cooperate (at Newco II's
expense) in any effort by Prime or Newco II to obtain a similar or replacement
Permit.
3.7 Environmental Issues.
(a) For purposes of this Section, the term "environmental laws" shall mean
all laws and regulations relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, or release, of any pollutant, contaminant, chemical, or industrial
toxic or hazardous substance or waste, and any order related thereto, affecting
the Assets or the Business.
(b) BDEC has complied in all material respects with and obtained all
authorizations and made all filings required by all environmental laws
applicable to the Business. The properties occupied or used in the Business by
BDEC have not been contaminated with any hazardous wastes, hazardous substances,
or other hazardous or toxic materials in violation of any applicable
environmental law, the violation of which could have a material adverse impact
on the Business.
(c) BDEC has not received any Superfund Notice, any Citation pertaining to
its business or any written notice from any private party alleging any such
non-compliance; and there are no pending or unresolved Superfund Notices,
Citations or written notices from private parties alleging any such
non-compliance.
3.8 Intellectual Property Rights. There are no patents, trademarks, trade
names, or copyrights used or relied on in the Business, and no applications
therefor, owned by or registered in the name of BDEC or in which BDEC has any
right, license, or interest. With respect to the Business, BDEC is not a party
to any license agreement, either as licensor or licensee, with respect to any
patents, trademarks, trade names, or copyrights. Except as set forth on Schedule
3.13, with respect to the ---------------------------- ------------- Business,
BDEC has not received any notice that it is infringing any patent, trademark,
trade name, or copyright of others.
3.9 Compliance with Laws. With respect to the Assets and the Business, to
its knowledge, BDEC has complied in all material respects, and BDEC is in
compliance in all material respects, with all federal, state, county, and local
laws, rules, regulations and ordinances currently in effect. BDEC has not
received any notice that a claim has been made or threatened by any governmental
authority against BDEC to the effect that the Business fails to comply in any
respect with any law, rule, -------------------- regulation, or ordinance.
3.10 Insurance. Attached hereto as Schedule 3.10 is a list of all
policies of fire, liability, business interruption, and other forms of insurance
(including, without limitation, professional liability insurance) and all
fidelity bonds held in relation to or applicable to the Business at any time
within the past three (3) years, which schedule sets forth in respect of each
such policy the policy name, policy number, carrier, term, type of coverage,
deductible amount or self-insured retention amount, limits of coverage, and
annual premium. To the knowledge of Sellers, no event directly relating to the
Business has occurred which will result in a retroactive upward adjustment of
premiums under any such policies or which is likely to result in any prospective
upward adjustment in such premiums. Except as described on Schedule 3.10, there
have been no material changes in the type of insurance coverage maintained by
BDEC for the Business during the past three (3) years, including without
limitation any change which has resulted in any period during which BDEC had no
insurance coverage with respect to the Business. Except as described on Schedule
3.10, excluding insurance policies which have expired and been replaced, no
insurance policy of BDEC related to the Business has been canceled within the
last three (3) years and no threat has been made to cancel any such insurance
policy of BDEC within such period.
3.11 Employee Benefit Matters. Except as set forth on Schedule 3.11,
BDEC does not maintain nor does it contribute nor is it required to contribute
to any "employee welfare benefit plan" (as defined in section 3(1) of the
Employee Retirement Income Security Act of 1974 (and any sections of the Code
amended by it) and all regulations promulgated thereunder, as the same have from
time to time been amended ("ERISA")) or any "employee pension benefit plan" (as
defined in ERISA). Except as described on Schedule 3.11, BDEC does not presently
maintain and has never maintained, or had any obligation of any nature to
contribute to, a "defined benefit plan" within the meaning of the Code.
3.12 Contracts and Agreements. Attached hereto as Schedule 3.12 is a
list of all written or oral contracts, commitments, leases, and other agreements
(including, without limitation, all promissory notes, loan agreements, and other
evidences of indebtedness, mortgages, deeds of trust, security agreements,
pledge agreements, service agreements, and similar agreements and instruments
and all confidentiality agreements) that relate to or affect the Assets or the
Business, to which BDEC is a party or by which BDEC or its properties are bound,
pursuant to which the obligations thereunder of any party thereto are, or are
contemplated as being, in respect of any such individual contracts, commitments,
leases, or other agreements during any year during the term thereof, $25,000 or
greater, or which are otherwise material to the Business (collectively the
"Contracts" and individually, a "Contract"). BDEC is not and, to the best
knowledge of Sellers, no other party thereto is in default (and no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a default by BDEC or, to the best knowledge of Sellers, by any other
party thereto) under any Contract. BDEC has not waived any material right under
any Contract, and no consents or approvals (other than those obtained in writing
and delivered to Prime prior to Closing) are required under any Contract in
connection with the sale of the Assets or the consummation of the transactions
contemplated hereby.
3.13 Claims and Proceedings. Attached hereto as Schedule 3.13 is a list
and description of all claims, actions, suits, proceedings, and investigations
pending or threatened in writing against BDEC, at law or in equity, or before or
by any court, municipal or other governmental department, commission, board,
agency, or instrumentality, which relate to or affect the Business or the
Assets. Except as set forth on Schedule 3.13 attached hereto, none of such
claims, actions, suits, proceedings, or investigations will result in any
liability or loss to BDEC which (individually or in the aggregate) is material,
and BDEC has not been, and BDEC is not now, subject to any order, judgment,
decree, stipulation, or consent of any court, governmental body, or agency. No
inquiry, action, or proceeding has been asserted, instituted, or threatened
against BDEC to restrain or prohibit the carrying out of the transactions
contemplated by this Agreement or to challenge the validity of such transactions
or any part thereof or seeking damages on account thereof.
3.14 Taxes. All Returns which were required to be filed by BDEC on or
before the date hereof have been filed within the time (including any applicable
extensions) and in the manner provided by law, and all such Returns are true and
correct in all material respects and accurately reflect the Tax liabilities of
BDEC. All Taxes, assessments, penalties, and interest which have become due
pursuant to such Returns have been paid or adequately accrued in the BDEC
Financial Statements. The provisions for Taxes reflected on the balance sheet
contained in the BDEC Financial Statements are adequate to cover all of BDEC's
estimated Tax liabilities for the respective periods then ended and all prior
periods; provided, however, that BDEC is not required to pay federal income
taxes and, accordingly, has not made any allowance in the BDEC Financial
Statements for any federal income taxes. As of the Closing Date, BDEC will not
owe any Taxes for any period prior to the Closing which are not reflected on the
BDEC Financial Statements, except for Taxes attributable to the operations of
BDEC between the date of the BDEC Financial Statements and the Closing Date.
BDEC has not executed any presently effective waiver or extension of any statute
of limitations against assessments and collection of Taxes. There are no pending
or threatened Tax Actions against BDEC with respect to any Taxes owed or
allegedly owed by BDEC. There are no tax liens on any of the assets of BDEC.
Proper and accurate amounts have been withheld and remitted by BDEC from and in
respect of all persons from whom it is required by applicable law to withhold
for all periods in compliance with the tax withholding provisions of all
applicable laws and regulations. BDEC is not a party to any tax sharing
agreement.
3.15 Personnel. Attached hereto as Schedule 3.15 is a list of names and
current annual rates of compensation of those individuals (the "Employees") who
will be involved in the operation of the Business after the Effective Time
pursuant to the Collocation Agreement (as hereinafter defined). Except as set
forth on Schedule 3.15, there are no bonus, profit sharing, percentage
compensation, company automobile, club membership, and other like benefits, if
any, paid or payable by BDEC to any Employees from December 31, 1998 through the
Closing Date. Schedule 3.15 attached hereto also contains a brief description of
all material terms of employment agreements and confidentiality agreements with
respect to the Business to which BDEC is a party and all severance benefits
which any Employee or sales representative involved in the operation of the
Business is or may be entitled to receive. BDEC has delivered to Prime accurate
and complete copies of all such employment agreements, confidentiality
agreements, and all other agreements, plans, and other instruments to which BDEC
is a party and under which any Employees are entitled to receive benefits of any
nature. The employee relations of BDEC are good and there is no pending or
threatened (i) union organization campaign relating to BDEC, (ii) claims against
BDEC or the Sellers by any Employees (other than those certain Workers'
Compensation claims specifically described on Schedule 3.13), or (iii) presently
anticipated terminations, resignations or retirements of any Employees. None of
the Employees are represented by any labor union or organization. There is no
unfair labor practice claim against BDEC before the National Labor Relations
Board or any strike, labor dispute, work slowdown, or work stoppage pending or
threatened against or involving BDEC.
3.16 Business Relations. Sellers have no reason to believe and have not
been notified that any supplier or customer of BDEC will cease or refuse to do
business with BDEC or Newco II in the same manner as previously conducted with
BDEC as a result of or within one (1) year after the consummation of the
transactions contemplated hereby, to the extent such cessation or refusal might
affect the Assets or the Business. BDEC has not received any notice of any
disruption (including delayed deliveries or allocations by suppliers) in the
availability of the materials or products used by BDEC.
3.17 Agents. Except as set forth on Schedule 3.17 attached hereto, BDEC has
not designated or appointed any person (other than BDEC's employees, officers
and managers) or other entity to act for it or on its behalf with respect to the
Business pursuant to any power of attorney or any agency which is presently in
effect. ------ -------------
3.18 Commission Sales Contracts. Except as disclosed in Schedule 3.18
attached hereto, BDEC does not employ or have any relationship, related to or
arising out of the Assets or the Business, with any individual, corporation,
partnership, or other entity whose compensation from BDEC is in whole or in part
determined on a commission basis. -------------------------- -------------
3.19 Certain Consents. Except as set forth on Schedule 3.19 attached
hereto, there are no consents, waivers, or approvals required to be executed
and/or obtained by any Sellers from third parties (including, without
limitation, Perkins, Pinkert, or the spouses of Dulaney, Barnet, Xxxxxxx or
Xxxxxxx) in connection with the execution, delivery, and performance of this
Agreement or any other Transaction Document. ---------------- -------------
3.20 Brokers. No Seller has engaged, or caused any liability to be incurred
to, any finder, broker, or sales agent (or has paid, or will pay, any finders
fee or similar fee or commission to any person) in connection with the
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby. -------
3.21 Interest in Competitors, Suppliers, and Customers. Except as set
forth on Schedule 3.21 attached hereto, no Seller or any affiliate of any
Seller, and to the knowledge of Sellers no officer, manager or employee of BDEC
or any affiliate of any officer, manager or employee of BDEC, has any ownership
interest in any competitor, customer or supplier of the Business or any property
used in the operation of the Business. For purposes of this Section, none of
Barnet, Dulaney, Xxxxxxx or Xxxxxxx, shall be considered, in his individual
capacity, a competitor, customer, or supplier of the Business.
3.22 Warranties. Except as set forth on Schedule 3.22, BDEC has not made
any warranties or guarantees to third parties with respect to any products sold
or services rendered by it related to the Assets or the Business. Except as set
forth on Schedule 3.22 attached hereto, no claims for breach of product or
service warranties related to the Assets or the Business have been made against
BDEC since January 1, 1996. ---------- ------------- -------------
3.23 Investment Representations. Each Seller:
(a) Is an "accredited investor," and has not retained or consulted with any
"purchaser representative" (as such terms are defined in Rule 501 of Regulation
D promulgated under the Securities Act of 1933, as amended (the "Securities
Act")) in connection with its execution of this Agreement and the consummation
of the transactions contemplated hereby;
(b) Has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in Newco
I and/or Newco II;
(c) Will acquire any Newco I and/or Newco II interests for its
own account for investment and not with the view toward resale or redistribution
in a manner which would require registration under the Securities Act, the Texas
Securities Act, as amended, or the securities laws of any other state, and
Sellers do not presently have any reason to anticipate any change in their
respective circumstances or other particular occasion or event which would cause
such Seller to sell its Newco I and/or Newco II interests, or any part thereof
or interest therein, and Sellers have no present intention of dividing the Newco
I and/or Newco II interests with others or reselling or otherwise disposing of
the Newco I and/or Newco II interests or any part thereof or interest therein
either currently or after the passage of a fixed or determinable amount of time
or upon the occurrence or nonoccurrence of any predetermined event or
circumstance;
(d) In connection with entering into this Agreement and the
Transaction Documents to which each Seller is a party, and in making the
investment decisions associated therewith, Sellers have neither received nor
relied on any representations or warranties from Newco I, Newco II, Prime, PMSI,
the affiliates of the foregoing or the officers, directors, shareholders,
employees, partners, managers, members, agents, consultants, personnel or
similarly related parties of any of the foregoing, other than those
representations and warranties contained in this Agreement;
(e) Is able to bear the economic risk of an investment in the Newco I
and/or Newco II interests and it has sufficient net worth to sustain a loss of
its entire investment without material economic hardship if such a loss should
occur; and
(f) Acknowledges that the Newco I and Newco II interests have not been
registered under the Securities Act, or the securities laws of any of the states
of the United States, that an investment in the Newco I and/or Newco II
interests involves a high degree of risk, and that the Newco I and Newco II
interests are an illiquid investment.
ARTICLE IV
Covenants
4.1 Cooperation Relating to Financial Statements. Sellers agree to
cooperate with Prime in the preparation of any financial statements of BDEC,
LASIK, Newco I and/or Newco II which Prime or its affiliates may be required by
any applicable law to prepare. --------------------------------------------
4.2 Member and Manager Action. Sellers each agree that, until such time
as none of the Sellers owns any ownership interest in either Newco I or Newco
II, none of them will, without obtaining the prior written consent of Prime, (i)
authorize the issuance of any additional membership interest in LASIK to any
third party, (ii) cause or allow any additional managers to be elected as
managers of BDEC or LASIK, or (iii) unless allowed under the Transfer
Restriction Agreement (as hereinafter defined), assign, or otherwise dispose of
any membership interest of LASIK owned or controlled by such Seller. The
provisions of this Section shall not be construed in a manner which limits the
application of effect of the provisions of Section 8.4(c) of this Agreement.
4.3 Credit Facilities.
(a) Working Capital Line of Credit. Prime and Newco I each
agree to execute, on or before the Closing Date (i) the Loan Agreement in
substantially the form attached hereto as Exhibit G1 (the "Loan Agreement"),
which provides for, among other credit accommodations described below, a
revolving line of credit in the maximum principal amount of $200,000 and
maturing one (1) year after the Closing (the "Working Capital Line"), pursuant
to which Newco I shall be entitled, subject to the conditions and limitations
contained in the Loan Agreement, to borrow, repay and reborrow funds in order to
meet obligations of Newco I arising in the ordinary course of business, (ii) the
Assignment and Security Agreement in substantially the form attached hereto as
Exhibit G4, and (iii) in connection with the Working Capital Line, the
Promissory Note in substantially the form attached hereto as Exhibit G2.
(b) Development Credit Facility. The Loan Agreement also
provides for a term loan facility, in the maximum principal amount of
$40,000,000 (the "Development Facility"), pursuant to which Newco I shall be
entitled, subject to the conditions and limitations contained in the Loan
Agreement, to borrow funds, from time to time, in order to finance up to one
hundred percent (100%) of the purchase price (or development costs) of a Target
Center (as hereinafter defined) being acquired (or developed) by Newco I;
provided, however, that in no event shall the Development Facility be used in
instances where Prime, PMSI or one of their affiliates independently acquires or
develops a Target Center as permitted by Section 8.1. In connection with the
Development Facility, Newco I agrees to execute, and all parties hereto agree to
vote their interests in Newco I, if any, and to take such other action as may be
necessary, to cause any entity through which Newco I acquires or develops a
Target Center to execute, on or before each closing date of a Target Center
acquisition or the commencement of development, a Promissory Note in
substantially the form attached hereto as Exhibit G5 and an Assignment and
Security Agreement in substantially the form attached hereto as Exhibit G3. In
addition, if Newco I is to obtain, through development or acquisition, directly
or indirectly, a one hundred percent (100%) interest in such Target Center,
Newco I and all parties hereto shall cause such Target Center to execute a
security agreement, acceptable in form and substance to Prime, granting to Prime
the highest available priority security interest in all of the assets of such
Target Center.
(c) Notwithstanding anything herein to the contrary, Prime's
obligations to make each extension of credit pursuant to subsection (b) above
are subject entirely and in all respects to Prime's obtaining prior written
approval from the bank syndication under its outstanding borrowing facilities.
Each of the parties to this Agreement acknowledges and agrees that the
assignment and security agreements, and security agreements, executed pursuant
to this Section will be assignable, and that Prime intends to make a collateral
assignment for the benefit of one or more of its lenders. In addition, each of
the parties to this Agreement agrees to take such action (including voting their
interests in any entity) which may be necessary to ensure the filing and
perfection of security interests required to be granted pursuant to this
Section.
(d) Each of the Sellers acknowledges and agrees that none of
Prime, PMSI or any affiliate of either of them may be required to (i) except as
expressly set forth in this ARTICLE IV and in Section 8.2(b)(ii), extend any
financing, credit facilities, guarantees or other credit enhancements to any
Seller, Newco I or Newco II or (ii) issue any of its capital stock (or rights to
acquire its capital stock) in connection with the acquisition of a Target Center
(provided, however, that Prime, PMSI or such affiliate may elect, upon obtaining
the consent of BDEC, to issue its capital stock in connection with the
acquisition of a Target Center by Newco I or any of its subsidiaries, and any
such issuance shall be treated for all purposes as a loan by Prime to Newco I
pursuant to the Development Credit Facility, in an amount equal to the fair
market value of the capital stock issued on the date of issuance).
(e) Each of the Sellers and Newco I acknowledges and agrees that Newco
I shall not distribute (or allow to be distributed) to its members, with respect
to their respective membership interests, any cash or other property of Newco I
or its subsidiaries if, at the time of the proposed distribution, any amounts
(whether principal or interest) are outstanding under the Credit Documents or
the Target Center Lending Documents (as such terms are hereinafter defined).
Furthermore, each of the Sellers and Newco I agrees that Newco I shall pay all
available cash flow to Prime in payment of Newco I's outstanding obligations, if
any, under the Working Capital Line and Development Facility, irrespective of
whether such payments exceed the minimum required payments under the Working
Capital Line and Development Facility. For purposes of allocating such payments
among any two or more of such outstanding obligations, such payments shall be
allocated pro rata, based upon the respective balances of such obligations,
unless (i) a greater portion of the payment is required to be paid toward a
given obligation in order to prevent a default with respect to that obligation
(but only to the extent necessary to prevent such a default) or (ii) eighty
percent (80%) of the managers of Newco I elect to allocate the payments in a
different manner.
Notwithstanding the foregoing, as long as there has been no
default by any Seller under this Agreement or any other Transaction Document
(excluding, however, the Credit Documents and the Target Center Lending
Documents), then, to the extent that (but only to the extent that) Newco I
possesses the cash flow necessary (in the reasonable discretion of a majority of
its managers) to pay its liabilities in the ordinary course consistent with past
practices, Newco I agrees to make quarterly estimates of its taxable income for
the current tax year and, if not prohibited by law, distribute quarterly (the
"Quarterly Distributions") an amount that would cover the federal and state
income taxes required to be paid by its members with respect such taxable
income, based on each member's then current proportionate interest in Newco I,
assuming that all members pay income taxes on Newco I's taxable earnings at a
rate equal to the highest effective individual tax rate in effect from time to
time (the Assumed Tax Rate"); provided, further, that Newco I shall determine
its actual taxable income at the end of each taxable year and (A) if the
Quarterly Distributions in a given year should have been higher based on the
amount of actual taxable income for that year, promptly distribute the amounts
necessary to eliminate such deficiency or (B) if the Quarterly Distributions in
a given year should have been lower based on the amount of actual taxable income
for that year, withhold dollar for dollar from the first following Quarterly
Distribution, and then against subsequent Quarterly Distributions in a like
manner, the amounts necessary to eliminate such surplus.
(f) All of the loan agreements, promissory notes, guarantees, security
agreements, assignment and security agreements and other agreements, documents
or instruments required to be executed by any party pursuant to this Section are
hereinafter collectively referred to as the "Credit Documents."
4.4 Capital Contributions. The parties agree that no party shall,
except for the express provisions of Section 1.1 and Section 4.3 of this
Agreement or of the Organizational Documents, be required to make any capital
contribution, or extend any credit facility or loans, to either Newco I or Newco
II (or a subsidiary of either) following the Closing, including, without
limitation, for purposes of providing working capital; provided, however, that
this sentence shall not affect any party's obligations under ARTICLE VI with
respect to any breach of the representations or warranties made by that party
under this Agreement.
4.5 Ownership Interest Transfer Restriction Agreement. Each of the owners
of LASIK agrees that it, and its spouse (if any), will execute, on or prior to
the Closing, an Ownership Interest Transfer Restriction Agreement applicable to
LASIK, in substantially the form attached hereto as Exhibit H (the "Transfer
Restriction Agreement"), that imposes certain limitations and conditions on the
sale, transfer, assignment or other disposition of any interest that is directly
or indirectly owned or -------------------------------------------------
--------- controlled by such party in LASIK.
4.6 ASC Option. BDEC acknowledges that it may, but is not obligated to,
acquire an interest in a certain Ambulatory Surgical Center located at 0000 X.
00xx Xx., Xxxxxxx, Xxxxxxx (the "ASC") from Physicians Resource Group, Inc. or
its successors or affiliates ("PRG"). Sellers agree that, upon any such
acquisition, directly or indirectly, by BDEC or any affiliate of BDEC or any
Seller (including, without limitation, LASIK), Newco I is hereby granted a right
of first refusal (the "ASC Option" pursuant to which Newco I or one of its
wholly owned subsidiaries may, in its sole discretion, and without any
obligation to do so, acquire from BDEC or such affiliate, at the price offered
by (and upon the same terms applicable to) any third party offer, all of the
business and assets of the ASC then held by BDEC or such affiliate, however
acquired by BDEC, prior to any sale or other transfer of the ASC, in whole or in
part, to any third party. Upon receiving any such third party offer, BDEC or
such affiliate shall give written notice thereof to Prime and Newco I. Following
its receipt of such notice, Newco I shall have thirty (30) days to exercise the
ASC Option, and Sellers agree that BDEC (or such affiliates) may not take any
action with respect to the third party offer until Newco I has either provided
written notice of its intent not to exercise the ASC Option, or the thirty (30)
day period has expired without any election by Newco I to exercise the ASC
Option. The closing of any purchase and sale pursuant to an exercise of the ASC
Option shall occur within 30 business days following such exercise, and the
purchase price shall be paid, at Newco I's sole election, in either immediately
available funds or such other manner as shall have been set forth in the notice
of third party offer. In connection with any exercise of the ASC Option by Newco
I, BDEC shall deliver all agreements, documents, instruments and certificates,
and take such other action, as may be reasonably necessary in order to
consummate the purchase and sale contemplated in this Section. The parties agree
that any acquisition pursuant to exercise of the ASC Option shall be
accomplished through an asset purchase, unless the parties otherwise agree.
4.7 Repurchase Option.
(a) At any time prior to the expiration of one (1) year following the
Effective Time, and thereafter at any time within thirty (30) days after BDEC
becomes aware of the occurrence of a Bankruptcy Event (as defined in Section 8.4
hereof) with respect to PMSI or Prime, BDEC shall have the right to elect to
purchase from Prime (the "Repurchase Option") all (but not less than all) of
Prime's interest in Newco II.
(b) The Repurchase Option may be exercised, in whole, and not
in part, by the delivery by BDEC of written notice to Newco II and Prime
specifying that such option is being exercised and a closing date for such
purchase (which shall be no sooner than thirty (30) days and no later than
ninety (90) days following the date of such written notice). The purchase price
(the "Repurchase Price") to be paid upon the closing of the purchase under the
Repurchase Option shall be paid to Prime and shall equal sixty percent (60%) of
(x) the immediately preceding twelve (12) months' EBITDA attributable to the
business and operations of Newco II, as of the effective time of the purchase,
multiplied by (y) six (6); but, in no event may the Repurchase Price be less
than $8,807,000. Prime, Newco II and BDEC shall deliver such other agreements,
documents, instruments and certificates, and take such other action (including
without limitation voting their ownership interest in Newco II), as may be
reasonably necessary in order to consummate the purchase and sale pursuant to
exercise of the Repurchase Option. For purposes of this Agreement, the "EBITDA"
of an entity or business, or interest therein, shall mean the net operating
earnings of such entity or business (or portion thereof attributable to the
interest therein), to the extent such net operating earnings are reasonably
expected to be recurring based on information available at the date of
calculation, calculated without deduction of interest expense, federal income
taxes, depreciation expense or amortization expense, and all as determined in
accordance with GAAP to the extent GAAP is not inconsistent with the definition
described in this sentence.
(c) In return for the grant by Newco II of the Repurchase
Option, BDEC agrees that, for a period of five (5) years immediately following
the closing of the sale and purchase pursuant to BDEC's exercise of the
Repurchase Option, if any (the "Repurchase Option Closing"), BDEC may not sell,
transfer, assign or otherwise dispose of any interest in the Assets or the
Business (each of which, for purposes of this subsection (c), shall include all
assets or business acquired in replacement of, substitution for, incidental to
or in connection with the Assets or the Business) without first offering in
writing all of the Assets and the Business to Prime (the "Prime Right of First
Refusal"). Such offer shall set forth the terms of any third party offer to
acquire the Assets and the Business (or any substantial portion thereof), and
Prime shall be entitled to exercise the Prime Right of First Refusal for:
(i) if such offer is received within the first year
following the Repurchase Option Closing, a purchase price determined by
(A) calculating the immediately preceding twelve (12) months' EBITDA
attributable to the Assets and the Business, as of the effective time
of the purchase pursuant to this subsection (c), and (B) multiplying
such amount by six (6); provided, however, that if such third party
offer is from any person or entity that controls, is controlled by, or
is under common control with BDEC, the purchase price shall be the
lesser of the purchase price determined pursuant to this subsection
(c)(i) and the purchase price determined pursuant to subsection (c)(ii)
below, or
(ii) if such offer is received within the second, third, fourth or fifth
years following the Repurchase Option Closing, the purchase price set forth in
such third party offer (adjusted proportionately, if applicable, to apply to all
of the Assets and the Business).
Upon exercise of the Prime Right of First Refusal, each of
Prime and BDEC shall deliver such other agreements, documents, instruments and
certificates, and take such other action, as may be reasonably necessary in
order to consummate the purchase and sale of the Assets and the Business on the
same terms and conditions as proposed by the third party, other than price and
except as set forth in subsection (d) below. In order to ensure the availability
of the rights granted to Prime under this subsection (c), BDEC agrees that,
during the five (5)-year period following its exercise of the Repurchase Option,
it shall not sell, transfer, assign or otherwise dispose of any of its right,
title or interest in and to any of the Assets or the Business (other than
dispositions in the ordinary course of business, dispositions of items being
replaced, or dispositions that, when considered with related dispositions, do
not exceed $500 in value), unless and until BDEC has given Prime the written
offer required hereunder and Prime has, in each case, either (I) declined in
writing to purchase the Assets and the Business, or (II) failed to respond to
BDEC within thirty (30) business days following its receipt of the written
offer.
(d) The parties agree that any acquisition pursuant to an exercise of the
Prime Right of First Refusal shall be accomplished through an asset purchase
unless the parties otherwise agree. In addition, Prime may elect, in its sole
discretion, to pay the purchase price in cash at the closing, and such method
shall be an acceptable form of payment, regardless of the form of payment
contemplated in the third party offer.
4.8 Forfeiture of Warrants, Certain Other Rights. In addition to any other
forfeiture of or limitation on rights granted to the Sellers under this
Agreement, each of the Sellers acknowledges and agrees that all Primary Warrants
and Target Center Warrants shall irrevocably terminate immediately and without
notice upon the occurrence of any of the following:
--------------------------------------------
(a) Any exercise by BDEC of the Repurchase Option granted in Section 4.7;
or
(b) Any breach by any of the Sellers under any of the Transaction Documents
or any agreement, contract, document or instrument executed by such Seller that
inures to the benefit of Newco I, Newco II, Prime, or any of Prime's affiliates,
including, without limitation, (i) any Consulting Agreement (as hereinafter
defined) to which such Seller is a party and (ii) any note or security agreement
to which such Seller is a party.
4.9 Insurance. Newco I and Newco II agree to maintain, for five (5) years
after the Closing Date, a prior acts insurance policy providing insurance
coverage of the same scope, in the same amounts and subject to the same
deductibles as the BDEC's insurance in effect immediately prior to the Closing
Date. ---------
4.10 Guaranty of PMSI. PMSI hereby unconditionally and irrevocably
guarantees each of the payment and performance obligations of Prime hereunder
and under each of the Transaction Documents. Without limiting the foregoing,
PMSI agrees that if Prime shall default in any obligation to pay to any
Seller(s) or Newco I any amount then due and payable by Prime to such Seller(s)
or Newco I under ARTICLE I or ARTICLE VII hereunder, PMSI shall immediately pay
such amount to such Seller(s) or Newco ----------------
I. PMSI hereby agrees not to require any Seller to proceed against Prime or
any other person or to pursue any other remedy before proceeding against
PMSI under this guaranty.
4.11 Tucson Earnout. Prime and BDEC acknowledge and agree that the
assets located at 000 X. Xxxxx Xxxx, Xxxxxx, Xxxxxxx (the "Tucson Assets"), and
any business conducted using the Tucson Assets (the "Tucson Operations"), are
included within the Assets and Business and are, pursuant to Section 1.1 of this
Agreement, transferred to Newco II as of the Effective Time. In consideration of
the transfer of the Tucson Assets and the Tucson Operations to Newco II, Prime
agrees to pay, after September 1, 2000, in accordance with the provisions below,
an amount equal to sixty percent (60%) of the Tucson Gross Value (the "Earnout
Payment"). For purposes of this Section, "Tucson Gross Value" shall mean (a) six
(6) times the recurring EBITDA arising solely from the Tucson Operations between
the dates of September 1, 1999 and September 1, 2000 (the "Earnout Period"),
minus (b) the amount of all debt, liabilities and other obligations,
collectively, incurred by Newco II that relate to the Tucson Assets or the
Tucson Operations, and that arose during the Earnout Period (excluding, however,
accounts payable and accrued liabilities arising from normal operating
expenses). On or prior to November 1, 2000, Prime shall provide BDEC with a
written statement setting forth the Earnout Payment. Following delivery of such
statement, BDEC shall have thirty (30) days during which it may dispute the
calculation of the Earnout Payment, and any dispute shall be resolved pursuant
to the arbitration provisions of this Agreement. If BDEC agrees with the
calculation of the Earnout Payment, or fails to respond within such thirty (30)
day period, then the amount of the Earnout Payment reflected in the statement
shall be final and binding on both BDEC and Prime. Promptly following final
determination of the amount of the Earnout Payment pursuant to this Section,
Prime shall pay the Earnout Payment in immediately available funds. In
connection with the payment of the Earnout Payment by Prime, BDEC agrees to
deliver all agreements, documents, instruments and certificates, and take such
other action, as may be reasonably necessary in order to evidence the conveyance
of the Tucson Assets and Business pursuant to Section 1.1 of this Agreement.
ARTICLE V )
Conditions to Closing )
5.1 Prime's Closing Obligations. At the Closing, Prime shall (each of which
is a condition to the obligations of each Seller to Close):
---------------------------
(a) pay the Purchase Price to BDEC;
(b) ensure that the Primary Warrants are delivered to BDEC;
(c) execute and deliver the Assignment and Assumption Agreement, the
Organizational Documents, the Credit Documents to which it is a party and each
other Transaction Document to which it is a party; and
(d) deliver such good standing certificates, officer certificates, and
similar documents and certificates as counsel for BDEC may reasonably
require. 5.2 Sellers Closing Obligations. At the Closing, each Seller
shall, as applicable (each of which is a condition to the obligations of
Prime to Close): ---------------------------
(a) execute and deliver the Assignment and Assumption Agreement, the
Organizational Documents, the Collocation and Employee and Cost Sharing
Agreement substantially in the form attached hereto as Exhibit I (the
"Collocation Agreement"), the Credit Documents, and the other Transaction
Documents, in each case, only where it is a party thereto; ---------
(b) except for LASIK and BDEC, execute and deliver a consulting
agreement, in substantially the form attached hereto as Exhibit J (the
"Consulting Agreement");
(c) cause each owner of BDEC and LASIK who is not a "Seller" under
this Agreement to execute and deliver, for the benefit of Prime, PMSI and
their affiliates, a non-compete agreement containing terms and provisions
consistent with those contained in Sections 9.3 through 9.7 of this
Agreement;
(d) deliver or cause to be delivered true and correct copies of
executed consents whereby Barnet, Dulaney, Rosenberg, Xxxxxxx and Xxxxxxx
and other managers, officers and/or members of BDEC or LASIK have, in their
respective capacities as managers, officers and/or members of BDEC or
LASIK, as applicable, each approved of and ratified (as necessary) BDEC's
or LASIK's execution and delivery of, and performance under, this Agreement
and each Transaction Document; and
(e) deliver such good standing certificates, officer certificates, and
similar documents and certificates as counsel for Prime may reasonably
require.
5.3 Newco I's Closing Obligations. At the Closing, Newco I shall
execute and deliver the Credit Documents to which it is a party, each
Transaction Document to which it is a party and such good standing
certificates, officer certificates, and similar documents and certificates
as counsel for Prime or any of the Sellers may reasonably require.
--------------------------------------
5.4 Newco II's Closing Obligations. At the Closing, Newco II shall
execute and deliver the Assignment and Assumption Agreement, the
Collocation Agreement, the Credit Documents to which it is a party, each
Transaction Document to which it is a party and such good standing
certificates, officer certificates, and similar documents and certificates
as counsel for Prime or any of the Sellers may reasonably require.
---------------------------------------
ARTICLE VI )
Indemnification of Prime, Newco I and Newco II
)
6.1 Indemnification of Prime, Newco I and Newco II.
(a) BDEC and LASIK, each jointly and severally, agree to
indemnify and hold harmless Prime, each subsidiary and/or affiliate of Prime
(including, without limitation, PMSI), each officer, director, shareholder,
manager, member, partner, employee, agent, or representative of Prime and,
following the Closing, Newco I and Newco II (collectively, the "Prime
Indemnified Parties"), from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs and attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) (collectively, "Indemnified Costs")
in connection with the commencement or assertion of any action, proceeding,
demand, or claim by a third party (collectively, a "third-party action") which
any of the Prime Indemnified Parties may sustain, arising out of (i) any breach
or default by any Seller of any of the representations, warranties, covenants or
agreements contained in this Agreement or any Transaction Document (including,
without limitation, the Organizational Documents), (ii) any obligation or
liability of BDEC not assumed by Newco II pursuant to the Assignment and
Assumption Agreement, (iii) any transaction or occurrence involving or related
to the ASC or PRG or any purchase of the assets of the ASC by BDEC (including,
without limitation, claims by a trustee in bankruptcy), or (iv) any obligations
or liabilities with respect to any claims arising out of actions or omissions by
any Seller (excluding any acts or omissions after the Closing in such Seller's
capacity as a member of Newco I or Newco II.
(b) Each of Xxxxxxx, Barnet and Xxxxxxxxx, severally, and not
jointly, agrees to indemnify and hold harmless each Prime Indemnified Party from
and against any and all Indemnified Costs incurred in connection with the
commencement or assertion of any third-party action which any of the Prime
Indemnified Parties may sustain, arising out of any breach or default by him of
any of the representations, warranties, covenants or agreements made by him in
this Agreement or any Transaction Document (including, without limitation, the
Organizational Documents).
6.2 Defense of Third-Party Claims. A Prime Indemnified Party shall
give prompt written notice to the indemnifying party or parties
(collectively, the "indemnifying party") of the commencement or assertion
of any third party action in respect of which such Prime Indemnified Party
shall seek indemnification hereunder. Any failure to so notify the
indemnifying party shall not relieve the indemnifying party from any
liability that it may have to such Prime Indemnified Party under this
ARTICLE ----------------------------- unless the failure to give such
notice materially and adversely prejudices the indemnifying party. The
indemnifying party shall have the right to assume control of the defense
of, settle, or otherwise dispose of such third-party action on such terms
as it deems appropriate; provided, however, that:
(a) The Prime Indemnified Party shall be entitled, at his,
her, or its own expense, to participate in the defense of such third-party
action;
(b) The indemnifying party shall obtain the prior written approval of
the Prime Indemnified Party, which approval shall not be unreasonably
withheld, before entering into or making any settlement, compromise,
admission, or acknowledgment of the validity of such third-party action or
any liability in respect thereof if, pursuant to or as a result of such
settlement, compromise, admission, or acknowledgment, injunctive or other
equitable relief would be imposed against the Prime Indemnified Party;
(c) The indemnifying party shall not consent to the entry of any
judgment or enter into any settlement with or involving any claimant or
plaintiff that does not include as an unconditional term thereof the
execution and delivery of a release from all liability in respect of such
third-party action by such claimant or plaintiff to, and in favor of, each
Prime Indemnified Party; and
(d) The indemnifying party shall not be entitled to control
(but shall be entitled to participate at their own expense in the defense of),
and the Prime Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action as to which the indemnifying party fails to assume the
defense within thirty (30) days; provided, however, that the Prime Indemnified
Party shall make no settlement, compromise, admission, or acknowledgment which
would give rise to liability (other than liability to Prime Indemnified Parties
under this Agreement) on the part of the indemnifying party or BDEC, without the
prior written consent of the indemnifying party.
(e) The indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this ARTICLE to or
for the account of the Prime Indemnified Party from time to time promptly upon
receipt of bills or invoices relating thereto or when otherwise due and payable,
provided that the Prime Indemnified Party has agreed in writing to reimburse the
indemnifying party for the full amount of such payments if the Prime Indemnified
Party is ultimately determined not to be entitled to such indemnification.
(f) The parties hereto shall extend reasonable cooperation in
connection with the defense of any third-party action pursuant to this
ARTICLE and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably requested.
6.3 Security. Without limiting or adversely affecting the rights of
Prime under Section 9.12, and in order to secure full and prompt payment of the
obligations of each of the Sellers under this ARTICLE, each of BDEC and LASIK
hereby grants to Prime a continuing security interest in and to distributions
either of them may be entitled to receive at any time after the Closing in
respect of any ownership interest held by either of them in either Newco I or
Newco II. In connection with the grant of a security interest contained in this
Section, each of BDEC and LASIK agrees (i) to execute all documents, agreements,
instruments and certificates, and to take such other actions, as are necessary
in order to fully evidence and perfect such security interest, and (ii) that it,
for a period of five (5) years after the Closing, will not, without obtaining
the express prior written consent of Prime in each instance, grant or assign to
any person or entity rights of any nature in the distributions covered by the
security interest granted in this Section, irrespective of whether such rights
are to be senior or subordinate to the rights granted under this Section.
ARTICLE VII
Indemnification of Sellers
7.1 Indemnification of Sellers. Prime agrees to indemnify and hold
harmless each Seller, each subsidiary and/or affiliate of any Seller, each
officer, director, shareholder, manager, member, partner, employee, agent, or
representative of any Seller and, following the Closing, Newco I and Newco II
(collectively, the "Seller Indemnified Parties") from and against any and all
Indemnified Costs in connection with the commencement or assertion of any third
party action which any of Seller Indemnified Parties may sustain, arising out of
(i) any breach or default by Prime of any of the representations, warranties,
covenants or agreements contained in this Agreement or any Transaction Document
(including, without limitation, the Organizational Documents) or (ii) any
obligations or liabilities with respect to claims arising out of acts or
omissions (excluding any acts or omissions after the Closing in its capacity as
a member of Newco I or Newco II) by Prime, PMSI or one or more of the PMSI
Controlled Parties (excluding Newco I and Newco II).
7.2 Defense of Third-Party Claims. A Seller Indemnified Party shall
give prompt written notice to Prime of the commencement or assertion of any
third party action in respect of which such Seller Indemnified Party shall
seek indemnification hereunder. Any failure to so notify Prime shall not
relieve Prime from any liability that it may have to such Seller
Indemnified Party under this ARTICLE unless the failure to give such notice
materially and adversely prejudices Prime. Prime shall have
----------------------------- the right to assume control of the defense
of, settle, or otherwise dispose of such third-party action on such terms
as it deems appropriate; provided, however, that:
(a) The Seller Indemnified Party shall be entitled, at his or its own
expense, to participate in the defense of such third-party action;
(b) Prime shall obtain the prior written approval of the Seller
Indemnified Party, which approval shall not be unreasonably withheld,
before entering into or making any settlement, compromise, admission, or
acknowledgment of the validity of such third-party action or any liability
in respect thereof if, pursuant to or as a result of such settlement,
compromise, admission, or acknowledgment, injunctive or other equitable
relief would be imposed against the Seller Indemnified Party;
(c) Prime shall not consent to the entry of any judgment or enter into
any settlement with or involving any claimant or plaintiff that does not
include as an unconditional term thereof the execution and delivery of a
release from all liability in respect of such third-party action by such
claimant or plaintiff to, and in favor of, each Seller Indemnified Party;
and
(d) Prime shall not be entitled to control (but shall be entitled to
participate at its own expense in the defense of), and the Seller
Indemnified Party shall be entitled to have sole control over, the defense
or settlement, compromise, admission, or acknowledgment of any third-party
action as to which Prime fails to assume the defense within thirty (30)
days; provided, however, that the Seller Indemnified Party shall make no
settlement, compromise, admission, or acknowledgment which would give rise
to liability (other than liability to Seller Indemnified Parties under this
Agreement) on the part of Prime without the prior written consent of Prime.
(e) Prime shall make payments of all amounts required to be made
pursuant to the foregoing provisions of this ARTICLE to or for the account
of the Seller Indemnified Party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable,
provided that the Seller Indemnified Party has agreed in writing to
reimburse Prime for the full amount of such payments if the Seller
Indemnified Party is ultimately determined not to be entitled to such
indemnification.
(f) The parties hereto shall extend reasonable cooperation in
connection with the defense of any third-party action pursuant to this
ARTICLE and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably requested.
ARTICLE VIII
Exclusivity
8.1 Agreement. Each of the parties to this Agreement (excluding Newco
I) agrees that, following the Closing Date, it will not directly or indirectly
through any affiliate, except through Newco I or one of its wholly owned
subsidiaries, acquire, develop or establish other centers for Refractive
Surgery, or the assets thereof, anywhere in the United States ("Target
Centers"); provided, however, Prime, PMSI or one of their affiliates shall be
entitled to independently acquire or develop any Target Center to which any one
or more of the following apply:
(a) The aggregate purchase price paid to the seller of such Target
Center exceeds $11,009,000;
(b) Newco I is financially unable to acquire or develop such
Target Center using its existing financial resources (including resources that
may be available in such instance under the Development Facility and any other
lines of credit or credit facilities) without requiring a guarantee or other
financial or credit assistance of any member of Newco I, Prime, PMSI or any
affiliate of Prime or PMSI, as determined conclusively in each instance by
either (i) the agreement of not less than eighty percent (80%) of the managers
of Newco I or (ii) the failure of Newco I to close the acquisition of such
Target Center within one hundred twenty (120) days following Newco I's and such
Target Center's agreement on the initial principal terms of such acquisition
(which agreement includes, without limitation, agreement on a terms sheet or
execution of a non-binding letter of intent) because Newco I could not obtain
financing on reasonable market terms;
(c) The managers of Newco I decide not to pursue the acquisition or
development of such Target Center by the affirmative vote of not less than
eighty percent (80%) of the managers then serving on the board of managers
of Newco I;
(d) In the opinion of the board of directors of PMSI, such Target
Center cannot be acquired or developed by Newco I because of the
involvement with and/or direct or indirect ownership of a portion of Newco
I by any of Xxxxxxx, Barnet or Xxxxxxxxx;
(e) The acquisition or development of such Target Center was
initiated, arranged for, originated or financed by any entity affiliated
with PMSI (other than Newco I or Newco II, or any future subsidiaries of
either of them) which has previously acquired or developed a Target Center,
or an interest therein, pursuant to any of the exceptions to exclusivity
contained in subsections (a) through (g) of this Section;
(f) Any of Xxxxxxx, Barnet or Xxxxxxxxx has previously
terminated, breached or threatened to breach any Transaction Document, any
Credit Document, any Target Center Lending Document or any Consulting Agreement
to which he is a party (provided, however, that (A) each of Barnet, Xxxxxxx and
Xxxxxxxxx shall have thirty days within which to cure any breach or default
under his respective Consulting Agreement following delivery of notice of such
breach or default by Prime or PMSI and (B) any termination of any Consulting
Agreement that is agreed to in writing by Prime, or that is done to permit the
agreed upon full time employment of the respective individual by Newco II, shall
not be grounds for exception to the exclusivity obligation pursuant to this
subsection (f)); or
(g) the Closing does not occur on or before July 31, 1999 and Prime,
PMSI or any of their affiliates enters into a definitive agreement for the
acquisition of such Target Center prior to the expiration of forty five
(45) days immediately following the Closing.
