U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-10701
TATONKA ENERGY, INC.
(Name of small business issuer in its charter)
Oklahoma, USA 73-1457920
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (214) 340-9912
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par Value of $.001 per Share
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $7,467.
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common equity
as of a specified date within the past 60 days: $435,557 based on the average of
the bid and asked price on June 1, 1998.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 49,099,069 shares of Common
Stock, $.001 par value, as of June 1, 1998.
Transitional Small Business Disclosure Format (check one): Yes__ No X
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TABLE OF CONTENTS
PART I
Page
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Item 1. Description of Business 3
Item 2. Description of Property 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 7
Item 6. Management's Discussion and Analysis or Plan of Operation 10
Item 7. Financial Statements 11
Item 8. Changes in and Disagreements with Accountants on Accounting 12
and Financial Disclosure
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 12
Item 10. Executive Compensation 14
Item 11. Security Ownership of Certain Beneficial Owners and Management 18
Item 12. Certain Relationships and Related Transactions 22
Item 13. Exhibits and Reports on Form 8-K 24
Signature Page 26
Index to Financial Statements 27
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PART I
Item 1. Description of Business
Business Development
The Registrant was organized under the laws of British Columbia,
Canada, on March 12, 1980, under the name of Sooner Energy Corp.
("Sooner-British Columbia"). On June 1, 1994, at an extraordinary general
meeting of members of Sooner-British Columbia, a special resolution was passed
for the continuance of the company as a Wyoming corporation in the United
States. On such date, Sooner-British Columbia was then"continued" as a Wyoming
corporation with the same name ("Sooner-Wyoming") and was immediately merged
into a wholly-owned subsidiary of Sooner-Wyoming which had been incorporated in
Oklahoma under the name of Tatonka Energy, Inc. ("Tatonka"). Tatonka was the
surviving corporation in the merger and is referred to in this report as
'Tatonka" or the 'Company.'
On April 3, 1998, the Company acquired 80% of the outstanding common
shares of Phy.Med., Inc., a Texas corporation ('PhyMed") in a reverse triangular
merger.
In connection with the Merger the Company issued and George C. Barker,
individually, and as Trustee of the Phy.Med., Inc. Employee Stock Ownership Plan
(the "ESOP"), acquired from the Company, in the aggregate, immediate ownership
of and the right to receive an aggregate of 68,915,409 authorized but unissued
shares of Common Stock, $.001 par value, of the Company, as presently
constituted, which, if all such shares were outstanding, would constitute 87.9%
of the Company's then outstanding 78,430,965 shares of Common Stock.
The parties involved in the merger contemplate a 1-for-10 reverse stock
split which will become effective shortly after the 1998 annual meeting of
shareholders. Upon the effectiveness of such reverse split, Mr. Barker and the
ESOP will own 6,941,540 shares of the 7,843,097 shares, $.01 par value,
outstanding (7,933,190 shares on a fully diluted basis). The Company will
continue to have 50,000,000 shares of Common Stock authorized.
The Company's registered office for service in Oklahoma is 1601 N.W.
Expressway, Suite 1910, Oklahoma City, Oklahoma 73118. The executive offices of
the Company are located in Dallas, Texas at 9603 White Rock Trail, Suite 100,
Dallas, Texas 75238. The main business telephone number of the Company at such
address is (214) 340-9912.
Business of the Company
The Registrant formerly engaged in the exploration and development of
oil and gas products. Arum Petroleum Corp., a wholly-owned subsidiary of the
Registrant, was dissolved in 1993 with its remaining assets and liabilities
distributed to its parent corporation. Effective May 1, 1994, the stock of
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Sooner Acquisition Corp., another wholly-owned subsidiary, was sold with the
Registrant incurring a loss of $27,076 on the sale. Gallatin Resources, Inc.,
yet another wholly-owned subsidiary was dissolved in December, 1994 with the
remaining assets and liabilities being distributed to the Company.
The Company explored for and developed oil and gas reserves in the
Mid-Continent region of the United States. The majority of the Company's proved
developed reserves were located in Caddo, Custer, Ellis and Kingfisher Counties
in Northwestern Oklahoma. The Company's exploration and production was conducted
for its own account. In 1996, the Company participated in no new wells. 1996 was
the second consecutive year that the Company saw no new revenue from oil and gas
production. As of December 31, 1996 the Company was no longer actively engaged
in the oil and gas industry.
