INCIDENTAL REGISTRATION RIGHTS AGREEMENT
THIS INCIDENTAL REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of March 1, 2000 (the "Effective Date"), by and among Prime Medical Services,
Inc., a Texas corporation (the "Company") and MBC Holding Company, L.L.C., a
Texas limited liability company (the "Holder").
WHEREAS, the Company has issued a Warrant Certificate, dated as of the
Effective Date (the "Warrant"), pursuant to which the Company has issued to the
Holder, a Warrant to purchase shares of the Company's common stock, $0.01 par
value (interchangeably, "Stock" or "Common Stock").
WHEREAS, in order to induce the Holder to purchase the Common Stock,
the parties hereto have agreed to enter into this Agreement pursuant to which
the Company has agreed to grant registration rights with respect to the Common
Stock.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Registration Rights.
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1.1 Incidental Registration Rights. If the Company at any time proposes to
register any of its Common Stock under the Securities Act for sale to the
public, whether for its own account or for the account of other security holders
or both (except with respect to registration statements on Form S-4 or another
form not available for registering the Stock for sale to the public), it will
give written notice to the Holder of its intention so to do, which notice shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify the Stock under the applicable state securities laws. Upon the written
request of the Holder, given within 10 days after receipt of any such notice, to
register any of its or their Stock (including Stock which the holder has the
right to acquire upon the exercise of the Warrant), the Company will, subject to
the limitations and conditions contained herein, use its best efforts to cause
the Stock as to which registration shall have been so requested (which shall
also be referred to as the "Covered Shares") to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
Holder; provided, however, that:
(a) The Holder shall have the right to request inclusion of its Stock (and
have such Stock included) in two registration statements that are
declared effective by the Commission;
(b) If, at any time after giving such written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities,
the Company may, at its election, give written notice of such
determination to the Holder, if a request as hereinabove provided has
been made, and thereupon the Company shall be relieved of its
obligation to register any Common Stock in connection with such
registration; and
(c) If such registration involves an underwritten offering, the Holder, if
the Holder has requested to be included in the Company's registration,
must sell its Common Stock to the underwriters selected by the Company
on the same terms and conditions as apply to the Company (except as
otherwise set forth herein).
The number of Covered Shares to be included in such an offering may be
reduced if and to the extent that the managing underwriter, if any, shall be of
the opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein. Notwithstanding anything to the
contrary contained in this Section 1.1, in the event that there is an
underwritten public offering of securities of the Company pursuant to a
registration covering Stock and the Holder does not elect to sell its Stock to
the underwriters of the Company's securities in connection with such offering,
the Holder shall refrain from selling such Stock during the period of
distribution of the Company's securities by such underwriters, the period in
which the underwriting syndicate participates in the after market and during any
lock-up period requested by such underwriters; provided, however, that the
Holder shall, in any event, be entitled to sell its Stock commencing on the
180th day after the effective date of such registration statement.
1.2 Registration Procedures. If and whenever the Company is required by the
provisions of Section 1 hereof to effect the registration of any of the Covered
Shares under the Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement (which,
in the case of an underwritten public offering pursuant to Section 1.1
hereof, shall be on Form X-0, XX-0 or other form of general
applicability satisfactory to the managing underwriter) with respect to
such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus in connection therewith
as may be necessary to keep such registration statement effective for
the period of distribution and as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Common Stock covered by such registration statement in accordance with
the sellers intended method of disposition set forth in such
registration statement for such period;
(c) furnish to the Holder, as applicable, and each underwriter such number
of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as they may reasonably
request in order to facilitate the public sale or other disposition of
the Covered Shares covered by such registration statement;
(d) use its best efforts to register or qualify the Covered Shares covered
by such registration statement under the securities or blue sky laws of
such jurisdictions as the Holder or, in the case of an underwritten
public offering, the managing underwriter, shall reasonably request
(provided that the Company will not be required to (1) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (2) subject
itself to taxation in any such jurisdiction or (3) consent to general
service of process in any such jurisdiction);
(e) promptly notify the Holder under such registration statement and each
underwriter, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act when it becomes aware of the
happening of any event as a result of which the prospectus contained in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances then
existing;
(f) use its best efforts (if the offering is underwritten) to furnish, at the
request of the Holder on the date that the Covered Shares are delivered to
the underwriters for sale pursuant to such registration: (1) an opinion
dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters and in customary form and
covering such matters as are customarily covered by opinions of counsel in
similar registrations and as may be required in the underwriting agreement
relating thereto, as may reasonably be requested by the underwriters or by
the Holder, as applicable; and (2) a comfort letter dated such date from
the independent public accountants retained by the Company, addressed to
the underwriters, in customary form and covering such matters as are
customarily covered by such comfort letters in similar registrations and as
may be required in the underwriting agreement relating thereto, as such
underwriters or the Holder, as applicable, may reasonably request; and
(g) make available for inspection by the Holder, any underwriter
participating in any distribution pursuant to such registration
statement, and any attorney, accountant, or other agent retained by the
Holder, or underwriter, all financial and other records, pertinent
corporate documents, and properties of the Company, and cause the
Company's officers, directors, and employees to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant, or agent in connection with such registration statement.