8.2 Additional Qualifications, Limitations. In addition to the
qualifications and limitations set forth above, the following shall apply:
--------------------------------------
(a) All acquisitions of Target Centers must be approved in advance by
a majority of the board of directors of Prime;
(b) If the exclusivity obligation contained in Section 8.1 above does
not apply to a particular Target Center solely because of the limitation
set forth in Section 8.1(a), and Prime or one of its affiliates acquires
such Target Center prior to the occurrence of any of the events described
in Section 8.1(f), then
(i) before consummating such acquisition, Prime or
its acquiring affiliate shall provide thirty (30) days' prior written
notice to LASIK of such pending acquisition, and LASIK shall have ten
(10) days from its receipt of such notice to notify Prime or its
acquiring affiliate that LASIK would like to acquire a specified
portion of up to forty percent (40%) of the non-medical Refractive
Surgery portion of the interest being offered to Prime or its acquiring
affiliate in such acquisition, upon the same terms and conditions
agreed to by Prime; provided, however, that the participation right
granted in this subsection (i) shall not apply if (A) Prime or its
acquiring affiliate does not receive notice from LASIK of its election
to participate in such acquisition within the ten (10)-day period
provided for such notice, (B) LASIK refuses or is unable to finance
(after giving effect to subsection (ii) below) its specified portion of
the acquisition, (C) LASIK refuses or is unable to timely execute,
deliver and perform all agreements, documents and instruments required
to be executed, delivered and performed by it (to the extent consistent
with those executed by Prime or its acquiring affiliate in such
transaction) or (D) LASIK fails or refuses to timely execute and
deliver the promissory note and security agreement described in Section
8.2(e) below in the event LASIK borrows any funds pursuant to
subsection (ii) below;
(ii) If LASIK has fully complied with its obligations
and met all other conditions set forth under subsection (i), then, with
respect to that portion of the purchase price to be paid by LASIK under
subsection (i) ("LASIK's Purchase Price"), LASIK shall be entitled to
request in writing and receive financing, made available by Prime or
one of its affiliates, in an amount not to exceed ten percent (10%) of
the aggregate purchase price for the non-medical Refractive Surgery
portion of the interest being offered to Prime or its acquiring
affiliate in such acquisition (but in no event may such amount exceed
LASIK's Purchase Price); provided, however, that LASIK's rights, and
Prime's or its acquiring affiliate's obligations, under this subsection
(ii) are subject entirely and in all respects to Prime's obtaining
prior written approval from (A) the bank syndication under its
outstanding borrowing facilities, and (B) any necessary number of
holders of Prime's outstanding 8 3/4 Senior Subordinated Promissory
Notes (as may be required pursuant to the Indenture governing such
Notes);
(c) If the exclusivity obligation contained in Section 8.1
above does not apply to the acquisition of a particular Target Center solely
because of the limitation set forth in Section 8.1(d) or Section 8.1(e), and
Prime or one of its affiliates acquires such Target Center prior to the
occurrence of any of the events described in Section 8.1(f), then LASIK (or any
combination of the principals of LASIK, but only pursuant to and in the manner
provided for in written instructions delivered to PMSI and Prime by LASIK prior
to such acquisition) shall receive warrants in connection with such acquisition,
in substantially the form attached hereto as Exhibit A (the "Target Center
Warrants"), entitling LASIK or such other person(s) to purchase, at one hundred
ten percent (110%) of PMSI's closing share price as quoted by NASDAQ on the
closing date of the acquisition of such Target Center, that whole number of
shares of common stock of PMSI determined by:
(i) if the Target Center is acquired solely in reliance on the
exception contained in Section 8.1(d), multiplying (i) 0.0075, by (ii) the
portion of the purchase price, expressed as a number and not in dollars,
paid by Prime or its acquiring affiliate in respect of the Refractive
Surgery operations of such Target Center (specifically excluding the value
of any non-Refractive Surgery operations of such Target Center that are
acquired pursuant to subsection (h) below); and
(ii) if the Target Center is acquired solely in reliance on the
exception contained in Section 8.1(e), multiplying (i) 0.0025, by (ii) the
portion of the purchase price, expressed as a number and not in dollars,
paid by Prime or its acquiring affiliate in respect of the Refractive
Surgery operations of such Target Center (specifically excluding the value
of any non-Refractive Surgery operations of such Target Center that are
acquired pursuant to subsection (h) below);
(d) The rights granted under Section 8.2(b) are personal to LASIK and,
notwithstanding any other provision of this Agreement, may not be assigned
to or exercised by any other party;
(e) Any and all amounts loaned to LASIK pursuant to Section
8.2(b)(ii) above shall be evidenced by a promissory note which shall provide
that, among other things (i) such amounts shall bear interest at the per annum
rate of fifteen percent (15%) or, following any default by LASIK under such
promissory note or under any other agreement, document or instrument executed by
LASIK for the benefit of Prime, PMSI or one of their affiliates, the maximum
rate allowed by law, (ii) such amounts shall be repaid in equal monthly
installments of principal and interest over a period of sixty (60) months, and
(iii) the promissory note shall be governed by Texas law; provided further that
such amounts shall be secured by a security agreement executed and delivered by
LASIK to Prime or its acquiring affiliate, securing all of LASIK's obligations
under such promissory note with all of LASIK's right, title and interest in and
to the Target Center being acquired (all notes, security agreements and other
agreements, documents, instruments or certificates required to be executed by
any party pursuant to this subsection (e) are referred to herein as the "Target
Center Lending Documents," and all Target Center Lending Documents shall be in
form and substance reasonably satisfactory to Prime and, unless specifically
specified otherwise, shall be deemed included in the Transaction Documents for
purposes of this Agreement, regardless of when executed);
(f) LASIK agrees that, notwithstanding any other provision of
this Agreement or the Transfer Restriction Agreement, it shall not be entitled
to transfer or assign, to any person or entity, any direct or indirect interest
in any Target Center acquired by it pursuant to the provisions of Section
8.2(b)(ii), until such time as (i) LASIK has irrevocably forfeited any and all
rights to borrow funds pursuant to Section 8.2(b)(ii) above (either by
termination of such rights pursuant to the terms of this Agreement or by
delivery by LASIK to Prime of an irrevocable, perpetual and binding waiver of
such rights) and (ii) there are no amounts (including principal and interest)
outstanding under any promissory note previously executed by LASIK pursuant to
Section 8.2(b)(ii); provided further, that any transfer or assignment of such
interest in any such Target Center in violation of this subsection shall be null
and void and shall not be given effect by PMSI, Prime or any other party to this
Agreement;
(g) Notwithstanding the exclusivity obligation contained in
Section 8.1, LASIK and/or one or more of their affiliates shall be entitled to
independently acquire or develop any Target Center to which any one or more of
the following apply: (i) a majority of the board of directors of Prime votes
against the acquisition of such Target Center; or (ii) Newco II is unable to
finance the acquisition of such Target Center using the Development Facility,
solely because of the limitation set forth in Section 4.3(c); provided, however,
that:
(y) in either instance, LASIK or its affiliates must acquire such
Target Center within one hundred twenty (120) days after the occurrence or
circumstances that triggered the application of this subsection (g), and
upon any failure to so acquire such Target Center within such one hundred
twenty (120) day period, the exclusivity obligation contained in Section
8.1 shall again apply with respect to such Target Center; and
(z) with respect to the exception to exclusivity set
forth in subsection (ii) of this subsection (g), before LASIK or one of
its affiliates acquires such Target Center, LASIK or its acquiring
affiliate shall provide thirty (30) days' prior written notice to Prime
of such pending acquisition, and Prime shall have ten (10) days from
its receipt of such notice to notify LASIK or its acquiring affiliate
that Prime would like to acquire a specified portion of up to forty
percent (40%) of the interest being offered to LASIK or its acquiring
affiliate in such acquisition, upon the same terms and conditions
agreed to by LASIK; provided, however, that the participation right
granted in this subsection (z) shall not apply if (A) LASIK or its
acquiring affiliate does not receive notice from Prime of its election
to participate in such acquisition within the ten (10)-day period
provided for such notice, (B) Prime refuses or is unable to finance its
specified portion of the acquisition, or (C) Prime refuses or is unable
to timely execute, deliver and perform all agreements, documents and
instruments required to be executed, delivered and performed by it (to
the extent consistent with those executed by LASIK or its acquiring
affiliate in such transaction); and
(h) The exclusivity obligation contained in Section 8.1 shall
not restrict Prime or PMSI, or any affiliate of either of them, from
independently acquiring, all or any portion of the non-Refractive Surgery assets
and business of a Target Center to the extent those assets and business are not
used primarily in, or materially relied on for, the conduct of Refractive
Surgery by such Target Center, and LASIK shall not, with respect to any such
acquisition, be entitled to any of the rights granted in this ARTICLE VIII,
including without limitation, the rights granted in subsections (b) and (c) of
this Section.
8.3 Effect. No provision of this ARTICLE VIII, shall be construed to
require any party to this Agreement to purchase any Target Center. ------
8.4 Automatic Termination. This entire ARTICLE VIII shall terminate
and become null and void automatically:
(a) if any party to this Agreement: (i) becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment for the benefit
of creditors, or admits in writing its inability to pay its debts as they become
due; (ii) generally is not paying its debts as such debts become due, and one of
the other parties, in good faith, determines that such event or condition could
frustrate the operation of this ARTICLE VIII or otherwise inhibit the delinquent
party's ability to perform its obligations under this Agreement or any
Transaction Document; (iii) has a receiver, trustee or custodian appointed for,
or take possession of, all or substantially all of the assets of such party,
either in a proceeding brought by such party or in a proceeding brought against
such party; (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state insolvency, bankruptcy or
similar laws (all of the foregoing hereinafter collectively called "Applicable
Bankruptcy Law"), or an involuntary petition for relief is filed against such
party under any Applicable Bankruptcy Law, or an order for relief naming such
party is entered under any Applicable Bankruptcy Law, or any composition,
rearrangement, extension, reorganization or other relief of debtors now or
hereafter existing is requested or consented to by such party; (v) fails to have
discharged within a period of thirty (30) days any attachment, sequestration or
similar writ levied upon, or any claim against or affecting, any property of
such party; or (vi) fails to pay within thirty (30) days any final money
judgment against such party (the events described in this Section are
hereinafter referred to as "Bankruptcy Events");
(b) upon any exercise of the Repurchase Option granted in Section 4.7;
(c) if, at any time after the Closing, Barnet and Xxxxxxx own,
collectively, less than sixty percent (60%) of the total outstanding
ownership interests of BDEC (after assuming the conversion, exchange or
exercise of any and all securities or rights convertible into, or
exchangeable or exercisable for, ownership interests of BDEC); or
(d) upon the expiration of the five (5) year period
immediately following the Closing Date.
ARTICLE IX
Post Closing Agreements
9.1 Transition of Business. Each Seller agrees to cooperate fully with
Prime and Newco II in transitioning the Business existing prior to the Closing,
including the relationships maintained by BDEC (with respect to the Business),
to Newco II after the Closing; and, each Seller agrees not to take any action or
make any disclosure, including disclosures related to the transactions
contemplated by this Agreement, which (with respect to the Business) might alter
or impair any relationship with any customer, or other service recipient, person
or entity which did business with BDEC prior to the Closing. With respect to the
Business, each Seller agrees to promptly remit to Newco II any payments received
by BDEC or any Seller for services provided by BDEC (as part of the Business) or
Newco II after the Effective Time. Newco I, Newco II and Prime each agree to
promptly remit to BDEC any payments received by it for services provided by BDEC
prior to the Effective Time. Furthermore, Sellers agree to deposit any such
payments received directly to a deposit account designated and controlled by
Newco II or to take such other action as may be requested by Prime to implement
and maintain a system for remitting payments due Newco II which come into the
possession or control of BDEC or any Seller.
9.2 Ratification by Newco I. Prime, BDEC and LASIK each agree that by
executing this Agreement they are deemed to be voting their ownership
interests in Newco I and Newco II, as applicable, to authorize Newco I and
Newco II to enter into and perform this Agreement and each of the
Transaction Documents to which either is a party. Prime, BDEC and LASIK
each agree to execute such resolutions and written consents, and take such
other actions, in their capacities as members of Newco I and Newco
----------------------- II, as any party shall reasonably require after the
Closing to have Newco I and Newco II ratify and adopt this Agreement,
notwithstanding the official date of Newco I's and Newco II's creation.
9.3 Confidentiality Agreement. Each of Prime, PMSI, and each Seller
acknowledges that through its relationship with Newco I and Newco II, it will be
exposed to Proprietary Information (as defined below) of Newco I, Newco II
and/or each of their present or future affiliates (which includes, without
limitation, BDEC, LASIK, Prime, PMSI and each of their present or future
affiliates) (the party owning such Proprietary Information is referred to as the
"Discloser"), that such Proprietary Information is unique and valuable and that
such Discloser would suffer irreparable injury if its Proprietary Information
were divulged to those in competition with Discloser. "Proprietary Information"
shall be all information concerning Discloser which a party acquires, or to
which it has access through its relationship with Discloser, Newco I or Newco
II, that has not been publicly disclosed by Discloser or that is not a matter of
common knowledge among Discloser's competitors, including, but not limited to,
information relating to any inventions, processes, software, formulae, plans,
devices, compilations of information, technical data, mailing lists, management
strategies, business distribution methods, names of suppliers (of both goods and
services) and customers, names of employees and terms of employment,
arrangements entered into with suppliers and customers, including, but not
limited to, proposed expansion plans of Discloser, marketing and other business
and pricing strategies, and trade secrets of Discloser.
Except with prior written approval of Discloser, Prime, PMSI, and each
Seller agrees that it will not, at any time after the Closing: (i) directly
or indirectly, disclose any Proprietary Information to any person except
its owners, directors, managers, officers, employees, agents and
consultants who need to know such Proprietary Information in connection
with such party's relationship with Newco I or Newco II nor (ii) use
Proprietary Information in any way, except for the purposes of Newco I or
Newco II.
Within forty-eight (48) hours of termination of its ownership of or
consulting relationship with Newco I or Newco II, as applicable, whether
voluntary or involuntary, Prime, PMSI, and each Seller will deliver to the
appropriate Discloser (without retaining copies thereof) all documents, records
or other memorializations including copies of documents and any notes which it
has prepared that contain Proprietary Information, all other tangible
Proprietary Information in its possession or control and all of Discloser's
credit cards, keys, equipment, vehicles, supplies and other materials that are
in its possession or under its control.
9.4 Non-Competition Agreement. Each of PMSI, Prime, and each Seller, as
a material inducement to one another to enter into this Agreement, hereby agrees
that, at all times during which the provisions of ARTICLE VIII are applicable,
and at all times until five (5) years after either LASIK and its affiliates
(excluding PMSI, Prime, and the subsidiaries of either of them), or Prime and
its affiliates (excluding LASIK), no longer own any equity or other interest in
Newco I, such party will not directly or indirectly, either through any kind of
ownership (other than ownership of securities of a publicly held corporation of
which it owns less than five percent (5%) of any class of outstanding
securities), or as a principal, shareholder, agent, employer, advisor,
consultant, co-partner or in any individual or representative capacity whatever,
either for its own benefit or for the benefit of any other person, corporation
or other entity, without the prior written consent of each other party hereto,
commit any of the following acts, which acts shall be considered violations of
this covenant not to compete:
(a) Except through Newco I or its subsidiaries, or Newco II,
directly or indirectly engage in, or provide, anywhere within a fifty (50) mile
radius of any center or facility that provides Refractive Surgery and is owned,
directly or indirectly, partially or wholly, by Newco I or a subsidiary of Newco
I (collectively, the "Restricted Area"), any services (other than services
included in the practice of medicine) related to (i) the operating of centers or
facilities that provide Refractive Surgery, (ii) the manufacture, maintenance,
refurbishing, repair, sale, or leasing of any equipment related to or necessary
for the operating of centers or facilities that provide Refractive Surgery, or
(iii) providing any management services, training or consulting services related
to any of the activities described in (i) or (ii);
(b) Except through Newco I or its subsidiaries, or Newco II,
directly or indirectly provide, anywhere within the Restricted Area, (i)
facilities, equipment and non-physician personnel for the performance by
physicians of Refractive Surgery, (ii) the marketing, scheduling and management
of Refractive Surgery (but excluding, with respect to either Barnet or Xxxxxxx,
marketing, scheduling and management of patients for treatment by Barnet or
Xxxxxxx, respectively), (iii) the credentialing and scheduling of physicians to
perform Refractive Surgery and (iv) the billing, collecting or accounting for
the use of any such facilities, equipment or non-physician personnel.
(c) Directly or indirectly request or advise any person, firm,
physician, corporation or other entity having a business relationship with
Newco I or any of its subsidiaries, Prime, each Seller or any affiliate or
related entity of any of them, to withdraw, curtail, or cancel its business
with such person or entity; or
(d) Directly or indirectly hire any employee of Newco I or any of its
subsidiaries, Prime, any Seller or any affiliate or related entity of any
of them, or induce or attempt to influence any employee of Newco I or any
of its subsidiaries, Prime, any Seller or any such affiliate or related
entity to terminate his or her employment with such person or entity.
9.5 Exclusivity. Each of the parties hereto acknowledges and agrees
that any acquisition or development of a Target Center by Prime, PMSI,
Newco II or a Seller through an entity not owned (wholly or partially,
directly or indirectly) by Newco I shall be subject to the provisions of
Section 9.4, regardless of whether such acquisition or development is
contemplated by or provided for in the provisions of ARTICLE VIII.
-----------
9.6 Agreement. Each of Prime, PMSI and each Seller has reviewed and
carefully considered the provisions of Sections 9.3 and 9.4 and, having
done so, agrees that the restrictions applicable to it as set forth therein
(a) are fair and reasonable with respect to time, geographic area and
scope, (b) are not unduly burdensome to them, and (c) are reasonably
required for the protection of the interests of the other parties hereto
for whose benefit such restrictions were agreed upon. ---------
9.7 Remedies. Each of Prime, PMSI and each Seller agrees that a
violation on its part of any applicable covenant contained in Sections 9.3 or
9.4 will cause the other parties hereto for whose benefit such restrictions were
agreed upon irreparable damage for which remedies at law may be insufficient,
and for that reason, it agrees that the other parties shall be entitled as a
matter of right to equitable remedies, including specific performance and
injunctive relief, therefor. The right to specific performance and injunctive
relief shall be cumulative and in addition to whatever other remedies, at law or
in equity, that the other parties may have, including, specifically, recovery of
additional damages.
9.8 Special Options to Sell or Acquire Interests In Newco I.
(a) Option to Sell. Upon the expiration of five (5) years
immediately following the Closing Date, if no Seller is in breach of this
Agreement or any other Transaction Document, all or any of the Sellers shall at
any time, and from time to time, be entitled to require that Prime purchase from
such Seller(s) up to a maximum twenty percent (20%) interest in Newco I (when
aggregated with all other purchases pursuant to this Section), upon the terms
and conditions hereinafter set forth, by giving written notice of such election
to Prime.
(b) No Further Obligation. The Sellers acknowledge and agree that
Prime shall be under no obligation to notify any Seller of the exercise by
another Seller of rights under this Section, and that Prime may not, under
any circumstances, be required to purchase more than an aggregate twenty
percent (20%) interest in Newco I (considering all purchases pursuant to
this Section together), regardless of whether one Seller disposes of more
or less of an interest in Newco I under this --------------------- Section
than another Seller.
(c) Purchase Price. The purchase price for any interest transferred
pursuant to this Section shall, in the absence of an agreement on price
between Prime and the applicable Seller(s), be determined as follows:
--------------
(i) If the exercise of the option hereunder is after the expiration of
such ninety (90) day period, then the purchase price must be mutually
agreed upon by the applicable Seller(s) and Prime.
(ii) If the exercise of the option hereunder is
within the ninety (90) day period immediately following the expiration
of the five (5) year period described in Section 9.8(a), then Prime
shall select a certified business appraiser (that is a member of either
the American Society of Appraisers or the Institute of Business
Appraisers) to value the interest being transferred. If the selling
Seller(s) under this Section do not agree with the value determined by
Prime's appraiser, such Seller(s) may, at their own expense, select a
second appraiser that is a member of one or both of the above named
professional organizations to value the interest being transferred. If
the two appraisers cannot agree on the value of the interest being
transferred, the two appraisers shall mutually select a third appraiser
(that meets the above described membership requirements) to value the
interest being transferred together with the first two appraisers,
based on a majority vote. Any valuation determined by such third
appraiser shall be final, binding and conclusive. The expense of such
third appraiser shall be paid by the selling Seller(s), unless the
appraised value ultimately determined is more than ten percent (10%)
greater than the value determined by Prime's original appraiser, in
which event Prime shall bear the entire cost of the third appraiser. If
the exercise of the option hereunder is after the expiration of such
ninety (90) day period, then the purchase price must be mutually agreed
upon by the applicable Seller(s) and Prime.
(d) Such purchase price shall be paid in immediately available
funds at the closing of the transfer pursuant to this Section. The closing of
any purchase and sale pursuant to this Section shall take place at the principal
office of Prime or such other place designated by Prime and the applicable
Seller(s), on the thirtieth day (or if such thirtieth day is not a business day,
the next business day following the thirtieth day) following the final
determination of a purchase price under subsection (c) above. At such closing,
Seller shall execute all documents and take such other actions as may be
reasonably necessary to deliver to Prime title to the interest transferred, free
and clear of all liens, claims, encumbrances or restrictions of any kind or
nature whatsoever, except those established in the Organizational Documents and
other governing documents of Newco I.
(e) Exceptions. Notwithstanding the foregoing provisions of this
Section 9.8, Prime shall not be obligated to purchase any interest in Newco
I pursuant to this Section if Prime is unable to obtain financing for such
purchase from a third party upon reasonable market terms, after Prime and
PMSI have exercised commercially reasonable efforts to obtain such
financing. ----------
9.9 Obligation to Extinguish Debt. Each of BDEC, Barnet and Xxxxxxx
agrees that it or he will take all necessary action, including, without
limitation, execute any documents and pay any amounts, that may be
necessary to cause the lien on certain of the Assets in favor of Camel Back
Bank (described more fully on Schedule 1.4 attached hereto) to be fully,
unconditionally and irrevocably released on or prior to September 30, 1999.
----------------------------- ------------
9.10 Notice of Certain Transfers. Without in any manner restricting or
modifying any prohibition on the sale of BDEC ownership interests by any of
the owners of BDEC, each of the Sellers agrees that it must notify Prime
and Newco II in writing within three (3) days of learning of any transfer
of BDEC ownership interests. ---------------------------
9.11 Fiscal Years of Newco I and Newco II. Each of the parties to this
Agreement hereby agrees to vote its interests, if any, in Newco I and Newco
II, and to vote in its capacity as a manager of Newco I or Newco II, if
applicable, to cause the fiscal years of each of Newco I and Newco II to
end annually on December 31. ------------------------------------
9.12 Right of Offset. Each Seller agrees that Newco I and Newco II
shall each have rights of offset against distributions to either BDEC and/or
LASIK in respect of any ownership interest either may have in either Newco I or
Newco II at any time following the Closing, for any and all debts, obligations
or liabilities that any Seller may have to Prime or PMSI, including, without
limitation, any liability arising out of or relating to such Seller's indemnity
obligations under this Agreement or any Transaction Document. Each Seller hereby
authorizes and directs Newco I and Newco II, and appoints each of Newco I and
Newco II as its attorney in fact, to withhold and pay such offset amounts to
Prime and to take all other actions necessary to make such payment. Each of
Newco I and Newco II hereby agrees to promptly remit any and all such offset
amounts to Prime upon request.
ARTICLE X
Miscellaneous
10.1 Collateral Agreements, Amendments, and Waivers. This Agreement
(together with the Transaction Documents) supersedes all prior documents,
understandings, and agreements, oral or written, relating to this
transaction and constitutes the entire understanding among the parties with
respect to the subject matter hereof. Any modification or amendment to, or
waiver of, any provision of this Agreement (or any Transaction Document
unless otherwise expressly provided therein) may be made only by
---------------------------------------------- an instrument in writing
executed by each party thereto.
10.2 Successors and Assigns. No party's rights or obligations under
this Agreement may be assigned without the prior written consent of all
parties hereto, except that Prime may assign its rights and obligations
hereunder to any entity, more than fifty percent (50%) of the voting equity
ownership interests of which is at the time owned, directly or indirectly,
by PMSI. Any assignment in violation of the foregoing shall be null and
void. Subject to the preceding sentences of this Section,
---------------------- the provisions of this Agreement (and, unless
otherwise expressly provided therein, of any Transaction Document) shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and assigns.
10.3 Expenses. Except as set forth in the following sentence,
regardless of whether the transactions contemplated hereby are consummated, each
party hereto shall pay all of its costs and expenses incurred by it in
connection with this Agreement, including the fees and disbursements of its
legal counsel and accountants. Up to $3,000 of the costs and expenses incurred
by Prime and associated specifically with the formation and documentation of
Newco I and Newco II, including legal fees and expenses for drafting the
Organizational Documents, shall be paid to Prime, or reimbursed, by Newco II.
10.4 Severability. This Agreement (including, without limitation, the
provisions contained in Section 9.3 and Section 9.4) is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules and regulations. If any provision of
this Agreement, or the application thereof to any person or circumstance,
shall, for any reason and to any extent, be invalid or unenforceable but
the extent of the invalidity or unenforceability does not ------------
destroy the basis of the bargain between the parties as contained herein,
the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be effected thereby, but rather
shall be enforced to the fullest extent permitted by law.
10.5 Waiver. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall operate as a
waiver of such right, power, or privilege; nor shall any single or partial
exercise of any such right, power, or privilege preclude any other or
future exercise thereof or the exercise of any other right, power or
privilege. ------
10.6 Notices. Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein, under Transaction
Document) shall be given in writing and shall be deemed received (a) when
delivered personally or by courier service to the relevant party at its address
as set forth below or (b) if sent by mail, on the third day following the date
when deposited in the United States mail, certified or registered mail, postage
prepaid, to the relevant party at its address indicated below:
Prime, Newco I and Prime Medical Operating, Inc., Prime/BDR Acquisition, L.L.C.
Newco II: and Prime/BDEC Acquisition, L.L.C.
0000 Xxxxxxx xx Xxxxx Xxxxxxx
Xxxxx X-000
Xxxxxx, Xxxxx 00000
Attention: President
with a copy to: Xx. Xxxxxxx X. XxXxxx
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Sellers: Barnet Xxxxxxx Eye Center, P.L.L.C., LASIK
Investors, L.L.C., Xxxxx X. Xxxxxxx, M.D.,
Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
with a copy to: Xx. Xxxx X. Xxxxxxxx
Xxxxxx & Xxxxxx, L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Each party may change its address for purposes of this Section by
proper notice to the other parties.
10.7 Survival of Agreement. Regardless of any investigation at any time
made by or on behalf of any party hereto or of any information any party may
have in respect thereof, all of the provisions of this Agreement and the
Transaction Documents shall survive the Closing.
10.8 Further Assurances. At, and from time to time after, the Closing, each
party shall, at the request of another party, but without further consideration,
execute and deliver such other instruments of conveyance, assignment,
assumption, transfer and delivery and take such other action as such party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
10.9 Construction, Knowledge and Materiality. This Agreement and each
Transaction Document shall be construed without regard to the identity of the
person who drafted the various provisions of the same. Each and every provision
of this Agreement and each Transaction Document shall be construed as though all
of the parties participated equally in the drafting of the same. Consequently,
the parties acknowledge and agree that any rule of construction that a document
is to be construed against the drafting party shall not be applicable either to
this Agreement or any Transaction Document. For purposes of this Agreement,
whenever there are references to "material" or "materially," such terms shall be
deemed to mean an economic impact exceeding $25,000 with respect to the fact or
matter being referred to or described. As used herein, "day" or "days" refers to
calendar days unless otherwise specified in each instance. When the term
"knowledge" is used in this Agreement in reference to (i) Prime, it shall mean
such items as are within the actual knowledge of Xxx Xxxxxxx, Xxx Xxxxxxx,
Xxxxxx Xxxxxxxx and Xxxx Xxxxxxx and (ii) BDEC or LASIK, it shall mean such
items as are within the actual knowledge of Xxxxxxx, Perkins, Dulaney, Barnet or
Xxxxxxxxx.
10.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
10.11 Arbitration. Any controversy between the parties regarding this
Agreement and any claims arising out of this Agreement or its breach shall be
submitted to arbitration by either party. The arbitration proceedings shall be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. The arbitration shall be conducted in
Dallas, Texas and the arbitrator shall have the right to award actual damages
and attorney fees and costs, but shall not have the right to award punitive,
exemplary or consequential damages against either party.
10.12 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument. Any party hereto may execute this
Agreement by signing any one counterpart.
[Signature pages follow]
SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PRIME: PRIME MEDICAL OPERATING, INC.
By:/s/ Xxxxxxx Xxxxxxx
Printed Name:Xxx Xxxxxxx
Title:Chairman of the Board
BDEC: BARNET XXXXXXX EYE CENTER, P.L.L.C.
By:/s/ Xxxxxx X. Xxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D., manager
By:/s/ Xxxxx X. Xxxxxxx, M.D.
Xxxxx X. Xxxxxxx, M.D., manager
LASIK: LASIK INVESTORS, L.L.C.
By:/s/ Xxxxxx X. Xxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D., manager
By: /s/ Xxxxx X. Xxxxxxx, M.D.
Xxxxx X. Xxxxxxx, M.D., manager
NEWCO I: PRIME/BDR ACQUISITION, L.L.C.
By:
LASIK Investors, L.L.C.. - Member
By: /s/ Xxxxxx X. Xxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D., manager
By: /s/ Xxxxx X. Xxxxxxx, M.D.
Xxxxx X. Xxxxxxx, M.D., manager
By:
Prime Medical Operating, Inc. - Member
By: /s/ Xxxxxx Xxxxxxxx
Printed Name: Xxxxxx Xxxxxxxx
Title: Treasurer
NEWCO II: PRIME/BDEC ACQUISITION, L.L.C.
By:
Barnet Xxxxxxx Eye Center, P.L.L.C. - Member
By: /s/ Xxxxxx X. Xxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D., manager
By: /s/ Xxxxx X. Xxxxxxx, M.D.
Xxxxx X. Xxxxxxx, M.D., manager
By:
Prime Medical Operating, Inc. - Member
By: /s/ Xxxxxx Xxxxxxxx
Printed Name: Xxxxxx Xxxxxxxx
Title: Treasurer
XXXXXXX: /s/ Xxxxx X. Xxxxxxx, M.D.
Xxxxx X. Xxxxxxx, M.D.
BARNET: /s/ Xxxxxx X. Xxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D.
XXXXXXXXX: /s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
PMSI: PRIME MEDICAL SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxx
Printed Name:Xxxxxx Xxxxxxxx
Title: Treasurer
TABLE OF EXHIBITS
Exhibit A Form of Primary Warrants
Exhibit B Form of Organizational Documents of Newco I
Exhibit C Form of Organizational Documents of Newco II
Exhibit D Form of Assignment and Assumption Agreement
Exhibit E PMSI Financial Statements
Exhibit F BDEC Financial Statements
Exhibits G1
to G5 Credit Documents
Exhibit H LASIK Ownership Interest Transfer Restriction
Agreement
Exhibit I Collocation Agreement
Exhibit J Consulting Agreement
EXHIBIT-A
WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED OR
RESOLD WITHOUT REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
UNLESS AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE.
WARRANT TO PURCHASE COMMON STOCK
OF
PRIME MEDICAL SERVICES, INC.
Date: ________________
This is to certify that, for value received, Barnet Xxxxxxx Eye Center,
P.L.L.C. (the "Holder") is entitled to purchase, subject to the provisions of
this Warrant (including, without limitation, the vesting provisions of Section
10), from Prime Medical Services, Inc., a Texas corporation (the "Company"),
Forty Four Thousand Thirty Five (44,035) shares of the Company's common stock,
$.01 par value (such class of stock being referred to herein as the "Stock"),
for $9.4875 per share (the "Exercise Price"). This Warrant is issued pursuant to
that certain Contribution Agreement (the "Contribution Agreement"), dated
effective September 1, 1999, by and among the Company, Prime Medical Operating,
Inc., a Delaware corporation, the Holder, Prime/BDEC Acquisition, L.L.C., a
Delaware limited liability company, Prime/BDR Acquisition, L.L.C., a Delaware
limited liability company, LASIK Investors, L.L.C., a Delaware limited liability
company, Xxxxx X. Xxxxxxx, M.D., Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx. The
number of shares of Stock to be received upon the exercise of this Warrant and
the Exercise Price shall be adjusted from time to time as hereinafter set forth.
The shares of Stock or other securities or property deliverable upon such
exercise, as adjusted from time to time, are hereinafter sometimes referred to
as "Warrant Shares." Unless the context otherwise requires, the term "Warrant"
or "Warrants" as used herein includes this Warrant and any other Warrant or
Warrants which may be issued pursuant to the provisions of this Warrant, whether
upon transfer, assignment, partial exercise, divisions, combinations, exchange
or otherwise, and the term "the Holder" includes any registered transferee or
transferees or registered assignee or assignees of the Holder, who in each case
shall be subject to the provisions of this Warrant, and when used with reference
to Warrant Shares, means the holder or holders of such Warrant Shares.
SECTION 1. Exercise of Warrant. Subject to the provisions hereof
(including, without limitation, the vesting provisions of Section 10), this
Warrant may be exercised in whole or in part at any time or from time to time
during the period commencing on _______________ (the "Commencement Date") and
ending 5:00 P.M., Central Standard Time, on _______________ (the "Expiration
Date"), by presentation and surrender to the Company at its principal office of
this Warrant and the Purchase Form, attached hereto as Exhibit A, duly executed
and accompanied by payment of the Exercise Price for the number of Warrant
Shares specified in such form. The Exercise Price may be paid at the Holder's
election either (i) by cash, certified or official bank check payable to the
order of the Company, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Holder elects the Net Issuance method, the Company will
issue that number of Warrant Shares determined by (a) subtracting the Exercise
Price from the Fair Market Value, (b) multiplying such difference by the number
of shares of Warrant Shares requested to be exercised under this Warrant and (c)
dividing such product by the Fair Market Value. As used in this Warrant, "Fair
Market Value" shall mean the per share price of the Warrant Shares at the time
of exercise, as determined by averaging the closing price per share quoted by
NASDAQ on the five trading days immediately preceding the date of Exercise. If
this Warrant is exercised in part only, the Company shall, promptly after
presentation of this Warrant upon such exercise, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable hereunder upon the same terms and conditions as
herein set forth.
SECTION 2. Reservation of Shares. The Company shall at all times after
the Commencement Date and until expiration of this Warrant reserve for issuance
and delivery upon exercise of this Warrant the number of Warrant Shares as shall
be required for issuance and delivery upon exercise of this Warrant.
SECTION 3. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon exercise
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current market value of such fractional share,
determined as follows:
(a) if the Stock is listed on a national securities exchange
or admitted to unlisted trading privileges thereon, the current value
shall be the last reported sale price of the Stock on such exchange on
the last business day prior to the date of exercise of this Warrant, or
if no such sale is made on such day, such price of the Stock for such
immediately preceding day as such a sale occurred on such exchange; or
(b) if the Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported high and low prices of the Stock reported by a comparable
exchange system selected by the Board of Directors of the Company, on
the last business day prior to the date of the exercise of this
Warrant; or
(c) if the Stock is not listed or admitted to unlisted trading
privileges, and bid and asked prices are not so reported, the current
value shall be an amount, not less than book value per share of Stock,
determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company.
SECTION 4. Transfer, Exchange, Assignment or Loss of Warrant.
4.1 Neither this Warrant, nor any rights or interest herein, may be
assigned, transferred or encumbered, in whole or in part, without the express
written consent of the Company in each instance, and upon receipt of such
consent may only be assigned, transferred or encumbered as provided herein so
long as such assignment or transfer is in accordance with and subject to the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (said Act and such rules and Regulations
being hereinafter collectively referred to as the "Securities Act"). Any
purported transfer or assignment made other than in accordance with this Section
4 shall be null and void and of no force and effect.
4.2 Any assignment permitted hereunder shall be made by surrender of
this Warrant to the Company at its principal office, with any requested
assignment form duly executed and funds sufficient to pay any transfer tax. In
such event the Company shall, without charge, execute and deliver a new Warrant
in the name of the assignee named in such instrument of assignment and designate
the assignee as the registered holder on the Company's records and this Warrant
shall promptly be canceled.
4.3 Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification to the
Company or (in the case of mutilation) presentation of this Warrant for
surrender and cancellation, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.
SECTION 5. Adjustment in the Number of Warrant Shares Purchasable and Exercise
Price.
5.1 The number of shares of Stock for which this Warrant may be
exercised shall be subject to adjustment as follows:
(a) in the event there is a subdivision or combination of the
outstanding shares of Stock into a larger or smaller number of shares,
the number of shares of Stock for which this Warrant may be exercised
shall be increased or reduced in the same proportion as the increase or
decrease in the outstanding shares of Stock;
(b) if the Company declares a dividend on Stock payable in
Stock or securities convertible into Stock, the number of shares of
Stock for which this Warrant may be exercised shall be increased, as of
the record date for determining which holders of Stock shall be
entitled to receive such dividend, in proportion to the increase in the
number of outstanding shares of Stock as a result of such dividend;
(c) if the Company decides to offer rights to all holders of
Stock which entitle them to subscribe to additional Stock or securities
convertible into Stock, the Company shall give written notice of any
such proposed rights offering to the Holder at least fifteen days prior
to the proposed record date in order to permit the Holder to exercise
this Warrant on or before such record date. There shall be no
adjustment in the number of shares of Stock for which this Warrant may
be exercised or the Exercise Price by virtue of such rights offering or
by virtue of any sale of any class of securities of the Company
pursuant to such rights offering.
5.2 In the event at any time prior to the expiration of this Warrant of
any reorganization or reclassification of the outstanding shares of Stock (other
than a change in par value, or from no par value to par value, or from par value
to no par value, or as a result of a subdivision or combination), the Holder
shall have the right, but not the obligation, to exercise this Warrant. Upon
such exercise, Holder shall have the right to receive the same kind and number
of shares of stock and other securities, cash or other property as would have
been distributed to the Holder upon such reorganization or reclassification had
Holder exercised this Warrant immediately prior to such reorganization or
reclassification. The Holder shall pay upon such exercise the Exercise Price
that otherwise would have been payable pursuant to the terms of this Warrant. If
any such reorganization or reclassification results in a cash distribution in
excess of the Exercise Price provided by this Warrant, the Holder may, at
Holder's option, exercise this Warrant without making payment of the Exercise
Price, and in such case the Company shall, upon distribution to Holder, consider
the Exercise Price to have been paid in full, and in making settlement to
Holder, shall deduct an amount equal to the Exercise Price from the amount
payable to the Holder.
5.3 If the Company shall, at any time prior to the expiration of this
Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the
right, but not the obligation, to exercise this Warrant. Upon such exercise
Holder shall have the right to receive, in lieu of the shares of Stock that
Holder otherwise would have been entitled to receive, the same kind and amount
of assets as would have been issued, distributed or paid to Holder upon any such
dissolution, liquidation or winding up with respect to such shares of Stock had
Holder been the holder of record of such shares of Stock receivable upon
exercise of this Warrant on the date for determining those entitled to receive
any such distribution. If any dissolution, liquidation or winding up results in
any cash distribution in excess of the Exercise Price provided for by this
Warrant, Holder may, at Holder's option, exercise this Warrant without making
payment of the Exercise Price and, in such case, the Company shall, upon
distribution to Holder, consider the Exercise Price to have been paid in full,
and in making settlement to Holder shall deduct an amount equal to the Exercise
Price from the amount payable to Holder.
5.4 In the event that, at any time prior to the expiration of this
Warrant, the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or more
than 50 percent of the outstanding voting securities of the Company are owned by
another corporation as a result of such merger or consolidation, then at the
election of the Board of Directors of the Company (i) the successor entity shall
assume the Company's obligations hereunder and Holder shall be entitled, upon
exercise of this Warrant, to receive in lieu of shares of Stock shares of such
stock or other securities as the holders of shares of Stock received pursuant to
the terms of the merger or consolidation or (ii) this Warrant may be canceled by
the Board of Directors of the Company as of the effective date of any such
merger or consolidation, provided that (x) notice of such cancellation shall be
given to Holder, and (y) Holder shall have the right to exercise this Warrant in
full during a thirty (30) day period preceding the effective date of such merger
or consolidation.
5.5 The Company may retain a firm of independent public accountants of
recognized standing (who may be any such firm regularly employed by the Company)
to make any computation required under this Section 5, and a certificate signed
by such firm shall be conclusive evidence of the correctness of any computation
made under this Section.
5.6 Whenever the number of shares of Stock purchasable upon the
exercise of this Warrant is adjusted as herein provided, the Exercise Price
shall be adjusted by multiplying the applicable Exercise Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
shares of Stock purchasable upon exercise of this Warrant immediately prior to
such adjustment and the denominator of which shall be the number of shares of
Stock purchasable immediately after such adjustment.
SECTION 6. Officer's Certificate. Whenever the number of Warrant Shares
or the Exercise Price shall be adjusted as required by the provisions of Section
5 hereof, the Company forthwith shall file in the custody of its secretary or an
assistant secretary, at its principal office, a certificate of the chief
executive officer of the Company setting forth the number and kind of shares
purchasable, as so adjusted, stating that such adjustments in the number or kind
of shares or other securities conform to the requirements of Section 5 of this
Warrant, and setting forth a brief statement of the facts accounting for such
adjustments. Promptly after receipt of such certificate, the Company will
deliver, by first-class mail, postage prepaid, a brief summary thereof (to be
supplied by the Company) to the Holder; provided however, that failure to file
or to give any notice required under this Subsection, or any defect therein,
shall not affect the legality or validity of any such adjustments under Section
5. Each such officer's certificate shall be made available at all reasonable
times during reasonable hours for inspection by Holder.
SECTION 7. Cancellation of Warrant. This Warrant may be revoked and
cancelled by the Company upon (i) the occurrence of certain events specified in
the Contribution Agreement, (ii) any breach, or threatened breach by BDEC or
Holder of the Contribution Agreement or any Transaction Document (as defined in
the Contribution Agreement) to which either BDEC or Holder is a party, (iii) any
breach or threatened breach by BDEC or Holder of any other contract or agreement
entered into at any time by BDEC or Holder and to which the Company or any of
the Company's subsidiaries or affiliates is a party or named beneficiary, and
(iv) upon any transfer or encumbrance or attempted transfer or encumbrance by
Holder of this Warrant or any rights hereunder or interest herein in violation
of the provisions of Section 4 hereof.
SECTION 8. Notice to Holder. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Stock otherwise than in cash or (ii) if the Company shall offer to the
holders of Stock for subscription or purchase by them any shares of any class or
any other rights or (iii) if there shall be any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company, or
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then in any such event, the Company shall cause to be mailed by certified mail
to Holder, at least twenty (20) days prior to the relevant date described below,
a notice containing a brief description of the proposed action and stating the
date or expected date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or such reclassification, reorganization,
consolidation, merger, conveyance, lease or transfer, dissolution, liquidation
or winding up and the date or expected date as of which the holders of Stock of
record shall be entitled to exchange their shares of Stock for securities or
other property deliverable upon such event.
SECTION 9. Warrant Certificate Holder Not Deemed a Stockholder. Holder
shall not, solely because of holding the warrant, be entitled to vote, receive
dividends or be deemed the holder of Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Warrant for any
purpose whatsoever, nor shall anything contained herein be construed to confer
upon the Holder, as such, any of the rights of stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any time thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger conveyance or otherwise), or to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
8 hereof), or to receive dividend or subscription rights, or otherwise, until
such Warrant Certificate shall have been exercised in accordance with the
provisions hereof and the Warrant Shares shall have been issued.
SECTION 10. Vesting. Assuming Holder complies with all of the terms and
conditions contained in this Warrant, all of Holder's rights under this Warrant
(including, without limitation, Holder's rights to acquire common stock pursuant
to this Warrant) shall vest twenty five percent (25%) upon each one-year
anniversary of the date of this Warrant.
SECTION 11. Agreement of Holder. The Holder, by accepting this Warrant consents
and agrees with
(a) The Warrants are transferable on the registry books of the Company only
upon the terms and conditions set forth in this Warrant; and
(b) The Company may deem and treat the person in whose name
the Warrant is registered as the absolute owner of the Warrant
(notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all
purposes whatever and the Company shall not be affected by any notice
to the contrary, except as set forth in Section 4 of this Warrant.
SECTION 12. Governing Law. This Warrant shall be construed in accordance with
the laws of the State of Texas applicable to contracts executed and to be
performed wholly within such state.
SECTION 13. Notice. Notices and other communications to be given to
Holder of the Warrant evidenced hereby shall be delivered by hand or by
first-class mail, postage prepaid, to Barnet Xxxxxxx Eye Center, P.L.L.C., 0000
Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attn: President (until another
address is filed in writing by the Holder with the Company). Notices or other
communications to the Company shall be deemed to have been sufficiently given if
delivered by hand or by first-class mail, postage prepaid to the Company at 0000
Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000, Xxxxxx, Xxxxx 00000, or such other
address as the Company shall have designated by written notice to such
registered owner is herein provided. Notice by mail shall be deemed given when
deposited in the United States mail, postage prepaid, as herein provided.
SECTION 14. Successors. All the covenants and provisions of this
Warrant by or for the benefit of the Company shall bind and inure to the benefit
of its successors and assigns hereunder, and all covenants and provisions of
this Warrant by or for the benefit of the Holder of this Warrant shall bind and
inure to the benefit of the registered holder of the Warrants.
SECTION 15. Termination. This Warrant shall terminate as of the earliest of: (a)
the close of business on the Expiration Date, (b) the date upon which all rights
hereunder shall have been exercised or redeemed or (c) upon its cancellation
pursuant to Section 7 of this Warrant.
SECTION 16. Benefits of this Agreement. Nothing in this Warrant
Certificate shall be construed to give to any person or corporation other than
the Company, and its respective successors and assigns hereunder and the Holder
of any legal or equitable right, remedy or claim hereunder, but shall be for the
sole and exclusive benefit of the Company and its respective successors and
assigns hereunder and the Holder.
[Signature page follows]
SIGNATURE PAGE TO
WARRANT CERTIFICATE
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date set forth above.
PRIME MEDICAL SERVICES, INC.
By: ___________________________________
Printed Name: ___________________________
Title: __________________________________
EXHIBIT A
PURCHASE FORM
TO: Prime Medical Services, Inc., Secretary
(1) The undersigned Holder hereby elects to purchase _______ shares of the
common stock, $.01 par value, of Prime Medical Services, Inc., a Delaware
corporation ("PMSI"), pursuant to the terms of the Warrant Agreement dated the
1st day of August, 1999 (the "Warrant Agreement") between PMSI and the Holder,
and tenders herewith payment in full of the Exercise Price (as defined in the
Warrant Agreement) for such shares of common stock using (check only one):
[ ] cash
[ ] certified check
[ ] Net Issuance Method (as defined in the Warrant Agreement)
(2) The undersigned also tenders herewith all applicable transfer taxes, if any,
using cash or certified check.