In August 1996, Richard A. Green, Sr. acquired control of the Company
through Verde, Inc., a corporation he controlled. At the time of the change in
control, the Company had experienced more than 12 months of inactivity in the
oil and gas industry. The new Management decided that there was little realistic
hope of profitable operation in the oil and gas industry and determined to
explore new business opportunities in an attempt to bring revenue to the
Company.
On September 11, 1996, as part of the new research and development
efforts, the Company invested in a new restaurant concept modeled upon certain
aspects of successful franchises. As part of this research, the Company obtained
items of restaurant supplies and equipment for $30,000.00, and contributed them
to be used in the operation of the first store. That equipment was returned to
the Company upon the closure of the store. The Company contributed an additional
$8,550.00 in cash to assist in various aspects of the operation of the
restaurant before making the decision to reject the opportunity as not being
viable for the Company. The Company decided that the new restaurant concept was
not appropriate for the Company and decided to liquidate the investment.
In a further attempt to find new revenue for the Company, on November
6, 1996, the Company invested $1,000 dollars in the establishment of a
wholly-owned subsidiary, Crescent Contractors, Inc., in the State of Texas. This
subsidiary was formed for the purpose of seeking and developing new lines of
business, particularly in the commercial construction industry. On November 27,
1996, Crescent Contractors, Inc. entered into a Motel Construction Agreement
with AmeriTel, Inc., for the construction of a motel facility in Gainesville,
Texas. Crescent Contractors, Inc. simultaneously entered a Joint Venture
Agreement with Rustown Homes, Inc. This agreement provided for only nominal
participation by Rustown and a final distribution to Rustown of One Thousand
Dollars ($1,000) upon completion of the project as its share of any profit. The
Joint Venture agreement was considered necessary and was designed to reassure
AmeriTel by including a company with an operating history in the project while
allowing Crescent Contractors, Inc. to build a history as an operating business.
On or about July 21, 1997, Richard A. Green, Sr., ceased to control the
Company. Verde, Inc. sold its holdings to Richard Bowes and Joe R. Love, and Mr.
Green resigned all positions with the Company.
In March 1997, the Company sold all remaining items of restaurant equipment
it owned to Food Franchises, Inc. for an extension of credit of $37,448.00 Food
Franchises, Inc. was an affiliate Richard A. Green, Sr. On July 7, 1997, in
connection with the sale of Mr. Green's control, the Company sold the $37,448.00
receivable to Verde, Inc., in exchange for the assumption of liabilities of the
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Company in the amount of $25,636.00. The Company recognized a loss on the
transaction of $11,812.00. See "Item 12. Certain Relationships and Related
Transactions."
Also, in connection with the sale of Mr. Green's control, the Company
sold its wholly owned subsidiary, Crescent Contractors, Inc., to Rustown Homes,
Inc. on June 11, 1997, for $414.00. At the same time, the Company sold its
wholly owned subsidiary Cresthaven, Inc. to Crestmont International, Inc. for
$414.00. In each case, the amount of the consideration constituted full
reimbursement to the Company of all expenditures paid on behalf of the
subsidiary. In addition, in each case the buyer was owned or partly owned by
Richard A. Green, Sr. No gain or loss was realized by the Company on these
sales.
Therefore, at December 31, 1997, the Company had only nominal assets
and no active business operations.
Canadian Regulation
The Company does not believe that it is subject to the provisions of
Investment Canada Act ("ICA") because as of December 31, 1996, it has not had
any employees in Canada for at least two years and did not maintain a business
establishment in Canada which would cause it to be considered a Canadian
business enterprise subject to ICA. The Company does not plan to alter its
contacts with Canada and, therefore, believes that ICA will continue not to be
applicable to the common stock of the Company and the acquisition thereof by a
non-resident or non-citizen of Canada. However, in the event that management of
the Company should, for whatever reason, decide that it is in the best interests
of the Company to hire employees in Canada, lease office space in Canada, or
acquire oil and gas properties in Canada, the Company would probably be deemed
to be a Canadian business enterprise and ICA would be applicable.