For purposes of paragraphs (i) and (ii) above, the period of
distribution of Covered Shares in an underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Covered Shares in
any other registration shall be deemed to extend until the earlier of the sale
of all Covered Shares or 180 days after the effective date thereof.
In connection with each registration hereunder, the Holder will furnish
to the Company in writing such information with respect to itself and the
proposed distribution by it as shall be requested by the Company in order to
assure compliance with federal and applicable state securities laws.
In connection with each registration covering an underwritten public
offering, the Company agrees to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and containing
such provisions as are customary in the securities business for such an
arrangement between major underwriters and companies of the Company's size and
investment stature; provided that such agreement shall not contain any such
provision applicable to the Company that is inconsistent with the provisions
hereof and, further, provided that the time and place of the closing under such
agreement shall be as mutually agreed upon between the Company and such managing
underwriter.
The Company will not be obligated to include any shares of Stock owned
by the Holder upon the Holder's request that a proposed registration include
such Stock if the Company delivers to the Holder the opinion of the Company's
counsel to the effect that the requested registration is not required to permit
the proposed disposition or any resale of such Stock without restrictions on
transfer under the Securities Act, which opinion may be furnished to and relied
upon by any broker through which the Holder intends to sell shares of Stock.
1.3 Conditions to Obligation to Register Shares. The Company's obligations
under this Section 1 shall be subject to the following limitations and
conditions:
(a) Information. The Company shall have received from the Holder all such
information as the Company may reasonably request from the Holder
concerning itself and its methods of distribution of the shares of
Stock to enable the Company to include in the registration statement
all material facts required to be disclosed therein.
(b) Notice Requirements. Any request by the Holder pursuant to this Agreement
for registration of the offering, sale and delivery of shares of Stock
shall provide that the Holder (i) has a present intention to sell such
shares; (ii) agrees to execute all consents, powers of attorneys and other
documents required in order to cause such registration statement to become
effective; (iii) agrees, if the offering is at the market, to give the
Company written notice of the first bona fide offering of such shares and
to use the prospectus forming a part of such registration statement only
for a period of 90 days after the effective date of the registration
statement unless the offering is pursuant to a continuous registration
pursuant to Rule 415 promulgated under the Securities Act; (iv) subject to
adverse events regarding the selling price of the shares, agrees to utilize
the proposed method of distribution of the shares; and (v) agrees to
promptly notify the Company and each underwriter, if any, with regard to
any registration statement, at any time when it becomes aware of the
happening of any event as a result of which any prospectus contained in
such registration statement that has been provided to the Holder includes
an untrue statement of a material fact regarding the Holder or omits to
state a material fact regarding the Holder required to be stated therein or
necessary to make the statements contained therein regarding the Holder not
misleading in light of the circumstances then existing.
1.4 Distribution Arrangements. The Holder agrees that, in disposing of the
shares of Stock owned by it in the registered public offering, it will comply
with Rules 10b-2, 10b-6 and 10b-7 and any other applicable rules promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "1934 Act").