(3) Please issue a certificate or certificates representing said shares of PMSI
common stock in the name of the undersigned or in such other name as is
specified below.
---------------------------------
(Name)
---------------------------------
(Address)
HOLDER: _________________________
By: _________________________
Title: _________________________
Date: _________________________
EXHIBIT-B
LIMITED LIABILITY COMPANY AGREEMENT
OF PRIME/BDR ACQUISITION, L.L.C.
Organized under the Delaware Limited Liability Company Act (the "Act").
ARTICLE I.
NAME AND LOCATION
Section 1.1. Name. The name of this limited liability company is Prime/BDR
Acquisition, L.L.C. (the "Company").
Section 1.2. Members. The only members of the Company upon the
execution of this Limited Liability Company Agreement (this "Agreement") shall
be Prime Medical Operating, Inc, a Delaware corporation ("Prime"), and LASIK
Investors L.L.C., a Delaware limited liability company ("LASIK"). For purposes
of this Agreement, the "Members" shall include such named members and any new
members admitted pursuant to the terms of this Agreement, but does not include
any person or entity who has ceased to be a member in the Company.
Section 1.3. Principal Office. The principal office of the Company shall be
located in 0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000, Xxxxxx, Xxxxx 00000-0000, or
such other location as may be selected by the Members.
Section 1.4. Registered Agent and Address. The name of the registered agent
and the address of the registered office of the Company as set forth in the
Certificate of Formation of the Company are:
The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Section 1.5. Other Offices. Other offices and other facilities for the
transaction of business shall be located at such places as the Managers may from
time to time determine.
Section 1.6 Contribution Agreement. The Company was initially formed
with a single member, LASIK, for the purpose of consummating the transactions
contemplated by that certain Contribution Agreement dated effective September 1,
1999, by and among Prime, Prime Medical Services, Inc., a Delaware corporation
("PMSI"), LASIK, Barnet Xxxxxxx Eye Center, P.L.L.C., an Arizona professional
limited liability company, the Company, Prime/BDEC Acquisition, L.L.C., a
Delaware limited liability company, Xxxxx X. Xxxxxxx, M.D., Xxxxxx X. Xxxxxx,
M.D., and Xxxx Xxxxxxxxx (the "Contribution Agreement"). The parties have
executed this Agreement upon consummation of the transactions contemplated by
the Contribution Agreement. This agreement supercedes and replaces any prior
membership agreement or other governing or organizational document of the
Company.
ARTICLE II.
MEMBERSHIP
Section 2.1. Members' Interests. The "Membership Interest" of each Member
is set forth on Exhibit A.
Section 2.2. Admission to Membership. The admission of new Members shall be
only by the unanimous vote of the Members. If new members are admitted, this
Agreement shall be amended to reflect each Member's revised Membership Interest.
Section 2.3. Property Rights. No Member shall have any right, title, or
interest in any of the property or assets of the Company.
Section 2.4. Liability of Members. No Member of the Company shall be
personally liable for any debts, liabilities, or obligations of the Company,
including under a judgment decree, or order of court.
Section 2.5. Transferability of Membership. Except as provided below,
Membership Interests in the Company are transferable only with the unanimous
written consent of all Members. If such unanimous written consent is not
obtained when required, the transferee shall be entitled to receive only the
share of profits or other compensation by way of income and the return of
contributions to which the transferor Member otherwise would be entitled.
Notwithstanding the foregoing, (i) the Membership Interests of Prime may be
freely transferred, without consent, to any entity that is then owned or
controlled, directly or indirectly, by PMSI (or its successor in interest), (ii)
the Membership Interests of any Member may be freely assigned, pledged or
otherwise transferred, without consent, to secure any debt, liability or
obligation owed to Prime by the Company, any Member or any entity affiliated
with the Company, (iii) the Membership Interests of any Member may be freely
assigned, pledged or otherwise transferred, without consent, in favor of the
Lender(s) under, or by the Lender(s) as a result of the enforcement of any
security interest arising pursuant to, that certain Senior Credit Facility (the
"Credit Facility") of PMSI, (iv) the Membership Interests of any Member may be
freely transferred, without consent, pursuant to and in accordance with the
express terms and conditions of the Contribution Agreement, and (iv) the pledge
by LASIK (pursuant to Section 6.3 of the Contribution Agreement) of its right to
receive distributions from the Company in respect of its Membership Interest
shall not be deemed to violate any provision of this Agreement..
Section 2.6. Resignation of Members. A Member may not withdraw from the
Company except on the unanimous consent of the remaining Members. The terms of
the Members withdrawal shall be determined by agreement between the remaining
Members and the withdrawing Member.
ARTICLE III.
MEMBERS' MEETINGS
Section 3.1. Time and Place of Meeting. All meetings of the Members
shall be held at such time and at such place within or without the State of
Delaware as shall be determined by the Managers.
Section 3.2. Annual Meetings. In the absence of an earlier meeting at
such time and place as the Managers shall specify, annual meetings of the
Members shall be held at the principal office of the Company on the date which
is thirty (30) days after the end of the Company's fiscal year if not a legal
holiday, and if a legal holiday, then on the next full business day following,
at 10:00 a.m., at which meeting the Members may transact such business as may
properly be brought before the meeting.
Section 3.3. Special Meetings. Special meetings of the Members may be
called at any time by any Member. Business transacted at special meetings shall
be confined to the purposes stated in the notice of the meeting.
Section 3.4. Notice. Written or printed notice stating the place, day
and hour of any Members' meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) days nor more than thirty (30) days before the date of the special
meeting, either personally or by mail, by or at the direction of the person
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered three (3) days after it is deposited
in the United States mail, postage prepaid, to the Member at his address as it
appears on the records of the Company at the time of mailing.
Section 3.5. Quorum. Members present in person or represented by proxy,
holding more than fifty percent (50%) of the total votes which may be cast at
any meeting shall constitute a quorum at all meetings of the Members for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the Members, the Members entitled to vote, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. When any adjourned meeting is reconvened
and a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. Once a
quorum is constituted, the Members present or represented by proxy at a meeting
may continue to transact business until adjournment, notwithstanding the
subsequent withdrawal therefrom of such number of Members as to leave less than
a quorum.
Section 3.6. Voting. When a quorum is present at any meeting, the vote
of the Members, whether present or represented by proxy at such meeting, holding
more than fifty percent (50%) of the total votes which may be cast at any
meeting shall be the act of the Members, unless the vote of a different number
is required by the Act, the Certificate of Formation or this Limited Liability
Company Agreement. Each Member shall be entitled to one vote for each percentage
point represented by their Membership Interest. Fractional percentage point
interests shall be entitled to a corresponding fractional vote.
Section 3.7. Proxy. Every proxy must be executed in writing by the
Member or by his duly authorized attorney-in-fact, and shall be filed with the
Secretary of the Company prior to or at the time of the meeting. No proxy shall
be valid after eleven (11) months from the date of its execution unless
otherwise provided therein. Each proxy shall be revocable unless expressly
provided therein to be irrevocable and unless otherwise made irrevocable by law.
Section 3.8. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Members may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Members entitled to vote with respect to the subject matter
thereof, and such consent shall have the same force and effect as a unanimous
vote of Members.
Section 3.9. Meetings by Conference Telephone. Members may participate
in and hold meetings of Members by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE IV.
MEMBERSHIP CAPITAL CONTRIBUTIONS
Except for each Member's initial capital contribution made in
connection with the formation of the Company, no capital contributions shall be
required of any Member without the approval of all the Members to raise
additional capital, and only then proportionately as to each Member.
ARTICLE V.
DISTRIBUTION TO MEMBERS
The Company shall not distribute (or allow to be distributed) to its
members, with respect to their respective membership interests, any cash or
other property of the Company or its subsidiaries if, at the time of the
proposed distribution, any amounts (whether principal or interest) are
outstanding under the Credit Documents or the Target Center Lending Documents
(as such terms are defined in the Contribution Agreement). Furthermore, the
Company shall pay all available cash flow to Prime in payment of the Company's
outstanding obligations, if any, under the Working Capital Line and Development
Facility (as such terms are defined in the Contribution Agreement), irrespective
of whether such payments exceed the minimum required payments under the Working
Capital Line and Development Facility. For purposes of allocating such payments
among any two or more of such outstanding obligations, such payments shall be
allocated pro rata, based upon the respective balances of such obligations,
unless (i) a greater portion of the payment is required to be paid toward a
given obligation in order to prevent a default with respect to that obligation
(but only to the extent necessary to prevent such a default) or (ii) eighty
percent (80%) of the managers of the Company elect to allocate the payments in a
different manner.
Notwithstanding the foregoing, as long as no party other than PMSI or
Prime is in default under the Contribution Agreement or any other Transaction
Document (as defined in the Contribution Agreement, but excluding, however, the
Credit Documents and the Target Center Lending Documents), then, to the extent
that (but only to the extent that) the Company possesses the cash flow necessary
(in the reasonable discretion of a majority of its managers) to pay its
liabilities in the ordinary course consistent with past practices, the Company
agrees to make quarterly estimates of its taxable income for the current tax
year and, if not prohibited by law, distribute quarterly (the "Quarterly
Distributions") an amount that would cover the federal and state income taxes
required to be paid by its members with respect such taxable income, based on
each member's then current proportionate interest in the Company, assuming that
all members pay income taxes on the Company's taxable earnings at a rate equal
to the highest effective individual tax rate in effect from time to time (the
"Assumed Tax Rate"); provided, further, that the Company shall determine its
actual taxable income at the end of each taxable year and (A) if the Quarterly
Distributions in a given year should have been higher based on the amount of
actual taxable income for that year, promptly distribute the amounts necessary
to eliminate such deficiency or (B) if the Quarterly Distributions in a given
year should have been lower based on the amount of actual taxable income for
that year, withhold dollar for dollar from the first following Quarterly
Distribution, and then against subsequent Quarterly Distributions in a like
manner, the amounts necessary to eliminate such surplus.
Subject to the foregoing, the Managers shall determine, in their sole
discretion, the amount and timing of all distributions from the Company.
Distributions shall be divided among the Members in accordance with their
Membership Interests. Distributions in kind shall be made on the basis of agreed
value as determined by the Members. In no event may the Company make a
distribution to its Members if, immediately after giving effect to the
distribution, all liabilities of the Company, other than liabilities to the
Members with respect to their interests and liabilities for which the recourse
of creditors is limited to specified property of the Company, exceed the fair
value of the Company's assets; except that the fair value of property that is
subject to liability for which recourse of creditors is limited, shall be
included in the Company assets only to the extent that the fair value of the
property exceeds that liability. Except as contemplated in this Article V, no
distributions of cash or other assets of the Company shall be made to the
Members in their capacity as owners of the Company.
ARTICLE VI.
ALLOCATION OF NET PROFITS AND LOSSES FOR TAX PURPOSES
For accounting and income tax purposes, all items of income, gain,
loss, deduction, and credit of the Company for any taxable year shall be
allocated among the Members in accordance with their respective Membership
Interests, except as may be otherwise required by the Internal Revenue Code of
1986, as amended.
ARTICLE VII.
DISSOLUTION AND WINDING UP
Section 7.1. Dissolution. Notwithstanding any provision of the Act, the
Company shall be dissolved only upon the first of the following to occur:
(a) Forty (40) years from the date of filing the Certificate of
Formation of the Company;
(b) Written consent of all the then current Members to
dissolution;
(c) The bankruptcy of a Member, unless there is at least one
remaining Member and such Member or, if more than one remaining Member,
all remaining Members agree to continue the Company and its business.
Section 7.2. Winding Up. Unless the Company is continued pursuant to
Section 7.1(c) of this Article VII., in the event of dissolution of the Company,
the Managers (excluding any Manager(s) holding office pursuant to designation by
a Member subject to bankruptcy proceedings) shall wind up the Company's affairs
as soon as reasonably practicable. On the winding up of the Company, the
Managers shall pay and/or transfer the assets of the Company in the following
order:
(a) In discharging liabilities (including loans from
Members) and the expenses of concluding the Company's affairs;
and
(b) The balance, if any, shall be divided between the
Members in accordance with the Members' Membership Interests.
ARTICLE VIII.
MANAGERS
Section 8.1. Selection of Managers. Management of the Company shall be
vested in the Managers. Initially, the Company shall have five (5) Managers,
being Xxx Xxxxxxx, Xxxxxx Xxxxxxxx, and Xxx Xxxxxxx, M.D., (as the initial
Manager designees of Prime), Xxxxx X. Xxxxxxx, M.D., and Xxxxxx X. Xxxxxx, M.D.
(as the initial Manager designees of LASIK). Thereafter, for so long as there
are five (5) Managers, (a) Prime shall be entitled to designate three (3) of the
Managers; and (b) LASIK shall be entitled to designate the remaining two (2) of
the Managers. Notwithstanding the foregoing, a Member shall not be entitled to
designate any Manager unless its Membership Interest: (x) has not (other than as
allowed under Section 2.5 of this Agreement) been transferred, repurchased,
assigned, pledged, hypothecated or in any way alienated; and (y) equals or
exceeds forty percent (40%) of the aggregate Membership Interests; provided,
however, that if the immediately preceding subsection (y) shall apply to LASIK
solely because of an exercise by LASIK of its put rights under Section 9.8 of
the Contribution Agreement, then LASIK shall, unless and until there is an
additional decrease in it Membership Interest other than pursuant to Section 9.8
of the Contribution Agreement, be entitled to designate only one Manager in the
manner provided above. The Members may, by unanimous vote of all Members, from
time to time, change the number of Managers of the Company and remove or add
Managers accordingly. A Manager shall serve as a Manager until their resignation
or removal pursuant to Section 8.2 or 8.3 of this Article VIII. Managers need
not be residents of the State of Delaware or Members of the Company.
Section 8.2. Resignations. Each Manager shall have the right to resign
at any time upon written notice of such resignation to the Members. Unless
otherwise specified in such written notice, the resignation shall take effect
upon the receipt thereof, and acceptance of such resignation shall not be
necessary to make same effective. The Member who designated a resigning manager
shall be entitled to designate the successor thereto and all Members agree to
take such action as may be necessary to cause the election of all such successor
Managers.
Section 8.3. Removal of Managers. Any Manager may be removed, for or
without cause, at any time, but only by the Member who designated such Manager,
upon the written notice to all Members. The Member who designated such removed
Manager shall be entitled to designate the successor thereto and all Members
agree to take such action as may be necessary to cause the election of all such
successor Managers.
Section 8.4. General Powers. The business of the Company shall be
managed by its Managers, which may, by the vote or written consent in accordance
with this Agreement, exercise any and all powers of the Company and do any and
all such lawful acts and things as are not by the Act, the Certificate of
Formation or this Limited Liability Company Agreement directed or required to be
exercised or done by the Members, including, but not limited to, contracting for
or incurring on behalf of the Company debts, liabilities and other obligations,
without the consent of any other person, except as otherwise provided herein.
Section 8.5. Place of Meetings. The Managers of the Company may hold their
meetings, both regular and special, either within or without the State of
Delaware.
Section 8.6. Annual Meetings. The annual meeting of the Managers shall
be held without further notice immediately following the annual meeting of the
Members, and at the same place, unless by unanimous consent of the Managers that
such time or place shall be changed.
Section 8.7. Regular Meetings. Regular meetings of the Managers may be held
without notice at such time and place as shall from time to time be determined
by the Managers.
Section 8.8. Special Meetings. Special meetings of the Mangers may be
called by any Manager on seven (7) days notice to each Manager, with such notice
to be given personally, by mail or by telecopy, telegraph or mailgram.
Section 8.9. Quorum and Voting. At all meetings of the Managers the
presence of at least four (4) Managers shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the affirmative vote of
at least a majority of the Managers present at any meeting at which there is a
quorum shall be the act of the Managers, except as may be otherwise specifically
provided by the Act, the Contribution Agreement, the Certificate of Formation or
this Agreement. If a quorum shall not be present at any meeting of Managers, the
Managers present there may adjourn the meeting from time to time without notice
other than announcement at the meeting, until a quorum shall be present.
Notwithstanding any voting, quorum, or other provisions of this Agreement to the
contrary, the affirmative vote of at least four (4) Managers shall be required
to effect any of the following actions:
(a) any amendment, modification or waiver of any provision of the
Company's Certificate of Formation or this Agreement;
(b) effecting any mergers, consolidations or combinations of the
Company with other entities;
(c) dissolving, liquidating, or filing bankruptcy or seeking
relief under any debtor relief law;
(d) entering into a transaction or other action with a Member or
Manager;
(e) borrowing or incurring any indebtedness, other than open
accounts payable to unaffiliated third parties, or granting any
collateral or security (by way of guaranty or otherwise) for any
indebtedness or obligation, that exceeds (in any single transaction or
directly related series of transactions) $25,000;
(f) purchasing or leasing assets or property, or entering into
any contract or obligation, which obligates the Company to pay in
excess of $25,000 in one or any directly related series of
installments;
(g) selling, leasing or otherwise transferring substantially all
of the Company's assets other than in the ordinary course of the
Company's business;
(h) except as expressly set forth in Section 9.12 of the
Contribution Agreement, allocating to the Company any costs or expenses
that are paid or incurred by any Member or its affiliates (excluding
the Company), or paid by the Company but reimbursable by any Member or
its affiliates (excluding the Company), in each instance;
(i) issuance of any ownership interest in the Company; and
(j) disposition, sale, assignment or other transfer by the
Company of any interest it owns in the Company, except that such
interest may be extinguished without the approval required under this
Section.
Section 8.10. Committees. The Managers may, by resolution passed by
eighty percent (80%) of the Managers, designate committees, each committee to
consist of two or more Managers (at least one of which must be a Manager
designee of Prime and one of which must be a Manager designee of LASIK), which
committees shall have such power and authority and shall perform such functions
as may be provided in such resolution. Such committee or committees shall have
such name or names as may be designated by the Managers and shall keep regular
minutes of their proceedings and report the same to the Managers when required.
Section 8.11. Compensation of Managers. The Members shall have the
authority to provide, by unanimous approval, that any one or more of the
Managers shall not be compensated, and may, by unanimous approval, fix any
compensation (which may include expenses) they elect to pay to any one or more
of the Managers.
Section 8.12. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Managers or of any committee
designated by the Managers may be taken without a meeting if written consent,
setting forth the action so taken, is signed by all the Managers or of such
committee, and such consent shall have the same force and effect as a unanimous
vote at a meeting.
Section 8.13. Meetings by Conference Telephone. Managers or members of
any committee designated by the Managers may participate in and hold a meeting
of the Managers or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 8.14. Liability of Managers. No Manager of the Company shall be
personally liable for any debts, liabilities, or obligations of the Company,
including under a judgment, decree, or order of the court.
Section 8.15. Specific Power of Managers. The Managers shall have the
authority to enter into and execute all documents in relation to the formation
of the Company including, but not limited to, issuance of the Certificate of
Formation and this Limited Liability Company Agreement.
ARTICLE IX.
NOTICES
Section 9.1. Form of Notice. Whenever under the provisions of the Act,
the Certificate of Formation or this Limited Liability Company Agreement notice
is required to be given to any Manager or Member, and no provision is made as to
how such notice shall be given, notice shall not be construed to mean personal
notice only, but any such notice may also be given in writing, by mail, postage
prepaid, addressed to such Manager or Member at such address as appears on the
books of the Company, or by telecopy, telegraph or mailgram. Any notice required
or permitted to be given by mail shall be deemed to be given three (3) days
after it is deposited, postage prepaid, in the United States mail as aforesaid.
Section 9.2. Waiver. Whenever any notice is required to be given to any
Manager or Member of the Company under the provision of the Act, the Certificate
of Formation or this Limited Liability Company Agreement, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether signed
before or after the time stated in such waiver, shall be deemed equivalent to
the giving of such notice.
ARTICLE X.
OFFICERS
Any Manager may also serve as an officer of the Company. The Managers
may designate one or more persons who are not Managers of the Company to serve
as officers and may designate the titles of all officers. The initial officers
of the Company shall be: Xxx Xxxxxxx, Chairman of the Board; Xxx Xxxxxxx, M.D.,
President; Xxxxxx Xxxxxxxx, Vice President, Secretary and Chief Financial
Officer; and Xxxx Xxxxxxxxx, Vice President. Unless otherwise provided in a
resolution of the Members or Managers the officers of the Company shall have the
powers designated with respect to such offices under the Delaware Limited
Liability Company Act, and any successor statute, as amended from time-to-time.
ARTICLE XI.
INDEMNITY
Section 11.1. Indemnification. The Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an action, suit
or proceeding and any inquiry or investigation that could lead to such an
action, suit or proceeding (whether or not by or in the right of the Company),
by reason of the fact that such person is or was a manager, officer, employee or
agent of the Company or is or was serving at the request of the Company as a
director, manager, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another corporation, employee benefit plan,
other enterprise, or other entity, against all judgments, penalties (including
excise and similar taxes), fines, settlements and reasonable expenses (including
attorneys' fees and court costs) actually and reasonably incurred by him in
connection with such action, suit or proceeding to the fullest extent permitted
by any applicable law, and such indemnity shall inure to the benefit of the
heirs, executors and administrators of any such person so indemnified pursuant
to this Article XI. The right to indemnification under this Article XI shall be
a contract right and shall not be deemed exclusive of any other right to which
those seeking indemnification may be entitled under any law, bylaw, agreement,
vote of members or disinterested managers or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. Any repeal or amendment of this Article XI by the Members of the Company
or by changes in applicable law shall, to the extent permitted by applicable
law, be prospective only, and shall not adversely affect the indemnification of
any person who may be indemnified at the time of such repeal or amendment.
Section 11.2. Indemnification Not Exclusive. The rights of
indemnification and reimbursement provided for in this Article XI shall not be
deemed exclusive of any other rights to which any such Manager, officer,
employee or agent may be entitled under the Certificate of Formation, this
Limited Liability Company Agreement, agreement or vote of Members, or as a
matter of law or otherwise.
Section 11.3. Other Indemnification Clauses. Notwithstanding the
foregoing, this Article XI shall not be construed to contradict the
indemnification provision of the Contribution Agreement. Notwithstanding
anything contained herein, this Article XI shall be ineffectual and shall not
permit or require indemnification for all, or any, losses, costs, liabilities,
claims or expenses arising, directly or indirectly, from any action or omission
permitting or requiring indemnification under the Contribution Agreement; and in
no event may any indemnity be allowed under this Agreement or pursuant to any
provision of the Act for an amount paid or payable pursuant to the
indemnification provisions of the Contribution Agreement.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Fiscal Year. The fiscal year of the Company shall be fixed by
resolution of the Managers.
Section 12.2. Records. At the expense of the Company, the Managers shall
maintain records and accounts of all operations of the Company. At a minimum,
the Company shall keep at its principal place of business the following records:
(a) A current list of the name and last known mailing address of
each Member;
(b) A current list of each Member's Membership Interest;
(c) A copy of the Certificate of Formation and Limited
Liability Company Agreement of the Company, and all amendments thereto,
together with executed copies of any powers of attorney;
(d) Copies of the Federal, state, and local income tax returns
and reports for the Company's six most recent tax years; and
(e) Correct and complete books and records of account of the
Company.
Section 12.3. Seal. The Company may by resolution of the Managers adopt
and have a seal, and said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced. Any officer of the
Company shall have authority to affix the seal to any document requiring it.
Section 12.4. Agents. Every Manager and Officer is an agent of the Company
for the purpose of the business. The act of a Manager or Officer, including the
execution in the name of the Company of any instrument for carrying on in the
usual way the business of the Company, binds the Company.
Section 12.5. Checks. All checks, drafts and orders for the payment of
money, notes and other evidences of indebtedness issued in the name of the
Company shall be signed by such officer, officers, agent or agents of the
Company and in such manner as shall from time to time be determined by
resolution of the Managers. In the absence of such determination by the Mangers,
such instruments shall be signed by the Treasurer or the Secretary and
countersigned by the President or a Vice President of the Company, if the
Company has such officers.
Section 12.6. Deposits. All funds of the Company shall be deposited from
time to time to the credit of the Company in such banks, trust companies or
other depositories as the Managers may select.
Section 12.7. Annual Statement. The Managers shall present at each
annual meeting, and, when called for by vote of the Members, at any special
meeting of the Members, a full and clear statement of the business and condition
of the Company.
Section 12.8. Financial Statements. As soon as practicable after the
end of each fiscal year of the Company, a balance sheet as at the end of such
fiscal year, and a profit and loss statement for the period ended, shall be
distributed to the Members, along with such tax information (including all
information returns) as may be necessary for the preparation of each Member of
its Federal, state and local income tax returns. The balance sheet and profit
and loss statement referred to in the previous sentence may be as shown on the
Company's federal income tax return.
Section 12.9. Binding Arbitration. Any controversy between the parties
regarding this Agreement and any claims arising out of this Agreement or its
breach shall be submitted to arbitration by either party. The arbitration
proceedings shall be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be conducted in Dallas, Texas and the arbitrator shall have the right to award
actual damages and attorney fees and costs, but shall not have the right to
award punitive, exemplary or consequential damages against either party.
ARTICLE XIII.
AMENDMENTS
Section 13.1. Amendments. This Agreement may be altered, amended or
repealed and a new limited liability company agreement may be adopted, only in
accordance with the provisions of Section 8.9, but otherwise at any regular
meeting or at any special meeting called for that purpose, or by execution of a
written consent in accordance with the provisions of Section 3.8.
Section 13.2. When Limited Liability Company Agreement Silent. It is
expressly recognized that when the Limited Liability Company Agreement is silent
or in conflict with the requirements of the Act as to the manner of performing
any Company function, the provisions of the Act shall control.
[Signature page follows]
SIGNATURE PAGE TO
LIMITED LIABILITY COMPANY AGREEMENT
IN WITNESS WHEREOF, the undersigned Members hereby adopt this Limited
Liability Company Agreement as the Limited Liability Company Agreement of the
Company, effective as of the 1st day of September, 1999.
LASIK Investors, L.L.C.
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
Prime Medical Operating, Inc.
By:
Printed Name:
Title:
EXHIBIT A
OWNERSHIP INTERESTS
Name Ownership Percentage
Prime 60%
LASIK 40%
EXHIBIT-C
LIMITED LIABILITY COMPANY AGREEMENT
OF PRIME/BDEC ACQUISITION, L.L.C.
Organized under the Delaware Limited Liability Company Act (the "Act").
ARTICLE I.
NAME AND LOCATION
Section 1.1. Name. The name of this limited liability company is Prime/BDEC
Acquisition, L.L.C. (the "Company"). ----
Section 1.2. Members. The only members of the Company upon the
execution of this Limited Liability Company Agreement (this "Agreement") shall
be Prime Medical Operating, Inc, a Delaware corporation ("Prime"), and Barnet
Xxxxxxx Eye Center, P.L.L.C., an Arizona professional limited liability company
("BDEC"). For purposes of this Agreement, the "Members" shall include such named
members and any new members admitted pursuant to the terms of this Agreement,
but does not include any person or entity who has ceased to be a member in the
Company.
Section 1.3. Principal Office. The principal office of the Company shall be
located in 0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000, Xxxxxx, Xxxxx 00000-0000, or
such other location as may be selected by the Members. ----------------
Section 1.4. Registered Agent and Address. The name of the registered agent
and the address of the registered office of the Company as set forth in the
Certificate of Formation of the Company are: -----------------------------
The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Section 1.5. Other Offices. Other offices and other facilities for the
transaction of business shall be located at such places as the Managers may from
time to time determine. -------------
Section 1.6 Contribution Agreement. The Company was initially formed
with a single member, BDEC, for the purpose of consummating the transactions
contemplated by that certain Contribution Agreement dated effective September 1,
1999, by and among Prime, Prime Medical Services, Inc., a Delaware corporation
("PMSI"), BDEC, the Company, Prime/BDR Acquisition, L.L.C., a Delaware limited
liability company, LASIK Investors, L.L.C., a Delaware limited liability
company, Xxxxx X. Xxxxxxx, M.D., Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx (the
"Contribution Agreement"). The parties have executed this Agreement upon
consummation of the transactions contemplated by the Contribution Agreement.
This agreement supercedes and replaces any prior membership agreement or other
governing or organizational document of the Company.
ARTICLE II.
MEMBERSHIP
Section 2.1. Members' Interests. The "Membership Interest" of each Member
is set forth on Exhibit A. ------------------ ---------
Section 2.2. Admission to Membership. The admission of new Members shall be
only by the vote of the Managers pursuant to Section 8.9 hereof. If new Members
are admitted, this Agreement shall be amended to reflect each Member's revised
Membership Interest. -----------------------
Section 2.3. Property Rights. No Member shall have any right, title, or
interest in any of the property or assets of the Company. ---------------
Section 2.4. Liability of Members. No Member of the Company shall be
personally liable for any debts, liabilities, or obligations of the Company,
including under a judgment decree, or order of court. --------------------
Section 2.5. Transferability of Membership. Except as provided below,
Membership Interests in the Company are transferable only with the unanimous
written consent of all Members. If such unanimous written consent is not
obtained when required, the transferee shall be entitled to receive only the
share of profits or other compensation by way of income and the return of
contributions to which the transferor Member otherwise would be entitled.
Notwithstanding the foregoing, (i) the Membership Interests of Prime may be
freely transferred, without consent, to any entity that is then owned or
controlled, directly or indirectly, by Prime Medical Services, Inc., a Delaware
corporation (or its successor in interest), (ii) the Membership Interests of any
Member may be freely assigned, pledged or otherwise transferred, without
consent, to secure any debt, liability or obligation owed to Prime by the
Company, any Member or any entity affiliated with the Company, (iii) the
Membership Interests of any Member may be freely assigned, pledged or otherwise
transferred, without consent, in favor of the Lender(s) under, or by the
Lender(s) as a result of the enforcement of any security interest arising
pursuant to, that certain Senior Credit Facility (the "Credit Facility") of
PMSI, and (iv) the pledge by BDEC (pursuant to Section 6.3 of the Contribution
Agreement) of its right to receive distributions from the Company in respect of
its Membership Interest shall not be deemed to violate any provision of this
Agreement.
Section 2.6. Resignation of Members. A Member may not withdraw from the
Company except on the unanimous consent of the remaining Members. The terms of
the Members withdrawal shall be determined by agreement between the remaining
Members and the withdrawing Member. ----------------------
ARTICLE III.
MEMBERS' MEETINGS
Section 3.1. Time and Place of Meeting. All meetings of the Members shall
be held at such time and at such place within or without the State of Delaware
as shall be determined by the Managers. -------------------------
Section 3.2. Annual Meetings. In the absence of an earlier meeting at such
time and place as the Managers shall specify, annual meetings of the Members
shall be held at the principal office of the Company on the date which is thirty
(30) days after the end of the Company's fiscal year if not a legal holiday, and
if a legal holiday, then on the next full business day following, at 10:00 a.m.,
at which meeting the Members may transact such business as may properly be
brought before --------------- the meeting.
Section 3.3. Special Meetings. Special meetings of the Members may be
called at any time by any Member. Business transacted at special meetings shall
be confined to the purposes stated in the notice of the meeting.
----------------
Section 3.4. Notice. Written or printed notice stating the place, day
and hour of any Members' meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) days nor more than thirty (30) days before the date of the special
meeting, either personally or by mail, by or at the direction of the person
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered three (3) days after it is deposited
in the United States mail, postage prepaid, to the Member at his address as it
appears on the records of the Company at the time of mailing.
Section 3.5. Quorum. Members present in person or represented by proxy,
holding more than fifty percent (50%) of the total votes which may be cast at
any meeting shall constitute a quorum at all meetings of the Members for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the Members, the Members entitled to vote, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. When any adjourned meeting is reconvened
and a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. Once a
quorum is constituted, the Members present or represented by proxy at a meeting
may continue to transact business until adjournment, notwithstanding the
subsequent withdrawal therefrom of such number of Members as to leave less than
a quorum.
Section 3.6. Voting. Members shall only be required to vote in
instances or with respect to matters where member voting is required by
applicable law or to the extent expressly contemplated in Section 8.1. With
respect to any act or transaction that requires a vote by the Members under
applicable law, the affirmative vote of not less than three (3) of the Managers
shall also be required in order to approve the act or transaction, in each
instance. Subject to the foregoing, when a quorum is present at any meeting, the
vote of the Members, whether present or represented by proxy at such meeting,
holding more than fifty percent (50%) of the total votes which may be cast at
any meeting shall be the act of the Members, unless the vote of a different
number is required by the Act, the Certificate of Formation or this Limited
Liability Company Agreement. Each Member shall be entitled to one vote for each
percentage point represented by their Membership Interest. Fractional percentage
point interests shall be entitled to a corresponding fractional vote. The
provisions of this Section shall not interfere with the provisions of Section
8.9 relating to acts or transactions requiring the written approval of three (3)
or more Managers. Each Member acknowledges and agrees that, in the event of any
exercise of the Repurchase Option, as defined in the Contribution Agreement,
each Member will vote its entire Membership Interest in favor of transferring
the Company's assets pursuant to the Repurchase Option.
Section 3.7. Proxy. Every proxy must be executed in writing by the Member
or by his duly authorized attorney-in-fact, and shall be filed with the
Secretary of the Company prior to or at the time of the meeting. No proxy shall
be valid after eleven (11) months from the date of its execution unless
otherwise provided therein. Each proxy shall be revocable unless expressly
provided therein to be irrevocable and unless otherwise made irrevocable by law.
-----
Section 3.8. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Members may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the Members entitled to vote with respect to the subject matter thereof, and
such consent shall have the same force and effect as a unanimous vote of
Members. -------------------------
Section 3.9. Meetings by Conference Telephone. Members may participate in
and hold meetings of Members by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the
-------------------------------- meeting is not lawfully called or convened.
ARTICLE IV.
MEMBERSHIP CAPITAL CONTRIBUTIONS
Except for each Member's initial capital contribution made in
connection with the formation of the Company, no capital contributions shall be
required of any Member without the approval of all the Members to raise
additional capital, and only then proportionately as to each Member.
ARTICLE V.
DISTRIBUTION TO MEMBERS
At the end of each calendar quarter, subject only to the qualifications
and limitations set forth below, the Company shall distribute its available
excess earnings to its members, to be divided among them in accordance with
their Membership Interests. Distributions in kind shall be made on the basis of
agreed value as determined by the Members. Notwithstanding the foregoing, the
Company may not make a distribution to its Members to the extent that,
immediately after giving effect to the distribution, all liabilities of the
Company, other than liabilities to the Members with respect to their interests
and liabilities for which the recourse of creditors is limited to specified
property of the Company, exceed the fair value of the Company assets; except
that the fair value of property that is subject to liability for which recourse
of creditors is limited, shall be included in the Company assets only to the
extent that the fair value of the property exceeds that liability.
ARTICLE VI.
ALLOCATION OF NET PROFITS AND LOSSES FOR TAX PURPOSES
For accounting and income tax purposes, all items of income, gain,
loss, deduction, and credit of the Company for any taxable year shall be
allocated among the Members in accordance with their respective Membership
Interests, except as may be otherwise required by the Internal Revenue Code of
1986, as amended.
ARTICLE VII.
DISSOLUTION AND WINDING UP
Section 7.1. Dissolution. Notwithstanding any provision of the Act, the
Company shall be dissolved only upon the first of the following to occur:
-----------
(a) Forty (40) years from the date of filing the Certificate of
Formation of the Company;
(b) Written consent of all the then current Members to dissolution;
(c) The bankruptcy of a Member, unless there is at least one remaining
Member and such Member or, if more than one remaining Member, all remaining
Members agree to continue the Company and its business. Section 7.2.
Winding Up. Unless the Company is continued pursuant to Section 7.1(c) of
this Article VII., in the event of dissolution of the Company, the Managers
(excluding any Manager(s) holding office pursuant to designation by a
Member subject to bankruptcy proceedings) shall wind up the Company's
affairs as soon as reasonably practicable. On the winding up of the
Company, the Managers shall pay and/or transfer the assets of the Company
in the following order: ----------
(a) In discharging liabilities (including loans from Members) and the
expenses of concluding the Company's affairs; and
(b) The balance, if any, shall be divided between the Members
in accordance with the Members' Membership Interests.
ARTICLE VIII.
MANAGERS
Section 8.1. Selection of Managers. Management of the Company shall be
vested in the Managers. Initially, the Company shall have four (4) Managers,
being Xxx Xxxxxxx, Xxx Xxxxxxx, M.D., (as the initial Manager designees of
Prime), Xxxxx X. Xxxxxxx, M.D. and Xxxxxx X. Xxxxxx, M.D., (as the initial
Manager designees of BDEC). Thereafter, for so long as there are four (4)
Managers, (a) Prime shall be entitled to designate two (2) of the Managers; and
(b) BDEC shall be entitled to designate the remaining two (2) of the Managers.
Notwithstanding the foregoing, a Member shall not be entitled to designate any
Manager unless its Membership Interest: (x) has not (other than as allowed under
Section 2.5 of this Agreement) been transferred, repurchased, assigned, pledged,
hypothecated or in any way alienated; and (y) equals or exceeds forty percent
(40%) of the aggregate Membership Interests. The Members may, by unanimous vote
of all Members, from time to time, change the number of Managers of the Company
and remove or add Managers accordingly. A Manager shall serve as a Manager until
their resignation or removal pursuant to Section 8.2 or 8.3 of this Article
VIII. Managers need not be residents of the State of Delaware or Members of the
Company.
Section 8.2. Resignations. Each Manager shall have the right to resign
at any time upon written notice of such resignation to the Members. Unless
otherwise specified in such written notice, the resignation shall take
effect upon the receipt thereof, and acceptance of such resignation shall
not be necessary to make same effective. The Member who designated a
resigning manager shall be entitled to designate the successor thereto and
all Members agree to take such action as may be ------------ necessary to
cause the election of all such successor Managers.
Section 8.3. Removal of Managers. Any Manager may be removed, for or
without cause, at any time, but only by the Member who designated such
Manager, upon the written notice to all Members. The Member who designated
such removed Manager shall be entitled to designate the successor thereto
and all Members agree to take such action as may be necessary to cause the
election of all such successor Managers. -------------------
Section 8.4. General Powers. The business of the Company shall be
managed by its Managers, which may, by the vote or written consent in accordance
with this Agreement, exercise any and all powers of the Company and do any and
all such lawful acts and things as are not by the Act, the Certificate of
Formation or this Limited Liability Company Agreement directed or required to be
exercised or done by the Members, including, but not limited to, contracting for
or incurring on behalf of the Company debts, liabilities and other obligations,
without the consent of any other person, except as otherwise provided herein.
Section 8.5. Place of Meetings. The Managers of the Company may hold
their meetings, both regular and special, either within or without the
State of Delaware. -----------------
Section 8.6. Annual Meetings. The annual meeting of the Managers shall
be held without further notice immediately following the annual meeting of
the Members, and at the same place, unless by unanimous consent of the
Managers that such time or place shall be changed. ---------------
Section 8.7. Regular Meetings. Regular meetings of the Managers may be
held without notice at such time and place as shall from time to time be
determined by the Managers. ----------------
Section 8.8. Special Meetings. Special meetings of the Mangers may be
called by any Manager on seven (7) days notice to each Manager, with such
notice to be given personally, by mail or by telecopy, telegraph or
mailgram. ----------------
Section 8.9. Quorum and Voting. At all meetings of the Managers the
presence of at least three (3) Managers shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the affirmative vote of
at least a majority of the Managers present at any meeting at which there is a
quorum shall be the act of the Managers, except as may be otherwise specifically
provided by the Act, the Contribution Agreement, the Certificate of Formation or
this Agreement. If a quorum shall not be present at any meeting of Managers, the
Managers present there may adjourn the meeting from time to time without notice
other than announcement at the meeting, until a quorum shall be present.
Notwithstanding any other Member or Manager voting or quorum provisions
contained in this Agreement, the following acts or transactions by, or
involving, the Company shall require the prior written approval of three (3)
Managers (unless and to the extent a particular act or transaction is expressly
required of the Company pursuant to the terms and provisions of the Contribution
Agreement or any Transaction Document):
(a) Any amendment to the Company's Certificate of Formation or this
Agreement.
(b) Mergers, consolidations or combinations of the Company with
another limited liability company or other entity.
(c) Purchase by the Company of any interest in the Company,
irrespective of the source of such interest.
(d) Disposition, sale, assignment or other transfer by the Company of
any interest it owns in the Company, except that such interest may be
extinguished without the approval required under this Article.
(e) Issuance of any interest in the Company to any party.
(f) Dissolving, liquidating, or filing bankruptcy or seeking
relief under any debtor relief law.
(g) Election or removal of officers, and establishing or
changing the compensation for Managers, officers or other employees.
(h) Not making any cash distributions to its Members that are required
by this Agreement to be made, or making any distributions to its Members of
cash or property that are prohibited under this Agreement.
(i) Sale, lease or other transfer of all or substantially all of the
Company's assets, or any assets other than in the ordinary course of the
Company's business.
(j) Initiating or settling any litigation or regulatory
proceeding, or confessing any judgment.
(k) Hiring or changing the Company's accountants or legal
counsel.
(l) Opening or closing bank or other depository accounts, and
establishing or changing the signature withdrawal authority with respect to any
such accounts.
(m) Borrowing or incurring any indebtedness, other than open accounts
payable to unaffiliated third parties, or granting any collateral or
security (by way of guaranty or otherwise) for any indebtedness or
obligation.
(n) Engaging in any act or transaction not in the ordinary
course of the Company's business.
(o) Purchasing or leasing assets or property, or entering into any
contract or obligation, which obligates the Company to pay in excess of
$10,000 in the aggregate in one or any series of installments.
(p) Doing any business other than the conduct of the Business (as
defined in the Contribution Agreement) or causing a change in the nature of
the business or the legal name of the Company.
(q) Entering into a transaction or other action with any
Manager, officer or Member.
(r) Waiving, refusing to enforce, amending, restating, superseding or
modifying any of the provisions of this Agreement or any Transaction
Document, including, without limitation, the Collocation Agreement.
(s) Taking any other action which, by the terms of this Agreement,
requires the approval or consent of not less than seventy-five percent
(75%) of the Members.
(t) Except as expressly set forth in the Collocation Agreement or
Section 9.12 of the Contribution Agreement, allocating to the Company any
costs or expenses that are paid or incurred by any Member or its affiliates
(excluding the Company), or paid by the Company but reimbursable by any
Member or its affiliates (excluding the Company), in each instance.
(u) With respect to the business and operations of Newco II conducted
or to be conducted at or near the location of 0000 X. 00xx Xx., Xxxxxxx,
Xxxxxxx, waiving, amending, supplementing or modifying any of the
professional fees, facility fees or fee allocations by Newco II, to the
extent such amounts or allocations were utilized in preparing the pro forma
financial statements of Newco II attached to the Collocation Agreement.
(v) With respect to the business and operations of Newco II conducted
or to be conducted at any other future office or business locations
(including without limitation, the office located at 000 X. Xxxxx Xxxx,
Xxxxxx, Xxxxxxx), adopting any professional fees, facility fees or fee
allocations.
Any of the above stated actions taken by the Company without the
necessary manager approval is void ab initio.
Section 8.10. Committees. The Managers may, by resolution passed by
eighty percent (80%) of the Managers, designate committees, each committee to
consist of two or more Managers (at least one of which must be a Manager
designee of Prime and one of which must be a Manager designee of BDEC), which
committees shall have such power and authority and shall perform such functions
as may be provided in such resolution. Such committee or committees shall have
such name or names as may be designated by the Managers and shall keep regular
minutes of their proceedings and report the same to the Managers when required.
Section 8.11. Compensation of Managers. The Members, by unanimous
approval, shall have the authority to provide that any one or more of the
Managers shall not be compensated, and may, by unanimous approval, fix any
compensation (which may include expenses) they elect to pay to any one or
more of the Managers. ------------------------
Section 8.12. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Managers or of any committee
designated by the Managers may be taken without a meeting if written
consent, setting forth the action so taken, is signed by all the Managers
or of such committee, and such consent shall have the same force and effect
as a unanimous vote at a meeting. -------------------------
Section 8.13. Meetings by Conference Telephone. Managers or members of
any committee designated by the Managers may participate in and hold a meeting
of the Managers or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 8.14. Liability of Managers. No Manager of the Company shall
be personally liable for any debts, liabilities, or obligations of the
Company, including under a judgment, decree, or order of the court.
---------------------
Section 8.15. Specific Power of Managers. The Managers shall have the
authority to enter into and execute all documents in relation to the
formation of the Company including, but not limited to, issuance of the
Certificate of Formation and this Limited Liability Company Agreement.
--------------------------
ARTICLE IX.
NOTICES
Section 9.1. Form of Notice. Whenever under the provisions of the Act,
the Certificate of Formation or this Limited Liability Company Agreement notice
is required to be given to any Manager or Member, and no provision is made as to
how such notice shall be given, notice shall not be construed to mean personal
notice only, but any such notice may also be given in writing, by mail, postage
prepaid, addressed to such Manager or Member at such address as appears on the
books of the Company, or by telecopy, telegraph or mailgram. Any notice required
or permitted to be given by mail shall be deemed to be given three (3) days
after it is deposited, postage prepaid, in the United States mail as aforesaid.
Section 9.2. Waiver. Whenever any notice is required to be given to
any Manager or Member of the Company under the provision of the Act, the
Certificate of Formation or this Limited Liability Company Agreement, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether signed before or after the time stated in such waiver,
shall be deemed equivalent to the giving of such notice. ------
ARTICLE X.
OFFICERS
Any Manager may also serve as an officer of the Company. The Managers
may designate one or more persons who are not Managers of the Company to serve
as officers and may designate the titles of all officers. The initial officers
of the Company shall be: Xxx Xxxxxxx, Chairman of the Board; Xxx Xxxxxxx, M.D.,
President; Xxxxxx Xxxxxxxx, Vice President, Secretary and Chief Financial
Officer; and Xxxx Xxxxxxxxx, Vice President. Unless otherwise provided in a
resolution of the Members or Managers the officers of the Company shall have the
powers designated with respect to such offices under the Delaware Limited
Liability Company Act, and any successor statute, as amended from time-to-time.