Employees
As of December 31, 1997, the Company had no full-time employees.
Recent Acquisition
As discussed above, the Company acquired 80% of PhyMed on April 3,
1998. In connection with the acquisition, a change of control occurred and
George C. Barker became the controlling shareholder of the Company. Mr. Barker
filed a Schedule 13D with the Commission on April 13, 1998, and the Company
filed a Form 8-K on April 20, 1998, to report these events.
PhyMed's Present Business and Contemplated Growth. PhyMed is a
seven-year-old company engaged in the operation and management of medical
diagnostic imaging centers, which provide a full scope of medical diagnostic
imaging services including magnetic resonance imaging (MRI), computer axial
tomography (CAT) scans, x-rays and other radiological services to physicians.
Currently, PhyMed owns and operates a diagnostic imaging center (the "Center" or
the "Dallas Center") in Dallas, Texas, which provides diagnostic services to
physicians in the greater Dallas area. The Dallas Center occupies approximately
13,000 square feet in leased premises. PhyMed also manages an imaging center in
Plano, Texas for other owners.
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Prior to the acquisition, PhyMed was a privately-held company and the
transaction with PhyMed was undertaken as part of an overall plan for expanding
the business of PhyMed through, among other possible endeavors, the development
of new centers, acquisitions of existing centers and commencing and expanding
the use of exclusive capitated services contracts, with a view towards
increasing the per-share value of the Company for the benefit of the
shareholders. There is no assurance any of these expansion efforts will take
place or that, if undertaken, they will be undertaken on terms favorable to the
Company, will be continued, or will be profitable.
PhyMed also has plans to establish a radiological professional
practices division and a capitated services division to market its radiological
services to self-insured corporations, health maintenance organizations,
preferred provider organizations and insurance companies; and a physician
practice management and services division. There is no assurance either of these
divisions will become actual business operations, or that, if commenced, any
such business operations will be conducted on terms favorable to the Company,
will be continued, or will be profitable.
This expansion will require additional capital, and the managements of
the Company and PhyMed believe that raising additional capital can best be
achieved through PhyMed having access to the public shareholders and reporting
company status under the Securities Exchange Act of 1934, which the Company
affords.
In furtherance of this goal of raising additional capital for
expansion, the Company has recently commenced a private offering of securities
to accredited investors only. The offering seeks to raise a minimum of $200,000
and a maximum of $3,000,000 from the sale of Units of a new Series B 12%
Convertible Preferred Stock and Warrants to purchase Common Stock.
Item 2. Description Property
At December 31, 1997, the Company did not own or operate any
properties.
Item 3. Legal Proceedings
At December 31, 1997, the Company was not a party to any pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fourth (last) quarter of the fiscal year ended December 31, 1997.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is quoted on the NASD's Electronic Bulletin
Board traded in the over-the-counter market under the symbol "TTKA". Trading is
only sporadic and there is no established trading market. The tables below list
the high and low bid prices in U.S. dollars for each quarter of the last two
fiscal years, as provided by CCDC, Inc.
Bid Quotations*
--------------------------
Low High
1997 (U.S. Dollars):
First Quarter .02 .12
Second Quarter .02 .12
Third Quarter .05 .15
Fourth Quarter .05 .15
1996 (U.S. Dollars):
First Quarter .01 .02
Second Quarter .01 .02
Third Quarter .01 .02
Fourth Quarter .01 .02
- - ------------------------------------------------------------------------------
*These quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and thus may not represent actual
transactions.
The Company has not paid any dividends on its Common Stock and
anticipates that future earnings, if any, will be retained to finance future
growth. In addition, the 135,139 shares of Series "A" Preferred Stock have an
annual noncumulative dividend preference of $6,757 (5% of Can. $135,139).
Accordingly, the Company does not anticipate paying any dividends on Common
Stock for the foreseeable future.
The Company is not aware of any limitations on the rights of foreigners
to hold or vote its securities, save and except the potential application of the
Foreign Investment Review Act of Canada (the "ICA").
