February 22, 2002
Bank of America, N.A., Fleet National Bank, formerly known as
as Administrative Agent BankBoston, N.A.,
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx as Documentation Agent
Xxxxxx, Xxxxx 00000 000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Request for Amendment to and Waiver of Certain Provisions of the Fourth
Amended and Restated Loan Agreement
Prime Medical Services, Inc., a Delaware corporation ("Company"), certain
Lenders (the "Lenders"), Bank of America, N.A., as Administrative Agent for
those Lenders ("Administrative Agent"), and BankBoston, N.A. (now known as
Fleet National Bank) as Documentation Agent for those Lenders (together with the
Administrative Agent, the "Agents") have entered into that certain Fourth
Amended and Restated Loan Agreement (as renewed, extended, restated, and amended
from time to time, the "Loan Agreement") dated as of January 31, 2000. Under the
terms of certain Guaranties (for each Guarantor defined below, the "Guaranty"),
certain of the "Subsidiaries" (as defined in the Loan Agreement) of Company
(collectively, the "Guarantors") have guaranteed payment of the "Guaranteed
Indebtedness" (as defined in the Guaranty). Unless otherwise specified
(i) capitalized terms used herein shall have the same meanings as set forth in
the Loan Agreement and (ii) references to "Sections" are to sections of the Loan
Agreement. Company hereby requests an amendment of certain terms and provisions
of the Loan Agreement, subject to the terms and conditions contained herein.
Section 1. Company Request. Company has advised Agents that it requests consent
of the Lenders to: (i) certain accounting writeoffs, (ii) amend the Total Net
Funded Debt to EBITDA Ratio, and (iii) amend the definition of Debt Service
Coverage Ratio.
Section 2. Amendments to Loan Agreement. The Loan Agreement shall be amended as
follows:
A. The definition of "Debt Service Coverage Ratio" set forth in Section
1.2 of the Loan Agreement shall be amended in its entirety to read as follows:
"Debt Service Coverage Ratio" means, as to the Companies (including on a pro
forma basis any Company acquired in any Permitted Acquisition, Permitted Other
Business Acquisition, or Permitted Refractive Acquisition for each of the
components of and for the entire period of calculation of Debt Service Coverage
Ratio) for any period, the ratio of (a) the sum of: (i) Adjusted EBITDA for such
period, minus (ii) the aggregate amount of Unfinanced Capital Expenditures made
during such period, minus (iii) all cash tax payments, divided by (b) the sum
of: (w) all cash interest payments payable during such period in respect of all
Debt of the Companies (without deduction for any minority interests), plus (x)
1/7 of the outstanding principal amount of the Loans and 1/7 of the outstanding
"Obligations" under the Advancing Term Loan Facility as of any date of
determination, plus (y) 1/7 of the Consolidated Earn-Out Indebtedness as of any
date of determination, plus (z) any regularly scheduled principal payments on
Debt (including Subordinated Debt, but excluding Earn- February 22, 2002 Page 2
D-990623.3 Out Indebtedness), all as determined on a rolling four (4) quarter
and consolidated basis in accordance with GAAP.
B. The definition of "EBITDA" set forth in Section 1.2 of the Loan Agreement
shall be amended in its entirety to read as follows:
"EBITDA" means, for any Person for any period: (a) Consolidated Net Income of
such Person for such period, determined after deduction of any minority
interests, plus (b) all amounts deducted therefrom during such period, in
conformity with GAAP, for interest, taxes, depreciation and amortization,
provided that cash flow from Permitted Passive Investments shall only be
included in the calculation of EBITDA to the extent: (i) it has been actually
received by Borrower or a Guarantor, and (ii) it does not exceed fifteen percent
(15%) of total EBITDA for such period, and provided further, that the 2002
Adjustments shall be excluded from any calculation of Borrower's EBITDA.
C. Section 1.2 of the Loan Agreement shall be amended by adding thereto
the following definitions of "Capital Expenditures", "2002 Adjustments ", and
"Net Capital Expenditures" in proper alphabetical order:
"Capital Expenditures" means an expenditure (determined in accordance with GAAP)
for any fixed asset owned by any Company and used in the operations of such
Company having a useful life of more than one year, or any improvements or
additions thereto, including the direct or indirect acquisition of such assets,
and including any Capitalized Lease Obligations.