ARTICLE XI.
INDEMNITY
Section 11.1. Indemnification. The Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an action, suit
or proceeding and any inquiry or investigation that could lead to such an
action, suit or proceeding (whether or not by or in the right of the Company),
by reason of the fact that such person is or was a manager, officer, employee or
agent of the Company or is or was serving at the request of the Company as a
director, manager, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another corporation, employee benefit plan,
other enterprise, or other entity, against all judgments, penalties (including
excise and similar taxes), fines, settlements and reasonable expenses (including
attorneys' fees and court costs) actually and reasonably incurred by him in
connection with such action, suit or proceeding to the fullest extent permitted
by any applicable law, and such indemnity shall inure to the benefit of the
heirs, executors and administrators of any such person so indemnified pursuant
to this Article XI. The right to indemnification under this Article XI shall be
a contract right and shall not be deemed exclusive of any other right to which
those seeking indemnification may be entitled under any law, bylaw, agreement,
vote of members or disinterested managers or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. Any repeal or amendment of this Article XI by the Managers (pursuant to
Section 8.9 hereof) or by changes in applicable law shall, to the extent
permitted by applicable law, be prospective only, and shall not adversely affect
the indemnification of any person who may be indemnified at the time of such
repeal or amendment.
Section 11.2. Indemnification Not Exclusive. The rights of
indemnification and reimbursement provided for in this Article XI shall not
be deemed exclusive of any other rights to which any such Manager, officer,
employee or agent may be entitled under the Certificate of Formation, this
Limited Liability Company Agreement, agreement or vote of Members, or as a
matter of law or otherwise. -----------------------------
Section 11.3. Other Indemnification Clauses. Notwithstanding the
foregoing, this Article XI shall not be construed to contradict the
indemnification provision of the Contribution Agreement. Notwithstanding
anything contained herein, this Article XI shall be ineffectual and shall not
permit or require indemnification for all, or any, losses, costs, liabilities,
claims or expenses arising, directly or indirectly, from any action or omission
permitting or requiring indemnification under the Contribution Agreement; and in
no event may any indemnity be allowed under this Agreement or pursuant to any
provision of the Act for an amount paid or payable pursuant to the
indemnification provisions of the Contribution Agreement.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Fiscal Year. The fiscal year of the Company shall be
fixed by resolution of the Managers. -----------
Section 12.2. Records. At the expense of the Company, the Managers
shall maintain records and accounts of all operations of the Company. At a
minimum, the Company shall keep at its principal place of business the
following records: -------
(a) A current list of the name and last known mailing address of each
Member;
(b) A current list of each Member's Membership Interest;
(c) A copy of the Certificate of Formation and Limited Liability
Company Agreement of the Company, and all amendments thereto, together with
executed copies of any powers of attorney;
(d) Copies of the Federal, state, and local income tax returns
and reports for the Company's six most recent tax years; and
(e) Correct and complete books and records of account of the
Company.
Section 12.3. Seal. The Company may by resolution of the Managers
adopt and have a seal, and said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
Any officer of the Company shall have authority to affix the seal to any
document requiring it. ----
Section 12.4. Agents. Every Manager and Officer is an agent of the
Company for the purpose of the business. The act of a Manager or Officer,
including the execution in the name of the Company of any instrument for
carrying on in the usual way the business of the Company, binds the
Company. ------
Section 12.5. Checks. All checks, drafts and orders for the payment of
money, notes and other evidences of indebtedness issued in the name of the
Company shall be signed by such officer, officers, agent or agents of the
Company and in such manner as shall from time to time be determined by
resolution of the Managers. In the absence of such determination by the Mangers,
such instruments shall be signed by the Treasurer or the Secretary and
countersigned by the President or a Vice President of the Company, if the
Company has such officers.
Section 12.6. Deposits. All funds of the Company shall be deposited
from time to time to the credit of the Company in such banks, trust
companies or other depositories as the Managers may select. --------
Section 12.7. Annual Statement. The Managers shall present at each
annual meeting a full and clear statement of the business and condition of
the Company. ----------------
Section 12.8. Financial Statements. As soon as practicable after the
end of each fiscal year of the Company, a balance sheet as at the end of such
fiscal year, and a profit and loss statement for the period ended, shall be
distributed to the Members, along with such tax information (including all
information returns) as may be necessary for the preparation of each Member of
its Federal, state and local income tax returns. The balance sheet and profit
and loss statement referred to in the previous sentence may be as shown on the
Company's federal income tax return.
Section 12.9. Binding Arbitration. Any controversy between the parties
regarding this Agreement and any claims arising out of this Agreement or
its breach shall be submitted to arbitration by either party. The
arbitration proceedings shall be conducted by a single arbitrator pursuant
to the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall be conducted in Dallas, Texas and the
arbitrator shall have the right to award actual damages and
------------------- attorney fees and costs, but shall not have the right
to award punitive, exemplary or consequential damages against either party.
ARTICLE XIII.
AMENDMENTS
Section 13.1. Amendments. This Agreement may be altered, amended or
repealed and a new limited liability company agreement may be adopted, only
in accordance with the provisions of Section 8.9, but otherwise at any
regular meeting or at any special meeting called for that purpose, or by
execution of a written consent in accordance with the provisions of Section
3.8. ----------
Section 13.2. When Limited Liability Company Agreement Silent. It is
expressly recognized that when the Limited Liability Company Agreement is
silent or in conflict with the requirements of the Act as to the manner of
performing any Company function, the provisions of the Act shall control.
-----------------------------------------------
[Signature page follows]
043838.0000 AUSTIN 133169 v8 S-1
SIGNATURE PAGE TO
LIMITED LIABILITY COMPANY AGREEMENT
IN WITNESS WHEREOF, the undersigned Members hereby adopt this Limited
Liability Company Agreement as the Limited Liability Company Agreement of the
Company, effective as of the 1st day of September, 1999.
Barnet Xxxxxxx Eye Center, P.L.L.C.
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
Prime Medical Operating, Inc.
By:
Printed Name:
Title:
A-
043838.0000 AUSTIN 133169 v8
EXHIBIT A
OWNERSHIP INTERESTS
Name Ownership Percentage
Prime 60%
BDEC 40%
EXHIBIT-D
ASSIGNMENT AND ASSUMPTION
AGREEMENT
For and in consideration of the sum of Ten Dollars ($10) and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and pursuant to and in accordance with that certain Contribution
Agreement, dated September 1, 1999, between and among Prime Medical Services,
Inc., a Delaware corporation, Prime Medical Operating, Inc., a Delaware
corporation ("Prime"), Barnet Xxxxxxx Eye Center, P.L.L.C., an Arizona
professional limited liability company ("BDEC"), LASIK Investors, L.L.C., a
Delaware limited liability company, Prime/BDEC Acquisition, L.L.C., a Delaware
limited liability company ("Newco II"), Prime/BDR Acquisition, L.L.C., a
Delaware limited liability company, Xxxxxx X. Xxxxxx, M.D., Xxxxx X. Xxxxxxx,
M.D. and Xxxx Xxxxxxxxx (the "Contribution Agreement"), each of Prime, BDEC, and
each of their constituent owners, hereby assigns, transfers and sets over to
Newco II, its successors and assigns, as of the Effective Time (as defined in
the Contribution Agreement), with such representations, warranties and covenants
as are expressly set forth in the Contribution Agreement, all of its right,
title and interest in and to the Assets and the Business (as such terms are
defined in the Contribution Agreement).
Newco II hereby assumes, as of the Effective Time, only those lease or
contract obligations of BDEC arising under lease agreements assigned to Newco II
pursuant to the foregoing paragraph, and only those liabilities set forth, by
item and amount, on Schedule 1.4 of the Contribution Agreement. With respect to
any lease or contract obligations assumed by Newco II pursuant to the foregoing
sentence, Newco II only assumes obligations thereunder which accrue after the
Effective Time, and has no responsibility whatsoever for any breaches or
defaults which occurred prior to the later of the Effective Time or the Closing
Date (as defined in the Contribution Agreement), or for obligations accruing
prior to the Effective Time.
BDEC acknowledges and agrees that, except as expressly set forth in the
immediately preceding paragraph, Newco II does not assume any debts, liabilities
or obligations of any kind whatsoever, whether known or unknown, absolute,
contingent or otherwise (including, but not limited to, federal, state and local
taxes, any sales taxes, use taxes and property taxes, any taxes arising from the
transactions contemplated by the Contribution Agreement, and any liabilities
arising from any litigation or civil, criminal or regulatory proceeding
involving or related to BDEC or its business), and any and all of such debts,
liabilities and obligations shall remain the sole responsibility of BDEC.
[Signature page follows]
SIGNATURE PAGE TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their duly authorized representatives,
effective for all purposes the 1st day of September, 1999.
PRIME: PRIME MEDICAL OPERATING, INC.
By:
Printed Name:
Title:
BDEC: BARNET XXXXXXX EYE CENTER, P.L.L.C.
By: ________________________________
Xxxxxx X. Xxxxxx, M.D., manager
By: ________________________________
Xxxxx X. Xxxxxxx, M.D., manager
NEWCO II: PRIME/BDEC ACQUISITION, L.L.C.
By:
Printed Name:
Title:
EXHIBIT-G1
LOAN AGREEMENT
This Loan Agreement (this "Agreement") is entered into as of the ____
day of September, 1999, by and between Prime Medical Operating, Inc., a Delaware
corporation, and Prime/BDR Acquisition, L.L.C., a Delaware limited liability
company.
Definitions:
EFFECTIVE DATE: September ___, 1999
BORROWER: Prime/BDR Acquisition, L.L.C., a Delaware limited liability
company
BORROWER'S ADDRESS: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000, Xxxxxx,
Xxxxx 00000
LENDER: Prime Medical Operating, Inc., a Delaware corporation
LENDER'S ADDRESS: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000, Xxxxxx, Xxxxx
00000
NOTES:
Working Capital Note: Promissory Note (Line of Credit) in the maximum
principal amount of $200,000 (the "Working Capital Maximum Principal Amount")
dated September ___, 1999, executed by Borrower, and payable to the order of
Lender as provided therein (the "Working Capital Note").
Development Facility Notes: Promissory Notes in the aggregate maximum
original principal amount not to exceed $40,000,000 (the "Development Facility
Maximum Principal Amount"), executed by Borrower and payable to the order of
Lender as provided therein (the "Development Facility Notes"). Collectively, the
Working Capital Notes and the Development Facility Notes are referred to herein
as the "Notes."
SECURITY AGREEMENTS: All documents, agreements and instruments hereinafter
or herewith executed by Borrower, LASIK Investors, L.L.C., a Delaware limited
liability company ("LASIK") or any Target Center securing this Agreement or the
obligations under any of the Notes.
LOAN DOCUMENTS: This Agreement, the Working Capital Note, the
Development Facility Notes, the Security Agreements, and all other
documents, agreements, and instruments now or hereafter existing,
evidencing, securing, or otherwise relating to this Agreement and any
transactions contemplated by this Agreement, as any of the foregoing items
may be modified or supplemented from time to time.
INDEBTEDNESS: All present and future indebtedness, obligations and liabilities
of Borrower to Lender, all present and future indebtedness, obligations and
liabilities of any Target Center to Lender, and all renewals, extensions and
modifications of either of the foregoing, arising pursuant to any of the Loan
Documents and all interest accruing thereon, and all other fees, costs,
expenses, charges and attorneys' fees payable, and covenants performable, under
any of the Loan Documents (including without limitation this Agreement).
DEFINED TERMS: Terms not otherwise defined herein shall have the
meaning provided in that certain Contribution Agreement dated effective
September 1, 1999, by and among Barnet Xxxxxxx Eye Center, P.L.L.C., Xxxxx
X. Xxxxxxx, M.D., Xxxxxx X. Xxxxxx, M.D., Xxxx Xxxxxxxxx, Prime Medical
Services, Inc., Lender, Borrower, LASIK and Prime/BDEC Acquisition, L.L.C.
(the "Contribution Agreement"). For the purposes hereof the terms "Target
Centers" and "Target Center" shall have the meaning set forth in the
Contribution Agreement, but shall include, upon the acquisition of a Target
Center by Borrower or any subsidiary or affiliate of Borrower, the
subsidiary or affiliate utilized to make such acquisition.
AGREEMENT:
Borrower has requested from Lender the credit accommodations described
below, and Lender has agreed to provide such credit accommodations on the
terms and conditions contained herein. Therefore, for good and valuable
consideration, the receipt and sufficiency of which Lender and Borrower
acknowledge, Lender and Borrower hereby agree as follows:
ARTICLE I
THE WORKING CAPITAL LOAN
1.1 The Working Capital Loan. Lender agrees to lend and Borrower
agrees to borrow an amount not to exceed the Working Capital Maximum
Principal Amount on the terms and conditions set forth herein (the "Working
Capital Loan"). The Working Capital Loan will be evidenced by the Working
Capital Note. ------------------------
1.2 Revolving Line of Credit. Subject to and in reliance upon the
terms, conditions, representations and warranties hereinafter set forth,
Lender agrees to make advances (the "Working Capital Advances") to Borrower
from time to time during the period from the Effective Date to and
including the one year anniversary of the Effective Date (the "Maturity
Date"), in an aggregate amount not to exceed the Working Capital Maximum
Principal Amount. Each Working Capital Advance must be either
------------------------ $10,000 or a higher integral multiple of $10,000.
Funds borrowed and repaid may be reborrowed, so long as all conditions
precedent to Working Capital Advances are met. The purpose of the Working
Capital Advances is to provide funds to Borrower for working capital and
for other general business purposes of Borrower.
1.3 Interest and Repayment. Borrower shall pay the aggregate unpaid
principal amount of all Working Capital Advances in accordance with the
terms of the Working Capital Note evidencing the indebtedness resulting
from such Working Capital Advances. Interest on the Working Capital
Advances shall be due and payable in the manner and at the times set forth
in the Working Capital Note, with final maturity of the Working Capital
Note being on or before the Maturity Date. ----------------------
1.4 Making Advances. Each Working Capital Advance shall be made within
two business days of written notice (or telephonic notice confirmed in
writing) given by noon (Austin, Texas time) on a business day of Lender by
Borrower to Lender specifying the amount and date thereof (which may be the
same business day) and if sent by wired funds, at Lender's option, the
wiring instructions of the deposit account of Borrower to which such
Working Capital Advance is to be deposited. ---------------
1.5 Payments and Computations. Borrower shall make each payment
hereunder and under the Working Capital Note on the day when due in lawful
money of the United States of America to Lender at Lender's Address for
Payment in same day funds. All repayments of principal on the Working
Capital Note shall be in a minimum amount of $1,000, or a higher integral
multiple of $1,000. All computations of interest shall be made by Lender on
the basis of the actual number of days (including the first
------------------------- day but excluding the last day) in the year (365
or 366, as the case may be) elapsed, but in no event shall any such
computation result in an amount of interest that would cause the interest
contracted for, charged or received by Lender to be in excess of the amount
that would be payable at the Highest Lawful Rate, as herein defined.
ARTICLE II
THE DEVELOPMENT FACILITY LOANS
2.1 The Development Facility. Subject to the terms of the Contribution
Agreement and the terms, conditions, representations and warranties
hereinafter set forth, Lender agrees to lend Borrower from time to time,
the amounts necessary to acquire or develop Target Centers, in an aggregate
amount not to exceed the Development Facility Maximum Principal Amount
(collectively, the "Development Facility Loans"). ------------------------
2.2 Development Facility Loans. Each Development Facility Loan will
finance up to 100% of the purchase price (or development cost) of a Target
Center being acquired (or developed) by Borrower. The parties acknowledge that
the grant of any Development Facility Loan does not create any obligation on the
part of Lender to extend further Development Facility Loans. Additionally, each
Development Facility Loan is subject in all respects to Lender obtaining prior
written approval from the bank syndication under its or its parent company's
outstanding borrowing facilities and the execution and delivery of such
guarantees by Borrower as may be required by such bank syndication. Pursuant to
the Contribution Agreement, each Development Facility Loan must be (a) evidenced
by a separate Development Facility Note executed by Borrower, (b) secured by all
of LASIK's ownership interest in Borrower as evidenced by an Assignment and
Security Agreement executed by LASIK, and (c) accompanied by Assignment and
Security Agreements executed by Borrower. In addition, if Borrower is acquiring,
directly or indirectly, a one hundred percent (100%) interest in a Target Center
(hereinafter referred to as a "100% Target Center"), Borrower shall cause such
Target Center to execute a security agreement, acceptable in form and substance
to Lender, granting to Lender or one of Lender's subsidiaries the highest
available priority security interest in all of the assets of such Target Center.
2.3 Interest and Repayment. Borrower and Target Center shall pay the
unpaid principal amount under each Development Facility Note in accordance
with the terms of the respective Development Facility Note. Payments of
interest and principal on each Development Facility Note shall be due and
payable in the manner and at the times set forth in the respective
Development Facility Note. ----------------------
ARTICLE III
CONDITIONS TO WORKING CAPITAL ADVANCES AND DEVELOPMENT FACILITY LOANS
3.1 Conditions Precedent to Initial Working Capital Advance. The
obligation of Lender to make its initial Working Capital Advance is subject
to the condition precedent that Lender shall have received on or before the
day of such Working Capital Advance the following, each in form and
substance satisfactory to Lender and properly executed by Borrower or other
appropriate parties: (a) the Working Capital Note duly executed by
Borrower, and (b) such other documents, opinions, certificates and
------------------------------------------------------- evidences as Lender
may reasonably request.
3.2 Conditions Precedent to Each Working Capital Advance/Development
Facility Loan. In addition to the conditions precedent stated elsewhere
herein, Lender shall not be obligated to make any Working Capital Advance
or any Development Facility Loan unless:
(a) the representations and warranties contained in Article IV are
true and correct in all material respects on and as of the date of such
Working Capital Advance or Development Facility Loan, as though made on and
as of such date with such changes therein;
(b) on the date of the Working Capital Advance or Development Facility
Loan, no Event of Default, and no event which, with the lapse of time or
notice or both, could become an Event of Default, has occurred and is
continuing;
(c) there shall have been no material adverse change, as determined by
Lender in its reasonable judgment, in the financial condition or business
of Borrower;
(d) there has been no breach or threatened breach by Borrower under
the Contribution Agreement or any Transaction Document (as such term is
defined in the Contribution Agreement);
with respect to each Development Facility Loan, Borrower executes
the respective Development Facility Note and Borrower executes an Assignment and
Security Agreement in the form attached as Exhibit G3 to the Contribution
Agreement, and otherwise in form and substance acceptable to Lender wherein
Lender is granted a first lien perfected security interest in all of Borrower's
or Borrower's subsidiaries' ownership interest in the Target Center and related
acquisition documents;
LASIK shall have previously granted to Lender a first lien
perfected security interest in all of LASIK's ownership interest in Borrower
through the execution and delivery of the Assignment and Security Agreement in
the form attached as Exhibit G4 to the Contribution Agreement and LASIK shall be
in compliance with all of its obligations thereunder;
(g) if Borrower is using a Development Facility Loan to acquire,
directly or indirectly, a 100% Target Center, Borrower shall cause such
Target Center to execute a security agreement, acceptable in form and
substance to Lender, granting to Lender or one of Lender's subsidiaries the
highest available priority security interest in all of the assets of such
Target Center; and
(h) Lender shall have received such other approvals, opinions,
documents, certificates or evidences as Lender may reasonably request (in
form and substance reasonably satisfactory to Lender). Each request for an
Working Capital Advance or Development Facility Loan shall be deemed a
representation by Borrower that the conditions of this Section 3.2 have
been met.
ARTICLE IV
BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
4.1 Good Standing. Borrower is a duly formed limited liability
company, duly organized and in good standing, under the laws of Delaware
and has the power to own its property and to carry on its business in each
jurisdiction in which Borrower operates. -------------
4.2 Authority and Compliance. Borrower has full power and authority to
enter into this Agreement, to make the borrowing hereunder, to execute and
deliver the Loan Documents and to incur the indebtedness described in this
Agreement, all of which has been duly authorized by all proper and necessary
action of its managers and members. No further consent or approval of any public
authority is required as a condition to the validity of any Loan Document, and
Borrower is in compliance with all laws and regulatory requirements to which it
is subject.
4.3 Binding Agreement. This Agreement and other Loan Documents when
issued and delivered pursuant hereto for value received will constitute,
valid and legally binding obligations of Borrower in accordance with their
terms. -----------------
4.4 Litigation. There are no proceedings pending or, to the knowledge
of Borrower, threatened before any court or administrative agency which
will or may have a material adverse effect on the financial condition or
operations of Borrower or any subsidiary, except as disclosed to Lender in
writing prior to the date of this Agreement. To the knowledge of Borrower,
there are no proceedings pending or threatened against any Target Center.
----------
4.5 No Conflicting Agreements. There are no provisions of Borrower's
organizational documents and no provisions of any existing agreement,
mortgage, indenture or contract binding on Borrower or affecting its
property, which would conflict with or in any way prevent the execution,
delivery, or carrying out of the terms of the Loan Documents.
-------------------------
4.6 Ownership of Assets. Borrower will at all times maintain its
tangible property, real and personal, in good order and repair taking into
consideration reasonable wear and tear. -------------------
4.7 Taxes. All income taxes and other taxes due and payable through
the date of this Agreement have been paid prior to becoming delinquent.
-----
ARTICLE V
BORROWER'S AFFIRMATIVE COVENANTS
So long as Borrower may borrow under this Agreement and until payment
in full of the Working Capital Note and all Development Facility Notes, and
performance of all other obligations of Borrower and Target Centers hereunder or
thereunder, Borrower covenants and agrees to do the following:
5.1 Financial Statements.
(a) Maintain, and cause each Target Center to maintain, a
system of accounting satisfactory to Lender and in accordance with
generally accepted accounting principles consistently applied, and will
permit Lender's officers or authorized representatives to visit and
inspect Borrower's or Target Center's books of account and other
records at such reasonable times and as often as Lender may desire
during office hours and after reasonable notice to Borrower, and pay
the reasonable fees and disbursements of any accountants or other
agents of Lender selected by Lender for the foregoing purposes. Unless
written notice of another location is given to Lender, Borrower's books
and records will be located at Borrower's Address.
(b) Furnish to Lender year end financial statements, of Borrower and
each Target Center, to include balance sheet, operating statement and
surplus reconciliation, together with an officer's certificate of
compliance with this Agreement including computations of all quantitative
covenants, within 90 days after the end of each annual accounting period.
(c) Furnish to Lender quarterly financial statements, of Borrower and
each Target Center, to include balance sheet and profit and loss statement,
together with an officer's certificate of compliance with this Agreement
including computations of all quantitative covenants, within 45 days of the
end of each such accounting period.
(d) With each balance sheet delivered under subsections (b) or
(c) of this Section 5.1, an aging of all Accounts Receivable.
(e) Promptly provide Lender with such additional information, reports
or statements respecting the business operations and financial condition of
Borrower or any Target Center, as Lender may reasonably request from time
to time.
5.2 Insurance. Maintain, and cause each Target Center to maintain,
insurance with responsible insurance companies on such of its respective
properties, in such amounts and against such risks as is customarily maintained
by similar businesses operating in the same vicinity, specifically to include a
policy of fire and extended coverage insurance covering all assets, and
liability insurance, all to be with such companies and in such amounts
satisfactory to Lender and to contain a mortgage clause naming Lender as its
interest may appear. Evidence of such insurance will be supplied to Lender.
5.3 Existence and Compliance. Maintain, and cause each Target Center
to maintain, its organizational existence in good standing and comply with
all laws, regulations and governmental requirements applicable to it or to
any of its property, business operations and transactions. Borrower further
agrees to provide Lender with copies of all instruments filed with the
Delaware Secretary of State amending and/or renewing Borrower's certificate
of formation. ------------------------
5.4 Adverse Conditions or Events. Promptly advise Lender in writing of
any condition, event or act which comes to its attention that would or
might materially affect Borrower's or any Target Center's financial
condition, Lender's rights under this Agreement or any of the Loan
Documents, and of any litigation filed against Borrower or to its knowledge
against any Target Center. ----------------------------
5.5 Taxes. Pay all taxes as they become due and payable.
5.6 Maintenance. Maintain, and cause each Target Center to maintain,
all of its respective tangible property in good condition and repair,
reasonable wear and tear excepted, and make all necessary replacements
thereof, and preserve and maintain all licenses, privileges, franchises,
certificates and the like necessary for the operation of its business.
-----------
5.7 Application of Earnings. Except as expressly contemplated in
Section 4.3(e) of the Contribution Agreement, pay all available funds
toward repayment of the Working Capital Note and any Development Facility
Notes, regardless of whether payment of such amounts exceeds the minimum
required payments under the Working Capital Note and the Development
Facility Notes. -----------------------
ARTICLE VI
BORROWER'S NEGATIVE COVENANTS
So long as Borrower may borrow under this Agreement and until payment
in full of the Working Capital Note and all Development Facility Notes, and
performance of all other obligations of Borrower or Target Center hereunder or
thereunder, Borrower will not, and will cause each of the Target Centers to not,
without the prior written consent of Lender:
6.1 Transfer of Assets. Enter into any merger or consolidation, or
sell, lease, assign, or otherwise dispose of or transfer any assets except
in the normal course of its business. ------------------
6.2 Change in Ownership or Structure. Dissolve or liquidate; become a
party to any merger or consolidation; reorganize as a professional
corporation; acquire by purchase, lease or otherwise all or substantially
all of the assets or capital stock of any corporation or other entity; or
sell, transfer, lease, or otherwise dispose of all or any substantial part
of its respective property or assets or business.
--------------------------------
6.3 Liens. From and after the date hereof grant, suffer, or permit
liens on or security interests in its respective assets, or fail to
promptly pay all lawful claims, whether for labor, materials, or otherwise,
except for purchase money security interests arising in the ordinary course
of its respective business. -----
6.4 Loans. Make any loans, advances or investments to or in any joint
venture, corporation or other entity, except for the purchase of
obligations of Lender or U.S. Government obligations or the purchase of
federally-insured certificates of deposit. -----
6.5 Borrowings. Except for borrowing or incurring open accounts
payable to unaffiliated third parties in the ordinary course of business,
create, incur, assume, or liable in any manner for any indebtedness (for
borrowed money, deferred payment for the purchase of assets, lease
payments, as surety or guarantor of the debt of another, or otherwise)
other than to Lender in excess of $25,000 without Lender's prior written
consent. ----------
6.6 Violate Other Covenants. Violate or fail to comply with any
covenants or agreements regarding other debt which will or would with the
passage of time or upon demand cause the maturity of any other debt to be
accelerated. -----------------------
6.7 Equity Redemptions or Restructurings. Apply any of its property or
assets to the purchase, retirement or redemption of any of its equity
interests or in any way amend its capital structure.
------------------------------------
6.8 Character of Business. Change the general character of business as
conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently and normally conducted.
---------------------
ARTICLE VII
EVENTS OF DEFAULT; NOTICE; ACCELERATION
7.1 Events of Default. If one or more of the following events of
default shall occur and continue after thirty (30) days' written notice to
Borrower, all outstanding principal plus unpaid interest of the Working
Capital Note and each Development Facility Note, and any other indebtedness
of Borrower to Lender, shall automatically be due and payable immediately
and Lender shall have no further obligation to fund under this Agreement.
-----------------
(a) There shall be any breach or default shall be made in the payment
of any installment of principal or interest upon the Working Capital Note
or any Development Facility Note, when due and payable, whether at maturity
or otherwise; or
(b) There shall be any breach or default (other than by Lender or
Prime Medical Services, Inc.) under any Loan Document, the Contribution
Agreement, or any Transaction Document (other than those certain Consulting
Agreements with Xx. Xxxxxxx, Xx. Xxxxxx and Xxxx Xxxxxxxxx as required
pursuant to the Contribution Agreement), or any other certificate,
agreement or document contemplated hereby or thereby; or
(c) Any representation or warranty of Borrower contained herein or in
any financial statement, certificate, report or opinion submitted to Lender
in connection with the Working Capital Loan or any Development Facility
Loan, or by Borrower pursuant to the requirements of this Agreement, shall
prove to have been incorrect or misleading in any material respect when
made; or
(d) Any judgment against Borrower or any attachment or other levy
against the property of Borrower with respect to a claim materially
affecting Borrower's financial status remains unpaid, unstayed on appeal,
undischarged, not bonded or not dismissed for a period of 30 days; or
(e) The bankruptcy, death, or dissolution of any guarantor of the
Indebtedness; or
(f) Borrower makes an assignment for the benefit of creditors,
admits in writing its inability to pay its debts generally as they
become due, files a petition in bankruptcy, is adjudicated insolvent or
bankrupt, petitions or applies to any tribunal for any receiver or any
trustee of Borrower or any substantial part of their respective
property, commences any action relating to Borrower under any
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, or if there is commenced against Borrower any such
action, or Borrower by any act indicates its consent to or approval of
any trustee for Borrower or any substantial part of its property, or
suffers any such receivership or trustee to continue undischarged.
7.2 Lender's Remedies. Upon the occurrence of an Event of Default,
Lender, without notice of any kind, except for any notice required under this
Agreement or any other Loan Document, may, at Lender's option: (i) terminate its
obligation to fund any Working Capital Advance or any Development Facility Loan
hereunder; (ii) declare the Indebtedness, in whole or in part, immediately due
and payable; and/or (iii) exercise any other rights and remedies available to
Lender under this Agreement, any other Loan Document, or applicable laws; except
that upon the occurrence of an Event of Default described in subsection 7.1(f),
all the Indebtedness shall automatically be immediately due and payable, and
Lender's obligation to fund any Working Capital Advance or any Development
Facility Loan hereunder shall automatically terminate, without notice of any
kind (including without limitation notice of intent to accelerate and notice of
acceleration) to Borrower or to any Target Center, guarantor, or to any surety
or endorser of any of the Notes, or to any other person. Borrower, each Target
Center, and each guarantor, surety, and endorser of any of the Notes, and any
and all other parties liable for the Indebtedness or any part thereof, waive
demand, notice of intent to demand, presentment for payment, notice of
nonpayment, protest, notice of protest, grace, notice of dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, and diligence
in collection.
7.3 Right of Set-Off. Borrower hereby authorizes Lender, to the maximum
extent permitted under and in accordance with applicable laws, at any time after
the occurrence of an Event of Default which continues uncured, to set-off and
apply any and all deposits, funds or assets at any time held and any and all
other indebtedness at any time owing by Lender to or for the credit or the
account of Borrower against any and all Indebtedness, whether or not Lender
exercises any other right or remedy hereunder and whether or not such
Indebtedness are then matured.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
8.1 Notices. All notices, demands, requests, approvals and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given when (a) presented personally, or (b) three (3) days
after deposited in a regularly maintained mail receptacle of the United States
Postal Service, postage prepaid, certified, return receipt requested, or (c)
upon receipt of confirmation after sending by facsimile transmission, addressed
to Borrower or Lender, as the case may be, at the respective addresses or
facsimile number for notice set forth on the first page of this Agreement, or
such other address or facsimile number as Borrower or Lender may from time to
time designate by written notice to the other.
8.2 Entire Agreement and Modifications. The Loan Documents, together
with the Contribution Agreement and Transaction Documents, constitute the
entire understanding and agreement between the undersigned with respect to
the transactions arising in connection with the Working Capital Loan and
the Development Facility Loans, and supersede all prior written or oral
understandings and agreements between the undersigned in connection
therewith. No provision of this Agreement or the other Loan
---------------------------------- Documents may be modified, waived, or
terminated except by instrument in writing executed by the party against
whom a modification, waiver, or termination is sought to be enforced, and,
in the case of Lender, executed by a Vice President or higher level officer
of Lender.
8.3 Severability. In case any of the provisions of this Agreement
shall for any reason be held to be invalid, illegal, or unenforceable, such
invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
------------
8.4 Cumulative Rights and No Waiver. Lender shall have all of the
rights and remedies granted in the Loan Documents and available at law or in
equity, and these same rights and remedies shall be cumulative and may be
pursued separately, successively, or concurrently against Borrower, at the sole
discretion of Lender. Lender's delay in exercising any right shall not operate
as a waiver thereof, nor shall any single or partial exercise by Lender of any
right preclude any other or future exercise thereof or the exercise of any other
right. Any of Borrower's covenants and agreements may be waived by Lender but
only in writing signed by an authorized officer of Vice President level or
higher of Lender or any subsequent owner or holder of any of the Notes. Except
as otherwise expressly provided in this Agreement and in any Note, Borrower
expressly waives any presentment, demand, protest, notice of default, notice of
intent to accelerate, notice of acceleration, notice of intent to demand
payment, or other notice of any kind. No notice to or demand on Borrower in any
case shall, of itself, entitle Borrower to any other or further notice or demand
in similar or other circumstances. No delay or omission by Lender in exercising
any power or right hereunder shall impair any such right or power or be
construed as a waiver thereof, or the exercise of any other right or power
hereunder.
8.5 Form and Substance. All documents, certificates, insurance
policies, and other items required under this Agreement to be executed
and/or delivered to Lender shall be in form and substance reasonably
satisfactory to Lender. ------------------
8.6 Limitation on Interest: Maximum Rate. Lender and Borrower intend to
contract in strict compliance with applicable usury law from time to time in
effect. To effectuate this intention, Lender and Borrower stipulate and agree
that none of the terms and provisions of any Note and any other agreement among
such parties, whether now existing or arising hereafter, shall ever be construed
as a contract to pay interest for the use, forbearance or detention of money in
excess of the Maximum Rate. If, from any possible construction of any document,
interest would otherwise be payable to Lender in excess of the Maximum Rate, any
such construction shall be subject to the provisions of this Section and such
document shall be automatically reformed and the interest payable to Lender
shall be automatically reduced to the Maximum Rate permitted under applicable
law, without the necessity of the execution of any amendment or new document.
Neither Borrower, endorsers or other persons now or hereafter becoming liable
for payment of any portion of the principal or interest of any Note shall ever
be liable for any unearned interest on the principal amount or shall ever be
required to pay interest thereon in excess of the Maximum Rate that may be
lawfully charged under applicable law from time to time in effect. Lender and
any subsequent holder of any Note expressly disavow any intention to charge or
collect unearned or excessive interest or finance charges in the event the
maturity of any Note, is accelerated. If the maturity of any Note is accelerated
for any reason, whether as a result of a default under any Note, or by voluntary
prepayment, or otherwise, any amounts constituting interest, or adjudicated as
constituting interest, which are then unearned and have previously been
collected by Lender or any subsequent holder of any Note shall be applied to
reduce the principal balance thereof then outstanding, or if such amounts exceed
the unpaid balance of principal, the excess shall be refunded to Borrower (and
Target Center, as applicable). In the event Lender or any subsequent holder of
any Note ever receives, collects or applies as interest any amounts constituting
interest or adjudicated as constituting interest which would otherwise increase
the interest to an amount in excess of the amount permitted under applicable
law, such amount which would be excessive interest shall be applied to the
reduction of the unpaid principal balance of such Note, and, if the principal
balances of such Note is paid in full, any remaining excess shall be paid to
Borrower (and Target Center, as applicable). In determining whether or not the
interest paid or payable under the specific contingencies exceeds the Maximum
Rate allowed by applicable law, Borrower and Lender shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium, rather than as interest; (ii) exclude voluntary
prepayments and the effect thereof; (iii) amortize, prorate, allocate and
spread, in equal parts, the total amount of interest throughout the entire
contemplated term of the applicable Note (as it may be renewed and extended) so
that the interest rate is uniform throughout the entire term of such Note. The
terms and provisions of this section shall control and supersede every other
provision of all existing and future agreements between Lender and Borrower (and
Target Center, as applicable). As used in this Agreement, "Maximum Rate" means
the maximum non-usurious interest rate that at any time or from time to time may
be contracted for, taken, reserved, charged or received on the unpaid principal
or accrued past due interest under applicable law and may be greater than the
applicable rate, the parties hereby stipulating and agreeing that Lender may
contract for, take, reserve, charge or receive interest up to the Maximum Rate
without penalty under any applicable law; and "applicable law" means the laws of
the State of Texas or the laws of the United States of America, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future. In the event applicable law provides for an
interest ceiling under Chapter One of Title 79, Texas Revised Civil Statutes
Annotated, as amended, that ceiling shall be the indicated rate ceiling, subject
to any right Lender may have in the future to change the method of determining
the Maximum Rate.
8.7 Third Party Beneficiary. Borrower acknowledges that the bank
syndication under the senior credit facility of Prime Medical Services,
Inc. (as hereinafter supplemented, modified, or replaced) is a third party
beneficiary to this Agreement. Except for the preceding sentence, this
Agreement is for the sole benefit of Lender and Borrower and is not for the
benefit of any third party. -----------------------
8.8 Borrower In Control. In no event shall Lender's rights and
interests under the Loan Documents be construed to give Lender the right
to, or be deemed to indicate that Lender is in control of the business,
management or properties of Borrower or any Target Center or has power over
the daily management functions and operating decisions made by Borrower or
any Target Center. -------------------
8.9 Use of Financial and Other Information. Borrower agrees that
Lender shall be permitted to investigate and verify the accuracy of any and
all information furnished to Lender in connection with the Loan Documents,
including without limitation financial statements, and to disclose such
information, or provide copies of such information, to representatives
appointed by Lender, including independent accountants, agents, attorneys,
asset investigators, appraisers and any other persons deemed
-------------------------------------- necessary by Lender to such
investigation.
8.10 Collateral Assignment of Loan Documents. Lender shall have the
right to collaterally assign all of its rights under this Agreement and the
other Loan Documents to the third party beneficiaries described in Section 8.7.
Lender shall have the right to disclose in confidence such financial information
regarding Borrower as may be necessary to complete any such assignment or
attempted assignment, including without limitation, all financial statements,
projections, internal memoranda, audits, reports, payment history, appraisals
and any and all other information and documentation in Lender's files relating
to Borrower. This authorization shall be irrevocable in favor of Lender, and
Borrower waives any claims against Lender or the party receiving information
from Lender regarding disclosure of information in Lender's files, and further
waive any alleged damages which may result from such disclosure. Borrower
acknowledges that Lender intends to make a collateral assignment of its rights
under this Agreement and the Loan Documents for the benefit of one or more of
its or its parent company's lenders and will not be authorized to amend or
modify this Agreement or the Loan Documents, or grant waivers of any of its
rights thereunder without the prior written consent of some or all of such
lenders.
8.11 Further Assurances. Borrower agrees to execute and deliver, and
cause each Target Center to execute and deliver, to Lender, promptly upon
request from Lender, such other and further documents as may be reasonably
necessary or appropriate to consummate the transactions contemplated
herein. ------------------
8.12 Number and Gender. Whenever used herein, the singular number
shall include the plural and the plural the singular, and the use of any
gender shall be applicable to all genders. The duties, covenants,
obligations, and warranties of Borrower in this Agreement shall be joint
and several obligations of Borrower and of each Borrower if more than one.
-----------------
8.13 Captions. The captions, headings, and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit,
amplify, or modify the terms and provisions hereof. --------
8.14 Continuing Agreement. This is a continuing agreement and all
rights, powers, and remedies of Lender under this Agreement and the other Loan
Documents shall continue in full force and effect until each Note is paid in
full as the same becomes due and payable and all other Indebtedness is paid and
discharged, until Lender has no further obligation to advance moneys to Borrower
under this Agreement, and until Lender, upon request of Borrower, has executed a
written termination statement. Furthermore, the parties contemplate that there
may be times when no Indebtedness is owing, but notwithstanding such occurrence,
this Agreement (and all other Loan Documents) shall remain valid and shall be in
full force and effect as to subsequent Indebtedness and Advances, provided that
Lender has not executed a written termination statement.
8.15 Applicable Law. This Agreement and the Loan Documents shall be
governed by and construed in accordance with the laws of the State of Texas
and the laws of the United States applicable to transactions within such
state. --------------
8.16 NO ORAL AGREEMENTS. THE WRITTEN LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE TO
LOAN AGREEMENT
EXECUTED as of ____ day of September, 1999.
BORROWER:
PRIME/BDR ACQUISITION, L.L.C.
By: ______________________________________
Name: ____________________________________
Title: _____________________________________
LENDER:
PRIME MEDICAL OPERATING, INC.
By: ______________________________________
Name: ____________________________________
Title: _____________________________________
EXHIBIT-G2
PROMISSORY NOTE
Austin, Texas (LINE OF CREDIT) September 1, 1999
PROMISE TO PAY: For value received, the undersigned Borrower (whether one or
more) promises to pay to the order of Lender the Principal Amount, to the extent
advanced by Lender, together with interest on the unpaid balance of such amount,
in lawful money of the United States of America, in accordance with all the
terms, conditions, and covenants of this Note and the Loan Documents identified
below.
BORROWER: Prime/BDR Acquisition, L.L.C., a Delaware limited liability
company
BORROWER'S ADDRESS FOR NOTICE: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000
Xxxxxx, Xxxxx 00000 Attention: President
LENDER: Prime Medical Operating, Inc., a Delaware corporation
LENDER'S ADDRESS FOR PAYMENT: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000,
Xxxxxx, Xxxxx 00000 Attention: Chief Financial Officer
PRINCIPAL AMOUNT: Two Hundred Thousand Dollars ($200,000)
INTEREST RATE: Fifteen Percent (15%)
PAYMENT TERMS: Interest on the unpaid balance of this Note is due and payable
quarterly, beginning November 1, 1999, and continuing regularly and quarterly
thereafter on or before the first day of February, May, August, until September
1, 2000 (the "Maturity Date"), when the outstanding principal balance and all
accrued interest shall be due and payable in full. Interest will be calculated
on the unpaid principal balance. Each payment will be credited first to the
accrued interest and then to the reduction of principal.
REVOLVING LINE OF CREDIT: This Note evidences a revolving line of credit.
Subject to the terms of the Loan Agreement between Borrower and Lender of even
date herewith, all or any portion of the Principal Amount of this Note may be
borrowed, paid, prepaid, repaid, and reborrowed, from time to time prior to the
Maturity Date and in accordance with the Loan Documents. Each borrowing and
repayment hereunder will be (i) endorsed on an attachment to this Note, or (ii)
entered in the books and records of Lender. The books and records of Lender
shall be prima facie evidence of all sums due Lender. If an event of default
exists under this Note or any Loan Document, then Lender shall be under no
obligation to make any advance under this Note.
LOAN AGREEMENT: This Note is executed pursuant to and is governed by the
terms of the Loan Agreement of even date herewith, executed by Borrower and
Lender, as amended (collectively, the "Loan Agreement").
1. INTEREST PROVISIONS:
Rate: The principal balance of this Note from time to time remaining unpaid
prior to maturity shall bear interest at the Interest Rate per annum stated
above. Interest shall be calculated on the amount of each advance of the
Principal Amount of this Note from the date of each such advance.
Maximum Lawful Interest: The term "Maximum Lawful Rate" means the maximum rate
of interest and the term "Maximum Lawful Amount" means the maximum
amount of interest that is permissible under applicable state or
federal law for the type of loan evidenced by this Note and the other
Loan Documents. If the Maximum Lawful Rate is increased by statute or
other governmental action subsequent to the date of this Note, then the
new Maximum Lawful Rate shall be applicable to this Note from the
effective date thereof, unless otherwise prohibited by applicable law.
Spreadingof Interest: Because of the possibility of irregular periodic balances
of principal or premature payment, the total interest that will accrue
under this Note cannot be determined in advance. Lender does not intend
to contract for, charge, or receive more than the Maximum Lawful Rate
or Maximum Lawful Amount permitted by applicable state or federal law,
and to prevent such an occurrence Lender and Borrower agree that all
amounts of interest, whenever contracted for, charged, or received by
Lender, with respect to the loan of money evidenced by this Note, shall
be spread, prorated, or allocated over the full period of time this
Note is unpaid, including the period of any renewal or extension of
this Note. If demand for payment of this Note is made by Lender prior
to the full stated term, the total amount of interest contracted for,
charged, or received to the time of such demand shall be spread,
prorated, or allocated along with any interest thereafter accruing over
the full period of time that this Note thereafter remains unpaid for
the purpose of determining if such interest exceeds the Maximum Lawful
Amount.
Excess Interest: At maturity (whether by acceleration or otherwise) or on
earlier final payment of this Note, Lender shall compute the total
amount of interest that has been contracted for, charged, or received
by Lender or payable by Borrower under this Note and compare such
amount to the Maximum Lawful Amount that could have been contracted
for, charged, or received by Lender. If such computation reflects that
the total amount of interest that has been contracted for, charged, or
received by Lender or payable by Borrower exceeds the Maximum Lawful
Amount, then Lender shall apply such excess to the reduction of the
principal balance and not to the payment of interest; or if such excess
interest exceeds the unpaid principal balance, such excess shall be
refunded to Borrower. This provision concerning the crediting or refund
of excess interest shall control and take precedence over all other
agreements between Borrower and Lender so that under no circumstances
shall the total interest contracted for, charged, or received by Lender
exceed the Maximum Lawful Amount.
Interest After Default: At Lender's option, the unpaid principal balance shall
bear interest after maturity (whether by acceleration or otherwise) at
the "Default Interest Rate." The Default Interest Rate shall be, at
Lender's option, (i) the Maximum Lawful Rate, if such Maximum Lawful
Rate is established by applicable law; or (ii) the Interest Rate stated
on the first page of this Note plus five (5) percentage points, if no
Maximum Lawful Rate is established by applicable law; or (iii) eighteen
percent (18%) per annum; or (iv) such lesser rate of interest as Lender
in its sole discretion may choose to charge; but never more than the
Maximum Lawful Rate or at a rate that would cause the total interest
contracted for, charged, or received by Lender to exceed the Maximum
Lawful Amount.