The Company does not believe that it is subject to the provisions of
ICA, because, as of December 31, 1997, it did not have any employees in Canada
and did not maintain a business establishment in Canada which would cause it to
be considered a Canadian business enterprise subject to ICA. The Company does
not plan to alter its contacts with Canada and, therefore, believes that ICA
will continue not to be applicable to the Common Stock of the Company and the
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acquisition thereof by a non-resident or non-citizen of Canada. However, in the
event that Management of the Company should, for whatever reason, decide that it
is in the best interests of the Company to hire employees in Canada, lease
office space in Canada, or acquire properties in Canada, the Company would
probably be deemed to be a Canadian business enterprise and ICA would be
applicable.
Within the past three years, the Company has sold the following
securities without registering under the Securities Act:
(a) During 1997, Messrs. Joe R. Love, Joe P. Foor and an outside
consultant, Richard Bowes, rendered services to the Company in
connection with Board meetings and, specifically, for due
diligence efforts regarding merger candidates. In consideration
of such services, on October 16, 1997, the Board of Directors
authorized, in general, the issuance of an aggregate of 3,000,000
shares, as presently constituted, to such persons (1,000,000
shares to each of such persons). Effective December 31, 1997, the
Board of Directors authorized the Company to treat the shares as
having been earned in full and deemed to be issued on such date.
The Common Stock was trading at approximately $0.06 per share on
such date. The shares were valued at $0.02 per share, on the
basis of the market value of the stock, discounted for being
"restricted securities" and lack of liquidity, as well as the
Company's lack of earnings and book value. See "Item 12. Certain
Relationships and Related Transactions."
The issuance of these shares was exempt under Section 4(2) of the
Securities Act. These shares were issued to persons who were at
the time a principal shareholder of the Company (Mr. Bowes) and
two Directors (Messrs. Love and Foor), one of whom (Mr. Love) was
also a principal shareholder of the Company. Such persons have
access to information concerning the Company and the ability to
fend for themselves. In addition, they took the shares for
investment.
(b) On April 3, 1998, the Company issued by operation of law in a
reverse triangular statutory merger certain shares of Common
Stock in a business combination. The Company acquired ownership
of 80% of Phy.Med., Inc. in the merger. In connection with the
merger, George C. Barker, individually, and the Phy.Med., Inc.
Employee Stock Ownership Plan (the "ESOP"), acquired from the
Company, in the aggregate, immediate ownership of and the right
to receive an aggregate of 68,915,409 authorized but unissued
shares of Common Stock, $.001 par value, of the Company, as
presently constituted, which, if all such shares were
outstanding, would constitute 87.9% of the 78,430,965 shares of
Common Stock the Company would then have outstanding. See "Item
11. Security Ownership of Certain Beneficial Owners and
Management."
The issuance of these shares is exempt under Section 4(2) of the
Securities Act. The Company is issuing these shares to a
sophisticated investor. In addition, Mr. Barker has access to
information concerning the Company and the ability to fend for
himself. He and the ESOP, of which he is the sole trustee, are
taking the shares for investment.
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(c) Effective December 31, 1997, the Board of Directors authorized
the Company to issue to Joe P. Foor 1,000,000 shares of Common
Stock, as presently constituted (which will be 100,000, after
giving effect to a proposed 1-for-10 reverse stock split), as a
finder's fee for his services in introducing the Company and
Phy.Med., Inc., and assisting in the consummation of an
acquisition of PhyMed, such shares to be issuable only in the
event of the consummation of a business combination transaction
whereby the Company acquires Phy.Med., Inc. On such date, the
Common Stock was trading at about $0.06 per share (or $20,000).
The 1,000,000 shares were valued at $0.02 per share, on the basis
of the market value of the stock, discounted for being
"restricted securities" and lack of liquidity, as well as the
Company's lack of earnings and book value. The Company became
obligated to issue such 1,000,000 shares of Common Stock to Joe
Foor for his services when the merger transaction which became
effective on April 3, 1998, and the shares are deemed to have
been issued on such date.
The issuance of these shares will be exempt under Section 4(2) of
the Securities Act. These shares are being issued to a Director
of the Company. Such person has access to information concerning
the Company and the ability to fend for himself. In addition, he
will take the shares for investment. See "Item 11. Security
Ownership of Certain Beneficial Owners and Management."