"2002 Adjustments" means the sum of the following writeoffs of the Companies to
be recognized by Borrower as of December 31, 2001: (a) the impairment of
goodwill related to the Subsidiaries of Borrower in the refractive and
lithotripsy businesses, not to exceed $28,500,000, as required by Statement
133 of the Financial Accounting Standards Board, (b) the write down of accounts
receivable of the Companies not to exceed $3,800,000, and (c) severance payments
due to former executive officers of Borrower not to exceed $2,500,000.
"Unfinanced Capital Expenditures" means for any Person for any period, the
aggregate of Capital Expenditures during such period, minus the aggregate amount
of such Capital Expenditures incurred in connection with the Real Estate
Acquisition.
D. Section 10.1 of the Loan Agreement is hereby amended in its entirety to read
as follows:
Section 10.1 Total Net Funded Debt to EBITDA. Borrower will not permit the Total
Net Funded Debt to EBITDA Ratio, determined as of the last day of each fiscal
quarter of February 22, 2002 Page 3 D-990623.3 the Companies and for the four
(4) fiscal quarter period then ending, to exceed the ratio set forth opposite
such period below:
Period Ratio
January 1, 1998 through December 31, 2000 3.50 to 1.0
January 1, 2001 through March 31, 2002 3.25 to 1.0
June 30, 2002 and thereafter 3.00 to 1.0
E. Section 10.4 of the Loan Agreement is hereby amended in its entirety to
read as follows:
Section 10.4 Consolidated Net Worth. Borrower shall not permit, as of the last
day of each fiscal quarter of Borrower, its Consolidated Net Worth to be less
than $85,000,000, such amount to be increased beginning with the fiscal quarter
ending March 31, 2002, and on the last day of each successive fiscal quarter of
Borrower by an amount equal to one hundred percent (100%) of the increase in net
worth arising from any Acquisition or equity issuance during such fiscal
quarter, (b) increased on March 31, 2002 and on the last day of each successive
fiscal quarter of Borrower, by an amount equal to seventy-five percent (75%) of
positive Consolidated Net Income for such fiscal quarter; and (c) decreased on
any date after March 31, 2002 by the amount of capital stock of Borrower
repurchased or retired by Borrower or any Subsidiary, not exceeding $2,500,000
in the aggregate.
Section 3. Representations. The Company and each Guarantor hereby represent and
warrant to Agents and the Lenders that:
(i) the representations and warranties contained in the Loan Agreement and the
other Loan Documents are true and correct on and as of the date hereof as though
made on and as of such date; (ii) neither the Company nor any of the Guarantors
is in default in the due performance of any covenant or agreement contained in
the Loan Agreement or any other Loan Document; and (iii) no Default has occurred
and is continuing.
Section 4. Confirmations. Each of the Company and the Guarantors
ratifies and confirms that the Loan Agreement, the Guaranties, the Borrower
Security Agreement, the Guarantor Security Agreements, the Pledge Agreements,
and the other Loan Documents are and remain in full force and effect in
accordance with their respective terms, as amended hereby. In addition, each of
the Guarantors acknowledges, agrees, accepts and consents to the terms and
provisions hereof and each other Loan Document as amended hereby. Except as
expressly provided herein, this letter does not constitute a waiver or
modification of any of the terms or provisions set forth in the Loan Agreement
or any other Loan Document and shall not impair any right that Agents or the
Lenders may now or hereafter have under or in connection with the Loan Agreement
or any other Loan Document.
Section 5. No Impairment. The waivers and amendments hereby granted by Agents
and the Required Lenders (i) does not impair Agents' or any of the Lenders'
rights to insist upon strict compliance with the Loan Agreement or the other
Loan Documents, and (ii) does not extend to any other Loan Document. The Loan
Documents, as amended hereby continue to bind and inure to Agents, the Lenders,
Company, the Guarantors, and their respective successors and permitted assigns.