Daily Computation of Interest: To the extent permitted by applicable law, Lender
at its option will calculate the per diem interest rate or amount based on the
actual number of days in the year (365 or 366, as the case may be), and charge
that per diem interest rate or amount each day. In no event shall Lender compute
the interest in a manner that would cause Lender to contract for, charge, or
receive interest that would exceed the Maximum Lawful Rate or the Maximum Lawful
Amount
DEFAULT PROVISIONS:
EVENTS OF DEFAULT AND ACCELERATION OF MATURITY: LENDER MAY, AFTER THIRTY (30)
DAYS' WRITTEN NOTICE TO BORROWER AND BORROWER'S FAILURE TO CURE WITHIN SUCH
30-DAY PERIOD AND WITHOUT FURTHER NOTICE OR DEMAND, (except as otherwise
required by statute), ACCELERATE THE MATURITY OF THIS NOTE AND DECLARE THE
ENTIRE UNPAID PRINCIPAL BALANCE AND ALL ACCRUED INTEREST AT ONCE DUE AND PAYABLE
IF:
There is default in the payment of any installment of principal,
interest, or any other sum required to be paid under the terms of this Note or
any of the Loan Documents; or
There is a breach or default (other than by Lender or Prime Medical
Services, Inc.) under this Note or any of the Loan Documents, including any
instrument securing the payment of this Note or any loan agreement relating to
the advance of loan proceeds.
WAIVER BY BORROWER: EXCEPT AS PROVIDED IN PARAGRAPH 2(a) HEREOF AND IN ANY
OTHER LOAN DOCUMENT, BORROWER AND ALL OTHER PARTIES LIABLE FOR THIS
NOTE WAIVE, DEMAND, NOTICE OF INTENT TO DEMAND, PRESENTMENT FOR
PAYMENT, NOTICE OF NONPAYMENT, PROTEST, NOTICE OF PROTEST, GRACE,
NOTICE OF DISHONOR, NOTICE OF INTENT TO ACCELERATE MATURITY, NOTICE OF
ACCELERATION OF MATURITY, AND DILIGENCE IN COLLECTION. EACH MAKER,
SURETY, ENDORSER, AND GUARANTOR OF THIS NOTE WAIVES AND AGREES TO ONE
OR MORE EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME, AND ANY PARTIAL
PAYMENTS, BEFORE OR AFTER MATURITY, WITHOUT PREJUDICE TO THE HOLDER OF
THIS NOTE. EACH MAKER, SURETY, ENDORSER, AND GUARANTOR WAIVES NOTICE OF
ANY AND ALL RENEWALS, EXTENSIONS, REARRANGEMENTS, AND MODIFICATIONS OF
THIS NOTE.
Non-Waiver by Lender: Any previous extension of time, forbearance, failure to
pursue some remedy, acceptance of late payments, or acceptance of partial
payment by Lender, before or after maturity, does not constitute a waiver by
Lender of its subsequent right to strictly enforce the collection of this Note
according to its terms.
Other Remedies Not Required: Lender shall not be required to first file suit,
exhaust all remedies, or enforce its rights against any security in order to
enforce payment of this Note.
Joint and Several Liability: Each Borrower who signs this Note, and all of the
other parties liable for the payment of this Note, such as guarantors,
endorsers, and sureties, are jointly and severally liable for the payment of
this Note.
Attorney's Fees: If Lender requires the services of an attorney to enforce the
payment of this Note or the performance of the other Loan Documents, or if this
Note is collected through any lawsuit, probate, bankruptcy, or other judicial
proceeding, Borrower agrees to pay Lender an amount equal to its reasonable
attorney's fees and other collection costs. This provision shall be limited by
any applicable statutory restrictions relating to the collection of attorney's
fees.
3. MISCELLANEOUS PROVISIONS:
Subsequent Holder: All references to Lender in this Note shall also refer to any
subsequent owner or holder of this Note by transfer, assignment, endorsement, or
otherwise.
Transfer:Borrower acknowledges and agrees that Lender may transfer this Note or
partial interests in the Note to one or more transferees or
participants, including without limitation transfers provided for in
Section 8.10 of the Loan Agreement. Borrower authorizes Lender to
disseminate to any such transferee or participant or prospective
transferee or participant any information it has pertaining to the loan
evidenced by this Note, including, without limitation, credit
information on Borrower and any guarantor of this Note and any of the
type of information described in Section 8.10 of the Loan Agreement.
Other Parties Liable: All promises, waivers, agreements, and conditions
applicable to Borrower shall likewise be applicable to and binding upon any
other parties primarily or secondarily liable for the payment of this Note,
including all guarantors, endorsers, and sureties.
Successors and Assigns: The provisions of this Note shall be binding upon and
for the benefit of the successors, assigns, heirs, executors, and administrators
of Lender and Borrower.
No Duty or Special Relationship: Borrower acknowledges that Lender has no duty
of good faith to Borrower, and Borrower acknowledges that no fiduciary, trust,
or other special relationship exists between Lender and Borrower.
Modifications: Any modifications agreed to by Lender relating to the release of
liability of any of the parties primarily or secondarily liable for the payment
of this Note, or relating to the release, substitution, or subordination of all
or part of the security for this Note, shall in no way constitute a release of
liability with respect to the other parties or security not covered by such
modification.
Entire Agreement: Borrower warrants and represents that the Loan Documents
constitute the entire agreement between Borrower and Lender with respect to the
loan evidenced by this Note and agrees that no modification, amendment, or
additional agreement with respect to such loan or the advancement of funds
thereunder will be valid and enforceable unless made in writing signed by both
Borrower and Lender.
Borrower's Address for Notice: All notices required to be sent by Lender to
Borrower shall be sent by U.S. Mail, postage prepaid, to Borrower's Address for
Notice stated on the first page of this Note, until Lender shall receive written
notification from Borrower of a new address for notice.
Lender's Address for Payment: All sums payable by Borrower to Lender shall be
paid at Lender's Address for Payment stated on the first page of this Note, or
at such other address as Lender shall designate from time to time.
Business Use: Borrower warrants and represents to Lender that the proceeds of
this Note will be used solely for business or commercial purposes, and in no way
will the proceeds be used for personal, family, or household purposes.
Chapter 15 Not Applicable: It is understood that Chapter 15 of the Texas Credit
Code relating to certain revolving credit loan accounts and tri-party accounts
is not applicable to this Note.
APPLICABLE LAW: THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE
LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS IN TEXAS.
4. LOAN DOCUMENTS:
This Note.
The Loan Agreement and the Loan Documents as defined therein.
All other documents signed in connection with the Loan Agreement or the
loan evidenced by this Note, including, without limitation, that
certain Contribution Agreement, dated effective September 1, 1999,
between and among Borrower, Lender, Prime Medical Services, Inc., a
Delaware corporation, Prime/BDEC Acquisition, L.L.C., a Delaware
limited liability company, Barnet Xxxxxxx Eye Center, P.L.L.C., an
Arizona professional limited liability company, LASIK Investors,
L.L.C., a Delaware limited liability company, Xxxxx X. Xxxxxxx, M.D.,
Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx (the "Contribution
Agreement") and each Transaction Document (as such term is defined in
the Contribution Agreement).
[Signature page follows]
SIGNATURE PAGE TO
PROMISSORY NOTE
EXECUTED this ____ day of September, 1999.
BORROWER:
PRIME/BDR ACQUISITION, L.L.C., a Delaware limited liability company
By: ________________________________________
Printed Name: _______________________________
Title: _______________________________________
EXHIBIT G3
FORM OF
ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement") is made and
entered into as of the ____ day of __________, 1999, by and between Prime
Medical Operating, Inc., a Delaware corporation (the "Secured Party") and
Prime/BDR Acquisition, L.L.C., a Delaware limited liability company (the
"Debtor").
RECITALS:
A. Debtor and Secured Party have executed and delivered that certain
Contribution Agreement dated effective September 1, 1999, between and among
Debtor, Secured Party, Prime Medical Services, Inc., a Delaware corporation,
Prime/BDEC Acquisition, L.L.C., a Delaware limited liability company, Barnet
Xxxxxxx Eye Center, P.L.L.C., an Arizona professional limited liability company,
LASIK Investors L.L.C., a Delaware limited liability company, Xxxxx X. Xxxxxxx,
M.D., Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx (the "Contribution Agreement"),
and that certain Loan Agreement, dated September ___, 1999 (the "Loan
Agreement"), pursuant to which Secured Party agrees to make certain loans to
Debtor on the terms and subject to the conditions provided therein.
B. Secured Party has requested that Debtor pledge the Collateral (as
defined below) to secure certain obligations and liabilities that Debtor may now
or hereafter have to Secured Party, including, without limitation, any
obligations arising under loans made pursuant to the Loan Agreement.
C. Debtor desires to enter into this Agreement as a material inducement to
Secured Party's extension of credit under the Loan Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor acknowledges, Debtor and Secured Party
agree as follows:
ARTICLE I
COLLATERAL AND SECURED OBLIGATIONS
1.1 Grant of Security Interest. Debtor hereby assigns, transfers, and
pledges to Secured Party, and Debtor hereby grants to Secured Party a security
interest in, the following described collateral (collectively, the
"Collateral"):
(a) Interest in Subsidiary. All ownership interests of Debtor in [Target
Center], whether now existing or hereafter acquired and including, without
limitation, that certain ____% interest in [Target Center]
(b) Interest in Acquisition Agreements. All of Debtor's interest and rights
(but not any obligations) under that certain [Describe Acquisition Documents
Pursuant To Which Target Center Was Acquired and Related Transaction Documents];
(c) Accounts. All accounts and rights now or hereafter
attributable to any of the Collateral described in (a) and (b)above, and all
rights of Debtor now or hereafter arising under any agreement pertaining to the
Collateral described in (a) and (b) above, including without limitation all
distributions, proceeds, fees, dividends, preferences, payments or other
benefits of whatever nature which Debtor is now or may hereafter become entitled
to receive with respect to any Collateral described in (a) and (b) above;
(d) Additional Property. "Collateral" shall also include the
following property (collectively, the "Additional Property") which Debtor
becomes entitled to receive or shall receive in connection with any other
Collateral: (i) any stock or other ownership certificate, including without
limitation, any certificate representing a stock dividend or any certificate in
connection with any recapitalization, reclassification, merger, consolidation,
conversion, sale of assets, combination, stock split, reverse stock split, or
spin-off; (ii) any option, warrant, subscription or right, whether as an
addition to or in substitution of any other Collateral; (iii) any dividends or
distributions of any kind whatsoever, whether distributable in cash, stock or
other property; (iv) any interest, premium or principal payments; and (v) any
conversion or redemption proceeds; and
(e) Proceeds. All proceeds (cash and non-cash) arising out of
the sale, exchange, collection or other disposition of all or any portion of the
Collateral described in (a), (b), (c) or (d) above, including without limitation
proceeds in the form of stock, accounts, chattel paper, instruments, documents,
goods, inventory and equipment.
The security interest in the Collateral hereby granted by Debtor to Secured
Party may sometimes be referred to in this Agreement as the "Security Interest".
1.2 Obligations. This Agreement and the Security Interest shall secure
full and punctual payment and performance of the following indebtedness, duties
and obligations (collectively, the "Obligations"):
(a) All liabilities and obligations of Debtor to Secured Party
or any subsidiary of Secured Party (including, without limitation, any
principal, interest, fees and other amounts, and any other obligations) under
and pursuant to this Agreement and/or the Contribution Agreement, the Loan
Agreement, each promissory note issued pursuant to the Loan Agreement
(collectively, the "Note"), and/or any other contract or agreement between
Secured Party (or any of its subsidiaries) and Debtor or any affiliate of Debtor
(collectively, including the Contribution Agreement, the Loan Agreement and the
Note, the "Other Agreements"); and
(b) (i) all indebtedness, obligations and liabilities of
Debtor and/or any affiliate of Debtor to Secured Party or any subsidiary of
Secured Party of any kind or character, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, arising from, connected with,
or related to the Other Agreements, or any other document, agreement, or
instrument executed in connection therewith, (ii) all accrued but unpaid
interest on any of the indebtedness described in (i) above, (iii) all
obligations of Debtor and/or any affiliate of Debtor to Secured Party or any
subsidiary of Secured Party under any documents or agreements evidencing,
securing, governing and/or pertaining to all or any part of the indebtedness
described in (i) and (ii) above, (iv) all costs and expenses incurred by Secured
Party or its subsidiaries in connection with the collection and administration
of all or any part of the indebtedness and obligations described in (i), (ii)
and (iii) above or the protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and obligations,
including without limitation all attorneys' fees, and (v) all renewals,
extensions, modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.
(c) All sums now or hereafter loaned or advanced by Secured
Party or any subsidiary of Secured Party to Debtor or any affiliate of Debtor,
or expended by Secured Party or its subsidiaries for the account of Debtor or
its affiliates or otherwise owing by Debtor or its affiliates to Secured Party
or its subsidiaries, in respect of the Obligations, and all other sums expended
or advanced by Secured Party or its subsidiaries pursuant to any term or
provision of this Agreement or any Other Agreement (i) to collect and/or enforce
the Obligations or (ii) to maintain, protect and preserve the Collateral.
ARTICLE II
DEBTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL
Debtor hereby represents and warrants to Secured Party as follows:
2.1 Ownership of Collateral. Debtor has good and marketable title to
the Collateral free and clear of any liens, security interests, shareholders
agreement, calls, charge, or encumbrance, except for this Security Interest. No
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except as may have
been filed in favor of Secured Party relating to this Agreement.
2.2 Power & Authority. Debtor has the lawful right, power, and
authority to grant the Security Interest in the Collateral. This Agreement,
together with all filings and other actions necessary or desirable to perfect
and protect such security interest, which have been duly taken, create a valid
and perfected first priority security interest in the Collateral securing the
payment and performance of the Obligations.
2.3 No Agreements. The Interests are not subject to any right of
redemption, or any call or put options, voting trust, proxy, shareholders
agreement, right of first refusal, or any other document or agreement which
would in any way impair or adversely affect this Security Interest or the rights
of Secured Party under this Agreement.
2.4 Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized and validly issued, are fully
paid and non-assessable, and were not issued in violation of the preemptive
rights of any party or of any agreement by which Debtor or the issuer thereof is
bound. No restrictions or conditions exist with respect to the transfer or
voting of any securities pledged as Collateral.
ARTICLE III
DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES
3.1 Solvency of Debtor. As of the date hereof, (i) Debtor is and will
be solvent; (ii) the fair saleable value of Debtor's assets exceeds and will
continue to exceed Debtor's liabilities (both fixed and contingent); (iii)
Debtor has and will have sufficient capital to satisfy all of Debtor's
obligations as they become due; (iv) no receiver, trustee, or custodian has been
appointed for, or taken possession of, all or substantially all of the assets of
Debtor, either in a proceeding brought by Debtor or in a proceeding brought
against Debtor; (v) Debtor is not the subject of a petition for relief under the
United States Bankruptcy Code or any similar federal or state insolvency law,
including without limitation a petition filed by Debtor or a petition filed by a
third party seeking relief against Debtor; and (vi) Debtor has no intention of
filing a petition for relief under the United States Bankruptcy Code or any
similar federal or state insolvency law, or of seeking any other form of
creditor relief, within the two-year period immediately following the date of
this Agreement.
3.2 Authority and Compliance. Debtor has full power and authority to
enter into this Agreement. Debtor has full power and authority to enter into and
perform its obligations under each Other Agreement. No further consent or
approval is required as a condition to the validity of this Agreement or any
Other Agreement. Debtor is in compliance with all applicable laws, ordinances,
statutes, orders, regulations, judgments, writs, or decrees of any governmental
entity to which it is subject.
3.3 Binding Agreement. This Agreement and each Other Agreement
constitute valid and legally binding obligations of Debtor, in accordance with
their terms, subject to the applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting creditors' rights generally.
3.4 Litigation. There are no proceedings pending or, to the knowledge
of Debtor, threatened before any court or administrative agency which will or
may have a material adverse effect on the financial condition of Debtor or upon
Debtor's ability to perform its obligations under this Agreement or any Other
Agreement.
3.5 No Conflicting Agreements. There are no provisions of any existing
agreement, mortgage, indenture or contract binding on Debtor or affecting its
property, which would conflict with or in any way prevent the execution,
delivery, or carrying out of the terms of this Agreement or any Other Agreement.
3.6 Ownership of Assets. Debtor has good and full title to the
Collateral, and the Collateral is owned free and clear of liens, charges,
claims, security interests, and other encumbrances.
3.7 Taxes. Debtor has filed all tax returns required to be filed by Debtor.
ARTICLE IV
DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL
Debtor covenants and agrees that from the date hereof and until the
payment and performance in full of the Obligations unless Secured Party
otherwise consents in writing:
4.1 Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Debtor covenants and agrees to deliver to Secured Party any
certificates, documents, or instruments representing or evidencing the
Collateral, with Debtor's endorsement thereon and/or accompanied by property
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party, signatures guaranteed by a member or member organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party.
4.2 Further Assurances. Debtor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may request in order (i)
to perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Secured
Party to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Secured Party;
(C) cooperating with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as Collateral to
any securities or financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to Secured Party;
and (E) obtaining written confirmation of the pledge of any securities
constituting Collateral from any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and substance
satisfactory to Secured Party.
4.3 Additional Property. All Additional Property, as defined in Section
1.1(c) above, received by Debtor shall be received in trust for the benefit of
Secured Party. All Additional Property and all certificates or other written
instruments or documents evidencing and/or representing the Additional Property
that is received by Debtor, together with such instruments of transfer as
Secured Party may request, shall immediately be delivered to or deposited with
Secured Party and held by Secured Party as Collateral under the terms of this
Agreement. If the Additional Property received by Debtor and delivered to
Secured Party pursuant to this Section shall be shares of stock or other
securities, such shares of stock or other securities shall be duly endorsed in
blank or accompanied by proper instruments of transfer and assignment duly
executed in blank with, if requested by Secured Party, signatures guaranteed by
a member or member organization in good standing of an authorized Securities
Transfer Agents Medallion Program, all in form and substance satisfactory to
Secured Party. Secured Party shall be deemed to have possession of any
Collateral in transit to Secured Party or its agent.
4.4 Sale, Transfer, Encumbrance. Debtor will not sell, transfer,
mortgage, or otherwise encumber any Collateral or impair the value thereof in
any manner without Secured Party's prior written consent, including without
limitation by purchase, lease, barter, trade, payment deferral, or the creation,
assumption or guarantee of indebtedness or other lending of credit. Secured
Party's written consent to any sale, mortgage, transfer, or encumbrance shall
not be construed to be a waiver of this provision in respect to any subsequent
proposed sale, mortgage, transfer, or encumbrance.
4.5 Liens. Neither Debtor nor any person acting on Debtor's behalf has,
or shall have any right, power, or authority to and shall not create, incur, or
permit to be placed or imposed, upon the Collateral, any lien of any type or
nature whatsoever, other than the liens in favor of Secured Party.
4.6 Matters or Occurrences Affecting Collateral or this Agreement.
Debtor will promptly notify Secured Party of any and all matters or occurrences
that may have a material adverse effect on the status or value of the Collateral
or this Agreement, including without limitation the occurrence of an Event of
Default, or an event which, with giving of notice or lapse of time, or both,
would constitute an Event of Default.
4.7 Agreements Pertaining to Collateral. Debtor will not enter into any
type of contract or agreement pertaining to any of the Collateral or in any way
transfer any voting rights pertaining to the Collateral to any person or entity.
4.8 Dilution of Ownership. As to any securities pledged as Collateral,
Debtor will not consent to or approve of the issuance of (i) any additional
interests or shares of any class of securities of such issuer, (ii) any
instrument convertible voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such securities, or (iii) any warrants, options, contracts or other
commitments entitling any third party to purchase or otherwise acquire any such
securities.
4.9 Restrictions on Securities. Debtor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Party. As to any securities pledged
as collateral, Debtor will not consent to or approve of any stock split, reverse
stock split, stock dividend, reclassification, or other similar act or
transaction regarding the Interests unless consented to in writing by Secured
Party.
ARTICLE V
DEBTOR'S AFFIRMATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees that it shall (i) promptly advise Secured Party in writing of any
litigation filed against Debtor and of any condition, event or act which comes
to its attention that would or might have a material adverse effect on Debtor's
financial condition or on Debtor's ability to perform the Obligations, (ii)
except as expressly contemplated in Section 4.3(e)(i) and (ii) of the
Contribution Agreement, pay all available funds toward repayment of the Note,
regardless of whether payment of such amounts exceeds the required payments
under the Note and (iii) if Borrower uses any proceeds from the Note, to
acquire, directly or indirectly, a one hundred percent (100%) interest in a
Target Center, Borrower shall cause such Target Center to execute a security
agreement, acceptable in form and substance to Lender, granting to Lender or one
of Lender's subsidiaries the highest available priority security interest in all
of the assets of such Target Center.
ARTICLE VI
NEGATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees that Debtor will not, without the prior written consent of Secured Party:
6.1 Liens. Grant, suffer, or permit liens on, or security interests in, the
Collateral.
6.2 Violate Other Covenants. Violate or fail to comply with any
covenants or agreements regarding other debt which will or would with the
passage of time or upon demand cause the maturity of any other debt to be
accelerated.
ARTICLE VII
DEFAULT AND REMEDIES
7.1 Events of Default. An Event of Default (herein so called) shall exist
if any one or more of the following events shall occur:
(a) The failure of Debtor to pay any amount required to be
paid under the Loan Agreement (including, without limitation, principal,
interest and fees due thereunder), or any other amount which Debtor may now or
hereafter owe to Secured Party under any Other Agreement or otherwise, within
ten (10) calendar days after such amount is due;
(b) The failure of Debtor to pay any Obligation after such
amount is due (and, if applicable under the terms of any contractual agreement
creating or governing such Obligation, after the expiration of any cure period
expressly required);
(c) Debtor's breach of a covenant in this Agreement or any other failure to
perform its obligations under this Agreement or any Other Agreement;
(d) Any representation or warranty made by Debtor in this
Agreement or any Other Agreement between Debtor and Secured Party shall be false
or materially misleading, as determined in the reasonable discretion of Secured
Party;
(e) Any event of default shall occur under the terms of the
Loan Agreement and shall not be cured within the time expressly provided for
with respect thereto in the Loan Agreement;
(f) If Debtor or any other party obligated to pay any portion
of the Obligations: (i) becomes insolvent, or makes a transfer in fraud of
creditors, or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due and Secured Party, in good faith,
determines that such event or condition could lead to a material impairment of
the Collateral, or any part thereof, or of any other payment security for any of
the Obligations; (iii) has a receiver, trustee or custodian appointed for, or
take possession of, all or substantially all of the assets of such party or any
of the Collateral, either in a proceeding brought by such party or in a
proceeding brought against such party and such appointment is not discharged or
such possession is not terminated within sixty (60) days after the effective
date thereof or such party consents to or acquiesces in such appointment or
possession; (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state insolvency, bankruptcy or
similar laws (all of the foregoing hereinafter collectively called "Applicable
Bankruptcy Law") or an involuntary petition for relief is filed against such
party under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within sixty (60) days after the filing thereof, or an order for
relief naming such party is entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of debtors
now or hereafter existing is requested or consented to by such party; (v) fails
to have discharged within a period of sixty (60) days any attachment,
sequestration or similar writ levied upon, or any claim against or affecting,
any property of such party; or (vi) fails to pay within ninety (90) days any
final money judgment against such party; or
(g) The issuer of any securities constituting Collateral files
a petition for relief under any Applicable Bankruptcy Law, an involuntary
petition for relief is filed against any such issuer under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within thirty (30)
days after the filing thereof, or an order for relief naming any such issuer is
entered under any Applicable Bankruptcy Law.
7.2 Secured Party's Remedies. Upon the occurrence of an Event of Default:
(a) Secured Party may declare the Obligations in whole or part
immediately due and may enforce payment and performance of the same and exercise
any rights under the Texas UCC, rights and remedies of Secured Party under this
Agreement, or otherwise.
(b) Secured Party may, at Secured Party's option and at the
expense of Debtor, either in Secured Party's own right or in the name of Debtor
and in the same manner and to the same extent that Debtor might reasonably so
act if this Agreement had not been made: (i) do all things requisite,
convenient, or necessary to enforce the performance and observance of all
rights, remedies and privileges of Debtor arising from the Collateral, or any
part thereof, including without limitation compromising, waiving, excusing, or
in any manner releasing or discharging any obligation of any party to or arising
from the Collateral; (ii) take possession of the books, papers, chattel paper,
documents of title, and accounts of Debtor, wherever located, relating to the
Collateral; (iii) xxx or otherwise collect and receive money attributable to the
Collateral; and (iv) exercise any other lawfully available powers or remedies,
and do all other things which Secured Party deems requisite, convenient or
necessary or which the Secured Party deems proper to protect the Security
Interest.
(c) Secured Party may foreclose this Agreement in the manner
now or hereafter provided or permitted by law and may upon such reasonable
notification prior thereto as may be required by applicable law (Debtor hereby
agreeing that ten days' notice is commercially reasonable), sell, assign,
transfer, or otherwise dispose of the Collateral at public or private sale, in
whole or in part, and Secured Party may, in its own name or as Debtor's
attorney-in-fact effectively assign and transfer the Collateral, or any part
thereof, absolutely, and execute and deliver all necessary assignments,
conveyances, bills of sale, and other instruments with power to substitute one
or more persons or corporations with like power. Any such foreclosure sale,
assignment, transfer, or other disposition shall, to the extent permitted by
law, be a perpetual bar, both at law and in equity, against Debtor and all
persons and corporations lawfully claiming by or through or under Debtor. Any
such foreclosure sale may be adjourned from time to time. Upon any sale, Secured
Party may bid for and purchase the Collateral, or any part thereof, and upon
compliance with the terms of sale may hold, retain, possess and dispose of the
Collateral, in its absolute right without further accountability. Secured Party
shall have the right to be credited on the amount of its bid a corresponding
amount of the Obligations as of the date of such sale.
(d) If, in the opinion of Secured Party, there is any question
that a public sale or distribution of any Collateral will violate any state or
federal securities law, Secured Party (i) may offer and sell securities
privately to purchasers who will agree to take them for investment purposes and
not with a view to distribution and who will agree to imposition of restrictive
legends on the certificates representing the security, or (ii) may sell such
securities in any type of offering which complies with, or is exempt from the
registration requirements of, the Securities Act of 1933 and any applicable
state securities laws, and no sale so made in good faith by Secured Party shall
be deemed to be not "commercially reasonable" because so made.
(e) Not in limitation of any other provision of this
Agreement, Secured Party shall have all rights and remedies of a secured party
under the Texas UCC.
7.3 Application of Proceeds. Secured Party may apply the proceeds of
any foreclosure sale hereunder or from any other permitted disposition of the
Collateral or any part thereof as follows: (a) first, to the payment of all
reasonable costs and expenses of any foreclosure and collection hereunder and
all proceedings in connection therewith, including reasonable attorneys' fees;
(b) then, to the reimbursement of Secured Party for all disbursements made by
Secured Party for taxes, assessments or liens superior to the Security Interest
and which Secured Party shall deem expedient to pay; (c) then, to the
reimbursement of Secured Party of any other disbursements made by Secured Party
in accordance with the terms hereof or under the Contribution Agreement or any
Other Agreement; (d) then, to or among the amounts of fees, interest and
principal then owing and unpaid in respect of the Obligations, in such priority
as Secured Party may determine in its discretion; and (e) the remainder of such
proceeds, if any, shall be paid to Debtor. If such proceeds shall be
insufficient to discharge the entire Obligations, Secured Party shall have any
other available legal recourse against Debtor under, or for the performance of,
the Contribution Agreement and any Other Agreement between Debtor and Secured
Party, for the deficiency, together with interest thereon at the maximum rate
permitted under applicable law.
7.4 Enforcement of Obligations. Nothing in this Agreement or in any
other document or agreement shall affect or impair the unconditional and
absolute right of Secured Party to enforce the Obligations as and when the same
shall become due in accordance with the terms of any Other Agreement.
ARTICLE VIII
RIGHTS OF SECURED PARTY
8.1 Subrogation. Upon the occurrence of an Event of Default, Secured
Party, at its election, may subrogate to all of the interest, rights and
remedies of the Debtor, in respect to any of the Collateral or agreements
pertaining thereto.
8.2 Secured Party Appointed Attorney-in-Fact. Debtor hereby appoints
Secured Party as attorney-in-fact of Debtor, with full authority in the place
and stead of Debtor and in the name of Debtor, Secured Party or otherwise, from
time to time on Secured Party's discretion and upon the occurrence of an Event
of Default, to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including without limitation: (a) to ask, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (b) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) of this Section 8.2; (c) to file any claims or take
any action or institute any proceeding which Secured Party may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Secured Party against any of the Collateral; and (d) to assign and
transfer the Collateral, or any part thereof, absolutely and to execute and
deliver endorsements, assignments, conveyances, bills of sale and other
instruments with power to substitute one or more persons or corporation with
like power.
8.3 Performance by Secured Party. If Debtor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause the
performance of, such agreement, and the reasonable expenses of Secured Party
incurred in connection therewith shall be payable by Debtor under Section 8.8.
In no event, however, shall Secured Party have any obligation or duties
whatsoever to perform any covenant or agreement of Debtor contained herein, and
any such performance by Secured Party shall be wholly discretionary with Secured
Party.
8.4 Duties of Secured Party. The powers conferred upon Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for money actually
received by it hereunder, Secured Party shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation, duty
or responsibility to do any of the following: (a) ascertain any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
the Collateral or informing Debtor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral; (c) collect any amounts
payable in respect of the Collateral; (d) sell all or any portion of the
Collateral, for any reason; or (e) hold the Collateral for or on behalf of any
party other than Debtor.
8.5 No Liability of Secured Party. Neither the acceptance of this
Agreement by Secured Party, nor the exercise of any rights hereunder by Secured
Party, shall be construed in any way as an assumption by Secured Party of any
obligations, responsibilities, or duties of Debtor arising in connection with
the Collateral assigned hereunder or otherwise bind Secured Party to the
performance of any obligations respecting the Collateral, it being expressly
understood that Secured Party shall not be obligated to perform, observe, or
discharge any obligation, responsibility, duty, or liability of Debtor in
respect of any of the Collateral, including without limitation appearing in or
defending any action, expending any money or incurring any expense in connection
therewith. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, DEBTOR SHALL AND
DOES AGREE TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS SECURED PARTY AND ITS
SUBSIDIARIES, AND EACH OF THEIR OFFICERS, DIRECTORS, REPRESENTATIVES, AGENTS,
EMPLOYEES, LENDERS, SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL LIABILITIES,
CLAIMS, DAMAGES, LOSSES, FINES, PENALTIES, CAUSES OF ACTIONS, SUITS, JUDGMENTS
AND EXPENSES (INCLUDING COURT COSTS, ATTORNEY'S FEES AND COST OF INVESTIGATION)
OF ANY NATURE, KIND OR DESCRIPTION OF ANY PERSON OR ENTITY, DIRECTLY OR
INDIRECTLY, ARISING OUT OF, CAUSED BY OR RESULTING FROM (IN WHOLE OR IN PART),
ANY ACT OR OMISSION OF SECURED PARTY, OR ANYONE ACTING ON BEHALF OF SECURED
PARTY, IN CONNECTION WITH THE COLLATERAL, INCLUDING WITHOUT LIMITATION ANY
MARKET FLUCTUATIONS IN THE COLLATERAL AS A RESULT OF SECURED PARTY'S SALE OF, OR
FAILURE TO SELL, THE INTERESTS AT ANY PARTICULAR TIME WHEN IT HAS THE RIGHT TO
DO SO. THE FOREGOING INDEMNITY SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS AGREEMENT.
8.6 Right of Secured Party to Defend Action Affecting Security. Secured
Party may, at the expense of Debtor, appear in and defend any action or
proceeding at law or in equity purporting to affect Secured Party's Security
Interest under this Agreement.
8.7 Right of Secured Party to Prevent or Remedy Default. If Debtor
shall fail to perform any of the covenants, conditions and agreements required
to be performed and observed by Debtor under any Other Agreement, or in respect
of the Collateral (subject to any applicable default cure period), Secured Party
(a) may but shall not be obligated to take any action Secured Party deems
necessary or desirable to prevent or remedy any such default by Debtor or
otherwise to protect the Security Interest, and (b) shall have the absolute and
immediate right to take possession of the Collateral or any part thereof (to the
extent Secured Party has not previously taken possession) to such extent and as
often as the Secured Party, in its sole discretion, deems necessary or desirable
in order to prevent or to cure any such default by Debtor, or otherwise to
protect the security of this Agreement. Secured Party may advance or expend such
sums of money for the account of Debtor as Secured Party in its sole discretion
deems necessary for any such purpose.
8.8 Secured Party's Expenses. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision of this Agreement for the protection of its security or for the
enforcement of any of its rights hereunder, including, without limitation, in
foreclosure proceedings commenced and subsequently abandoned or in any dispute
or litigation in which Secured Party or the holder of any of the Obligations may
become involved by reason of or arising out of any Other Agreement or the
Collateral, shall be a part of the Obligations and shall be paid by Debtor to
Secured Party, upon demand, and shall bear interest until paid at the maximum
rate of interest permitted by applicable law, from the date incurred by Secured
Party until repaid by Debtor.
8.9. Convertible Collateral. Secured Party may present for conversion
any Collateral which is convertible into any other instrument or investment
security or a combination thereof with cash, but Secured Party shall not have
any duty to present for conversion any Collateral unless it shall have received
from Debtor detailed written instructions to that effect at a time reasonably
far in advance of the final conversion date to make such conversion possible.
8.10 Secured Party's Right of Set-Off. Upon the happening of any event
entitling Secured Party to pursue any remedy provided herein, or if Secured
Party shall be served with garnishment process in which Debtor shall be named as
defendant, whether or not Debtor shall be in default hereunder at the time,
Secured Party may, but shall not be required to, set-off any indebtedness owing
by Secured Party to Debtor against any of the Obligations without first
resorting to the security hereunder and without prejudice to any other rights or
remedies of Secured Party or its Security Interest.
8.11 Remedies. No right or remedy herein reserved to Secured Party is
intended to be exclusive of any other right or remedy, but each and every such
remedy shall be cumulative, not in lieu of, but in addition to any other rights
or remedies given under this Agreement and all other security documents. Any and
all of Secured Party's rights and remedies may be exercised from time to time
and as often as such exercise as deemed necessary or desirable by Secured Party.
8.12 Debtor's Waivers. Debtor waives notice of the creation, advance,
increase, existence, extension, or renewal of, and of any indulgence with
respect to, the Obligations; waives notice of intent to accelerate, notice of
acceleration, notice of intent to demand, presentment, demand, notice of
dishonor, and protest; waives notice of the amount of the Obligations
outstanding at any time, notice of any change in financial condition of any
person liable for the Obligations or any part thereof, notice of any Event of
Default, and all other notices respecting the Obligations; and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by Secured Party in its discretion, without notice
to Debtor.
8.13 Other Parties and Other Collateral. No renewal or extension of or
any other indulgence with respect to the Obligations or any part thereof, no
release of any security, no release of any person (including any maker,
endorser, guarantor, or surety) liable on the Obligations, no delay in
enforcement of payment, and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any security
therefor or guaranty thereof or under this Agreement shall in other manner
impair or affect the rights of Secured Party under the law, under this
Agreement, or under any other document or agreement pertaining to the other
security for the Obligations, before foreclosing upon the Collateral for the
purpose of paying the Obligations. Debtor waives any right to the benefit of or
to require or control application of any other security or proceeds thereof, and
Debtor agrees that Secured Party shall have no duty or obligation to Debtor to
apply to the Obligations any such other security or proceeds thereof.
ARTICLE IX
MISCELLANEOUS
9.1 Terms Commercially Reasonable. The terms of this Agreement shall be
deemed commercially reasonable within the meaning of the Texas UCC.
9.2 Notices. Any notices or demands required or permitted to be given
hereunder shall be deemed sufficiently given if in writing and personally
delivered or mailed (with all postage and charges prepaid), addressed to Secured
Party or to Debtor their respective addresses set forth below, or at such other
address as the above parties may from time to time designate by written notice
to the other given in accordance with this Section 9.2. Any such notice, if
personally delivered or transmitted by telex or telegram, shall be deemed to
have been given on the date so delivered or transmitted or, if mailed, be deemed
to have been given on the day after such notice is placed in the United States
mail in accordance with this Section 9.2.
Secured Party: 0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: President
with copy to: Xxxxxxx X. XxXxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1900 Frost Bank Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Debtor: Prime/BDR Acquisition, L.L.C.
0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: President
9.3 Parties Bound. Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any assignment or transfer of any of the Obligations or the
Collateral, Secured Party thereafter shall be fully discharged from any
responsibility with respect to the Collateral so assigned or transferred, but
Secured Party shall retain all rights and powers hereby given with respect to
any of the Obligations or Collateral not so assigned or transferred. All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives, heirs,
successors, and assigns of Debtor.
9.4 Waiver. No delay of Secured Party in exercising any power or right
shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right preclude other or further exercise thereof or the exercise of
any other power or right. No waiver by Secured Party of any right hereunder of
any default by Debtor shall be binding upon Secured Party unless in writing, and
no failure by Secured Party to exercise any power or right hereunder or waiver
of any default by Debtor shall operate as a waiver of any other or further
exercise of such right or power of any further default.
9.5 Agreement Continuing. This Agreement shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether or
not of the character contemplated at the date of this Agreement, and if all
transactions between Secured Party and Debtor shall be closed at any time, shall
be equally applicable to any new transactions thereafter. Provisions of this
Agreement, unless by their terms exclusive, shall be in addition to those
contained in any Other Agreement.
9.6 Definitions. Unless the context indicated otherwise, definitions in
the Texas Business and Commerce Code ("Texas UCC") apply to words and phrases in
this Agreement; if Texas UCC definitions conflict, Chapter 9 definitions apply.
9.7 Miscellaneous. In this Agreement, whenever the context so requires,
the neuter gender includes the masculine and feminine, and the singular number
includes the plural and vice versa. The headings of paragraphs herein are
inserted only for convenience and shall in no way define, describe or limit the
scope of intent of any provisions of this Agreement. No change, amendment,
modification, cancellation, or discharge of any provision of this Agreement
shall be valid unless consented to in writing by Secured Party.
9.8 Assignment of Secured Party's Interest. Secured Party shall have
the right to assign all or any portion of its rights in this Agreement without
approval or consent. Debtor acknowledges that Lender intends to make a
collateral assignment of its rights under this Agreement for the benefit of one
or more of its lenders. Debtor may not assign this Agreement or any of its
rights or obligations hereunder without the express prior written consent of
Secured Party in each instance.
9.9 Applicable Laws. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
9.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE LOAN AGREEMENT, THE NOTE AND THE
CONTRIBUTION AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[Signature page follows]
S-1
SIGNATURE PAGE TO
ASSIGNMENT AND
SECURITY AGREEMENT
EXECUTED this ____ day of __________, 1999.
DEBTOR: Prime/BDR Acquisition, L.L.C.
By:_________________________________
Printed Name:________________________
Title:_______________________________
SECURED PARTY: Prime Medical Operating, Inc.
By:_________________________________
Printed Name:________________________
Title:_______________________________
EXHIBIT-G4
ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of September, 1999, by and between Prime Medical
Operating, Inc., a Delaware corporation (the "Secured Party") and Prime/BDR
Acquisition, L.L.C., a Delaware limited liability company (the "Debtor").
RECITALS:
A. Debtor and Secured Party have executed and delivered that certain
Contribution Agreement dated effective September 1, 1999, between and among
Debtor, Secured Party, Prime Medical Services, Inc., a Delaware corporation,
Prime/BDEC Acquisition, L.L.C., a Delaware limited liability company, Barnet
Xxxxxxx Eye Center, P.L.L.C., an Arizona professional limited liability company,
LASIK Investors L.L.C., a Delaware limited liability company, Xxxxx X. Xxxxxxx,
M.D., Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx (the "Contribution Agreement"),
and that certain Loan Agreement, dated September 1, 1999 (the "Loan Agreement"),
pursuant to which Secured Party agrees to make certain loans to Debtor on the
terms and subject to the conditions provided therein.
B. Secured Party has requested that Debtor pledge the Collateral (as
defined below) to secure certain obligations and liabilities that Debtor
may now or hereafter have to Secured Party, including, without limitation,
any obligations arising under loans made pursuant to the Loan Agreement.
C. Debtor desires to enter into this Agreement as a material inducement
to Secured Party's extension of credit under the Loan Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor acknowledges, Debtor and Secured Party
agree as follows:
ARTICLE I
COLLATERAL AND SECURED OBLIGATIONS
1.1 Grant of Security Interest. Debtor hereby assigns, transfers, and
pledges to Secured Party, and Debtor hereby grants to Secured Party a
security interest in, the following described collateral (collectively, the
"Collateral"): --------------------------
(a) Interest in Subsidiary. All ownership interests of Debtor in
Horizon Vision Center, Inc., a Nevada corporation ("Horizon"), whether now
existing or hereafter acquired and including, without limitation, that
certain 60% interest in Horizon (the "Interests"). ----------------------
(b) Interest in Acquisition Agreements. All of Debtor's interest and
rights (but not any obligations) under those certain Stock Purchase
Agreements by and between Debtor and the Shareholders of Horizon;
----------------------------------
(c) Accounts. All accounts and rights now or hereafter attributable to
any of the Collateral described in (a) and (b)above, and all rights of
Debtor now or hereafter arising under any agreement pertaining to the
Collateral described in (a) and (b) above, including without limitation all
distributions, proceeds, fees, dividends, preferences, payments or other
benefits of whatever nature which Debtor is now or may hereafter become
entitled to receive with respect to any Collateral --------described in (a)
and (b) above;
(d) Additional Property. "Collateral" shall also include the
following property (collectively, the "Additional Property") which Debtor
becomes entitled to receive or shall receive in connection with any other
Collateral: (i) any stock or other ownership certificate, including without
limitation, any certificate representing a stock dividend or any certificate in
connection with any recapitalization, reclassification, merger, consolidation,
conversion, sale of assets, combination, stock split, reverse stock split, or
spin-off; (ii) any option, warrant, subscription or right, whether as an
addition to or in substitution of any other Collateral; (iii) any dividends or
distributions of any kind whatsoever, whether distributable in cash, stock or
other property; (iv) any interest, premium or principal payments; and (v) any
conversion or redemption proceeds; and
(e) Proceeds. All proceeds (cash and non-cash) arising out of the
sale, exchange, collection or other disposition of all or any portion of
the Collateral described in (a), (b), (c) or (d) above, including without
limitation proceeds in the form of stock, accounts, chattel paper,
instruments, documents, goods, inventory and equipment. --------
The security interest in the Collateral hereby granted by Debtor to Secured
Party may sometimes be referred to in this Agreement as the "Security Interest".
1.2 Obligations. This Agreement and the Security Interest shall secure
full and punctual payment and performance of the following indebtedness,
duties and obligations (collectively, the "Obligations"): -----------
(a) All liabilities and obligations of Debtor to Secured Party
or any subsidiary of Secured Party (including, without limitation, any
principal, interest, fees and other amounts, and any other obligations) under
and pursuant to this Agreement and/or the Contribution Agreement, the Loan
Agreement, each promissory note issued pursuant to the Loan Agreement
(collectively, the "Note"), and/or any other contract or agreement between
Secured Party (or any of its subsidiaries) and Debtor or any affiliate of Debtor
(collectively, including the Contribution Agreement, the Loan Agreement and the
Note, the "Other Agreements"); and
(b) (i) all indebtedness, obligations and liabilities of
Debtor and/or any affiliate of Debtor to Secured Party or any subsidiary of
Secured Party of any kind or character, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, arising from, connected with,
or related to the Other Agreements, or any other document, agreement, or
instrument executed in connection therewith, (ii) all accrued but unpaid
interest on any of the indebtedness described in (i) above, (iii) all
obligations of Debtor and/or any affiliate of Debtor to Secured Party or any
subsidiary of Secured Party under any documents or agreements evidencing,
securing, governing and/or pertaining to all or any part of the indebtedness
described in (i) and (ii) above, (iv) all costs and expenses incurred by Secured
Party or its subsidiaries in connection with the collection and administration
of all or any part of the indebtedness and obligations described in (i), (ii)
and (iii) above or the protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and obligations,
including without limitation all attorneys' fees, and (v) all renewals,
extensions, modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.
(c) All sums now or hereafter loaned or advanced by Secured
Party or any subsidiary of Secured Party to Debtor or any affiliate of Debtor,
or expended by Secured Party or its subsidiaries for the account of Debtor or
its affiliates or otherwise owing by Debtor or its affiliates to Secured Party
or its subsidiaries, in respect of the Obligations, and all other sums expended
or advanced by Secured Party or its subsidiaries pursuant to any term or
provision of this Agreement or any Other Agreement (i) to collect and/or enforce
the Obligations or (ii) to maintain, protect and preserve the Collateral.
ARTICLE II
DEBTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL
Debtor hereby represents and warrants to Secured Party as follows:
2.1 Ownership of Collateral. Debtor has good and marketable title to
the Collateral free and clear of any liens, security interests,
shareholders agreement, calls, charge, or encumbrance, except for this
Security Interest. No financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any
recording office, except as may have been filed in favor of Secured Party
relating to this Agreement. -----------------------
2.2 Power & Authority. Debtor has the lawful right, power, and
authority to grant the Security Interest in the Collateral. This Agreement,
together with all filings and other actions necessary or desirable to
perfect and protect such security interest, which have been duly taken,
create a valid and perfected first priority security interest in the
Collateral securing the payment and performance of the Obligations.
-----------------
2.3 No Agreements. The Interests are not subject to any right of
redemption, or any call or put options, voting trust, proxy, shareholders
agreement, right of first refusal, or any other document or agreement which
would in any way impair or adversely affect this Security Interest or the
rights of Secured Party under this Agreement. -------------
2.4 Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized and validly issued, are
fully paid and non-assessable, and were not issued in violation of the
preemptive rights of any party or of any agreement by which Debtor or the
issuer thereof is bound. No restrictions or conditions exist with respect
to the transfer or voting of any securities pledged as ----------
Collateral.