(d) Effective May 4, 1998, the Board of Directors granted stock
options to Messrs. Barker, Love and Foor, subject to the approval
of the shareholders. Each of the options is subject to a separate
stock option agreement and is not part of a plan. The three
options are exercisable to purchase a total of 10,000,000 shares
of the Company's Common Stock at $0.075 per share, as presently
constituted (1,000,000 shares at $.75 per share, after the
effectiveness of the 1-for-10 reverse stock split).
Mr. Barker's option is exercisable to purchase 5,000,000 shares
of Common Stock, as presently constituted (500,000 shares, after
the effectiveness of the 1-for-10 reverse stock split). The
option is not immediately exercisable. It vests and becomes
exercisable in full at the end of any quarter during any fiscal
year when the cumulative "Operating Profit Before Corporate
Overhead" for such fiscal year to date equals or exceeds
$1,065,483.
Mr. Barker's option has a term of 10 years and expires on May 4,
2008. The purpose of Mr. Barker's stock option is to retain and
incentivise him as Chairman of the Board, President and Chief
Executive Officer of the Company.
The options granted to Mr. Love and Mr. Foor are each exercisable
to purchase 2,500,000 shares, as presently constituted (250,000
shares, after the effectiveness of the 1-for-10 reverse stock
split). Each option can be exercised in whole or in part at any
time after the effectiveness of the 1-for-10 reverse stock split,
has a term of 10 years and expires on May 4, 2008. The purpose of
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the options granted to Mr. Love and Mr. Foor is to compensate
them for serving as Directors of the Company.
The grant of the options was exempt under Section 4(2) of the
Securities Act. These options were granted to the three Directors
of the Company, one of whom is also the Chief Executive Officer
of the Company. The optionees have access to information
concerning the Company and the ability to fend for themselves. In
addition, the optionees took the options for investment. The
issuance of the underlying shares of Common Stock upon exercise
of the options will likewise be exempt for the same reason.
However, the Company plans to register the shares of Common Stock
underlying the options on Form S-8 whenever anyone of the three
optionees advises the Company that he would like to exercise part
or all of his option. See "Item 10. Executive Compensation."
Item 6. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation.
The Company had no revenue from operations in 1997 or 1996. At December
31, 1997, the Company has only nominal assets, no liabilities, no current
business operations and no employees. The Company's total assets consists of
$116 cash. The Company will continue to depend on present management as its
major source of liquidity, as it has no unused line of credit or any formal
arrangements with any lending institution to borrow any funds.
During 1996 and 1997, former and present management has engaged in a
process of seeking out new business opportunities for the company. As part of
this process, they met with several investment bankers and broker-dealers in an
effort to generate interest in conducting a public offering of the Company's
securities. However, as of December 31, 1997 such discussions had not resulted
in an agreement for such offering. July of 1997 brought a change in management,
but no public offering was successfully undertaken. As of December 31, 1997,
management has been unable to secure additional financing through the public
market. Nonetheless, the Company will continue to seek out and investigate
opportunities which are presented through the contacts of present management.
As of December 31, 1997, the Company's future efforts to obtain
additional capital may include efforts to conduct a public or private offering
of the Company's equity securities, as well as proposed acquisitions of real
estate properties in exchange for Common Stock of the Company. However, the
Company will wait until more details are available for review and analysis
before making a final decision in this matter. In the opinion of the Company,
due to its lack of substantial current assets, it is possible that the Company
may have to issue additional equity or debt instruments, including substantial
blocks of common stock, in order to complete a transaction involving the
development of any new business operations. In addition, although there are no
formal plans to purchase significant properties or equipment, the Company
considers it likely that an issuance of equity or debt instruments would be
necessary to secure any new assets. At December 31, 1997, the Company does not
have enough details to form a formal plan.
