1
FACILITY USE AGREEMENT
This Facility Use Agreement (hereinafter referred to as the
"Agreement") is made and executed as of the close of business on the 1st day of
March, 2000 by and among Caster One, L.L.C., a Delaware limited liability
company, (hereinafter referred to as "Newco"), Xxxxxx Xxxxxx, M.D. (hereinafter
referred to as "Provider") and Caster Eye Center Medical Group, a California
professional corporation (hereinafter referred to as "Caster PC").
Preliminary Statements:
Provider, a licensed medical professional, together with Caster PC
provides Refractive Surgery (as hereinafter defined) and related services in the
area of Los Angeles County, California.
Newco owns certain equipment and assets (none of which include the
practice of medicine) used in the performance of Refractive Surgery and related
services.
Provider and Caster PC desire to use Newco's facilities to render
medical services to their patients.
Caster PC desires to employ certain employees on behalf of Newco, for
the purpose of rendering services at and using the facilities of Newco.
Statement of Agreement
In consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and on the terms and subject to
the conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
Certain Defined Terms
Unless otherwise defined in Section 1.1 or elsewhere in this Agreement,
all capitalized terms used in this Agreement shall have the meanings ascribed to
them in that certain Contribution Agreement (the "Contribution Agreement") dated
as of March 1, 2000, among Prime Medical Services, Inc., a Delaware corporation,
Prime Refractive, L.L.C., a Delaware limited liability company, Newco, Provider
and Caster PC.
ARTICLE II
Relationship of the Parties
The relationship under this Agreement between Newco, on the one hand,
and Provider and Caster PC, on the other hand, shall be that of independent
contractors. The provisions hereof are not intended to create any partnership,
joint venture, agency or employment relationship between the parties. Newco
acknowledges and agrees that Provider and Caster PC shall retain the exclusive
authority to direct the medical, clinical professional, and ethical aspects of
their respective medical practices. Newco shall neither exercise control over
nor interfere with the physician-patient relationships of Provider or Caster PC,
which shall be maintained strictly between Provider, Caster PC and their
patients.
ARTICLE III
Services to be Provided by Newco
Section 3.1 General. No party will act in a manner that would prevent
the other parties from performing their duties hereunder, and each party will
provide such information and assistance to each other party as is reasonably
required to enable such other party to perform its services hereunder. Newco
shall, and shall use its best efforts to cause its employees to, comply with all
applicable federal, state and local laws, rules and regulations in its provision
of services hereunder.
Section 3.2 Facilities. Newco shall make available to Caster PC and
Provider the real property located at 0000 Xxxxxxxx Xxxx., Xxxxx 000X, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000, and the improvements, facilities and assets located
thereon, including without limitation, the Assets, the Business and personnel,
for the use of Caster PC and Provider in the performance of Refractive Surgery
and related services (together with any subsequent property, improvements,
facilities or assets acquired by Newco in replacement of or in addition to the
foregoing, the "Facilities"). Newco agrees to maintain the Facilities in a
commercially reasonable manner in light of the intended use of the Facilities.
Section 3.3 Newco Management. Newco shall manage and administer the
Facilities, which management and administration shall include, without
limitation, all administration, accounting, purchasing, payroll, legal services,
record keeping, bookkeeping, computer services, information management,
printing, postage, duplication services, hiring of personnel, quality assurance
programs, billing and collecting from, and contracting with, patients, insurance
companies, managed care payors, governmental entities and other third-party
payors with respect to all professional, medical and other services provided by
Caster PC or Provider, and management and administration of all other aspects of
the Business.
Notwithstanding any provision of this Agreement to the contrary:
(a) Newco shall not engage in the practice of medicine, and Provider shall
at all times be responsible for all activities that constitute the practice of
medicine; and
(b) this Agreement shall not be construed to require Provider,
or any other medically trained or licensed medical professionals under the
direction or control of Provider, to perform Refractive Surgery at the
facilities of, or use the equipment of, Newco, if in Provider's professional
medical judgment, such use would be detrimental to Provider's patients.
(c) although Caster PC shall pay and provide all required
salaries and benefits to all employees, said employees shall, to the extent they
work on the Business conducted by Newco, and except as limited by the
Transaction Documents, be treated as employees of Newco, and Newco shall, only
in accordance with the provisions of Section 4.2 hereof, provide Caster PC with
such funds as Caster PC requires to satisfy said payment obligation.