ARTICLE III
DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES
3.1 Solvency of Debtor. As of the date hereof, (i) Debtor is and will
be solvent; (ii) the fair saleable value of Debtor's assets exceeds and will
continue to exceed Debtor's liabilities (both fixed and contingent); (iii)
Debtor has and will have sufficient capital to satisfy all of Debtor's
obligations as they become due; (iv) no receiver, trustee, or custodian has been
appointed for, or taken possession of, all or substantially all of the assets of
Debtor, either in a proceeding brought by Debtor or in a proceeding brought
against Debtor; (v) Debtor is not the subject of a petition for relief under the
United States Bankruptcy Code or any similar federal or state insolvency law,
including without limitation a petition filed by Debtor or a petition filed by a
third party seeking relief against Debtor; and (vi) Debtor has no intention of
filing a petition for relief under the United States Bankruptcy Code or any
similar federal or state insolvency law, or of seeking any other form of
creditor relief, within the two-year period immediately following the date of
this Agreement.
3.2 Authority and Compliance. Debtor has full power and authority to
enter into this Agreement. Debtor has full power and authority to enter
into and perform its obligations under each Other Agreement. No further
consent or approval is required as a condition to the validity of this
Agreement or any Other Agreement. Debtor is in compliance with all
applicable laws, ordinances, statutes, orders, regulations, judgments,
writs, or decrees of any governmental entity to which it is subject.
------------------------
3.3 Binding Agreement. This Agreement and each Other Agreement
constitute valid and legally binding obligations of Debtor, in accordance
with their terms, subject to the applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally. -----------------
3.4 Litigation. There are no proceedings pending or, to the knowledge
of Debtor, threatened before any court or administrative agency which will
or may have a material adverse effect on the financial condition of Debtor
or upon Debtor's ability to perform its obligations under this Agreement or
any Other Agreement. ----------
3.5 No Conflicting Agreements. There are no provisions of any existing
agreement, mortgage, indenture or contract binding on Debtor or affecting
its property, which would conflict with or in any way prevent the
execution, delivery, or carrying out of the terms of this Agreement or any
Other Agreement. -------------------------
3.6 Ownership of Assets. Debtor has good and full title to the
Collateral, and the Collateral is owned free and clear of liens, charges,
claims, security interests, and other encumbrances. -------------------
3.7 Taxes. Debtor has filed all tax returns required to be filed by
Debtor.
ARTICLE IV
DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL
Debtor covenants and agrees that from the date hereof and until the
payment and performance in full of the Obligations unless Secured Party
otherwise consents in writing:
4.1 Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Debtor covenants and agrees to deliver to Secured Party any
certificates, documents, or instruments representing or evidencing the
Collateral, with Debtor's endorsement thereon and/or accompanied by property
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party, signatures guaranteed by a member or member organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party.
4.2 Further Assurances. Debtor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may request in order (i)
to perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Secured
Party to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Secured Party;
(C) cooperating with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as Collateral to
any securities or financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to Secured Party;
and (E) obtaining written confirmation of the pledge of any securities
constituting Collateral from any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and substance
satisfactory to Secured Party.
4.3 Additional Property. All Additional Property, as defined in Section
1.1(d) above, received by Debtor shall be received in trust for the benefit of
Secured Party. All Additional Property and all certificates or other written
instruments or documents evidencing and/or representing the Additional Property
that is received by Debtor, together with such instruments of transfer as
Secured Party may request, shall immediately be delivered to or deposited with
Secured Party and held by Secured Party as Collateral under the terms of this
Agreement. If the Additional Property received by Debtor and delivered to
Secured Party pursuant to this Section shall be shares of stock or other
securities, such shares of stock or other securities shall be duly endorsed in
blank or accompanied by proper instruments of transfer and assignment duly
executed in blank with, if requested by Secured Party, signatures guaranteed by
a member or member organization in good standing of an authorized Securities
Transfer Agents Medallion Program, all in form and substance satisfactory to
Secured Party. Secured Party shall be deemed to have possession of any
Collateral in transit to Secured Party or its agent.
4.4 Sale, Transfer, Encumbrance. Debtor will not sell, transfer,
mortgage, or otherwise encumber any Collateral or impair the value thereof in
any manner without Secured Party's prior written consent, including without
limitation by purchase, lease, barter, trade, payment deferral, or the creation,
assumption or guarantee of indebtedness or other lending of credit. Secured
Party's written consent to any sale, mortgage, transfer, or encumbrance shall
not be construed to be a waiver of this provision in respect to any subsequent
proposed sale, mortgage, transfer, or encumbrance.
4.5 Liens. Neither Debtor nor any person acting on Debtor's behalf
has, or shall have any right, power, or authority to and shall not create,
incur, or permit to be placed or imposed, upon the Collateral, any lien of
any type or nature whatsoever, other than the liens in favor of Secured
Party. -----
4.6 Matters or Occurrences Affecting Collateral or this Agreement.
Debtor will promptly notify Secured Party of any and all matters or
occurrences that may have a material adverse effect on the status or value
of the Collateral or this Agreement, including without limitation the
occurrence of an Event of Default, or an event which, with giving of notice
or lapse of time, or both, would constitute an Event of Default.
-------------------------------------------------------------
4.7 Agreements Pertaining to Collateral. Debtor will not enter into
any type of contract or agreement pertaining to any of the Collateral or in
any way transfer any voting rights pertaining to the Collateral to any
person or entity. -----------------------------------
4.8 Dilution of Ownership. As to any securities pledged as Collateral,
Debtor will not consent to or approve of the issuance of (i) any additional
interests or shares of any class of securities of such issuer, (ii) any
instrument convertible voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such securities, or (iii) any warrants, options, contracts or other
commitments entitling any third party to purchase or otherwise acquire any such
securities.
4.9 Restrictions on Securities. Debtor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Party. As to any securities pledged
as collateral, Debtor will not consent to or approve of any stock split, reverse
stock split, stock dividend, reclassification, or other similar act or
transaction regarding the Interests unless consented to in writing by Secured
Party.
ARTICLE V
DEBTOR'S AFFIRMATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees that it shall (i) promptly advise Secured Party in writing of any
litigation filed against Debtor and of any condition, event or act which comes
to its attention that would or might have a material adverse effect on Debtor's
financial condition or on Debtor's ability to perform the Obligations, (ii)
except as expressly contemplated in Section 4.3(e)(i) and (ii) of the
Contribution Agreement, pay all available funds toward repayment of the Note,
regardless of whether payment of such amounts exceeds the required payments
under the Note and (iii) if Borrower uses any proceeds from the Note, to
acquire, directly or indirectly, a one hundred percent (100%) interest in a
Target Center (as defined in the Contribution Agreement), Borrower shall cause
such Target Center to execute a security agreement, acceptable in form and
substance to Lender, granting to Lender or one of Lender's subsidiaries the
highest available priority security interest in all of the assets of such Target
Center.
ARTICLE VI
NEGATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees that Debtor will not, without the prior written consent of Secured Party:
6.1 Liens. Grant, suffer, or permit liens on, or security interests in,
the Collateral.
6.2 Violate Other Covenants. Violate or fail to comply with any
covenants or agreements regarding other debt which will or would with the
passage of time or upon demand cause the maturity of any other debt to be
accelerated. -----------------------
ARTICLE VII
DEFAULT AND REMEDIES
7.1 Events of Default. An Event of Default (herein so called) shall
exist if any one or more of the following events shall occur:
-----------------
(a) The failure of Debtor to pay any amount required to be paid under
the Loan Agreement (including, without limitation, principal, interest and
fees due thereunder), or any other amount which Debtor may now or hereafter
owe to Secured Party under any Other Agreement or otherwise, within ten
(10) calendar days after such amount is due;
(b) The failure of Debtor to pay any Obligation after such amount is
due (and, if applicable under the terms of any contractual agreement
creating or governing such Obligation, after the expiration of any cure
period expressly required);
(c) Debtor's breach of a covenant in this Agreement or any
other failure to perform its obligations under this Agreement or any Other
Agreement;
(d) Any representation or warranty made by Debtor in this Agreement or
any Other Agreement between Debtor and Secured Party shall be false or
materially misleading, as determined in the reasonable discretion of
Secured Party;
(e) Any event of default shall occur under the terms of the Loan
Agreement and shall not be cured within the time expressly provided for
with respect thereto in the Loan Agreement;
(f) If Debtor or any other party obligated to pay any portion
of the Obligations: (i) becomes insolvent, or makes a transfer in fraud of
creditors, or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due and Secured Party, in good faith,
determines that such event or condition could lead to a material impairment of
the Collateral, or any part thereof, or of any other payment security for any of
the Obligations; (iii) has a receiver, trustee or custodian appointed for, or
take possession of, all or substantially all of the assets of such party or any
of the Collateral, either in a proceeding brought by such party or in a
proceeding brought against such party and such appointment is not discharged or
such possession is not terminated within sixty (60) days after the effective
date thereof or such party consents to or acquiesces in such appointment or
possession; (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state insolvency, bankruptcy or
similar laws (all of the foregoing hereinafter collectively called "Applicable
Bankruptcy Law") or an involuntary petition for relief is filed against such
party under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within sixty (60) days after the filing thereof, or an order for
relief naming such party is entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of debtors
now or hereafter existing is requested or consented to by such party; (v) fails
to have discharged within a period of sixty (60) days any attachment,
sequestration or similar writ levied upon, or any claim against or affecting,
any property of such party; or (vi) fails to pay within ninety (90) days any
final money judgment against such party; or
(g) The issuer of any securities constituting Collateral files a
petition for relief under any Applicable Bankruptcy Law, an involuntary
petition for relief is filed against any such issuer under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within thirty
(30) days after the filing thereof, or an order for relief naming any such
issuer is entered under any Applicable Bankruptcy Law.
7.2 Secured Party's Remedies. Upon the occurrence of an Event of
Default:
(a) Secured Party may declare the Obligations in whole or part
immediately due and may enforce payment and performance of the same and
exercise any rights under the Texas UCC, rights and remedies of Secured
Party under this Agreement, or otherwise.
(b) Secured Party may, at Secured Party's option and at the
expense of Debtor, either in Secured Party's own right or in the name of Debtor
and in the same manner and to the same extent that Debtor might reasonably so
act if this Agreement had not been made: (i) do all things requisite,
convenient, or necessary to enforce the performance and observance of all
rights, remedies and privileges of Debtor arising from the Collateral, or any
part thereof, including without limitation compromising, waiving, excusing, or
in any manner releasing or discharging any obligation of any party to or arising
from the Collateral; (ii) take possession of the books, papers, chattel paper,
documents of title, and accounts of Debtor, wherever located, relating to the
Collateral; (iii) xxx or otherwise collect and receive money attributable to the
Collateral; and (iv) exercise any other lawfully available powers or remedies,
and do all other things which Secured Party deems requisite, convenient or
necessary or which the Secured Party deems proper to protect the Security
Interest.
(c) Secured Party may foreclose this Agreement in the manner
now or hereafter provided or permitted by law and may upon such reasonable
notification prior thereto as may be required by applicable law (Debtor hereby
agreeing that ten days' notice is commercially reasonable), sell, assign,
transfer, or otherwise dispose of the Collateral at public or private sale, in
whole or in part, and Secured Party may, in its own name or as Debtor's
attorney-in-fact effectively assign and transfer the Collateral, or any part
thereof, absolutely, and execute and deliver all necessary assignments,
conveyances, bills of sale, and other instruments with power to substitute one
or more persons or corporations with like power. Any such foreclosure sale,
assignment, transfer, or other disposition shall, to the extent permitted by
law, be a perpetual bar, both at law and in equity, against Debtor and all
persons and corporations lawfully claiming by or through or under Debtor. Any
such foreclosure sale may be adjourned from time to time. Upon any sale, Secured
Party may bid for and purchase the Collateral, or any part thereof, and upon
compliance with the terms of sale may hold, retain, possess and dispose of the
Collateral, in its absolute right without further accountability. Secured Party
shall have the right to be credited on the amount of its bid a corresponding
amount of the Obligations as of the date of such sale.
(d) If, in the opinion of Secured Party, there is any question
that a public sale or distribution of any Collateral will violate any state or
federal securities law, Secured Party (i) may offer and sell securities
privately to purchasers who will agree to take them for investment purposes and
not with a view to distribution and who will agree to imposition of restrictive
legends on the certificates representing the security, or (ii) may sell such
securities in any type of offering which complies with, or is exempt from the
registration requirements of, the Securities Act of 1933 and any applicable
state securities laws, and no sale so made in good faith by Secured Party shall
be deemed to be not "commercially reasonable" because so made.
(e) Not in limitation of any other provision of this Agreement,
Secured Party shall have all rights and remedies of a secured party under
the Texas UCC.
7.3 Application of Proceeds. Secured Party may apply the proceeds of
any foreclosure sale hereunder or from any other permitted disposition of the
Collateral or any part thereof as follows: (a) first, to the payment of all
reasonable costs and expenses of any foreclosure and collection hereunder and
all proceedings in connection therewith, including reasonable attorneys' fees;
(b) then, to the reimbursement of Secured Party for all disbursements made by
Secured Party for taxes, assessments or liens superior to the Security Interest
and which Secured Party shall deem expedient to pay; (c) then, to the
reimbursement of Secured Party of any other disbursements made by Secured Party
in accordance with the terms hereof or under the Contribution Agreement or any
Other Agreement; (d) then, to or among the amounts of fees, interest and
principal then owing and unpaid in respect of the Obligations, in such priority
as Secured Party may determine in its discretion; and (e) the remainder of such
proceeds, if any, shall be paid to Debtor. If such proceeds shall be
insufficient to discharge the entire Obligations, Secured Party shall have any
other available legal recourse against Debtor under, or for the performance of,
the Contribution Agreement and any Other Agreement between Debtor and Secured
Party, for the deficiency, together with interest thereon at the maximum rate
permitted under applicable law.
7.4 Enforcement of Obligations. Nothing in this Agreement or in any
other document or agreement shall affect or impair the unconditional and
absolute right of Secured Party to enforce the Obligations as and when the
same shall become due in accordance with the terms of any Other Agreement.
--------------------------
ARTICLE VIII
RIGHTS OF SECURED PARTY
8.1 Subrogation. Upon the occurrence of an Event of Default, Secured
Party, at its election, may subrogate to all of the interest, rights and
remedies of the Debtor, in respect to any of the Collateral or agreements
pertaining thereto. -----------
8.2 Secured Party Appointed Attorney-in-Fact. Debtor hereby appoints
Secured Party as attorney-in-fact of Debtor, with full authority in the place
and stead of Debtor and in the name of Debtor, Secured Party or otherwise, from
time to time on Secured Party's discretion and upon the occurrence of an Event
of Default, to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including without limitation: (a) to ask, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (b) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) of this Section 8.2; (c) to file any claims or take
any action or institute any proceeding which Secured Party may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Secured Party against any of the Collateral; and (d) to assign and
transfer the Collateral, or any part thereof, absolutely and to execute and
deliver endorsements, assignments, conveyances, bills of sale and other
instruments with power to substitute one or more persons or corporation with
like power.
8.3 Performance by Secured Party. If Debtor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause the
performance of, such agreement, and the reasonable expenses of Secured
Party incurred in connection therewith shall be payable by Debtor under
Section 8.8. In no event, however, shall Secured Party have any obligation
or duties whatsoever to perform any covenant or agreement of Debtor
contained herein, and any such performance by Secured Party shall be
---------------------------- wholly discretionary with Secured Party.
8.4 Duties of Secured Party. The powers conferred upon Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for money actually
received by it hereunder, Secured Party shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation, duty
or responsibility to do any of the following: (a) ascertain any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
the Collateral or informing Debtor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral; (c) collect any amounts
payable in respect of the Collateral; (d) sell all or any portion of the
Collateral, for any reason; or (e) hold the Collateral for or on behalf of any
party other than Debtor.
8.5 No Liability of Secured Party. Neither the acceptance of this
Agreement by Secured Party, nor the exercise of any rights hereunder by Secured
Party, shall be construed in any way as an assumption by Secured Party of any
obligations, responsibilities, or duties of Debtor arising in connection with
the Collateral assigned hereunder or otherwise bind Secured Party to the
performance of any obligations respecting the Collateral, it being expressly
understood that Secured Party shall not be obligated to perform, observe, or
discharge any obligation, responsibility, duty, or liability of Debtor in
respect of any of the Collateral, including without limitation appearing in or
defending any action, expending any money or incurring any expense in connection
therewith. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, DEBTOR SHALL AND
DOES AGREE TO INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS SECURED PARTY AND ITS
SUBSIDIARIES, AND EACH OF THEIR OFFICERS, DIRECTORS, REPRESENTATIVES, AGENTS,
EMPLOYEES, LENDERS, SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL LIABILITIES,
CLAIMS, DAMAGES, LOSSES, FINES, PENALTIES, CAUSES OF ACTIONS, SUITS, JUDGMENTS
AND EXPENSES (INCLUDING COURT COSTS, ATTORNEY'S FEES AND COST OF INVESTIGATION)
OF ANY NATURE, KIND OR DESCRIPTION OF ANY PERSON OR ENTITY, DIRECTLY OR
INDIRECTLY, ARISING OUT OF, CAUSED BY OR RESULTING FROM (IN WHOLE OR IN PART),
ANY ACT OR OMISSION OF SECURED PARTY, OR ANYONE ACTING ON BEHALF OF SECURED
PARTY, IN CONNECTION WITH THE COLLATERAL, INCLUDING WITHOUT LIMITATION ANY
MARKET FLUCTUATIONS IN THE COLLATERAL AS A RESULT OF SECURED PARTY'S SALE OF, OR
FAILURE TO SELL, THE INTERESTS AT ANY PARTICULAR TIME WHEN IT HAS THE RIGHT TO
DO SO. THE FOREGOING INDEMNITY SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS AGREEMENT.
8.6 Right of Secured Party to Defend Action Affecting Security.
Secured Party may, at the expense of Debtor, appear in and defend any
action or proceeding at law or in equity purporting to affect Secured
Party's Security Interest under this Agreement.
----------------------------------------------------------
8.7 Right of Secured Party to Prevent or Remedy Default. If Debtor
shall fail to perform any of the covenants, conditions and agreements required
to be performed and observed by Debtor under any Other Agreement, or in respect
of the Collateral (subject to any applicable default cure period), Secured Party
(a) may but shall not be obligated to take any action Secured Party deems
necessary or desirable to prevent or remedy any such default by Debtor or
otherwise to protect the Security Interest, and (b) shall have the absolute and
immediate right to take possession of the Collateral or any part thereof (to the
extent Secured Party has not previously taken possession) to such extent and as
often as the Secured Party, in its sole discretion, deems necessary or desirable
in order to prevent or to cure any such default by Debtor, or otherwise to
protect the security of this Agreement. Secured Party may advance or expend such
sums of money for the account of Debtor as Secured Party in its sole discretion
deems necessary for any such purpose.
8.8 Secured Party's Expenses. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision of this Agreement for the protection of its security or for the
enforcement of any of its rights hereunder, including, without limitation, in
foreclosure proceedings commenced and subsequently abandoned or in any dispute
or litigation in which Secured Party or the holder of any of the Obligations may
become involved by reason of or arising out of any Other Agreement or the
Collateral, shall be a part of the Obligations and shall be paid by Debtor to
Secured Party, upon demand, and shall bear interest until paid at the maximum
rate of interest permitted by applicable law, from the date incurred by Secured
Party until repaid by Debtor.
8.9. Convertible Collateral. Secured Party may present for conversion
any Collateral which is convertible into any other instrument or investment
security or a combination thereof with cash, but Secured Party shall not
have any duty to present for conversion any Collateral unless it shall have
received from Debtor detailed written instructions to that effect at a time
reasonably far in advance of the final conversion date to make such
conversion possible. ----------------------
8.10 Secured Party's Right of Set-Off. Upon the happening of any event
entitling Secured Party to pursue any remedy provided herein, or if Secured
Party shall be served with garnishment process in which Debtor shall be named as
defendant, whether or not Debtor shall be in default hereunder at the time,
Secured Party may, but shall not be required to, set-off any indebtedness owing
by Secured Party to Debtor against any of the Obligations without first
resorting to the security hereunder and without prejudice to any other rights or
remedies of Secured Party or its Security Interest.
8.11 Remedies. No right or remedy herein reserved to Secured Party is
intended to be exclusive of any other right or remedy, but each and every
such remedy shall be cumulative, not in lieu of, but in addition to any
other rights or remedies given under this Agreement and all other security
documents. Any and all of Secured Party's rights and remedies may be
exercised from time to time and as often as such exercise as deemed
necessary or desirable by Secured Party. --------
8.12 Debtor's Waivers. Debtor waives notice of the creation, advance,
increase, existence, extension, or renewal of, and of any indulgence with
respect to, the Obligations; waives notice of intent to accelerate, notice of
acceleration, notice of intent to demand, presentment, demand, notice of
dishonor, and protest; waives notice of the amount of the Obligations
outstanding at any time, notice of any change in financial condition of any
person liable for the Obligations or any part thereof, notice of any Event of
Default, and all other notices respecting the Obligations; and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by Secured Party in its discretion, without notice
to Debtor.
8.13 Other Parties and Other Collateral. No renewal or extension of or
any other indulgence with respect to the Obligations or any part thereof, no
release of any security, no release of any person (including any maker,
endorser, guarantor, or surety) liable on the Obligations, no delay in
enforcement of payment, and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any security
therefor or guaranty thereof or under this Agreement shall in other manner
impair or affect the rights of Secured Party under the law, under this
Agreement, or under any other document or agreement pertaining to the other
security for the Obligations, before foreclosing upon the Collateral for the
purpose of paying the Obligations. Debtor waives any right to the benefit of or
to require or control application of any other security or proceeds thereof, and
Debtor agrees that Secured Party shall have no duty or obligation to Debtor to
apply to the Obligations any such other security or proceeds thereof.
ARTICLE IX
MISCELLANEOUS
9.1 Terms Commercially Reasonable. The terms of this Agreement shall
be deemed commercially reasonable within the meaning of the Texas UCC.
-----------------------------
9.2 Notices. Any notices or demands required or permitted to be given
hereunder shall be deemed sufficiently given if in writing and personally
delivered or mailed (with all postage and charges prepaid), addressed to Secured
Party or to Debtor their respective addresses set forth below, or at such other
address as the above parties may from time to time designate by written notice
to the other given in accordance with this Section 9.2. Any such notice, if
personally delivered or transmitted by telex or telegram, shall be deemed to
have been given on the date so delivered or transmitted or, if mailed, be deemed
to have been given on the day after such notice is placed in the United States
mail in accordance with this Section 9.2.
Secured Party: 0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: President
with copy to: Xxxxxxx X. XxXxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1900 Frost Bank Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Debtor: Prime/BDR Acquisition, L.L.C.
0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: President
9.3 Parties Bound. Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any assignment or transfer of any of the Obligations or the
Collateral, Secured Party thereafter shall be fully discharged from any
responsibility with respect to the Collateral so assigned or transferred, but
Secured Party shall retain all rights and powers hereby given with respect to
any of the Obligations or Collateral not so assigned or transferred. All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives, heirs,
successors, and assigns of Debtor.
9.4 Waiver. No delay of Secured Party in exercising any power or right
shall operate as a waiver thereof; nor shall any single or partial exercise
of any power or right preclude other or further exercise thereof or the
exercise of any other power or right. No waiver by Secured Party of any
right hereunder of any default by Debtor shall be binding upon Secured
Party unless in writing, and no failure by Secured Party to exercise any
power or right hereunder or waiver of any default by Debtor ------ shall
operate as a waiver of any other or further exercise of such right or power
of any further default.
9.5 Agreement Continuing. This Agreement shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether
or not of the character contemplated at the date of this Agreement, and if
all transactions between Secured Party and Debtor shall be closed at any
time, shall be equally applicable to any new transactions thereafter.
Provisions of this Agreement, unless by their terms exclusive, shall be in
addition to those contained in any Other Agreement. --------------------
9.6 Definitions. Unless the context indicated otherwise, definitions
in the Texas Business and Commerce Code ("Texas UCC") apply to words and
phrases in this Agreement; if Texas UCC definitions conflict, Chapter 9
definitions apply. -----------
9.7 Miscellaneous. In this Agreement, whenever the context so
requires, the neuter gender includes the masculine and feminine, and the
singular number includes the plural and vice versa. The headings of
paragraphs herein are inserted only for convenience and shall in no way
define, describe or limit the scope of intent of any provisions of this
Agreement. No change, amendment, modification, cancellation, or discharge
of any provision of this Agreement shall be valid unless consented to in
------------- writing by Secured Party.
9.8 Assignment of Secured Party's Interest. Secured Party shall have
the right to assign all or any portion of its rights in this Agreement
without approval or consent. Debtor acknowledges that Lender intends to
make a collateral assignment of its rights under this Agreement for the
benefit of one or more of its lenders. Debtor may not assign this Agreement
or any of its rights or obligations hereunder without the express prior
written consent of Secured Party in each instance.
--------------------------------------
9.9 Applicable Laws. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. ---------------
9.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE LOAN AGREEMENT, THE NOTE
AND THE CONTRIBUTION AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. ----------------
[Signature page follows]
2
SIGNATURE PAGE TO
ASSIGNMENT AND
SECURITY AGREEMENT
EXECUTED this ____ day of September, 1999.
DEBTOR: Prime/BDR Acquisition, L.L.C.
By: ______________________________________
Printed Name: _____________________________
Title: _____________________________________
SECURED PARTY: Prime Medical Operating, Inc.
By: ______________________________________
Printed Name: _____________________________
Title: _____________________________________
EXHIBIT G5
FORM OF
PROMISSORY NOTE
Austin, Texas ____________, 1999
PROMISE TO PAY: For value received, the undersigned Borrower (whether one or
more) promises to pay to the order of Lender the Principal Amount, together with
interest on the unpaid balance of such amount, in lawful money of the United
States of America, in accordance with all the terms, conditions, and covenants
of this Note and the Loan Documents identified below.
BORROWER: Prime/BDR Acquisition, L.L.C., a Delaware limited liability company
BORROWER'S ADDRESS FOR NOTICE: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000
Xxxxxx, Xxxxx 00000
Attention: President
LENDER: Prime Medical Operating, Inc., a Delaware corporation
LENDER'S ADDRESS FOR PAYMENT: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000,
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
PRINCIPAL AMOUNT: ______________________ ($____________)
INTEREST RATE: Fifteen Percent (15%)
PAYMENT TERMS: Interest on the unpaid balance of this Note is due and payable
quarterly, beginning ______________, 1999, and continuing regularly and
quarterly thereafter on or before the first day of ____________, ____________,
____________ and ____________ of each year, until [seven years from date of
loan] (the "Maturity Date"), when the outstanding principal balance and all
accrued interest shall be due and payable in full. Interest will be calculated
on the unpaid principal balance. Each payment will be credited first to the
accrued interest and then to the reduction of principal.
LOAN AGREEMENT: This Note is executed pursuant to and is governed by the terms
of that certain Loan Agreement dated September ___, 1999, executed by Borrower
and Lender, as amended (collectively, the "Loan Agreement").
1. INTEREST PROVISIONS:
(a) Rate: The principal balance of this Note from time to time remaining
unpaid prior to maturity shall bear interest at the Interest Rate per
annum stated above.
(b) Maximum Lawful Interest: The term "Maximum Lawful Rate" means the
maximum rate of interest and the term "Maximum Lawful Amount" means the
maximum amount of interest that is permissible under applicable state
or federal law for the type of loan evidenced by this Note and the
other Loan Documents. If the Maximum Lawful Rate is increased by
statute or other governmental action subsequent to the date of this
Note, then the new Maximum Lawful Rate shall be applicable to this Note
from the effective date thereof, unless otherwise prohibited by
applicable law.
(c) Spreading of Interest: Because of the possibility of irregular
periodic balances of principal or premature payment, the total
interest that will accrue under this Note cannot be determined in
advance. Lender does not intend to contract for, charge, or receive
more than the Maximum Lawful Rate or Maximum Lawful Amount permitted
by applicable state or federal law, and to prevent such an occurrence
Lender and Borrower agree that all amounts of interest, whenever
contracted for, charged, or received by Lender, with respect to the
loan of money evidenced by this Note, shall be spread, prorated, or
allocated over the full period of time this Note is unpaid, including
the period of any renewal or extension of this Note. If demand for
payment of this Note is made by Lender prior to the full stated term,
the total amount of interest contracted for, charged, or received to
the time of such demand shall be spread, prorated, or allocated along
with any interest thereafter accruing over the full period of time
that this Note thereafter remains unpaid for the purpose of
determining if such interest exceeds the Maximum Lawful Amount.
(d) Excess Interest: At maturity (whether by acceleration or otherwise) or
on earlier final payment of this Note, Lender shall compute the total
amount of interest that has been contracted for, charged, or received
by Lender or payable by Borrower under this Note and compare such
amount to the Maximum Lawful Amount that could have been contracted
for, charged, or received by Lender. If such computation reflects that
the total amount of interest that has been contracted for, charged, or
received by Lender or payable by Borrower exceeds the Maximum Lawful
Amount, then Lender shall apply such excess to the reduction of the
principal balance and not to the payment of interest; or if such
excess interest exceeds the unpaid principal balance, such excess
shall be refunded to Borrower. This provision concerning the crediting
or refund of excess interest shall control and take precedence over
all other agreements between Borrower and Lender so that under no
circumstances shall the total interest contracted for, charged, or
received by Lender exceed the Maximum Lawful Amount.
(e) Interest After Default: At Lender's option, the unpaid principal
balance shall bear interest after maturity (whether by acceleration or
otherwise) at the "Default Interest Rate." The Default Interest Rate
shall be, at Lender's option, (i) the Maximum Lawful Rate, if such
Maximum Lawful Rate is established by applicable law; or (ii) the
Interest Rate stated on the first page of this Note plus five (5)
percentage points, if no Maximum Lawful Rate is established by
applicable law; or (iii) eighteen percent (18%) per annum; or (iv)
such lesser rate of interest as Lender in its sole discretion may
choose to charge; but never more than the Maximum Lawful Rate or at a
rate that would cause the total interest contracted for, charged, or
received by Lender to exceed the Maximum Lawful Amount.
(f) Daily Computation of Interest: To the extent permitted by applicable
law, Lender at its option will calculate the per diem interest rate or
amount based on the actual number of days in the year (365 or 366, as
the case may be), and charge that per diem interest rate or amount each
day. In no event shall Lender compute the interest in a manner that
would cause Lender to contract for, charge, or receive interest that
would exceed the Maximum Lawful Rate or the Maximum Lawful Amount
2. DEFAULT PROVISIONS:
(a) EVENTS OF DEFAULT AND ACCELERATION OF MATURITY: LENDER MAY, AFTER
THIRTY (30) DAYS' WRITTEN NOTICE TO BORROWER AND BORROWER'S FAILURE TO
CURE WITHIN SUCH 30-DAY PERIOD AND WITHOUT FURTHER NOTICE OR DEMAND,
(except as otherwise required by statute), ACCELERATE THE MATURITY OF
THIS NOTE AND DECLARE THE ENTIRE UNPAID PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST AT ONCE DUE AND PAYABLE IF:
(i) There is default in the payment of any installment of
principal, interest, or any other sum required to be paid under the
terms of this Note or any of the Loan Documents; or
(ii) There is a breach or default (other than by Lender or Prime
Medical Services, Inc.) under this Note or any of the Loan Documents,
including any instrument securing the payment of this Note or any loan
agreement relating to the advance of loan proceeds.
(b) WAIVER BY BORROWER: EXCEPT AS PROVIDED IN PARAGRAPH 2(a) HEREOF AND IN
ANY OTHER LOAN DOCUMENT, BORROWER AND ALL OTHER PARTIES LIABLE FOR
THIS NOTE WAIVE, DEMAND, NOTICE OF INTENT TO DEMAND, PRESENTMENT FOR
PAYMENT, NOTICE OF NONPAYMENT, PROTEST, NOTICE OF PROTEST, GRACE,
NOTICE OF DISHONOR, NOTICE OF INTENT TO ACCELERATE MATURITY, NOTICE OF
ACCELERATION OF MATURITY, AND DILIGENCE IN COLLECTION. EACH MAKER,
SURETY, ENDORSER, AND GUARANTOR OF THIS NOTE WAIVES AND AGREES TO ONE
OR MORE EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME, AND ANY PARTIAL
PAYMENTS, BEFORE OR AFTER MATURITY, WITHOUT PREJUDICE TO THE HOLDER OF
THIS NOTE. EACH MAKER, SURETY, ENDORSER, AND GUARANTOR WAIVES NOTICE
OF ANY AND ALL RENEWALS, EXTENSIONS, REARRANGEMENTS, AND MODIFICATIONS
OF THIS NOTE.
(c) Non-Waiver by Lender: Any previous extension of time, forbearance,
failure to pursue some remedy, acceptance of late payments, or
acceptance of partial payment by Lender, before or after maturity, does
not constitute a waiver by Lender of its subsequent right to strictly
enforce the collection of this Note according to its terms.
(d) Other Remedies Not Required: Lender shall not be required to first
file suit, exhaust all remedies, or enforce its rights against any
security in order to enforce payment of this Note.
(e) Joint and Several Liability: Each Borrower who signs this Note, and all
of the other parties liable for the payment of this Note, such as
guarantors, endorsers, and sureties, are jointly and severally liable
for the payment of this Note.
(f) Attorney's Fees: If Lender requires the services of an attorney to
enforce the payment of this Note or the performance of the other Loan
Documents, or if this Note is collected through any lawsuit, probate,
bankruptcy, or other judicial proceeding, Borrower agrees to pay Lender
an amount equal to its reasonable attorney's fees and other collection
costs. This provision shall be limited by any applicable statutory
restrictions relating to the collection of attorney's fees.
3. MISCELLANEOUS PROVISIONS:
(a) Subsequent Holder: All references to Lender in this Note shall also refer
to any subsequent owner or holder of this Note by transfer, assignment,
endorsement, or otherwise.
(b) Transfer: Borrower acknowledges and agrees that Lender may transfer
this Note or partial interests in the Note to one or more transferees
or participants, including without limitation transfers provided for in
Section 8.10 of the Loan Agreement. Borrower authorizes Lender to
disseminate to any such transferee or participant or prospective
transferee or participant any information it has pertaining to the loan
evidenced by this Note, including, without limitation, credit
information on Borrower and any guarantor of this Note and any of the
type of information described in Section 8.10 of the Loan Agreement.
(c) Other Parties Liable: All promises, waivers, agreements, and conditions
applicable to Borrower shall likewise be applicable to and binding upon
any other parties primarily or secondarily liable for the payment of
this Note, including all guarantors, endorsers, and sureties.
(d) Successors and Assigns: The provisions of this Note shall be binding
upon and for the benefit of the successors, assigns, heirs, executors,
and administrators of Lender and Borrower.
(e) No Duty or Special Relationship: Borrower acknowledges that Lender has
no duty of good faith to Borrower, and Borrower acknowledges that no
fiduciary, trust, or other special relationship exists between Lender
and Borrower.
(f) Modifications: Any modifications agreed to by Lender relating to the
release of liability of any of the parties primarily or secondarily
liable for the payment of this Note, or relating to the release,
substitution, or subordination of all or part of the security for this
Note, shall in no way constitute a release of liability with respect to
the other parties or security not covered by such modification.
(g) Entire Agreement: Borrower warrants and represents that the Loan
Documents constitute the entire agreement between Borrower and Lender
with respect to the loan evidenced by this Note and agrees that no
modification, amendment, or additional agreement with respect to such
loan or the advancement of funds thereunder will be valid and
enforceable unless made in writing signed by both Borrower and Lender.
(h) Borrower's Address for Notice: All notices required to be sent by
Lender to Borrower shall be sent by U.S. Mail, postage prepaid, to
Borrower's Address for Notice stated on the first page of this Note,
until Lender shall receive written notification from Borrower of a new
address for notice.
(i) Lender's Address for Payment: All sums payable by Borrower to Lender
shall be paid at Lender's Address for Payment stated on the first page
of this Note, or at such other address as Lender shall designate from
time to time.
(j) Business Use: Borrower warrants and represents to Lender that the proceeds
of this Note will be used solely for business or commercial purposes, and
in no way will the proceeds be used for personal, family, or household
purposes.
(k) Chapter 15 Not Applicable: It is understood that Chapter 15 of the
Texas Credit Code relating to certain revolving credit loan accounts
and tri-party accounts is not applicable to this Note.
(l) APPLICABLE LAW: THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN TEXAS AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE
OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO
TRANSACTIONS IN TEXAS.
4. LOAN DOCUMENTS:
(a) This Note.
(b) The Loan Agreement and the Loan Documents as defined therein.
(c) All other documents signed in connection with the Loan Agreement or the
loan evidenced by this Note, including, without limitation, that
certain Contribution Agreement, dated effective September 1, 1999,
between and among Borrower, Lender, Prime Medical Services, Inc., a
Delaware corporation, Prime/BDEC Acquisition, L.L.C., a Delaware
limited liability company, Barnet Xxxxxxx Eye Center, P.L.L.C., an
Arizona professional limited liability company, LASIK Investors,
L.L.C., a Delaware limited liability company, Xxxxx X. Xxxxxxx, M.D.,
Xxxxxx X. Xxxxxx, M.D., and Xxxx Xxxxxxxxx (the "Contribution
Agreement") and each Transaction Document (as such term is defined in
the Contribution Agreement).
[Signature page follows]
S-1
EXECUTION PAGE TO
PROMISSORY NOTE
EXECUTED this ___ day of ___________, 1999.
BORROWER:
Prime/BDR Acquisition, L.L.C., a Delaware limited liability
company
By: ________________________________________
Printed Name: ________________________________________
Title: ________________________________________
EXHIBIT-H
MEMBERSHIP INTEREST
TRANSFER RESTRICTION AGREEMENT
This Membership Interest Transfer Restriction Agreement (this "Agreement")
is entered into effective as of the 1st day of September, 1999, by and among
LASIK Investors, L.L.C., a Delaware limited liability company (the "Company"),
Prime Medical Operating, Inc., a Delaware corporation ("Prime"), Xxxxxx X.
Xxxxxx, M.D. ("Barnet"), Xxxxx X. Xxxxxxx, M.D. ("Xxxxxxx"), Xxxx Xxxxxxxxx
("Xxxxxxxxx"), Xxxxx X. Xxxxxxx, M.D. ("Xxxxxxx"), and Xxxxxx X. Xxxxxxx, O.D.
("Xxxxxxx"). Barnet, Dulaney, Rosenberg, Xxxxxxx and Xxxxxxx, together with any
subsequent Members in the Company who hereafter execute this Agreement, are
collectively referred to herein as the "Members".
R E C I T A L S:
WHEREAS, Barnet, Dulaney, Rosenberg, Xxxxxxx and Xxxxxxx own all
the issued and outstanding membership interests of the Company (all such
membership interests, together with any hereafter acquired, are hereinafter
referred to as the "Membership Interests"); and
WHEREAS, this Agreement is a "Transaction Document," as defined in
that certain Contribution Agreement (the "Contribution Agreement") dated
effective September 1, 1999, by and among Prime, Prime Medical Services, Inc., a
Delaware corporation ("PMSI"), the Company, Barnet Xxxxxxx Eye Center, P.L.L.C.,
an Arizona professional limited liability company, Prime/BDR Acquisition,
L.L.C., a Delaware limited liability company, Prime/BDEC Acquisition, L.L.C., a
Delaware limited liability company, Barnet, Xxxxxxx and Xxxxxxxxx.
WHEREAS, the Members, the Company and Prime desire to enter into
this Agreement to control the distribution of ownership interests in the Company
and to promote the harmonious management of the Company's affairs.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PERMITTED TRANSFERS; RESTRICTIONS AGAINST TRANSFER
As used in this Agreement, "Permitted Transfers" shall mean any transfer of all
or any part of any Member's Membership Interest to (i) the members of the
immediate family of the Member or a trust or trusts for the benefit of members
of the immediate family of the Member, provided that after any such transfer the
Member retains the sole express right to vote, or direct the votes of, the
Membership Interest, (ii) any other Member, provided that after any transfer
pursuant to this subsection (ii) is consummated, Barnet and Xxxxxxx (or trusts
that hold Membership Interests as a result of Permitted Transfers subsection (i)
above) must collectively own in the aggregate at least fifty-one percent (51%)
of the total outstanding Membership Interests of the Company, or (iii) Prime.
Any Member transferring all or a portion of its Membership Interest pursuant to
a Permitted Transfer shall give written notice of the Permitted Transfer
(containing the same information as required for notice under Section 2.1.1) to
Prime and the other Members fifteen (15) days prior to the effective date of the
Permitted Transfer. Except for a Permitted Transfer, or as otherwise provided in
this Agreement, a Member shall not transfer, assign, pledge, hypothecate, or in
any way alienate any Membership Interest, or any interest therein, whether
voluntarily or by operation of law, or by gift or otherwise, without the prior
written consent of the Company, the other Members and Prime, which consent may
be withheld in their sole and absolute discretion. Any purported transfer in
violation of any provision of this Agreement shall be void and ineffectual,
shall not operate to transfer any interest or title to the purported transferee,
and shall give the Company, the other Members and Prime options to purchase such
Membership Interest in the manner and on the conditions hereinafter provided. As
used in this Agreement, "Option Members" shall mean all Members of the Company
except (i) the Member who, prior to the proposed transfer or the incident
resulting in the proposed transfer of all or a portion of a Membership Interest,
owned such interest and (ii) Xxxxxxxxx.
ARTICLE II
OPTIONS
2.1 OPTION UPON VOLUNTARY TRANSFER.
2.1.1 Notice of Intention to Transfer. If a Member intends to
voluntarily transfer any of its Membership Interest, other than pursuant to a
Permitted Transfer, to any person other than the Company, and does not obtain
the written consents required in ARTICLE I hereof, the Member shall give written
notice to the other Members, Xxxxxxxxx and Prime stating (i) the intention to
transfer a Membership Interest, (ii) the amount of Membership Interest to be
transferred, (iii) the name, business and residence address of the proposed
transferee, (iv) the nature and amount of the consideration, and (v) the other
terms of the proposed sale.
2.1.2 Option to Purchase. The Option Members shall have, and may
exercise within 30 days after receipt of the notice of intent to transfer, an
option to purchase all or any portion of the Membership Interest the
transferring Member intends to transfer, for the price and upon the other terms
stated in the notice of intent to transfer. If the Option Members fail, within
such 30-day period, to exercise their purchase option (by delivery of written
notice) with respect to the entire Membership Interest being transferred, the
Option Members shall be deemed to have elected not to exercise their purchase
option with respect to such unpurchased Membership Interest. Upon any notice of
non-exercise (or deemed non-exercise) by the Option Members, Xxxxxxxxx (if not
the transferring Member) shall have, and may exercise within 30 days of receipt
of notice of such non-exercise (or deemed non-exercise), an option to purchase
all or any portion of such unpurchased Membership Interest upon the same terms
and conditions. If Xxxxxxxxx fails, within such 30-day period, to exercise his
purchase option (by delivery of written notice) with respect to the entire
unpurchased Membership Interest, Xxxxxxxxx shall be deemed to have elected not
to exercise his purchase option with respect to any remaining Membership
Interest. Upon any notice of non-exercise (or deemed non-exercise) by Xxxxxxxxx,
Prime shall have, and may exercise within 30 days of receipt of notice of such
non-exercise (or deemed non-exercise), an option to purchase all of such
remaining Membership Interest upon the same terms and conditions.
2.1.3 Death Before Closing. If a Member who proposed to transfer a
Membership Interest dies prior to the closing of the sale and purchase
contemplated by this Section 2.1, the Membership Interest of such deceased
Member shall be the subject of sale and purchase under Section 2.3.
2.1.4 Allowable Consideration. All parties hereto acknowledge and
agree that it would be impractical to exercise an option to purchase arising
pursuant to this Section 2.1 whenever the proposed consideration to be received
by the transferring Member is other than cash or cash equivalents. Therefore,
the parties agree that no transfer shall be permitted and no option shall arise
pursuant to this Section 2.1 whenever the consideration to be received from the
proposed transferee is other than cash or cash equivalents.
2.2 OPTION UPON CERTAIN INVOLUNTARY TRANSFERS.
2 2.1 Exercise Event and Notice. The filing of a voluntary or
involuntary petition of bankruptcy by or on behalf of a Member, an assignment by
a Member of any of its Membership Interest, or of any right or interest therein,
for the benefit of creditors, or the voluntary transfer, transfer by law or any
other transfer, of any Membership Interest, or of any right or interest therein
(other than transfers governed by ARTICLE I or Sections 2.1, 2.3 or 2.4 or
ARTICLE VII hereof), shall give the other Members, Xxxxxxxxx and Prime the
option to purchase the Membership Interest of such bankrupt Member or such
transferred Membership Interest as provided herein. Upon the filing of a
voluntary or involuntary petition of bankruptcy by or on behalf of a Member or
an assignment by Member of any of its Membership Interest, or of any right or
interest therein, for the benefit of creditors, the Member or its personal
representative shall promptly give written notice of such occurrence to the
other Members, Xxxxxxxxx and Prime. In the event of a transfer of Membership
Interest, as described above, the Member transferring such Membership Interest
shall promptly give written notice of such transfer to the other Members,
Xxxxxxxxx and Prime.