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During 1997, Messrs. Joe R. Love, Joe P. Foor and an outside
consultant, Richard Bowes, rendered services to the Company, partly for services
rendered in connection with Board meetings and partly for consulting services
consisting of due diligence efforts regarding merger candidates. In
consideration of such services, on October 16, 1997, the Board of Directors
authorized the issuance of an aggregate of 3,000,000 shares, as presently
constituted, to such persons (1,000,000 shares to each of such persons). The
Company treated the shares as having been earned in full and issued at the end
of the year, December 31, 1997. The Company valued such services at $60,000 and
recorded that amount as an expense for 1997. The Common Stock was trading at
approximately $0.06 per share on December 31, 1997. The shares were valued at
$0.02 per share, on the basis of the market value of the stock, discounted for
being 'restricted securities" and lack of liquidity, as well as the Company's
lack of earnings and book value.
Effective April 3, 1998, pursuant to an agreement and plan or
reorganization and merger, between the Company and Phy.Med., Inc. (PhyMed), the
Company acquired 80% of the outstanding capital stock of PhyMed in exchange for
68,915,409 shares of common stock. The merger, which results in the former
PhyMed shareholders owning approximately 87.9% of the outstanding Common Stock
of the Company, will be accounted for as a reverse acquisition whereby PhyMed
will be deemed to the acquiring company.
Unaudited financial information for PhyMed as of December 31, 1997, and
for the year then ended is presented below:
Total assets $5,210,032
Stockholders' equity $ 203,554
Net revenue $3,884,043
Net earnings $ 183,348
PhyMed has 30 full-time employees, none of whom is represented by a
labor union. PhyMed considers its employee relations to be good.
Item 7. Financial Statements
The following financial statements are attached to this report:
Balance Sheet - December 31, 1997
Statements of Operations -
Year ended December 31, 1997 and 1996
Statement of Stockholders' Equity -
Year ended December 31, 1997 and 1996
Statements of Cash Flows -
Year ended December 31, 1997 and 1996
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Notes to Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Directors
The shareholders elected three Directors at the last Annual Meeting
of Shareholders on July 15, 1997. The three Directors were Messrs. Joe R. Love,
Joe P. Foor and Richard A. Green, Sr. Mr. Green resigned as a Director and
officer of the Company on July 21, 1997, in connection with the sale of a
controlling interest in the Company beneficially owned by him. George C. Barker
was elected as a director on April 3, 1998, in connection with the Merger, to
fill the existing vacancy. The term of the present directors will expire
concurrently with the election of directors at the forthcoming 1998 Annual
Meeting of Shareholders.
Management will propose that Messrs. Barker, Love and Foor be
re-elected as Directors for the coming year at the forthcoming 1998 Annual
Meeting of Shareholders and that two additional Directors be elected; namely,
Marilyn Moss and Judith F. Barker. George C. Barker and Judith F. Barker are
married.
The Company's Certificate of Incorporation provides that the number of
Directors shall be as specified in the Bylaws, and the Bylaws provide that the
number of Directors shall be not less than one nor more than seven. The Bylaws
further provide that the shareholders may at any annual meeting determine the
number of Directors, and the number so determined shall remain fixed until
changed at a subsequent annual meeting. The present number of authorized
Directors is three, and management proposes to enlarge the Board of Directors to
five members.
Each Director elected at the forthcoming 1998 Annual Meeting of
Shareholders will serve until the next Annual Meeting of Shareholders and until
his or her successor has been duly elected and qualified.
Information Concerning Nominees
Management's presently contemplated five nominees for Director are
listed below with brief statements setting forth their principal occupations and
other biographical information. Certain information concerning the five nominees
to the Board of Directors is set forth in "Item 11. Security Ownership of
Certain Beneficial Owners and Management."
George C. Barker
Joe R. Love
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Joe P. Foor
Marilyn Moss
Judith F. Barker
George C. Barker has a background in management and healthcare of more
than twenty-five years. He was appointed to the Board of Directors of the
Company in April 1998 after the acquisition of Phy.Med., Inc. At the same time,
he was also elected Chairman of the Board, President and Chief Executive
Officer. He co-founded Phy.Med., Inc. in 1990 and has been the President, Chief
Executive Officer and the Chairman of the Board of Directors of that company
since 1993. Mr. Barker's background includes financial and administrative
positions with large hospitals, division level management with national hospital
management companies and radiology center operations. His management duties have
included responsibilities for annual budgets exceeding $45 million and 1,100
employees. He earned his MBA at Suffolk University and his undergraduate degree
at New Hampshire College and is 54 years old.