Section 3.4 Events Excusing Performance. In the event of strikes,
lock-outs, calamities, acts of God, unavailability of supplies or other events
over which Newco has no control (hereinafter, with respect to any non-performing
party not having control over such event, a "Force Majeure Event"), Newco shall
not be liable to Caster PC or Provider for failure to provide any of the
Facilities hereunder, and Caster PC and Provider shall not have the right to
terminate this Agreement, for so long as such events continue and for a
reasonable period of time thereafter; provided, however, that if such events
continue and Newco is not able to provide any Facilities hereunder for a period
of one hundred and eighty (180) consecutive days or more, Newco, Caster PC or
Provider may terminate this Agreement by written notice to the others.
Notwithstanding any provision of the Transaction Documents to the contrary, for
any portion of such periods following a Force Majeure Event in excess of five
(5) business days during which Newco is unable to provide Facilities sufficient
to allow Caster to perform Refractive Surgery, then Caster may perform medical
services, including Refractive Surgery at such other locations within or without
the Restricted Area as he deems appropriate and he shall be entitled to retain
all compensation receive therefrom.
ARTICLE IV
Obligations of Caster PC and Provider
Section 4.1 Facility Fee. Subject to modification in the manner
prescribed by Section 8.9 of Newco's Limited Liability Company Agreement, the
fees payable to Newco by Caster PC and Provider in return for use of the
Facilities made available by Newco hereunder (the "Facility Usage Fee") shall be
determined on a per procedure basis, and shall be remitted to Newco weekly
following the performance of the procedure for which the Facility Usage Fee is
due, less any unreimbursed reimbursable expenses that have been incurred under
Section 4.2 up to that time. The amount of the Facility Usage Fee with respect
to any procedure shall be determined in accordance with the following
procedures.
(a) As long as Caster PC's standard, undiscounted fee charged
to the patient (determined without reference to the fee charged for any single
procedure, the "Patient Fee") has at all prior times remained between the
amounts of $2,400 per procedure and $2,275 per procedure, the Facility Usage Fee
shall equal (i) the amount actually collected for such procedure minus (ii)
$400.
(b) At all times following any reduction of the Patient Fee to
an amount less than $2,275 per procedure, or any increase in the Patient Fee to
an amount greater than $2,400 per procedure, the Facility Usage Fee shall equal
(i) the amount actually collected for such procedure minus (ii) an amount up to
seventeen and 58/100 percent (17.58%) of such Patient Fee; provided, however,
that in no event shall the Facility Usage Fee be below the fair market value of
the use of the Facilities in the aggregate.
(c) Notwithstanding the foregoing provisions of this Section
4.1, or any other contrary provision of any Transaction Document, Provider shall
be entitled to perform procedures for free and refund amounts paid for
procedures on a limited basis in a manner and to the extent Provider has done so
in the past, or as otherwise consented to by Newco. The Facility Usage Fee with
respect to such procedures shall be eliminated, as long as the aggregate
Facility Usage Fee paid hereunder equals or exceeds the fair market value of the
use of the Facilities.
Section 4.2 Budgeted Expenses. Caster PC acknowledges that certain of
its employees have in the past performed services utilizing the assets acquired
by Newco pursuant to the Contribution Agreement (the "Remaining Employees"), and
that the continued availability of the Remaining Employees to Newco is critical
to the business of Newco. Caster PC hereby agrees to make the Remaining
Employees exclusively available to Newco, unless prohibited by law, in
accordance with the instructions of a majority of the Managers of Newco, and to
incur certain budgeted expenses, including without limitation the expenses of
maintaining and administering the existing retirement plan of Caster PC, in
connection with the operations of Newco and those operations of Caster PC or
Provider for which Newco will reimburse Caster PC or Provider as contemplated in
Sections 4.4 and 4.5; provided that such availability and use of the Remaining
Employees, and expenses related to Newco's, Caster PC's and Provider's
operations, shall be consistent with the practices of Caster PC prior to the
Effective Time (as defined in the Contribution Agreement), subject to
appropriate adjustment for any growth in the volume of procedures done using the
Facilities during the term of this Agreement. Newco agrees that it shall bear
the actual, out-of-pocket costs of employing the Remaining Employees, and any
other actual, out-of-pocket expenses incurred by Caster PC and related solely to
the operations of Newco, but only to the extent (a) such costs or expenses are,
individually and collectively, not in excess of amounts reflected in the budget
agreed upon pursuant to the other provisions of this Section (collectively, the
"Budgeted Costs") or (b) such costs or expenses are specifically and by amount
agreed to in writing by any one (1) of the Prime designated managers of Newco.