2.2.2 Option to Purchase. The Option Members shall have, and may
exercise within 30 days after receipt of the notice of the applicable exercise
event, an option to purchase all or any portion of the Membership Interest the
bankrupt or transferring Member intends to transfer, for the price and upon the
other terms hereinafter provided. If the Option Members fail, within such 30-day
period, to exercise their purchase option (by delivery of written notice) with
respect to the entire Membership Interest being transferred, the Option Members
shall be deemed to have elected not to exercise their purchase option with
respect to such unpurchased Membership Interest. Upon any notice of non-exercise
(or deemed non-exercise) by the Option Members, Xxxxxxxxx (if not the bankrupt
or transferring Member) shall have, and may exercise within 30 days of receipt
of notice of such non-exercise (or deemed non-exercise), an option to purchase
all or any portion of such unpurchased Membership Interest for the price and
upon the other terms hereinafter provided. If Xxxxxxxxx fails, within such
30-day period, to exercise his purchase option (by delivery of written notice)
with respect to the entire unpurchased Membership Interest, Xxxxxxxxx shall be
deemed to have elected not to exercise his purchase option with respect to any
remaining Membership Interest. Upon any notice of non-exercise (or deemed
non-exercise) by Xxxxxxxxx, Prime shall have, and may exercise within 30 days of
receipt of notice of such non-exercise (or deemed non-exercise), an option to
purchase all of such remaining Membership Interest for the price and upon the
other terms hereinafter provided.
2.3 PURCHASE AND SALE OF MEMBERSHIP INTEREST UPON DEATH.
2.3.1 Notice of Death. Upon the death of the Member, the
representative of the estate of the deceased Member shall promptly give written
notice of the death to the other Members, Xxxxxxxxx and Prime.
2.3.2 Option to Purchase. The Option Members shall have, and may
exercise within 30 days after receipt of the notice of death, an option to
purchase all or any portion of the Membership Interest of the deceased Member,
for the price and upon the other terms hereinafter provided. If the Option
Members fail, within such 30-day period, to exercise their purchase option (by
delivery of written notice) with respect to the entirety of such Membership
Interest, the Option Members shall be deemed to have elected not to exercise
their purchase option with respect to such unpurchased Membership Interest. Upon
any notice of non-exercise (or deemed non-exercise) by the Option Members,
Xxxxxxxxx (but not his estate if he is the deceased Member) shall have, and may
exercise within 30 days of receipt of notice of such non-exercise (or deemed
non-exercise), an option to purchase all or any portion of such unpurchased
Membership Interest for the price and upon the other terms hereinafter provided.
If Xxxxxxxxx fails, within such 30-day period, to exercise his purchase option
(by delivery of written notice) with respect to the entire unpurchased
Membership Interest, Xxxxxxxxx shall be deemed to have elected not to exercise
his purchase option with respect to any remaining Membership Interest. Upon any
notice of non-exercise (or deemed non-exercise) by Xxxxxxxxx, Prime shall have,
and may exercise within 30 days of receipt of notice of such non-exercise (or
deemed non-exercise), an option to purchase all of such remaining Membership
Interest for the price and upon the other terms hereinafter provided.
2.4 OPTION UPON DEATH OF A MEMBER'S SPOUSE, TERMINATION OF MARITAL RELATIONSHIP
OR PARTITION OF COMMUNITY PROPERTY.
2.4.1 Death of Member's Spouse. Each Member and each Member's
spouse agree that in the event the spouse of a Member predeceases such Member
and such Member does not succeed by the spouse's last will and testament or by
operation of law to any interest (including, without limitation, a community
property interest) of the spouse in the Membership Interest, such Member shall
have, and may exercise within 60 days after the death of the spouse, an option
to purchase all or any portion of the spouse's interest for the price and upon
the other terms hereinafter provided. If the Member fails, within such 60-day
period, to exercise his purchase option (by delivery of written notice) with
respect to the entirety of such spouse's interest, that Member shall be deemed
to have elected not to exercise his purchase option with respect to such
spouse's interest. Upon any notice of non-exercise (or deemed non-exercise) by
the Member, the Option Members shall then have, and may exercise within 30 days
after receipt of such non-exercise (or deemed non-exercise), an option to
purchase all or any portion of the deceased spouse's interest, for the price and
upon the other terms hereinafter provided. If the Option Members fail, within
such 30-day period, to exercise their purchase option (by delivery of written
notice) with respect to the entirety of such deceased spouse's interest, the
Option Members shall be deemed to have elected not to exercise their purchase
option with respect to such unpurchased deceased spouse's interest. Upon any
notice of non-exercise (or deemed non-exercise) by the Option Members, Xxxxxxxxx
(if not the Member whose spouse is deceased) shall have, and may exercise within
30 days of receipt of notice of such non-exercise (or deemed non-exercise), an
option to purchase all or any portion of such unpurchased deceased spouse's
interest for the price and upon the other terms hereinafter provided. If
Xxxxxxxxx fails, within such 30-day period, to exercise his purchase option (by
delivery of written notice) with respect to the entire unpurchased deceased
spouse's interest, Xxxxxxxxx shall be deemed to have elected not to exercise his
purchase option with respect to any remaining portion of the deceased spouse's
interest. Upon any notice of non-exercise (or deemed non-exercise) by Xxxxxxxxx,
Prime shall have, and may exercise within 30 days of receipt of notice of such
non-exercise (or deemed non-exercise), an option to purchase all of such
remaining portion of the deceased spouse's interest for the price and upon the
other terms hereinafter provided.
2.4.2 Termination of Marital Relationship or Partition of Community
Property. In the event a divorce, annulment or other proceeding for termination
of the marital relationship is filed by or against a Member, or upon the
initiation of any voluntary or involuntary attempt to partition the community
property estate between a Member and such Member's spouse for any reason, the
Member shall promptly give written notice to the other Members, Xxxxxxxxx, and
Prime, of such event. The Member shall have, and may exercise within 60 days of
giving of such notice, an option to purchase all or any portion of the departing
spouse's interest in such Membership Interest (including without limitation any
community property interest, for purposes of this Section), for the price and
upon the other terms hereinafter provided. If the Member fails, within such
60-day period, to exercise his purchase option (by delivery of written notice)
with respect to the entirety of such spouse's interest, that Member shall be
deemed to have elected not to exercise his purchase option with respect to such
spouse's interest. Upon any notice of non-exercise (or deemed non-exercise) by
the Member, the Option Members shall then have, and may exercise within 30 days
after receipt of such non-exercise (or deemed non-exercise), an option to
purchase all or any portion of the departing spouse's interest, for the price
and upon the other terms hereinafter provided. If the Option Members fail,
within such 30-day period, to exercise their purchase option (by delivery of
written notice) with respect to the entirety of such departing spouse's
interest, the Option Members shall be deemed to have elected not to exercise
their purchase option with respect to such unpurchased departing spouse's
interest. Upon any notice of non-exercise (or deemed non-exercise) by the Option
Members, Xxxxxxxxx (if not the Member whose spouse is departing) shall have, and
may exercise within 30 days of receipt of notice of such non-exercise (or deemed
non-exercise), an option to purchase all or any portion of such unpurchased
departing spouse's interest for the price and upon the other terms hereinafter
provided. If Xxxxxxxxx fails, within such 30-day period, to exercise his
purchase option (by delivery of written notice) with respect to the entire
unpurchased departing spouse's interest, Xxxxxxxxx shall be deemed to have
elected not to exercise his purchase option with respect to any remaining
portion of the departing spouse's interest. Upon any notice of non-exercise (or
deemed non-exercise) by Xxxxxxxxx, Prime shall have, and may exercise within 30
days of receipt of notice of such non-exercise (or deemed non-exercise), an
option to purchase all of such remaining portion of the departing spouse's
interest for the price and upon the other terms hereinafter provided.
2.5 ALTERNATE NOTICES.
The failure of any person, whether a party to this Agreement or
otherwise, to give notice of the occurrence of an Exercise Event (as defined in
Section 4.3) as contemplated herein shall not operate to prevent the creation of
any option which would otherwise arise pursuant to this ARTICLE II. Any party to
this Agreement who has actual knowledge of the occurrence of an Exercise Event
may give the required written notice of the occurrence of an Exercise Event, and
upon the giving of such written notice the options shall be created and become
exercisable to the same extent as if such notice was given by the party
initially contemplated above. For instance, and purely by way of example, in the
event of the death of a Member, another Member having actual knowledge of the
Member's death may give the notice initially contemplated to be given by a
representative of the estate of the deceased Member pursuant to Section 2.3.1
above, whereupon the Option Members' option described in Section 2.3.2 would
arise and become exercisable to the same extent as if the notice had been given
by the representative of the estate of the deceased Member.
ARTICLE III
EXERCISE OF OPTIONS; EFFECT OF NON-EXERCISE
3.1 MANNER OF EXERCISE OF OPTIONS.
All options granted in, or arising pursuant to, ARTICLE II shall be
exercised by a written notice to that effect delivered within the time provided
for the exercise of the option.
3.2 COMPLETE EXERCISE OF OPTIONS.
Notwithstanding anything herein to the contrary, the holders of
options granted in, or arising pursuant to, ARTICLE II must, either alone or in
the aggregate, exercise the options in such a manner as to purchase all of the
Membership Interest (or interest therein) subject to such options, and failure
to do so shall cause a forfeiture of the options.
3.3 MULTIPLE OPTION HOLDERS.
In cases where an option is held by more than one Option Member,
each purchasing Option Member shall be entitled to purchase his or her
proportionate share of the Membership Interest subject to the option. An Option
Member's proportionate share shall equal the total amount of Membership
Interests subject to the option multiplied by a fraction the numerator of which
is the amount of Membership Interests held by such Option Member and the
denominator of which shall be the amount of Membership Interests held by all
Option Members electing to exercise the option.
3.4 EFFECT OF NON-EXERCISE OF OPTIONS.
If the holders of options granted or arising pursuant to this
Agreement do not exercise their options, or such options are forfeited, as
provided herein, the person or persons acquiring the Membership Interests (or
interest therein) that were the subject of the options shall execute a
counterpart of this Agreement and become a party hereto and shall hold such
Membership Interests subject to all the terms and conditions provided herein,
and any transfer of such Membership Interests (or interest therein) shall only
be made in accordance with the terms and conditions provided herein. In the
event the person or persons acquiring the Membership Interests (or interest
therein) fail to execute a counterpart of this Agreement and become a party
hereto, such transfer shall be void and ineffectual, and shall not operate to
transfer any interest or title to the purported transferee and such Membership
Interests shall thereafter be subject to cancellation and extinguishment by the
Company, without consideration therefor. In addition, in the event of a
voluntary transfer subject to the provisions of Section 2.1, upon the lapse or
forfeiture of the options arising pursuant to that Section, the Member proposing
the transfer shall have the right to effectuate the transfer of Membership
Interests in accordance with the terms stated in the notice of intent to
transfer, and the transferee of such Membership Interests shall execute and
become a party to this Agreement and shall hold such Membership Interests
subject to all of its terms and conditions. Provided further, however, any such
transfer of Membership Interests shall be void and ineffectual, and shall not
operate to transfer any interest or title to the purported transferee, if (i)
the transfer is not upon the terms or is not to the transferee stated in the
notice of intent to transfer, or (ii) the transfer is not closed within 10 days
of receipt of written notice of the election not to exercise, or the forfeiture
of, all applicable options.
ARTICLE IV
PURCHASE PRICE
4.1 PURCHASE PRICE.
The purchase price of the Membership Interests to be purchased
pursuant to options granted, held or exercised pursuant to Sections 2.2, 2.3 and
2.4 hereof, shall be the amount calculated in accordance with Section 4.2
hereof.
4.2 CALCULATION OF PURCHASE PRICE.
When determined in accordance with this Section 4.2, the purchase
price for the Membership Interest or any portion thereof or spouse's interest
therein shall be equal to the Appraised Value of the Membership Interest as of
the Valuation Date (as defined in Section 4.3 hereof), reduced when necessary to
reflect the purchase of less than a one hundred percent (100%) interest in each
of the Membership Interests to be transferred (for example: reduced by one-half
when a spouse's interest is only an undivided one-half community property
interest in each of the Membership Interests of a Member spouse). For purposes
of this Agreement, the "Appraised Value" of a Membership Interest shall be (i)
based on the overall value of the Company as a going concern, expressed in a per
Membership Interest unit amount without consideration to whether the Membership
Interest, or interest therein, being transferred constitutes a controlling or
minority interest in the Company, and (ii) determined by a certified business
appraiser, selected by the Company, that is a member of either the American
Society of Appraisers or the Institute of Business Appraisers; but if a Member
or Prime disagrees with such determination that Member or Prime may, at its
expense, have another certified business appraiser that is a member of one or
both of the above named professional organizations determine the value, and if
the two appraisers cannot agree upon a value, they shall mutually select a third
certified business appraiser (that meets the above described membership
requirements) who shall, together with the first two appraisers, determine the
value of the Membership Interest by majority vote. The expense of such third
appraiser shall also be paid by the Member or Prime, as the case may be, who
disagrees with the value determination of the Company's original appraiser,
unless the appraised value ultimately determined is more than ten percent (10%)
greater than the value determined by the Company's original appraiser.
4.3 CERTAIN DEFINITIONS.
As used herein, the term "Valuation Date" shall mean and refer to
the end of the fiscal year of the Company immediately preceding the Exercise
Event, unless the purchasing party elects to use the alternate valuation date,
in which event the Valuation Date shall be the end of the month immediately
preceding the Exercise Event. As used herein, the term "Exercise Event" shall
mean and refer to the event or circumstance described in ARTICLE II of this
Agreement, as a result of which the Company, a Member, or Prime, as the case may
be in the first instance, becomes entitled to exercise a purchase option
hereunder.
ARTICLE V
PAYMENT OF THE PURCHASE PRICE
5.1 PAYMENT.
Except as otherwise provided in this Agreement, including Section
2.1, the purchase price for a Membership Interest to be purchased from a selling
party shall either: (i) be paid in cash; or (ii) at the option of the purchasing
party, up to seventy percent (70%) of the purchase price may be deferred with
the remainder paid in cash at the closing.
5.2 PROMISSORY NOTE.
If the purchasing party elects to defer part of the purchase price
by the execution and delivery of a promissory note, the deferred portion of the
price shall be evidenced by the promissory note of the purchasing party to the
order of the selling party payable in sixty (60) equal monthly installments of
principal and interest on or before the first day of each month beginning the
month next following the date of closing. The interest rate for such installment
promissory note shall be equal to the prime or base rate on corporate loans at
large U.S. money center commercial banks as published in the "Money Rates"
column of the Wall Street Journal on the date of exercise of the option to
purchase (or, if such option is not exercised on a date on which such rate is
published, the next following date on which such rate is published). In no event
shall the interest rate exceed the maximum legal interest rate then prevailing
for such obligations in the state of Texas. The note shall be secured by a first
lien security interest in the Membership Interest transferred and the purchasing
party shall deliver certificates evidencing the Membership Interest to the
selling party and take such further action as is reasonably necessary to perfect
the security interest.
ARTICLE VI
THE CLOSING
Unless otherwise agreed by the parties, the closing of the sale and
purchase of a Membership Interest shall take place at the principal offices of
the Company within sixty (60) days after the exercise of any option provided by
this Agreement. Each party hereto (including the spouses of the Members) shall
bear its own transaction costs, including legal and accounting fees, if any,
attributable to any transfer of a Membership Interest, or any interest therein,
pursuant to this Agreement. Upon the closing, the selling party shall deliver
its Membership Interest to the purchaser free and clear of all liens and
encumbrances, and shall deliver to the Company its resignation and that of all
of its nominees, if any, as officers and directors of the Company and any of the
Company's subsidiaries. The selling party shall deliver to the purchasing party
at closing, all appropriate documents of transfer, including without limitation
bills of sale, assignments or other instruments of conveyance. As a condition to
any closing of the sale and purchase of a Membership Interest (or any interest
therein) pursuant to this Agreement: (i) the selling party shall be indemnified
by the purchasing party (in a form reasonably satisfactory to the selling party)
for all the Company's liabilities, whether fixed or contingent, to lenders and
others, incurred prior to the closing of the transaction, (ii) the purchasing
party and/or the Company shall cause the release of any personal guaranties by
the selling party that the selling party may have granted to the Company's
lenders or other creditors or which may have otherwise been provided by the
selling party for the benefit of the Company, and (iii) if the selling party is
a creditor of the Company, the purchasing party shall unconditionally guarantee
the debt of the Company to the selling party and execute such documents and
instruments of guarantee as may be necessary in connection therewith.
Furthermore, and as a condition to closing, in the event the selling party owes
any amounts to the Company at the time of closing, such indebtedness shall be
paid in full by the selling party at or prior to the closing, or may be deducted
from and offset against the purchase price by the purchasing party, in the
purchasing party's sole discretion. In the event of a failure to close as a
result of the non-satisfaction of the conditions to closing set forth herein,
this Agreement shall remain in full force and effect and all Membership
Interests shall remain subject to the restrictions contained herein and, in
addition, the parties hereto shall be entitled to such other remedies as may be
available in the event the failure to close constitutes a breach hereof.
ARTICLE VII
LEGEND ON CERTIFICATES
All Membership Interests now or hereafter owned by the Members, or
their permitted transferees, shall be subject to the provisions of this
Agreement, and any certificates representing same shall bear the following
legend:
"THE MEMBERSHIP INTEREST REPRESENTED HEREBY AND THE SALE,
ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF ARE
SUBJECT TO CERTAIN RESTRICTIONS CONTAINED IN A MEMBERSHIP INTEREST
TRANSFER RESTRICTION AGREEMENT AMONG THE COMPANY AND THE WITHIN
NAMED MEMBER, AND ANY AMENDMENT THERETO. THE AGREEMENT LIMITS THE
USE OF THIS MEMBERSHIP INTEREST AS COLLATERAL FOR ANY LOAN WHETHER
BY PLEDGE, HYPOTHECATION OR OTHERWISE. A COPY OF THE MEMBERSHIP
INTERES TRANSFER RESTRICTION AGREEMENT AND ALL APPLICABLE
AMENDMENTS THERETO WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE."
ARTICLE VIII
TERMINATION OF AGREEMENT
This Agreement and all restrictions on Membership Interest transfer
created hereby shall terminate on the occurrence of any of the following events:
(a) The bankruptcy or dissolution of the Company.
(b) The ownership by one person of all of the Membership Interests of the
Company which are then subject to this Agreement.
(c) The execution of a written instrument by the Company, all of
the Members who then own Membership Interests subject to this Agreement, and
Prime which terminates the same.
(d) The date twenty-one (21) years after the death of the last survivor of
all individuals who are parties to this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 REMEDIES FOR BREACH.
The Membership Interests are unique chattels, and each party to
this Agreement shall have the remedies which are available to him, her or it for
the violation of any of the terms of this Agreement, including, but not limited
to, the equitable remedy of specific performance.
9.2 BINDING EFFECT.
This Agreement is binding upon and inures to the benefit of the
Company, its successors and permitted assigns, to the Members and their
respective heirs, personal representatives, successors and permitted assigns,
and to Prime, its successors and permitted assigns. This Agreement may not be
assigned, in whole or in part, by any party hereto without the express written
consent of all parties hereto.
9.3 PRIOR AGREEMENTS.
This Agreement supersedes all prior written and oral agreements
between the parties regarding the subject matter hereof.
9.4 GOVERNING LAWS.
This Agreement is executed under, and in conformity with, the laws
of the State of Texas and shall be governed thereby. If any provision of this
Agreement shall be determined to be invalid or unenforceable or prohibited by
the laws of the State of Texas, this Agreement shall be considered divisible as
to such provisions and such provisions shall be inoperative and shall not be a
part of the consideration moving from any party to another party. The remaining
provisions shall be valid and binding upon the parties and be of like effect as
though such invalid, unenforceable or prohibited provisions were not included
herein.
9.5 AMENDMENT.
This Agreement may be amended in whole or in part only by the
written consent of all the parties. Such amendment shall be effective as of the
date then determined by the parties and shall supersede any provisions herein
contained which are in conflict.
9.6 CAPTIONS AND GENDER.
The captions and titles herein are for convenience only and are not
intended to include or conclusively define the subject matter of the text. All
pronouns and references thereto shall refer to the masculine, feminine, and
neuter genders, singular or plural, as the identification of the persons,
entities, and companies may require. The term "person" as used in this Agreement
shall include natural persons, companies, partnerships, trusts, estates and any
other form of entity.
9.7 NOTICES.
All notices required to be given hereunder shall be deemed to be
duly given by personally delivering such notice or by mailing it by certified
mail, to the Company, to the Members, and to Prime at the following addresses
(which may be changed by giving written notice of such change to all other
parties hereto):
To the Company: LASIK Investors, L.L.C.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Barnet: Xxxxxx X. Xxxxxx, M.D.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Xxxxxxx: Xxxxx X. Xxxxxxx, M.D.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Xxxxxxxxx: Xxxx Xxxxxxxxx
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Xxxxxxx: Xxxxx X. Xxxxxxx, M.D.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Xxxxxxx: Xxxxxx X. Xxxxxxx, O.D.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Prime: Prime Medical Operations, Inc.
Attention: President
0000 Xxxxxxx xx Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
9.8 BINDING EFFECT OF THIS AGREEMENT ON ADDITIONAL MEMBERSHIP INTEREST ACQUIRED
BY A MEMBER.
In the event a Member acquires, contracts to acquire, or receives
any Membership Interests of the Company which are not subject to this Agreement
at the time of acquisition, such additional Membership Interests of the Member
shall be automatically subject to this Agreement and any certificates
representing such Membership Interests shall bear the legend prescribed herein
and this Agreement shall be amended, if necessary, to reflect the acquisition of
such Membership Interests by the Member.
9.9 EXECUTION OF DOCUMENTS.
Whenever Membership Interests are to be purchased by the Company, a
Member, or Prime pursuant to this Agreement, the transferor shall do all things
and execute and deliver all documents and make all transfers as may be necessary
to consummate such purchase. In the event that the transferor refuses to abide
by the terms and conditions specified herein, the purchaser(s) may tender
payment for such Membership Interest by mailing payment to the transferor's
attention at the address of the Company's registered office on file at the
office of the Texas Secretary of State. After payment is tendered accordingly,
the Company shall be entitled to cancel such Membership Interest on its books,
and reissue such Membership Interest to the purchaser(s) or, if the purchaser is
the Company, the Company may hold such Membership Interest as treasury stock or
cancel such Membership Interest.
9.10 ACTIONS BY THE COMPANY.
Any decision by the Company to exercise any purchase option, give
any notice or otherwise enforce any provisions of this Agreement, shall be made
by a majority vote of Members who are not then in breach of this Agreement and
whose Membership Interests are not then the subject of any option or requirement
of notice of an Exercise Event.
[Signature pages follow]
SIGNATURE PAGE TO
MEMBERSHIP INTEREST
TRANSFER RESTRICTION AGREEMENT
EXECUTED as of the date first mentioned above.
COMPANY: LASIK Investors, L.L.C.
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
BARNET:
Xxxxxx X. Xxxxxx, M.D.
XXXXXXX:
Xxxxx X. Xxxxxxx, M.D.
XXXXXXXXX:
Xxxx Xxxxxxxxx
Xxxxxxx:
Xxxxx X. Xxxxxxx, M.D.
Xxxxxxx:
Xxxxxx X. Xxxxxxx, O.D.
PRIME: Prime Medical Operating, Inc.
By:
Printed Name:
Title:
SPOUSAL CONSENTS
The undersigned spouse of Xxxxxx X. Xxxxxx, M.D. hereunto
subscribes her name in evidence of her agreement and consent to the disposition
made of any interest she may have, including any community property interests,
in the membership interest of LASIK Investors, L.L.C., referred to in the
foregoing Agreement, and to all other provisions of such Agreement.
Signature:
Printed Name:
The undersigned spouse of Xxxxx X. Xxxxxxx, M.D. hereunto
subscribes her name in evidence of her agreement and consent to the disposition
made of any interest she may have, including any community property interests,
in the membership interest of LASIK Investors, L.L.C., referred to in the
foregoing Agreement, and to all other provisions of such Agreement.
Signature:
Printed Name:
The undersigned spouse of Xxxx Xxxxxxxxx hereunto subscribes her
name in evidence of her agreement and consent to the disposition made of any
interest she may have, including any community property interests, in the
membership interest of LASIK Investors, L.L.C., referred to in the foregoing
Agreement, and to all other provisions of such Agreement.
Signature:
Printed Name:
The undersigned spouse of Xxxxx X. Xxxxxxx, M.D. hereunto
subscribes her name in evidence of her agreement and consent to the disposition
made of any interest she may have, including any community property interests,
in the membership interest of LASIK Investors, L.L.C., referred to in the
foregoing Agreement, and to all other provisions of such Agreement.
Signature:
Printed Name:
The undersigned spouse of Xxxxxx X. Xxxxxxx, O.D. hereunto
subscribes her name in evidence of her agreement and consent to the disposition
made of any interest she may have, including any community property interests,
in the membership interest of LASIK Investors, L.L.C., referred to in the
foregoing Agreement, and to all other provisions of such Agreement.
Signature:
Printed Name:
EXHIBIT-I
COLLOCATION AGREEMENT
BY AND BETWEEN
BARNET XXXXXXX EYE CENTER, P.L.L.C.
AND
PRIME/BDEC ACQUISITION, L.L.C.
COLLOCATION
AGREEMENT
This COLLOCATION AGREEMENT ("Agreement"), effective as of the 1st day of
September, 1999 (the "Effective Time"), is by and between BARNET XXXXXXX EYE
CENTER, P.L.L.C., an Arizona professional limited liability company ("BDEC"),
and PRIME/BDEC ACQUISITION, L.L.C., a Delaware limited liability company
("Company").
W I T N E S S E T H:
WHEREAS, the Company has been organized for the purpose of providing
facilities, equipment and non-physician personnel for the performance by
physicians of Refractive Surgery (as defined herein), for the marketing,
scheduling and management of Refractive Surgery, for the credentialing and
scheduling of physicians to perform Refractive Surgery and for the billing,
collecting and accounting for the use of the facility, equipment and
non-physician personnel (the "Business");
WHEREAS, BDEC has owned or leased assets for the performance by physicians
of Refractive Surgery, including, without limitation, certain space located in a
building at 0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 and certain space
located in a building at 000 Xxxx Xxxxx Xxxx, Xxxxxx, Xxxxxxx (individually a
"Facility" and collectively the "Facilities") and in connection with each
Facility, equipment, instruments, computer software used in connection with the
equipment, certain leases and contracts, the leasehold improvements, furniture,
fixtures and other fixed assets and items of personal property used primarily in
or materially relied on for the performance of Refractive Surgery (the
"Equipment and Personalty");
WHEREAS, BDEC employs non-physician personnel (the "BDEC Employees") with
expertise and experience in assisting physicians in the performance of
Refractive Surgery, in credentialing and scheduling physicians for the
performance of Refractive Surgery in the Facilities, in performing the
scheduling of patients for Refractive Surgery in the Facilities, in performing
marketing, accounting, billing and collection services for the use of the
Facilities and in managing the Facilities and all non-physician aspects of
Refractive Surgery in the Facilities (the "Support Services");
WHEREAS, BDEC employs physician and non-physician executives (the
"Managers") with expertise and experience in the management of the Facilities,
the Equipment and Personalty, the Support Services and all other elements of a
Refractive Surgery center (the "Management Services");
WHEREAS, BDEC, Prime Medical Operating, Inc.("Prime") and others entered
into that certain Contribution Agreement dated effective September 1, 1999 (the
"Contribution Agreement"), pursuant to which Prime, BDEC and others have
participated in a series of transactions that were completed simultaneously with
the execution and delivery of this Agreement, in which transactions the Company
became the owner of the Equipment and Personalty and the business conducted
therewith, excluding the practice of medicine, and in which transactions BDEC
agreed to provide to the Company the Facility and the Management Services and
Support Services on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants set forth
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby forever acknowledged and confessed, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Agreement shall mean this Collocation Agreement between the Company and
BDEC and any amendments hereto as may from time to time be adopted as
hereinafter provided.
1.2 BDEC shall mean Barnet Xxxxxxx Eye Center, P.L.L.C.
1.3 Buildings shall mean Building P and Building T.
1.4 Building P shall mean the building located at 0000 Xxxxx 00xx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000, and known generally as the Barnet Dulaney Eye Center.
1.5 Building T shall mean the building located at 000 Xxxx Xxxxx Xxxx,
Xxxxxx, Arizona, and known generally as the Barnet Xxxxxxx Eye Center.
1.6 Business shall mean the provision of facilities, equipment and
non-physician personnel for the performance by physicians of Refractive Surgery
(as defined herein), the marketing, scheduling and management of Refractive
Surgery, the credentialing and scheduling of physicians to perform Refractive
Surgery and the billing, collecting and accounting for the use of the facility,
equipment and non-physician personnel.
1.7 Business Expense shall mean all out-of-pocket costs and expenses
incurred by BDEC solely and exclusively in the performance of its duties and
obligations under, and in accordance with, this Agreement. Business Expense
shall also include that portion (allocated based on the relative percentage
amount of each such employee's time spent working directly on the Business of
the Company) of salaries, wages and benefits for those personnel employed by
BDEC to provide services hereunder, but only to the extent such employees (i)
work directly on the Business of the Company and (ii) are either listed on
Exhibit B hereto or are subsequently employed to replace such listed employees
or are added in the same service categories related to the Business as
corresponds to the service categories applicable to the employees listed on
Exhibit B. Business Expense shall also include a reasonable allocation of the
out-of-pocket costs incurred by BDEC related to hiring such personnel.
Notwithstanding the foregoing, Business Expense shall not include any portion of
the salaries, wages or benefits related to any personnel employed or otherwise
retained or contracted by BDEC who work in any of the following departments or
fall within any of the following categories: (a) accounting, (b) accounts
receivable, (c) purchasing, (d) practice operations, (e) management information
systems and facilities support, (f) human resources, (g) credentialing, or (h)
executive management. Furthermore, Business Expense shall not include any rent
or other costs or expenses incurred by BDEC pursuant to the Base Leases. For
illustration purposes, the parties agree that Business Expense for the Phoenix
Refractive Surgery center based on the pro forma annualized facility model
attached hereto as Exhibit A for the first full year of the Term of this
Agreement would be $1,663,638, being the sum of the categories on Exhibit A
marked with an asterisk. It is the intention of the parties that Business
Expense be consistent with the methodology reflected in Exhibit A.
1.8 Company shall mean Prime/BDEC Acquisition, L.L.C.
1.9 Facility and Facilities shall have the meaning given to it in the
recitals to this Agreement.
1.10 Premises P shall mean the Facility and other space located in Building
P to which the right to use is granted in Section 2.3 hereof.
1.11 Premises T shall mean the Facility and other space located in Building
T to which the right to use is granted in Section 2.3 hereof.
1.12 Refractive Surgery shall mean, collectively, any current and/or future
surgical procedures intended to correct myopia, hyperopia or astigmatism of the
eye, excluding procedures aimed only at restoring accommodation (presbyopia) and
procedures to treat only cataracts, glaucoma, oculoplastics or retinal
abnormality.
1.13 Services Fee shall mean BDEC's compensation established and described
in Article VI hereof.
1.14 State shall mean the State of Arizona.
1.15 Term shall mean the initial and any renewal periods of duration of
this Agreement as described herein.
ARTICLE II
RIGHT TO USE THE PREMISES
2.1 Base Lease. Section 2.3 contains a grant of a right to use Premises P
and Premises T and is subject and subordinate to the terms and conditions of
those certain leases as amended ("Base Leases") pursuant to which BDEC leases
the Building P and Building T.
2.2 Users of Buildings. Building P and Building T are used for multiple
activities, including, but not limited to, Refractive Surgery, office and clinic
activities of BDEC physicians and other professionals, an ambulatory surgery
center ("ASC") and marketing, accounting, management and other administrative
activities. The various activities in each Building do not necessarily have
specific or identified space and, in some instances, more than one activity uses
a space at the same time or at different times. BDEC designates, schedules and
modifies the location and the times that each activity can use space in the
Buildings.
2.3 Grant of Right to Use. In consideration of Company's payment to
BDEC of the Purchase Price, as defined in the Contribution Agreement, and on the
terms and conditions of this Agreement, BDEC hereby grants to the Company the
non-exclusive right to use for Refractive Surgery the spaces in the Buildings
where the Equipment and Personalty are located at the times during regular
business hours and in the manner designated by BDEC (but in no event less than
forty percent (40%) of the of the business hours during each week), which might
require the using of such space while the same or adjoining space is being used
by an ASC or on a cooperative schedule with an ASC. BDEC also grants to the
Company the non-exclusive right to use and to permit its guests and invitees to
use the common areas in accordance with the Base Leases. Notwithstanding that
the foregoing grants are non-exclusive, BDEC covenants and agrees that it will
not allow any person or entity, other than the Company, to utilize any space in
the Buildings, any Equipment and Personalty or any BDEC Employees for purposes
of conducting any component of the Business.
2.4 Term and Conditions of Grant. The grants set forth in Section 2.3 above
are each for the term and on the conditions, requirements, covenants, rules and
regulations of the Base Leases and subject to Company's paying its allocated
portion of the rent, common area charges and other payments required of BDEC
under the Base Leases.
2.5 Maintenance of Base Leases. Throughout the Term of this Agreement, BDEC
covenants and agrees to maintain all Base Leases in full force and affect,
without any breach or default by BDEC thereunder.
ARTICLE III
APPOINTMENT AND AUTHORITY OF BDEC
3.1 Appointment. The Company hereby appoints BDEC as its sole and exclusive
agent for the management and performance of day-to-day operations of the
Business in the Facilities, using the Equipment and Personalty, through the
provision of Management Services and Support Services, as defined herein, and
BDEC hereby accepts such appointment, subject at all times to the provisions of
this Agreement.
3.2 Authority. Consistent with the provisions of this Agreement,
directions given by the Company and operating and capital budgets established by
the Company, BDEC shall have the responsibility and commensurate authority to
provide, or cause to be provided, personnel, business and administrative
services for the Company, which shall include those services set forth in
Article III hereof. BDEC is hereby expressly authorized to provide all such
services in whatever manner BDEC, in good faith, deems appropriate and
consistent with commercially reasonable standards to meet the day-to-day
requirements of the business functions of the Company or related to the
Business. The authority of BDEC shall extend no further than is expressly
provided herein, and shall not be extended by implication or otherwise.
Notwithstanding anything contained herein to the contrary, BDEC shall have no
authority to speak on behalf of, or to bind, the Company with respect to any
third party.
3.3 Retained Authority. The Company shall at all times retain the ultimate
responsibility for the operation of the Business and, except as delegated to
BDEC herein or by resolution of Company's managers, shall retain the authority
and power and to make all decisions with respect to its assets and rights.
3.4 Nature of Relationship. The parties acknowledge and agree that no
partnership or other form of entity, or any joint and several liability, is
intended to be created by or between them by the execution or operation of this
Agreement, and none of the foregoing should be implied.
ARTICLE IV
COVENANTS OF BDEC
4.1 Management and Support Services. BDEC shall provide the Management
Services and Support Services necessary to operate the Business as it was
operated by BDEC prior to the Effective Time, including, but not limited to the
following:
4.1.1 Marketing and Scheduling. BDEC shall conduct marketing efforts for
the Facility and shall schedule patient treatment in the Facility, in the manner
that such services were performed prior to the Effective Time.
4.1.2 Physician Matters. BDEC shall credential physicians to perform
Refractive Surgery in the Facility and shall schedule physicians to use the
Facility in the manner that such services were performed prior to the Effective
Time.
4.1.3 Supplies. As agent for the Company, BDEC shall obtain all reasonable
medical, office, and other supplies, including stationery and forms, and shall
ensure that the Company is at all times adequately stocked with such supplies as
are reasonably necessary and appropriate for the operation of the Business.
4.1.4 Licenses and Permits. BDEC shall coordinate all development and
planning processes, and apply for and use BDEC's best efforts to obtain and
maintain all federal, state, and local licenses and regulatory permits required
for or in connection with the operation of the Business.
4.1.5 Contract Negotiations. BDEC shall negotiate, either directly or on
the Company's behalf, as appropriate, all contractual arrangements with third
parties as are reasonably necessary and appropriate for the Business.
4.1.6 Financial Matters. BDEC shall establish and administer
accounting procedures, controls, and systems for the development, preparation,
and safekeeping of records and books of accounts relating to the Company, all of
which shall be prepared and maintained in accordance with generally accepted
accounting principles consistently applied. BDEC shall prepare and deliver to
the Company, and each of its members, within thirty (30) days after the end of
each fiscal year of the Company, a balance sheet, a profit and loss statement,
and a statement of sources and applications of funds and changes in working
capital reflecting the financial status of the Company and as of the end of such
prior fiscal year, all of which shall be prepared in accordance with generally
accepted accounting principles consistently applied. Additionally, BDEC shall
prepare and deliver to the board of managers of the Company, and each of the
Company's members, monthly financial statements within ten (10) days after the
end of each month, and shall prepare and deliver to the board of managers of the
Company, and each of the Company's members, such other financial statements or
records as BDEC may from time to time deem appropriate or as the board of
managers of the Company, or its members, may reasonably request. On or before
ninety (90) days prior to the end of each fiscal year of the Company, BDEC will
prepare and deliver to the board of managers of the Company, and each of the
Company's members, a proposed operating budget of projected expenses and
revenues of the Company for the next fiscal year of the Company, and
representatives of BDEC shall make themselves reasonably available to the board
of managers and the members of the Company to explain such proposed budget and
the underlying assumptions.
4.1.7 Billing and Collection. BDEC shall be solely responsible for billing
and collecting for all services provided by Company and for the use of the
Facility and Equipment and Personalty. Company shall be entitled to all monies
collected by BDEC on behalf of Company.
4.1.8 Information Systems. BDEC shall provide and maintain the information
systems it deems necessary to operate the Business. BDEC shall have reasonable
discretion to select hardware and software, provided such hardware and software
shall be adequate to operate the Business in a commercially reasonable manner,
and BDEC shall be responsible for training employees to operate any such
systems.
4.1.9 Legal Actions. As requested by the Company, BDEC shall advise and
assist the Company in instituting or defending legal actions or proceedings by
or against third parties arising out of the Business, including, without
limitation, those actions necessary for the protection and continued operation
of the Company. BDEC shall have no authority to initiate, compromise or settle
any legal action in the name of the Company, or to confess a judgment in the
name of, or on behalf of, the Company.
4.1.10 Insurance. (a) BDEC shall obtain and maintain professional and
comprehensive general liability insurance and other insurance covering Company
for the risks and in the amounts typically carried by others in the same
business as Company.
(b) BDEC shall obtain and maintain appropriate workers' compensation
coverage for BDEC's personnel and shall carry professional and comprehensive
general liability insurance covering all BDEC personnel in amounts that BDEC
deems necessary, the cost of which insurance shall be a Business Expense.
4.2 Personnel. BDEC shall employ or otherwise retain, and shall be
responsible for interviewing, selecting, hiring, training, supervising,
scheduling, and terminating, non-physician personnel as BDEC deems reasonably
necessary and appropriate for the performance of Management Services and Support
Services. Such personnel may include temporary or "floater" personnel who are
retained by BDEC to substitute for permanent personnel. BDEC shall have sole
responsibility for determining the salaries, wages, and fringe benefits of all
such personnel, for paying such salaries and wages, and for providing such
fringe benefits, and for withholding, as required by law, any sums for income
tax, unemployment insurance, social security, or any other withholding required
by applicable law or governmental requirement. BDEC shall have sole discretion
in decisions regarding the termination of personnel employed by BDEC to provide
services to the Company. BDEC shall indemnify the Company and the Compan s
managers and members and hold them harmless from and against any claim or cause
of action which alleges or is based upon any act or omission by BDEC or its
owners, managers, directors, officers or employees with respect to any employee
or former employee of BDEC. This indemnity obligation shall survive any
termination or expiration of this Agreement.
4.2.1 Non-Exclusivity. In recognition of the fact that the personnel
retained by BDEC to provide services pursuant to this Agreement may from
time to time perform services for others, this Agreement shall not prevent
BDEC from performing such services for others or restrict BDEC from using
such personnel in the performance of services for other parties which are
not in the same business as Company.
4.2.2 Equal Employment Opportunity. Without limitation of any
provision set forth herein, BDEC expressly agrees, for itself and on behalf of
the Company, to abide by any and all applicable federal and/or State equal
employment opportunity statutes, rules, and regulations, including, without
limitation, Title VII of the Civil Rights Act of 1964, the Equal Employment
Opportunity Act of 1972, the Age Discrimination in Employment Act of 1967, the
Equal Pay Act of 1963, the National Labor Relations Act, the Fair Labor
Standards Act, the Rehabilitation Act of 1973, the Occupational Safety and
Health Act of 1970, and the Americans with Disabilities Act, all as may from
time-to-time be modified or amended.
4.2.3 Labor Reports. BDEC shall for its own account or on behalf of
the Company, as appropriate, prepare, maintain, and file all requisite
reports and statements regarding income tax withholdings, unemployment
insurance, social security, workers' compensation, equal employment
opportunity, or other reports and statements required with respect to
personnel provided by BDEC pursuant to this Agreement and with respect to
all personnel employed or otherwise retained by the Company.
4.3 Conduct of Business. BDEC represents and warrants to the Company
that it is authorized to enter into and perform this Agreement and its
duties hereunder without the consent or approval of any third party which
has not been obtained. BDEC covenants and agrees to provide all of the
services required of it hereunder, and to perform all of its obligations
hereunder, in a commercially reasonable manner and in compliance with all
applicable laws and legal requirements.
ARTICLE V y'
COVENANTS OF COMPANY y'
5.1 Notices to BDEC. Company will give BDEC timely notice of operating
and capital budgets approved by the Company and directions or requests that
it has with respect to the conduct of the Business or the manner in which
BDEC performs its duties hereunder in order that BDEC shall have an
opportunity to comply with such budgets, directions or requests.
5.2 Invoices and Payment. BDEC shall deliver to the board of managers
of the Company, and to each of the members of the Company, monthly invoices
setting forth the Services Fee, Use Fees, and expense reimbursement due BDEC for
the immediately preceding month, together with such supporting documentation as
shall be reasonably necessary to document the calculation and incurrence of such
amounts in accordance with the terms of this Agreement. The Company will pay, or
authorize BDEC in writing to pay, the invoiced amounts properly due within ten
(10) days after receipt of such invoice, unless any of such amounts are
contested in good faith.
ARTICLE VI y'
FINANCIAL ARRANGEMENT y'
6.1 Amount of Services Fee. As compensation (the "Services Fee") for
the Management Services and Support Services to be rendered hereunder, BDEC
shall be entitled to receive from the Company an amount equal to Two
percent (2%) of the Company's Net Revenues (as hereinafter defined).
6.2 Determination of Net Revenues. For purposes of Section 6.1, "Net
Revenues" shall mean the total operating revenues of the Company net of revenue
deductions which include without limitation an allowance for contractual
allowances, discounts, professional fees, co-management fees and staff managed
fees and other uncollectible amounts, all as determined in accordance with the
methodology used in the preparation of Exhibit A hereto and otherwise in
accordance with generally accepted accounting principles consistently applied.
For illustration purposes, the parties agree that Net Revenues for the Phoenix
Refractive Surgery center based on the pro forma annualized facility model
attached hereto as Exhibit A for the first full year of the Term of this
Agreement would be $5,968,627.
6.3 Business Expenses. In addition to the Services Fee described in
Section 6.1, the Company shall reimburse BDEC, upon submission by BDEC of
an invoice and necessary supporting documentation, for any Business Expense
properly incurred by BDEC in accordance with this Agreement.
6.4 Use Payment. Company agrees to pay (the "Use Payment") to BDEC on
a monthly basis as compensation for BDEC's grant to Company of the right to
use the Premises and common areas of the Buildings. The Use Payment for the
Premises in Building P shall be twelve percent (12%), and for the Premises
in Building T shall be thirty-six percent (36%) of the rent and all other
costs and expenses incurred by BDEC pursuant to the Base Lease for each of
the respective building. The Use Payment shall be paid in advance and shall
be due and payable on the first day of each month during the Term.
ARTICLE VII y'
TERM AND TERMINATION y'
7.1 Term. This Agreement shall be effective for an initial period (the
"Term") commencing on the Effective Date and ending September 1, 2004.
7.2 Termination. The Company may terminate this Agreement immediately
upon the occurrence of one of the following events:
(1) the dissolution or bankruptcy of BDEC; or
(2) after the expiration of a ninety (90) day period in
which BDEC has failed to remedy its failure to perform its
duties under this Agreement after having received written
notice from the Company of BDEC's failure to perform its
duties under this Agreement, which notice must specify the
failure to perform.
7.3 Termination by Agreement. In the event the Company and BDEC shall
mutually agree in writing, this Agreement may be terminated on the date
specified in such written agreement.
7.4 Effects of Termination. Upon termination of this Agreement, as
hereinabove provided, no party shall have any further obligations hereunder
except for (i) obligations accruing prior to the date of termination, and (ii)
obligations, promises, or covenants set forth herein that are expressly made to
extend beyond the Term, including, without limitation, payment of accrued money
due under Article VI, if any, and the authority and limited power of attorney
granted to BDEC herein, which shall survive until such time as such obligations,
promises, or covenants shall be fully paid and satisfied (all of which
provisions shall survive the expiration or termination of this Agreement).
Notwithstanding anything to the contrary herein, upon termination of this
Agreement for any reason, all accrued Service Fees, Business Expenses and Use
Payments, if any, shall become immediately due and payable to BDEC without
demand or notice.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. Any notice, request, demand, instruction, communication, or
other document required, permitted, or desired to be given hereunder shall be in
writing and, except as otherwise provided for herein, shall be deemed
effectively given: (a) on receipt if delivered personally or by commercial
courier service or if sent by prepaid telex, telegram, by facsimile or by other
instantaneous electronic transmission device, or (b) on the fifth day after
deposit (unless a different date is shown on the return receipt) if sent postage
prepaid registered or certified United States mail, return receipt requested, as
follows:
Company: Prime/BDEC Acquisition, L.L.C.
0000 Xxxxxxx xx Xxxxx Xxxxxxx
Xxxxx X-000
Xxxxxx, Xxxxx 00000
Attn.: President
Facsimile: (000) 000-0000
BDEC: Barnet Xxxxxxx Eye Center, P.L.L.C.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxx Xxxxxxxxx
Facsimile: (000) 000-0000
or to such other address, or to the attention of such other person or officer,
as either party may by written notice designate.
8.2 Governing Law. This Agreement has been executed and delivered in, and
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Texas. Proper venue for any action with respect to this Agreement
shall be Dallas County, Texas.