Joe R. Love has been a Director since the Company's inception in the
early 1980's. In addition to being co-founder and Chairman of CCDC, Inc., he is
on the Board of Directors of First Cash, Inc., a public company which operates a
chain of pawn shops, for which Mr. Love has served as a Board member since 1991.
He is also a director of Western Country Clubs, Inc., a public company which
operates country and western night clubs. He has been instrumental in arranging
public offerings totaling approximately $52 million for a number of his
portfolio companies. Over the last ten years, Mr. Love has been involved in
several other public companies as well as being active in real estate and
restaurant ventures. His real estate activities include acting as general
partner of a $94 million joint venture with Metropolitan Life Insurance Company.
He has also been involved as a partner in several Hilton Hotels. Mr. Love is a
graduate of the University of Oklahoma with a BBA and is 59 years old.
Joe P. Foor has been a Director of the Company since 1996. He is the
Chief Executive Officer of Featherstone Financial Services, representing such
clients as Greenbriar Corporation (a publicly-held company based in Dallas,
Texas), Qual-Med, Inc., Catalyst Energy Systems, and other businesses. Mr. Foor
holds a BA from The University of Oklahoma and a Masters Degree from Southern
Methodist University and is 59 years old.
Marilyn Moss is a nominee for Director and has been Executive Vice
President - Operations since April 1998. She has over twenty years experience in
the radiology services business. She joined PhyMed in February 1998 as Executive
Vice President - Operations. Previously, she had been, since 1994, the Vice
President-Diagnostic Imaging for Physicians Resource Network, Inc., a publicly
traded company in the Dallas area and had responsibility for six outpatient
imaging centers, twenty cancer centers and 32 radiologists. From March 1993 to
December 1994, she was the administrator for Southwest Diagnostic Imaging
Center. It was a joint venture between a large urban hospital and physician
limited partners. Ms. Moss is a registered radiology technologist and a
certified nuclear medicine technologist. She earned her BBA at Dallas Baptist
College and her MBA from East Texas State University and is 49 years old.
Judith F. Barker is a nominee for Director and has been Secretary and
Treasurer of the Company since April 1998. She has been the Secretary of PhyMed
and the Business Office Manager of PhyMed Diagnostic Imaging Center Dallas for
13
<PAGE>
more than the last five years. She has been involved in office management,
health facility billing and collections for over twenty years. Her experience
has been gained at individual physician and large group practice offices,
hospitals and credit companies. Since 1992, she has played a key role in the
management of PhyMed's accounts receivable. Mrs. Barker is 57 years old.
Board of Directors-Meetings and Committees
The Board of Directors held three meetings during calendar year 1997.
The Board of Directors had no Audit Committee, Compensation or Nomination
Committees during 1997 and does not currently have an Audit, Compensation, or
Nomination Committee.
Executive Officers
During calendar 1997, Richard A. Green, Sr. served as President and
Chief Executive Officer of the Company from January 1 to July 21. He resigned on
July 21 in connection with his sale of his control of the Company. His
resignation was accepted by the Board of Directors on October 9, 1997. On that
date, Joe P. Foor was elected President, and he held such position until April
3, 1998.
In addition, Valerie Lynn Jones was Secretary of the Company during
1997 until May 15, 1997. She resigned on May 15, 1997, and Richard Green, Jr.
was elected to replace her on June 10, 1997. He no longer served in that
capacity after his father sold control of the Company on July 21, 1007.
At the time of the Merger on April 3, 1998, the officers of the Company
were Joe P. Foor and Joe R. Love who were President and Secretary of the
Company. In connection with the Merger, they resigned their offices so that new
officers could be elected. George C. Barker was elected Chairman of the Board,
President and Chief Executive Officer, Marilyn Moss was elected Executive Vice
President - Operations, and Judith F. Barker was elected Secretary and Treasurer
of the Company. Mr. and Mrs. Barker are married.