1.5 Expenses. All expenses incurred by the Company in complying with a
registration covering Stock, including, without limitation, all registration,
qualification, and filing fees, blue sky fees and expenses, printing expenses,
fees and disbursements of legal counsel and independent public accountants for
the Company, the reasonable fees and expenses of one law firm serving as legal
counsel for the Holder, fees of the National Association of Securities Dealers,
Inc., transfer taxes, escrow fees, fees of transfer agents and registrars, and
costs of insurance, but excluding any Selling Expenses, are herein called
"Registration Expenses." All underwriting discounts, and selling commissions
applicable to the sale of Covered Shares are herein called "Selling Expenses."
The Company shall pay all Registration Expenses in connection with any
registration statement filed pursuant to this Section 1. All Selling Expenses in
connection with any registration statement filed pursuant to this Section 1
shall be borne by the Holder, or by such persons other than the Company (except
to the extent the Company shall be a seller), as they may agree.
1.6 Miscellaneous.
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1.6.1 Registration Rights are Exclusive. The Holder
understands that it has certain registration rights pursuant to this
Agreement with respect to its shares of Stock, but other than as
specifically set forth in this Agreement, the Company has not
covenanted and is not obligated to finish a registration statement
under the Securities Act covering any shares of Stock, to file a
notification under Regulation A promulgated under the Securities Act
with respect to shares of Stock, or to take any other action that would
make available an exemption from registration.
1.6.2 No Requirement. In no event shall the Company be
required to amend any registration statement filed pursuant to this
Agreement after it has become effective or to amend or supplement any
prospectus to permit the continued disposition of shares of Common
Stock registered under any registration statement in either case beyond
the period initially contemplated therein.
1.7 Indemnification. In the event of a registration of any of the Covered Shares
under the Securities Act, the Company shall indemnify and hold harmless the
Holder thereunder, and each underwriter and each associate, if any, of the
Holder, as applicable, or underwriter, against any losses, claims, damages, or
liabilities, joint or several, to which the Holder, or underwriter or associate
thereof may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
Covered Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction by the Company in connection with any
such registration, and shall reimburse the Holder, each underwriter and/or
associate thereof for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage, or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in conformity with information
furnished by the Holder, each underwriter and/or associate thereof in writing
specifically for use in such registration statement or prospectus.
In the event of a registration of any of the Covered Shares under the
Securities Act, the Holder will indemnify and hold harmless the Company and its
affiliates, if any, and each underwriter and each associate of any underwriter
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such underwriter or associate may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Covered Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company, each underwriter and/or associate thereof for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Holder will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to the Holder as such, furnished in writing to the Company by the
Holder specifically for use in such registration statement or prospectus; and
provided further, however, that the liability of each of the Holder hereunder
shall be limited to the proportion of any such loss, claim, damage, liability or
expense that is equal to the proportion that the public offering price of shares
sold by the Holder under such registration statement bears to the total public
offering price of all securities sold thereunder, but not to exceed the proceeds
received by the Holder, from the sale of Common Stock covered by such
registration statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability it may have to any
indemnified party other than under this Section 1.7. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 1.7 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so elected; provided, however
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select separate counsel and
to assume its defense and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred. The indemnifying party will not be subject to any settlement made
without its consent, which consent shall not be unreasonably withheld. The
indemnifying party will pay to the indemnified party all sums due hereunder
within 10 days of a final non-appealable judgment or pursuant to the terms of a
settlement agreement.
1.8 Limitation on Subsequent Registration Rights. From and after the date of
this Agreement, without the prior written consent of Holder, the Company shall
not enter into any agreement with any holder or prospective holder of any
securities of the Company (nor shall the Company, in the absence of any such
prior agreement, permit any such holder or prospective holder) to include such
securities in any registration contemplated by this Agreement other than
"piggyback" registration rights with terms which are less favorable than those
granted in this Agreement.
[Signature page follows]
S-1
SIGNATURE PAGE
TO
INCIDENTAL REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be signed and delivered by its duly authorized officer or
representative as of the Effective Date.
PRIME MEDICAL SERVICES, INC.
By: _____________________________
Printed Name: _____________________
Title: ____________________________
MBC HOLDING COMPANY, L.L.C.
By: _____________________________
Printed Name: _____________________
Title: ____________________________