February 22, 2002 Page 4 D-990623.3
Section 6. Conditions Precedent. The effectiveness of this letter and amendment
agreement is subject to the conditions precedent that the Documentation Agent
and Administrative Agent shall have received all of the following, in form and
substance satisfactory to the Agents:
(a) Updating Certificate. A Certificate signed by the Chief Executive or Chief
Financial Officer or Vice President-Treasurer of Company and the Guarantors
setting forth any changes to the Schedules to the Loan Agreement since the date
of execution of the Loan Agreement;
(b) Attorneys' Fees and Expenses. Evidence that the costs and expenses
(including attorneys' fees) referred to in Section 13.1 of the Loan Agreement,
to the extent incurred, shall have been paid in full by Company;
(c) No Default. No Default shall have occurred and be continuing under the Loan
Agreement;
(d) Representations and Warranties. All of the representations and warranties
contained in Article VII of the Loan Agreement hereof and in each of the other
Loan Documents shall be true and correct on and as of the date hereof with the
same force and effect as if such representations and warranties had been made
on and as of such date, except to the extent that such representations and
warranties speak to a specific date or the facts on which such representations
and warranties are based have been changed by transactions contemplated by the
Loan Documents; and
(e) Fees. Payment to each Lender executing a counterpart of this Agreement of a
fee equal to its Commitment on the date hereof, multiplied by 10.0 basis points.
Section 8. Counterparts. This agreement, when countersigned by Company,
Guarantors, Agents, and Required Lenders shall be a "Loan Document" as defined
and referred to in the Loan Agreement and the other Loan Documents and may be
signed in any number of counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
agreement shall be governed by and construed in accordance with the laws of the
State of Texas.
Section 9. Entire Agreement. THIS AGREEMENT, THE LOAN AGREEMENT,
THE NOTES AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
February 22, 2002
Page 5
If the foregoing is agreeable to you, please signify your acceptance of the
terms and conditions set forth herein by placing your signature in the space
provided below.
Very truly yours,
PRIME MEDICAL SERVICES, INC.,
as Company
By:
-------------------------------------
Xxxx X. Xxxxxxxx
Vice President-Treasurer
Signature Page Page One of Five
February 22, 2002
Page 6
GUARANTORS:
PRIME MEDICAL OPERATING, INC.
PRIME MANAGEMENT, INC.
PRIME CARDIAC REHABILITATION SERVICES, INC.
PRIME DIAGNOSTIC SERVICES, INC.
PRIME LITHOTRIPSY SERVICES, INC.
PRIME KIDNEY STONE TREATMENT, INC.
PRIME DIAGNOSTIC CORP. OF FLORIDA, INC.
PRIME LITHOTRIPTER OPERATIONS, INC.
PRIME PRACTICE MANAGEMENT, INC.
R.R. LITHO, INC.
OHIO LITHO, INC.
ALABAMA RENAL STONE INSTITUTE, INC.
SUN MEDICAL TECHNOLOGIES, INC.
SUN ACQUISITION, INC.
LITHOTRIPTERS, INC.
PROSTATHERAPIES, INC.
FASTSTART, INC.
NATIONAL LITHOTRIPTERS ASSOCIATION, INC.
EXECUTIVE MEDICAL ENTERPRISES, INC.
MEDTECH INVESTMENTS, INC.
PRIME RVC, INC.
each as a Guarantor
By:
-------------------------------------
Xxxx X. Xxxxxxxx
Authorized Officer
PRIME MEDICAL MANAGEMENT, L.P.
By: PRIME MEDICAL OPERATING, INC.,
a Delaware corporation, its General Partner
By: -------------------------------
Xxxx X. Xxxxxxxx
Authorized Officer
Signature Page Page Two of Five
February 22, 2002
Page 7
AGREED AND ACCEPTED as of the date first stated above.
BANK OF AMERICA, N.A., as Administrative Agent
By: Xxxxxxxx Xxxxxxx
Vice President
BANK OF AMERICA, N.A., as a Lender
By: Xxxxxx X. Xxxxxx
Senior Vice President
FLEET NATIONAL BANK (formerly known as
BANKBOSTON, N.A.), as Documentation Agent and a
Lender
By:
Name:
Title:
BANK ONE, NA, with its main office in Chicago,
Illinois, successor by merger to
BANK ONE, TEXAS N.A., as a Lender
By:
Name:
Title:
Signature Page Page Three of Five
February 22, 2002
Page 8
GUARANTY FEDERAL BANK, F.S.B., as a Lender
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH, as a Lender
By:
Name:
Title:
IMPERIAL BANK, as a Lender
By:
Name:
Title:
LaSALLE BANK, NATIONAL ASSOCIATION, formerly
known as LaSalle National Bank, as a Lender
By:
Name:
Title:
Signature Page Page Four of Five
February 22, 2002
Page 9
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH, RABOBANK, as Lender
By:
Name:
Title:
By:
Name:
Title:
Signature Page Page Five of Five