All costs or expenses to be reimbursed by or charged or netted from amounts owed
to Newco must be specifically reflected in an annual budget prepared and
delivered by Caster PC to Newco, that has been agreed upon in form and substance
by a majority of the managers of Newco. Such budgets shall be delivered not less
than sixty (60) days prior to the beginning of the period to which the budget
applies; provided, however, that the initial budget for the remainder of the
year 2000 shall be delivered on the date of this Agreement.
Newco shall have the right to audit and inspect all of the
records of Caster PC as they relate to Caster PC's costs and expenses pursuant
to this Section. Caster PC and Provider shall cooperate and provide access to
all relevant books and records in connection with the exercise of such right.
Newco must give at least ten (10) days prior written notice to Caster PC of its
intent to exercise its auditing rights, and Newco will bear the costs of any
such audit, unless the audit reveals that Budgeted Costs were overpaid by Newco
by more than five percent (5%), in which case Caster PC will promptly reimburse
Newco for all reasonable out-of-pocket costs and expenses incurred by it in
connection with such audit. Unless otherwise agreed by the parties involved,
such audit shall be conducted during normal business hours at the offices of
Caster PC. Any overpayments by Newco for Budgeted Costs shall be paid to Newco
by Caster PC, together with interest accrued thereon at the rate of eighteen
percent (18%) per annum from the date of overpayment until the date paid by
Caster PC. Any underpayments by Newco for Budgeted Costs shall be paid to Caster
PC by Newco, together with interest accrued thereon at the rate of eighteen
percent (18%) per annum from the date of underpayment until the date paid by
Newco.
Section 4.3 Compliance With Laws. Caster PC and Provider shall provide
professional services to patients in compliance at all times with, and shall
otherwise comply with, all ethical standards, laws, rules and regulations
applicable to the operations of Caster PC and Provider. Caster PC and Provider
shall use reasonable efforts to ensure that Provider and the employees of Caster
PC and Provider have all required licenses, credentials, approvals or other
certifications to perform his or her duties and services for Caster PC and
Provider. In the event that any disciplinary actions or medical malpractice
actions are initiated against Provider or any employee of Provider or Caster PC,
Caster PC and Provider shall promptly inform Newco of such action and the
underlying facts and circumstances.
Section 4.4 Caster PC's and Provider's Internal Matters. Caster PC and
Provider shall be responsible for matters involving their respective corporate
governance, employees and similar internal matters, including, but not limited
to, preparation and contents of such reports to regulatory and tax authorities
governing Caster PC and Provider that Caster PC or Provider are required by law
to provide, distribution of professional fee income among Provider or the
shareholders of Caster PC, disposition of Caster PC's and Provider's property
and stock and hiring and firing of their employees and licensing. The legal,
accounting and other professional services fees incurred by Provider or Caster
PC in connection with the internal matters of Caster PC, the distribution of the
fee income among Provider or shareholders of Caster PC and the personal
accounting of Caster PC and Provider and similar internal and personal matters,
shall be borne exclusively by Caster PC and/or Provider, except to the extent
included as reimbursable by Newco in the budget prepared pursuant to, or
otherwise approved for reimbursement in accordance with, Section 4.2 above.
Section 4.5 Personal Expenses. Except as expressly provided above in
Section 4.2, Provider agrees that Personal Expenses of Provider shall not be
considered expenses of Newco and shall be borne solely by Provider, unless
agreed otherwise by the unanimous vote or written consent of the managers of
Newco. For purposes of this Section, the term "Personal Expenses" shall mean all
liabilities, obligations, costs and expenses of Caster that arise after the
Closing Date that are not directly and exclusively related to the provision or
operation of the Facilities, the conduct of the Business, or the employees,
excluding expenses included as reimbursable by Newco in the budget prepared
pursuant to, or otherwise approved for reimbursement in accordance with, Section
4.2 above.