8.3 Assignment. Except as may be herein specifically provided to the
contrary, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors, and
assigns; provided, however, that neither party may assign its rights and
obligations under this Agreement without the prior written consent of the other.
8.4 No Waiver. The failure of either party to insist at any time upon the
strict observance or performance of any provision of this Agreement or to
exercise any right or remedy as provided in this Agreement shall not impair any
right or remedy of such party or be construed as a waiver or relinquishment
thereof with respect to subsequent defaults or breaches. Every right and remedy
given by this Agreement to the parties hereto may be exercised from time to time
and as often as may be deemed expedient by the appropriate party.
8.5 Consents, Approvals, and Exercise of Discretion. Except as may be
herein specifically provided to the contrary, whenever this Agreement requires
any consent or approval to be given by either party, or either party must or may
exercise discretion, the parties agree that such consent or approval shall not
be unreasonably withheld or delayed, and such discretion shall be reasonably
exercised.
8.6 Severability. In the event any provision of this Agreement is held to
be invalid, illegal, or unenforceable for any reason and in any respect, such
invalidity, illegality, or unenforceability shall not affect the remainder of
this Agreement, if the remainder of this Agreement can be enforced to achieve
its purposes equitably to both parties.
8.7 Divisions and Headings. The division of this Agreement into articles,
sections, and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall not affect in any way the meaning
or interpretation of this Agreement.
8.8 Sales and Use Tax. BDEC and the Company acknowledge and agree that
certain of the services to be provided by BDEC hereunder may be subject to state
sales and use taxes and that BDEC may have a legal obligation to collect such
taxes from the Company and to remit same to the State. The Company agrees to pay
the applicable state sales and use taxes in respect of the portion of the
Services Fee attributable to such services, and grants BDEC the right to
withdraw and disburse from the bank accounts of the Company amounts necessary to
timely and fully pay such taxes.
8.9 Entire Agreement. With respect to the subject matter of this
Agreement, this Agreement supersedes all previous contracts and constitutes the
entire agreement between the parties. Neither party shall be entitled to
benefits other than those specified herein. No oral statements or prior written
material not specifically incorporated herein shall be of any force and effect,
and no changes in or additions to this Agreement shall be recognized unless
incorporated herein by amendment in writing and signed by all parties hereto.
Such amendment(s) shall become effective on the date stipulated in such
amendment(s). The parties specifically acknowledge that, in entering into and
executing this Agreement, the parties rely solely upon the representations and
agreements contained in this Agreement and no others.
8.10 Audit Rights. During the Term of this Agreement and for a period
of two (2) years after any termination or expiration of this Agreement, the
Company and each of its members shall be entitled to audit and inspect the books
and records of BDEC for purposes of determining the propriety of all Business
Expenses, Services Fees and Use Payments charged to the Company under this
Agreement. BDEC agrees to maintain, throughout such period, detailed records
supporting all amounts charged to, or reimbursed by, the Company pursuant to
this Agreement and to cooperate fully with, and to make its employees and
records available during normal business hours to, the auditors or other
representatives of the Company or its members performing such audit. Audit
rights may not be exercised more frequently than once in every eighteen (18)
month period and all costs and expenses associated therewith shall be borne by
the party exercising audit rights unless any such inspection reveals that the
Company has overpaid, by at least $25,000, any amounts which should have been
properly paid or reimbursed to BDEC in accordance with the terms of this
Agreement. BDEC shall be entitled to receive at least thirty (30) days' prior
written notice of the exercise of audit rights prior to the beginning of such
inspection.
[Signature page follows]
SIGNATURE PAGE TO
COLLOCATION AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COMPANY: PRIME/BDEC ACQUISITION, L.L.C.
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
BDEC: BARNET XXXXXXX EYE CENTER, P.L.L.C.
By: ______________________________________
Xxxxxx X. Xxxxxx, M.D., manager
By: ______________________________________
Xxxxx X. Xxxxxxx, M.D., manager
EXHIBIT A
Pro Forma Annualized
Facility Model
EXHIBIT B
EMPLOYEES
EXHIBIT J
FORM OF
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made and entered into
as of September 1, 1999 (the "Effective Date"), by and between Prime/BDR
Acquisition, L.L.C., a Delaware limited liability company (the "Company") and
____________________________ (the "Consultant").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. BACKGROUND. This Agreement is entered into in connection with the
Company's and Consultant's execution of that certain Contribution Agreement,
dated September 1, 1999, between and among the Company, Consultant, Prime
Medical Services, Inc., a Delaware corporation, Prime Medical Operating, Inc., a
Delaware corporation ("Prime"), Prime/BDEC Acquisition, L.L.C., a Delaware
limited liability company, Barnet Xxxxxxx Eye Center, P.L.L.C., an Arizona
professional limited liability company, LASIK Investors, L.L.C., a Delaware
limited liability company, Xxxxx X. Xxxxxxx, M.D., Xxxxxx X. Xxxxxx, M.D. and
Xxxx Xxxxxxxxx (the "Contribution Agreement"). Accordingly, the terms and
provisions of this Agreement shall be construed consistently with the terms and
provisions of the Contribution Agreement. Consultant acknowledges that its
execution of this Agreement serves as a material inducement to the Company's and
Prime's execution of the Contribution Agreement.
2. TERM. The term of this Agreement shall commence on the Effective Date
and continue through the earlier to occur of the following:
a. Delivery of written notice from either Prime or the Company following any
breach of, or failure to perform for any reason under, this Agreement by
Consultant;
b. The death or disability of Consultant (For purposes of this Agreement,
the meaning of "disability" shall be as defined in the Disability
Insurance Policy that covers Consultant at the time in question, or if
no such policy is then in force, the insurance policy that covered
Consultant on September 1, 1999); and
c. The termination of the exclusivity obligations of the parties to the
Contribution Agreement as set forth in ARTICLE VIII of the Contribution
Agreement, pursuant to the terms of the Contribution Agreement.
3. SERVICES. During the term of this Agreement, Consultant shall, from
time to time, make himself available to Prime, the Company, and the Company's
subsidiaries to represent the interests of such entities in professional
associations and other professional or trade associations or groups related to
the field of refractive surgery. Furthermore, Consultant shall make himself, and
those clinics operated, utilized or controlled by Consultant, available to Prime
and the Company for professional development and training of physicians and
other medical professions and staff, all with respect to refractive surgery.
Consultant shall make himself available to consult with other doctors affiliated
with the Company, or with whom the Company seeks an affiliation, and will assist
the Company and the Company's subsidiaries with staffing, training, consultation
on outcomes analysis and strategic planning.
It is expressly agreed that Consultant is an independent
contractor and shall not be construed to be an employee of the Company with
regard to any matter, under any circumstances or for any purposes whatsoever.
The services to be provided by Consultant hereunder are vitally important to the
Company and its subsidiaries and shall be rendered at such times and places as
mutually agreed upon by the Company and Consultant; provided it is the
understanding and agreement of all parties hereto that the responsibilities of
Consultant hereunder will require substantially less than the full time efforts
of Consultant. Any failure or inability of Consultant to provide the services
contemplated in this Agreement, for any or no reason, shall terminate the
exclusivity obligations of Prime arising under ARTICLE VIII of the Contribution
Agreement.
4. COMPENSATION. Consultant acknowledges and agrees that Consultants
entering into and performing its obligations hereunder is in consideration for
Prime and the Company agreeing to enter into the Consulting Agreement and the
transactions contemplated therein. Accordingly, the parties hereto acknowledge
and agree that no further compensation is due Consultant for consulting services
hereunder. The Company shall reimburse Consultant for reasonable out-of-pocket
travel, lodging and meal expenses approved by the Company and Prime and which
are necessary for Consultant to perform consulting services hereunder that are
requested by the Company or Prime.
5. AUTHORITY. This Agreement does not grant Consultant any authority
whatsoever as an agent, officer, member, employee, manager or other
representative of the Company, to bind or commit the Company in any way,
contractually or otherwise. Except as specifically set forth in Section 4, the
Company shall have no responsibility to reimburse the Consultant for any costs,
expenses or other amounts that may be incurred by Consultant in connection with
the providing of Consultant's services hereunder.
6. CONFIDENTIAL INFORMATION. Consultant shall maintain and protect the
confidentiality of the terms and existence of this Agreement, and any
information obtained by Consultant pursuant to this Agreement or the performance
of this Agreement.
7. NOTICES. Any notice required or allowed hereunder shall be deemed to
have been delivered when either hand-delivered to the party or when deposited in
the United States mail, postage pre-paid, certified, return receipt requested,
addressed to the party at the address set forth below or to the last new address
provided in writing by the party:
Consultant: ____________________________
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
Company: 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000
Xxxxxx, XX 00000
Attn: President
8. COMPLIANCE WITH LAWS. Consultant shall comply with all applicable state,
federal, and local laws, in the performance of its services.
9. ASSIGNMENT. This Agreement is personal to Consultant and may not be
assigned in whole or in part by Consultant without the express written consent
of the Company in each instance. This Agreement shall inure to the benefit of
and be binding upon any successors and permitted assigns of the parties.
10. WAIVER OR MODIFICATION. The failure of any party to insist, in any
one or more instances, upon the performance of any of the terms, covenants, or
conditions of this contract or to exercise any right, shall not be construed as
a waiver or relinquishment of the future performance of any such terms,
covenants or conditions or the future exercise of such rights. Any waiver,
alteration, or modification of any of the provisions of this Agreement or
cancellation or replacement of this Agreement shall not be valid unless made in
writing and signed by all the parties hereto. Waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
11. CONSTRUCTION. This Agreement shall be governed by the laws of the state
of Texas.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one and the same Agreement.
13. DESCRIPTIVE HEADINGS. The descriptive headings for the sections in this
Agreement are inserted for convenience only and do not constitute part of the
Agreement.
14. NEGOTIATED AGREEMENT. This Agreement reflects the negotiations of
all parties hereto. The language used herein shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied. All parties acknowledge and agree that they are
fully aware of the affiliated relationship between and among each other.
15. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
16. ENTIRE AGREEMENT. This Agreement, together with the Contribution
Agreement and each other Transaction Document (as defined in the Contribution
Agreement), constitutes the entire agreement between the parties with respect to
the subject matter hereof, and all prior agreements, representations,
statements, negotiations, and undertakings are superseded by this Agreement. The
binding arbitration provisions of the contribution Agreement shall apply with
respect to any disputes hereunder.
[Signature page follows]
SIGNATURE PAGE TO
CONSULTING AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: Prime/BDR Acquisition, L.L.C.
By:
Printed Name:
Title:
CONSULTANT:
Printed Name: _____________________________
FIRST AMENDMENT
TO
CONTRIBUTION AGREEMENT
This First Amendment to Contribution Agreement (this "Amendment") is
executed to be effective as of January 31, 2000, by and between Prime Medical
Operating, Inc., a Delaware corporation ("Prime"), Prime Medical Services, Inc.
a Delaware corporation ("PMSI"), Barnet Xxxxxxx Eye Center, P.L.L.C., an Arizona
professional limited liability company ("BDEC"), Prime Refractive, L.L.C., a
Delaware limited liability company ("Prime Refractive"), Prime Refractive
Management, L.L.C., a Delaware limited liability company ("Prime Management"),
LASIK Investors, L.L.C., a Delaware limited liability company ("LASIK"), Xxxxx
X. Xxxxxxx, M.D. ("Xxxxxxx"), Xxxxxx X. Xxxxxx, M.D. ("Barnet"), Xxxx Xxxxxxxxx
("Xxxxxxxxx"), Prime/BDR Acquisition, L.L.C., a Delaware limited liability
company ("Newco I") and Prime/BDEC Acquisition, L.L.C., a Delaware limited
liability company ("Newco II"). All of the foregoing parties other than Prime
Refractive and Prime Management are sometimes referred to collectively herein as
the "Original Parties." Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to them in that certain Contribution
Agreement, dated effective as of September 1, 1999, among the Original Parties
(the "Contribution Agreement").
Preliminary Statements
Prime has agreed in Section 4.3 of the Contribution Agreement to make
certain credit accommodations available to Newco I for the acquisition and/or
development of Target Centers, including, without limitation, the Development
Facility provided for in the Loan Agreement.
Pursuant to the provisions of Section 4.3 of the Contribution
Agreement, Prime and Newco I executed that certain Loan Agreement, dated as of
September 1, 1999 (the "Original Loan Agreement") which provides for a
$40,000,000 development loan facility (the "Original Development Facility").
Newco I has borrowed certain amounts under the Original Loan Agreement
in order to finance the acquisition of an equity ownership interest in Horizon
Vision Center, Inc., a Nevada corporation.
The Original Parties have agreed in ARTICLE VIII of the Contribution
Agreement to certain exclusivity obligations and related terms and conditions.
The Original Parties have agreed to hereby amend the Contribution
Agreement to provide for: (a) the addition of Prime Refractive and Prime
Management as parties to the Contribution Agreement, for only those purposes
expressly stated in this Amendment; (b) the execution of a second Loan Agreement
which shall create a replacement loan facility that replaces any and every
obligation of Prime to advance additional money to any party under the Original
Loan Agreement in respect of the Original Development Facility; and (c) the
extension of certain provisions of the Contribution Agreement to specifically
apply to, benefit, and/or bind Prime Refractive and/or Prime Management, as
applicable.
Statement of Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
Section 1. Joinder of Prime Refractive and Prime Management. Each of
Prime Refractive and Prime Management hereby agrees that its execution of this
Amendment constitutes its execution of the Contribution Agreement (as amended by
this Amendment), and that it is hereby made a party to the Contribution
Agreement and is bound by and shall benefit from all of the applicable terms and
conditions of the Contribution Agreement (as amended by this Amendment).
Section 2. Amendments, Additions and Deletions to Agreement.
------------------------------------------------
a. The Original Parties hereby agree to amend Section 4.3(a)
of the Contribution Agreement to read in its entirety as follows:
" (a) Working Capital Line of Credit. Prime Refractive
Management, L.L.C., a Delaware limited liability company
("Prime Management"), and Prime Refractive, L.L.C., a
Delaware limited liability company ("Prime Refractive"),
have each executed a loan agreement, dated January 31, 2000
(the "Development Facility") which provides for, among other
credit accommodations described below, a revolving line of
credit in the maximum principal amount of $200,000 and
maturing one (1) year after the Closing (the "Working
Capital Line"), pursuant to which Prime Refractive shall be
entitled, subject to the conditions and limitations
contained in the Loan Agreement, to borrow, repay and
reborrow funds in order to meet obligations of Prime
Refractive arising in the ordinary course of business."
b. The Original Parties hereby agree to amend Section 4.3(b) of the
Contribution Agreement to read in its entirety as follows:
" (b) Development Credit Facility. In addition to the Working
Capital Line, the Development Facility provides for an
additional lending facility, in the aggregate maximum
principal amount of $29,165,000, pursuant to which Prime
Refractive shall be entitled, subject to the conditions and
limitations contained in the Development Facility, to borrow
funds, from time to time, in order to finance up to one
hundred percent (100%) of the purchase price (or development
costs) of a Target Center (as hereinafter defined) being
acquired (or developed) by Prime Refractive; provided,
however, that in no event shall the Development Facility be
used in instances where Prime, PMSI or one of their affiliates
independently acquires or develops a Target Center as
permitted by Section 8.1. In connection with the Development
Facility, Prime Refractive agrees to execute, and all parties
hereto agree to vote their interests in Prime Refractive, if
any, and to take such other action as may be necessary, to
cause any entity through which Prime Refractive acquires or
develops a Target Center to execute, on or before each closing
date of a Target Center acquisition or the commencement of
development, an Assignment and Security Agreement in
substantially the form attached hereto as Exhibit G1 and a
Promissory Note in substantially the form attached hereto as
Exhibit G2. In addition, if Prime Refractive is to obtain,
through development or acquisition, directly or indirectly, a
one hundred percent (100%) interest in such Target Center,
Prime Refractive and all parties hereto shall cause such
Target Center to execute a security agreement, acceptable in
form and substance to Prime, granting to Prime Management the
highest available priority security interest in all of the
assets of such Target Center."
c. The Original Parties hereby agree to amend Section 4.3(c) of the
Contribution Agreement to read in its entirety as follows:
" (c) Pursuant to the Development Facility, Prime Management's
obligations to make each extension of credit described in
subsection (b) above are subject entirely and in all respects
to Prime and Prime Management obtaining prior written approval
from the lenders under (but only if such approval is required
under) either (i) that certain Loan Agreement for a
$14,000,000 advancing term loan (the "$14,000,000 Facility"),
entered into by Prime Management, Bank of America, N.A., as
administrative agent, BankBoston, N.A., as documentation agent
and such lenders named therein or (ii) that certain Loan
Agreement for a $86,000,000 revolving credit loan (the
"$86,000,000 Facility"), entered into by PMSI, Bank of
America, N.A., as administrative agent, BankBoston, N.A., as
documentation agent and such lenders named therein. Each of
the parties to this Agreement acknowledges and agrees that the
assignment and security agreements, and security agreements,
executed pursuant to this Section and Section 8.2 will be
assignable to the lenders under the $14,000,000 Facility, and
that Prime and/or Prime Management intends to make a
collateral assignment for the benefit of such lenders. In
addition, each of the parties to this Agreement agrees to take
such action (including voting their interests in any entity)
which may be necessary to ensure the filing and perfection of
security interests required to be granted pursuant to this
Section."
d. The Original Parties hereby agree to amend Section 4.3(d) of the
Contribution Agreement to read in its entirety as follows:
" (d) Each of the Sellers acknowledges and agrees that none of
Prime Management, Prime, PMSI or any affiliate of any of them
may be required to (i) except as expressly set forth in this
ARTICLE IV and in Section 8.2(b)(ii), extend any financing,
credit facilities, guarantees or other credit enhancements to
any Seller, Prime Refractive, Newco I or Newco II or (ii)
issue any of its ownership interests (or rights to acquire its
ownership interests) in connection with the acquisition of a
Target Center (provided, however, that Prime Management,
Prime, PMSI or such affiliate may elect, upon obtaining the
consent of BDEC, to issue its ownership interests in
connection with the acquisition of a Target Center by Prime
Refractive or any of its subsidiaries, and any such issuance
shall be treated for all purposes as a loan by Prime
Management to Prime Refractive pursuant to the Development
Credit Facility, in an amount equal to the fair market value
of the capital stock issued on the date of issuance)."
e. The Original Parties hereby agree to amend Section 4.3(e) of the
Contribution Agreement to read in its entirety as follows:
" (e) Each of the Sellers, Newco I, and Prime Refractive
acknowledges and agrees that neither Newco I nor Prime
Refractive shall distribute (or allow to be distributed) to
its members, with respect to their respective membership
interests, any of its or its subsidiaries' cash or other
property if, at the time of the proposed distribution, any
amounts (whether principal or interest) are outstanding under
the Credit Documents or the Target Center Lending Documents
(as such terms are hereinafter defined). Furthermore, each of
the Sellers, Newco I, and Prime Refractive agrees that each of
Newco I and Prime Refractive shall pay all available cash flow
in payment of its respective outstanding obligations, if any,
under the Loan Agreement or Development Facility (as
applicable), irrespective of whether such payments exceed the
minimum required payments under the Loan Agreement or
Development Facility. For purposes of allocating such payments
by either Newco I or Prime Refractive among any two or more of
such entity's respective outstanding obligations, such
payments shall be allocated pro rata, based upon the
respective balances of such obligations, unless (i) a greater
portion of the payment is required to be paid toward a given
obligation in order to prevent a default with respect to that
obligation (but only to the extent necessary to prevent such a
default) or (ii) eighty percent (80%) of the managers of such
entity elect to allocate the payments in a different manner.
Notwithstanding the foregoing, as long as
there has been no default by any Seller under this Agreement
or any other Transaction Document (excluding, however, the
Credit Documents and the Target Center Lending Documents),
then, to the extent that (but only to the extent that) either
of Newco I or Prime Refractive possesses the cash flow
necessary (in the reasonable discretion of a majority of its
managers) to pay its liabilities in the ordinary course
consistent with past practices, such entity agrees to make
quarterly estimates of its taxable income for the current tax
year and, if not prohibited by law, distribute quarterly (the
"Quarterly Distributions") an amount that would cover the
federal and state income taxes required to be paid by its
members with respect to such taxable income, based on each
member's then current proportionate interest in such entity,
assuming that all members pay income taxes on such entity's
taxable earnings at a rate equal to the highest effective
individual tax rate in effect from time to time (the "Assumed
Tax Rate"); provided, further, that such entity shall
determine its actual taxable income at the end of each taxable
year and (A) if the Quarterly Distributions in a given year
should have been higher based on the amount of actual taxable
income for that year, promptly distribute the amounts
necessary to eliminate such deficiency or (B) if the Quarterly
Distributions in a given year should have been lower based on
the amount of actual taxable income for that year, withhold
dollar for dollar from the first following Quarterly
Distribution, and then against subsequent Quarterly
Distributions in a like manner, the amounts necessary to
eliminate such surplus."
f. The Original Parties hereby agree to amend Section 4.3(f) of the
Contribution Agreement to read in its entirety as follows:
" (f) The parties acknowledge the execution and existence of
that certain Loan Agreement in the maximum principal amount of
$10,835,000, dated September 1, 1999, between Prime and Newco
I (the "Loan Agreement"), that certain Promissory Note, in the
amount of $10,835,000, executed by Newco I and dated September
1, 1999 (the "Horizon Note"), and that certain Assignment and
Security Agreement, dated September 1, 1999, between Prime and
Newco I (the "Horizon Security Agreement"). The parties agree
that the Loan Agreement, the Horizon Note and the Horizon
Security Agreement are "Transaction Documents" for purposes of
this Agreement. The Parties further agree that the Loan
Agreement, the Horizon Note, the Horizon Security Agreement,
and all of the loan agreements, promissory notes, guarantees,
security agreements, assignment and security agreements and
other agreements, documents or instruments executed by any
party in connection with the Loan Agreement or the Development
Facility are hereinafter collectively referred to as the
"Credit Documents"."
g. The Original Parties hereby agree to amend Section 4.4 of the
Contribution Agreement to read in its entirety as follows:
" 4.4 Capital Contributions. The parties agree that no party
shall, except for the express provisions of Section 1.1 and
Section 4.3 of this Agreement or of the Organizational
Documents, be required to make any capital contribution, or
extend any credit facility or loans, to either Prime
Refractive, Newco I or Newco II (or a subsidiary of either)
following the Closing, including, without limitation, for
purposes of providing working capital; provided, however, that
this sentence shall not affect any party's obligations under
Article VI with respect to any breach of the representations
or warranties made by that party under this Agreement."
h. The Original Parties hereby agree to amend Section 4.6 of
the Contribution Agreement to replace every reference to "Newco I" contained in
Section 4.6 with a reference instead to "Prime Refractive".
i. The Original Parties hereby agree to amend Section 4.10 of the
Contribution Agreement to read in its entirety as follows:
" 4.10 Guaranty of PMSI. PMSI hereby unconditionally and
irrevocably guarantees each of the payment and performance
obligations of Prime Refractive, Prime Management and Prime
hereunder and under each of the Transaction Documents. Without
limiting the foregoing, PMSI agrees that if Prime, Prime
Refractive or Prime Management shall default in any obligation
to pay to any Seller(s) or Newco I any amount then due and
payable by Prime, Prime Refractive or Prime Management to such
Seller(s) or Newco I under ARTICLE I or ARTICLE VII hereunder,
PMSI shall immediately pay such amount to such Seller(s) or
Newco I. PMSI hereby agrees not to require any Seller to
proceed against Prime Refractive, Prime Management, Prime or
any other person or to pursue any other remedy before
proceeding against PMSI under this guaranty."
j. The Original Parties hereby agree to amend Section 6.3 of the
Contribution Agreement to read in its entirety as follows:
" 6.3 Security. Without limiting or adversely affecting the
rights of Prime under Section 9.12, and in order to secure
full and prompt payment of the obligations of each of the
Sellers under this ARTICLE, each of BDEC and LASIK hereby
grants to Prime (for the benefit of Prime Refractive or any
other subsidiary or affiliate of Prime to which any Seller may
hereafter owe any amount) a continuing security interest in
and to distributions either of them may be entitled to receive
at any time after the Closing in respect of any ownership
interest held by either of them in any of Prime Refractive,
Newco I or Newco II. In connection with the grant of a
security interest contained in this Section, each of BDEC and
LASIK agrees (i) to execute all documents, agreements,
instruments and certificates, and to take such other actions,
as are necessary in order to fully evidence and perfect such
security interest, and (ii) that it will not for a period of
five (5) years after the Closing grant or assign to any person
or entity, without obtaining the express prior written consent
of Prime in each instance, rights of any nature in the
distributions covered by the security interest granted in this
Section, irrespective of whether such rights are to be senior
or subordinate to the rights granted under this Section;
provided, however, that Prime acknowledges and agrees that any
grant of a security interest in such distributions by LASIK to
either Prime Management or the lenders under the $14,000,000
Facility shall not be a violation of this Section, and the
grant to the lenders under the $14,000,000 Facility shall be
senior to the security interest hereby granted by LASIK to
Prime."
k. The Original Parties hereby agree to amend the following
subsections of Section 8.1 of the Contribution Agreement to replace every
reference to "Newco I" contained in such subsections with a reference instead to
"Prime Refractive": introductory paragraph to Section 8.1; Section 8.1(b);
Section 8.1(c); and Section 8.1(d).
l. The Original Parties hereby agree to amend Section 8.1(e) of the
Contribution Agreement to read in its entirety as follows:
" (e) The acquisition or development of such Target Center
was initiated, arranged for, originated or financed by any
entity affiliated with PMSI (other than Prime Refractive,
Newco I or Newco II, or any future subsidiaries of either of
them) which has previously acquired or developed a Target
Center, or an interest therein, pursuant to any of the
exceptions to exclusivity contained in subsections (a) through
(g) of this Section;"
m. The Original Parties hereby agree to amend the first paragraph of
Section 8.2(g) of the Contribution Agreement to read in its entirety as follows:
" (g) Notwithstanding the exclusivity obligation contained in
Section 8.1, LASIK and/or one or more of their affiliates
shall be entitled to independently acquire or develop any
Target Center to which any one or more of the following apply:
(i) a majority of the board of directors of Prime votes
against the acquisition of such Target Center; or (ii) Prime
Refractive is unable to finance the acquisition of such Target
Center using the Development Facility, solely because of the
limitation set forth in Section 4.3(c); provided, however,
that:"
n. The Original Parties hereby agree to amend Section 9.3 of
the Contribution Agreement to replace every reference to "Newco I" contained in
Section 9.3 with a reference instead to "Prime Refractive, Newco I".
o. The Original Parties hereby agree to amend Section 9.4 of the
Contribution Agreement to read in its entirety as follows:
" 9.4 Non-Competition Agreement. Each of PMSI, Prime, Prime
Management and each Seller, as a material inducement to one
another to enter into this Agreement, hereby agrees that, at
all times during which the provisions of Article VIII are
applicable, and at all times until five (5) years after either
LASIK and its affiliates (excluding PMSI, Prime, and the
subsidiaries of either of them), or Prime and its affiliates
(excluding LASIK), no longer own any equity or other interest
in either Newco I or Prime Refractive, such party will not
directly or indirectly, either through any kind of ownership
(other than ownership of securities of a publicly held
corporation of which it owns less than five percent (5%) of
any class of outstanding securities), or as a principal,
shareholder, agent, employer, advisor, consultant, co-partner
or in any individual or representative capacity whatever,
either for its own benefit or for the benefit of any other
person, corporation or other entity, without the prior written
consent of each other party hereto, commit any of the
following acts, which acts shall be considered violations of
this covenant not to compete:
(a) Except through Newco I, Prime
Refractive, either of their subsidiaries, or Newco II,
directly or indirectly engage in, or provide, anywhere within
a fifty (50) mile radius of any center or facility that
provides Refractive Surgery and is owned, directly or
indirectly, partially or wholly, by Newco I, Prime Refractive,
or a subsidiary of either of them (collectively, the
"Restricted Area"), any services (other than services included
in the practice of medicine) related to (i) the operating of
centers or facilities that provide Refractive Surgery, (ii)
the manufacture, maintenance, refurbishing, repair, sale, or
leasing of any equipment related to or necessary for the
operating of centers or facilities that provide Refractive
Surgery, or (iii) providing any management services, training
or consulting services related to any of the activities
described in (i) or (ii);
(b) Except through Newco I, Prime
Refractive, the subsidiaries of either of them, or Newco II,
directly or indirectly provide, anywhere within the Restricted
Area, (i) facilities, equipment and non-physician personnel
for the performance by physicians of Refractive Surgery, (ii)
the marketing, scheduling and management of Refractive Surgery
(but excluding, with respect to either Barnet or Xxxxxxx,
marketing, scheduling and management of patients for treatment
by Barnet or Xxxxxxx, respectively), (iii) the credentialing
and scheduling of physicians to perform Refractive Surgery and
(iv) the billing, collecting or accounting for the use of any
such facilities, equipment or non-physician personnel;
(c) Directly or indirectly request or advise
any person, firm, physician, corporation or other entity
having a business relationship with Newco I, Prime Refractive,
a subsidiary of either of them, Prime, each Seller or any
affiliate or related entity of any of them, to withdraw,
curtail, or cancel its business with such person or entity; or
(d) Directly or indirectly hire any employee
of Newco I, Prime Refractive, any subsidiary of either of the
foregoing, Prime, any Seller or any affiliate or related
entity of any of them, or induce or attempt to influence any
employee of Newco I, Prime Refractive, any subsidiary of
either of the foregoing, Prime, any Seller or any such
affiliate or related entity to terminate his or her employment
with such person or entity."
p. The Original Parties hereby agree to amend Section 9.5 of the
Contribution Agreement to read in its entirety as follows:
" 9.5 Exclusivity. Each of the parties hereto acknowledges
and agrees that any acquisition or development of a Target
Center by Prime Management, Prime, PMSI, Newco II or a Seller
through an entity not owned (wholly or partially, directly or
indirectly) by Prime Refractive or Newco I shall be subject to
the provisions of Section 9.4, regardless of whether such
acquisition or development is contemplated by or provided for
in the provisions of ARTICLE VIII."
q. The Original Parties hereby agree to amend Section 9.8 of the
Contribution Agreement to read in its entirety as follows:
" 9.8 Special Options to Sell or Acquire Interests In Newco I and
Prime Refractive.
(a) Option to Sell. Upon the expiration of
five (5) years immediately following the Closing Date, if no
Seller is in breach of this Agreement or any other Transaction
Document, all or any of the Sellers shall at any time, and
from time to time, be entitled to require that Prime purchase
from such Seller(s) up to a maximum twenty percent (20%)
interest in each of Newco I and Prime Refractive (when
aggregated for each entity with all other purchases by all
Sellers pursuant to this Section), upon the terms and
conditions hereinafter set forth, by giving written notice of
such election to Prime; provided, however, that any exercise
of the option to sell pursuant to this Section must (unless
Prime consents otherwise in writing) be made by such Seller
with respect to exactly equal percentage interests in Newco I
and Prime Refractive, in each instance and taken individually
and not in combination with elections by another Seller.
(b) No Further Obligation. The Sellers
acknowledge and agree that Prime shall be under no obligation
to notify any Seller of the exercise by another Seller of
rights under this Section, and that Prime may not, under any
circumstances, be required to purchase more than an aggregate
twenty percent (20%) interest in either Newco I or Prime
Refractive (considering all purchases by all Sellers pursuant
to this Section), regardless of whether one Seller disposes of
more or less of an interest in Newco I and Prime Refractive
under this Section than another Seller.
(c) Purchase Price. The purchase price for any interest
transferred pursuant to this Section shall, in the absence
of an agreement on price between Prime and the applicable
Seller(s), be determined as follows:
(i) If the exercise of the option
hereunder is after the expiration of such ninety (90)
day period, then the purchase price must be mutually
agreed upon by the applicable Seller(s) and Prime.
(ii) If the exercise of the option
hereunder is within the ninety (90) day period
immediately following the expiration of the five (5)
year period described in Section 9.8(a), then Prime
shall select a certified business appraiser (that is
a member of either the American Society of Appraisers
or the Institute of Business Appraisers) to value the
interests being transferred. If the selling Seller(s)
under this Section do not agree with the value
determined by Prime's appraiser, such Seller(s) may,
at their own expense, select a second appraiser that
is a member of one or both of the above named
professional organizations to value the interests
being transferred. If the two appraisers cannot agree
on the value of the interests being transferred, the
two appraisers shall mutually select a third
appraiser (that meets the above described membership
requirements) to value the interests being
transferred together with the first two appraisers,
based on a majority vote. Any valuation determined by
such majority vote shall be final, binding and
conclusive. The expense of such third appraiser shall
be paid by the selling Seller(s), unless the
appraised value ultimately determined is more than
ten percent (10%) greater than the value determined
by Prime's original appraiser, in which event Prime
shall bear the entire cost of the third appraiser. If
the exercise of the option hereunder is after the
expiration of such ninety (90) day period, then the
purchase price must be mutually agreed upon by the
applicable Seller(s) and Prime.
(d) Such purchase price shall be paid in
immediately available funds at the closing of the transfer
pursuant to this Section. The closing of any purchase and sale
pursuant to this Section shall take place at the principal
office of Prime or such other place designated by Prime and
the applicable Seller(s), on the thirtieth day (or if such
thirtieth day is not a business day, the next business day
following the thirtieth day) following the final determination
of a purchase price under subsection (c) above. At such
closing, Seller shall execute all documents and take such
other actions as may be reasonably necessary to deliver to
Prime title to the interests transferred, free and clear of
all liens, claims, encumbrances or restrictions of any kind or
nature whatsoever, except (i) those established in the
organizational documents and other governing documents of
Newco I and Prime Refractive, (ii) those in favor of the
lenders under $14,000,000 Facility and the $86,000,000
Facility pursuant to any Transaction Document and (iii) those
in favor of Prime or any affiliate or subsidiary of Prime
pursuant to any Transaction Document.
(e) Exceptions. Notwithstanding the
foregoing provisions of this Section 9.8, Prime shall not be
obligated to purchase any interest in either Newco I or Prime
Refractive pursuant to this Section if Prime is unable to
obtain financing for such purchase from a third party upon
reasonable market terms, after Prime and PMSI have exercised
commercially reasonable efforts to obtain such financing."
r. The Original Parties hereby agree to amend Section 9.12 of
the Contribution Agreement to replace every reference to "Newco I" contained in
Section 9.12 with a reference instead to "Prime Refractive, Newco I", and to
replace every reference to "Prime or PMSI" contained in Section 9.12 with a
reference instead to "Prime Management, Prime or PMSI".
s. The Original Parties hereby agree to amend the first paragraph of
Exhibit G3 to the Contribution Agreement to read in its entirety as follows:
" THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement")
is made and entered into as of the ____ day of __________,
200__, by and between Prime Refractive Management, L.L.C., a
Delaware limited liability company (the "Secured Party") and
Prime Refractive, L.L.C., a Delaware limited liability company
(the "Debtor")."
t. The Original Parties hereby agree to amend Recital A. of Exhibit G3 to
the Contribution Agreement to read in its entirety as follows:
" A. Debtor and Secured Party have executed and delivered
that certain Contribution Agreement dated effective September 1,
1999, between and among Debtor, Secured Party, Prime Medical
Operating, Inc., a Delaware corporation, Prime Medical Services,
Inc., a Delaware corporation, Prime/BDEC Acquisition, L.L.C., a
Delaware limited liability company, Prime/BDR Acquisition,
L.L.C., a Delaware limited liability company, Barnet Xxxxxxx Eye
Center, P.L.L.C., an Arizona professional limited liability
company, LASIK Investors L.L.C., a Delaware limited liability
company, Xxxxx X. Xxxxxxx, M.D., Xxxxxx X. Xxxxxx, M.D., and Xxxx
Xxxxxxxxx (as amended by that certain First Amendment to
Contribution Agreement dated as of January 31, 2000, among the
foregoing parties, the "Contribution Agreement"), and that
certain Loan Agreement, dated as of January 31, 2000 (the "Loan
Agreement"), pursuant to which Secured Party agrees to make
certain loans to Debtor on the terms and subject to the
conditions provided therein."
u. The Original Parties hereby agree to amend Article I of
Exhibit G3 to the Contribution Agreement to add the following Section 1.3 in its
entirety as a new Section:
1.3 Subordination. Liens created hereby are subordinate to
liens in favor of Lenders (as such term is defined in that
certain Loan Agreement for a $14,000,000 advancing term loan,
entered into by Secured Party, Bank of America, N.A., as
administrative agent, BankBoston, N.A., as documentation agent
and such Lenders).
v. The Original Parties hereby agree to amend Section 4.3 of
Exhibit G3 to the Contribution Agreement to replace the reference to "Section
1.1(c)" contained in Section 4.3 with a reference instead to "Section 1.1(d)".
w. The Original Parties hereby agree to amend Article V of
Exhibit G3 to the Contribution Agreement to replace the reference to "Target
Center" contained in Article V with a reference instead to "Target Center (as
defined in the Contribution Agreement)".
x. The Original Parties hereby agree to amend Section 9.2 of Exhibit G3 to
the Contribution Agreement to replace the reference to "Prime/BDR Acquisition,
L.L.C." contained in Section 9.2 with a reference instead to "Prime Refractive,
L.L.C.".
y. The Original Parties hereby agree to amend the signature page to Exhibit
G3 to the Contribution Agreement to (i) replace the reference to "Prime/BDR
Acquisition, L.L.C." contained in the signature page with a reference instead to
"Prime Refractive, L.L.C.", (ii) replace the reference to "Prime Medical
Operating, Inc." contained in the signature page with a reference instead to
"Prime Refractive Management, L.L.C.", and (iii) replace the reference to "1999"
contained in the signature page with a reference instead to "200__".
z. The Original Parties hereby agree to amend the second paragraph of
Exhibit G5 to the Contribution Agreement (beginning with "Borrower:") to replace
the reference to "Prime/BDR Acquisition, L.L.C." contained in such paragraph
with a reference instead to "Prime Refractive, L.L.C.".
aa. The Original Parties hereby agree to amend the fourth paragraph of
Exhibit G5 to the Contribution Agreement (beginning with "LENDER:") to
replace the reference to "Prime Medical Operating, Inc., a Delaware
corporation" contained in such paragraph with a reference instead to "Prime
Refractive Management, L.L.C., a Delaware limited liability company".
bb. The Original Parties hereby agree to amend the eighth paragraph of
Exhibit G5 to the Contribution Agreement (beginning with "payment terms:")
to replace the reference to "1999" contained in such paragraph with a
reference instead to "200__".
cc. The Original Parties hereby agree to amend the ninth paragraph of
Exhibit G5 to the Contribution Agreement (beginning with "Loan Agreement:")
to read in its entirety as follows:
"LOAN AGREEMENT: This Note is executed pursuant to and is
governed by the terms of that certain Loan Agreement dated as
of January 31, 2000, executed by Borrower and Lender, as
amended (collectively, the "Loan Agreement")."
dd. The Original Parties hereby agree to amend Section
2(a)(ii) of Exhibit G5 to the Contribution Agreement to replace the reference to
"Lender" contained in Section 2(a)(ii) with a reference instead to "Lender,
Prime Medical Operating, Inc.".
ee. The Original Parties hereby agree to amend Section 4(c) of Exhibit
G5 to the Contribution Agreement to read in its entirety as follows:
" (c) All other documents signed in connection with the
Loan Agreement or the loan evidenced by this Note,
including, without limitation, that certain Contribution
Agreement, dated effective September 1, 1999, between and
among Borrower, Lender, Prime Medical Services, Inc., a
Delaware corporation, Prime Medical Operating, Inc., a
Delaware corporation, Prime/BDEC Acquisition, L.L.C., a
Delaware limited liability company, Prime/BDR Acquisition,
L.L.C., a Delaware limited liability company, Barnet Xxxxxxx
Eye Center, P.L.L.C., an Arizona professional limited
liability company, LASIK Investors, L.L.C., a Delaware
limited liability company, Xxxxx X. Xxxxxxx, M.D., Xxxxxx X.
Xxxxxx, M.D., and Xxxx Xxxxxxxxx (as amended by that certain
First Amendment to Contribution Agreement dated as of
January 31, 2000, among the foregoing parties, the
"Contribution Agreement") and each Transaction Document (as
such term is defined in the Contribution Agreement)."
ff. The Original Parties hereby agree to amend the signature page to
Exhibit G5 to the Contribution Agreement to replace the reference to "Prime/BDR
Acquisition, L.L.C." contained in the signature page with a reference instead to
"Prime Refractive, L.L.C.".
gg. The Original Parties hereby agree to (i) delete Exhibit
G1, Exhibit G2 and Exhibit G4 from the Contribution Agreement, (ii) rename
Exhibit G3 as Xxxxxxx X0, (xxx) rename Exhibit G5 as Exhibit G2, and (iv) amend
the TABLE OF EXHIBITS of the Contribution Agreement to replace the reference to
"Exhibits G1 to G5" contained in the TABLE OF EXHIBITS with a reference instead
to "Exhibits G1 and G2".
Section 3. Amendment of Loan Agreement. Each Original Party agrees that
the Original Loan Agreement is hereby amended to eliminate the $200,000 Working
Capital Line and to reduce the remaining maximum principal amount of $40,000,000
to $10,835,000. Each Original Party further acknowledges and agrees that Prime
has previously advanced the maximum principal amount under the Original Loan
Agreement, and that, accordingly, Prime is hereby unconditionally released from
any obligation (whether asserted now or in the future) to advance additional
money under the Original Loan Agreement.
Section 4. Relationship Between Prime and Prime Refractive. The parties
agree that for all purposes under the Contribution Agreement, each of Prime
Refractive and Prime Management shall be deemed an affiliate of Prime for as
long as Prime owns, directly or indirectly, an equity ownership interest in it.
Section 5. Transaction Document. This Amendment, and each other
document, agreement, and certificate executed in connection with or contemplated
by this Amendment (each a "Related Document"), shall be considered a
"Transaction Document," as such term is used in the Contribution Agreement.
Section 6. No Assumption of Liabilities. Notwithstanding any provision of
this Amendment or any Related Document, neither Prime Refractive nor Prime
Management assumes any debts, obligations or liabilities of any of the Original
Parties.
Section 7. Authority. Each of Prime Refractive, Prime Management and
each Original Party, hereby represents and warrants (severally and not jointly)
that it has full power and authority to enter into and perform this Amendment
and each Related Document to be executed or delivered by such party. The
execution, delivery, and performance of this Amendment and such Related
Documents have been duly authorized by all necessary action of such party and,
if applicable, its respective officers and owners. This Amendment has been duly
and validly executed and delivered by such party and constitutes a valid and
binding obligation of such party enforceable against such party in accordance
with its terms. The execution, delivery, and performance by such party of this
Amendment and each such Related Document does not violate or conflict with (a)
any law, rule, or regulation applicable to such party, (b) any agreement to
which such party is a party, or (c) the organizational documents of such party.
Section 8. Ratification by Prime Refractive. Each of Prime Management
and each Original Party agrees that by executing this Amendment, it is deemed to
be voting its ownership interest (if any) in Prime Refractive to authorize Prime
Refractive to enter into and perform this Amendment and each other Related
Document to which Prime Refractive is a party. Each such party agrees to execute
such resolutions and written consents, and take such other actions, in their
capacities as members of Prime Refractive, as any other such party shall
reasonably require after the date of this Amendment in order to have Prime
Refractive ratify and adopt this Amendment, notwithstanding the date of Prime
Refractive's creation.
Section 9. Cooperation Relating to Financial Statements. Each of the
Sellers agrees to cooperate with Prime in the preparation of any financial
statements of Prime Refractive which Prime or its affiliates may be required by
any applicable law to prepare.
Section 10. Effect on Existing Agreements. This Amendment is
incorporated into the Contribution Agreement by reference. Other than as
provided in this Amendment, the Contribution Agreement (including Exhibits and
Schedules) has not been modified or amended and is in full force and effect.
Each Original Party hereby affirms that it remains a party to the Contribution
Agreement (as amended by this Amendment) after the execution of this Amendment.
The Contribution Agreement may be restated as amended hereby for the convenience
of the parties hereto. This Amendment may be executed in a number of identical
counterparts which, taken together, shall constitute collectively one and the
same agreement.
[Signature pages follow]
SIGNATURE PAGE TO
FIRST AMENDMENT
TO
CONTRIBUTION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the day and year first above written.
PMSI: PRIME MEDICAL SERVICES, INC.
By:
Printed Name:
Title:
PRIME: PRIME MEDICAL OPERATING, INC.
By:
Printed Name:
Title:
PRIME MANAGEMENT: PRIME REFRACTIVE MANAGEMENT, L.L.C.
By:
Printed Name:
Title:
BDEC: Barnet Xxxxxxx Eye CENTER, P.L.L.C.
By:
Xxxxx X. Xxxxxxx, M.D., manager
LASIK: LASIK INVESTORS, L.L.C.
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
NEWCO I: PRIME/BDR ACQUISITION, L.L.C.
By: LASIK Investors, L.L.C.. - Member
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
By: Prime Medical Operating, Inc. - Member
By:
Printed Name:
Title:
NEWCO II: PRIME/BDEC ACQUISITION, L.L.C.
By: Barnet Xxxxxxx Eye Center, P.L.L.C. - Member
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
By: Prime Medical Operating, Inc. - Member
By:
Printed Name:
Title:
PRIME REFRACTIVE: PRIME REFRACTIVE, L.L.C.
By: LASIK Investors, L.L.C.. - Member
By:
Xxxxxx X. Xxxxxx, M.D., manager
By:
Xxxxx X. Xxxxxxx, M.D., manager
By: Prime Refractive Management, L.L.C. - Member
By:
Printed Name:
Title:
XXXXXXX:
Xxxxx X. Xxxxxxx, M.D.
BARNET:
Xxxxxx X. Xxxxxx, M.D.
XXXXXXXXX:
Xxxx Xxxxxxxxx