Section 4.6 Events Excusing Performance. In the event of a Force
Majeure Event that prevents Caster PC's or Provider's performance under this
Agreement, Caster PC and/or Provider (as applicable) shall not be liable to
Newco for failure to perform any covenants hereunder to the extent such
performance is prevented or impeded by such Force Majeure Event, and Newco shall
not have the right to terminate this Agreement, for so long as such events
continue and for a reasonable period of time thereafter; provided, however, that
if such events continue and Caster PC and/or Provider is not able to perform its
obligations hereunder for a period of one hundred and eighty (180) consecutive
days or more, Newco, Caster PC or Provider may terminate this Agreement by
written notice to the others. Notwithstanding any provision of the Transaction
Documents to the contrary, for any portion of such periods following a Force
Majeure Event in excess of five (5) business days during which Caster PC and/or
Caster is unable to perform its obligations hereunder, then Newco may enter into
agreements with other physicians regarding use of the Facilities, upon such
terms and conditions as a simple majority of Newco's managers may agree, not
subject to any specific approval rights in favor of any particular manager or
member of Newco, and each of the parties hereto agrees to cast any vote it may
have as a manager or member of Newco as necessary to give full effect to this
sentence.
ARTICLE V
Term and Termination
This Agreement shall commence on the date hereof and shall expire on
the earlier of (a) the 40th anniversary hereof or (b) the expiration or
termination of the Restricted Period (as defined in the Contribution Agreement);
provided, however, that (y) Prime may elect to have Newco terminate this
Agreement at any time following any breach by Provider of the provisions of
ARTICLE VIII or ARTICLE IX of the Contribution Agreement (with the further
understanding that no breach by Provider of Section 9.3(b) of the Contribution
Agreement can be cured) and (z) Provider or Caster PC may elect to terminate
this Agreement at any time following any material breach by PMSI or Prime of the
provisions of ARTICLE VIII or ARTICLE IX of the Contribution Agreement.
ARTICLE VI
General Provisions
Section 6.1 Collateral Agreements, Amendments, and Waivers. This
Agreement (together with the Contribution Agreement and all documents delivered
pursuant to the Contribution Agreement) 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 document delivered pursuant to this
Agreement unless otherwise expressly provided therein) may be made only by an
instrument in writing executed by each party thereto.
Section 6.2 Successors and Assigns. No party's rights or obligations
under this Agreement may be assigned without the prior written consent of all
parties hereto. 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 document
delivered pursuant to this Agreement) shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors, and assigns.
Section 6.3 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement.
Section 6.4 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.
Section 6.5 Notices. Unless specifically provided otherwise herein, any
notices required or permitted to be given under this Agreement shall be given
and deemed received in the manner provided in the Contribution Agreement.
Section 6.6 Survival of Representations, Warranties, and Covenants.
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
covenants, agreements, representations, and warranties made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
survive the execution of this Agreement.
Section 6.7 Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith 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 such
other documents and instruments 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 such other documents and instruments.
Section 6.8 Other Agreements. Each party hereto agrees that any
material breach by it of any of the terms and provisions of another Transaction
Document (as defined in the Contribution Agreement) to which it is a party shall
also be deemed to have been a material breach by it of this Agreement, for all
purposes. The remedy provided in Section 9.7 of the Contribution Agreement, and
termination of this Agreement, shall in all events be the exclusive remedy for
any and all acts or omissions of Caster that result in a material breach of any
of the provisions of ARTICLE VIII or ARTICLE IX thereof, regardless of whether
such acts or omissions, in the absence of this sentence, would give rise to a
claim under any of the Transaction Documents, including this Agreement.
Section 6.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 6.10 Arbitration. Any controversy between the parties regarding
this Agreement or any other Transaction Document, any claims arising out of any
breach or alleged breach of this Agreement or any other Transaction Document,
and any claims arising out of the relationship between the parties created
hereunder, shall be submitted to binding arbitration by all parties involved in
accordance with the terms of the Contribution Agreement.
Section 6.11 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 page follows]
S-1
SIGNATURE PAGE
TO
FACILITY USE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
Newco: Caster One, L.L.C.
Xxxxx Xxxxxx, signing as a manager of Newco
and on behalf of Prime, as a member of Newco
Xxxxxx Xxxxxx, signing as both a manager
and on behalf of Seller, as a member of Newco
Caster: _______________________________________________
Xxxxxx Xxxxxx, M.D.
Seller: Caster Eye Center Medical Group
By:
Xxxxxx Xxxxxx, M.D., President