After the forthcoming 1998 Annual Meeting of Shareholders, the newly
elected Directors will hold a regular annual meeting of the Board of Directors
(or sign a unanimous consent of directors in lieu of holding the meeting) and
re-elect the following officers for the coming year:
George C. Barker Chairman of the Board, President
and Chief Executive Officer
Marilyn Moss Executive Vice President - Operations
Judith F. Barker Secretary and Treasurer
Item 10. Executive Compensation
Executive Officers
14
<PAGE>
During the last three fiscal years, neither the Chief Executive Officer
of the Company, nor any executive officer, received any cash or noncash
compensation for serving in such capacity. During fiscal 1997, no options were
granted to the Company's officers; no outstanding options were exercised; and no
options were terminated. However the Company issued shares of Common Stock to
Messrs. Love and Foor, partly for services rendered in connection with Board
meetings and partly for consulting services consisting of due diligence efforts
regarding merger candidates. See "Item 12. Certain Relationships and Related
Transactions."
Post-April 3, 1998, Compensation to Mr. Barker
In 1993, PhyMed and Mr. Barker entered into a ten-year employment
Merger pursuant to which PhyMed pays Mr. Barker $240,000 per annum. In
connection with the Merger, on April 3, 1998 Mr. Barker became an employee of
the Company and the Company assumed the obligations of PhyMed under the
employment Merger.
During the fiscal year ended December 31, 1997, George C. Barker was
the Chief Executive Officer of PhyMed and the only executive officer of PhyMed
whose total compensation exceeded $100,000. PhyMed paid or accrued $240,000 of
salary to Mr. Barker during such period.
On May 4, 1998, the Board of Directors of the Company granted Mr.
Barker an option to purchase 5,000,000 shares of Common Stock, as presently
constituted (500,000 shares after the effectiveness of the 1-for-10 reverse
stock split), with vesting to be contingent upon the attainment by the Company
of certain financial objectives. For additional information, see "Stock Option
Grants" below.
Compensation of Directors
Messrs. Joe R. Love and Joe P. Foor were compensated for their services
as Directors during 1997 in shares of Common Stock. Such shares were issued as
part of a block of stock issued to them and an outside consultant, Richard
Bowes, for services rendered to the Company, partly for services rendered in
connection with Board meetings and partly for consulting services consisting of
due diligence efforts regarding merger candidates. This transaction is described
in detail in "Item 12. Certain Relationships and Related Transactions."
On May 4, 1998, the Board of Directors granted to each Mr. Love and Mr.
Foor an option to purchase 2,500,000 shares of Common Stock, as presently
constituted (250,000 shares after the effectiveness of the 1-for-10 reverse
stock split). The purpose of the options granted to Mr. Love and Mr. Foor is to
compensate them for serving as Directors of the Company. For additional
information, see "Stock Option Grants" below.
1998 Stock Option Grants
Effective May 4, 1998, the Board of Directors granted stock options to
Messrs. Barker, Love and Foor, subject to the approval of the shareholders. Each
15
<PAGE>
of the options is subject to a separate stock option agreement and is not part
of a plan. The three options are exercisable to purchase a total of 10,000,000
shares of the Company's Common Stock at $0.075 per share, as presently
constituted (1,000,000 shares at $.75 per share, after the effectiveness of the
1-for-10 reverse stock split).
Mr. Barker's option is exercisable to purchase 5,000,000 shares of
Common Stock, as presently constituted (500,000 shares, after the effectiveness
of the 1-for-10 reverse stock split). The option is not immediately exercisable.
It vests and becomes exercisable in full at the end of any quarter during any
fiscal year when the cumulative "Operating Profit Before Corporate Overhead" for
such fiscal year to date equals or exceeds $1,065,483.
Mr. Barker's option has a term of 10 years and expires on May 4, 2008.
The purpose of Mr. Barker's stock option is to retain and incentivise him as
Chairman of the Board, President and Chief Executive Officer of the Company.
The options granted to Mr. Love and Mr. Foor are each exercisable to
purchase 2,500,000 shares, as presently constituted (250,000 shares, after the
effectiveness of the 1-for-10 reverse stock split). Each option can be exercised
in whole or in part at any time after the effectiveness of the 1-for-10 reverse
stock split, has a term of 10 years and expires on May 4, 2008. The purpose of
the options granted to Mr. Love and Mr. Foor is to compensate them for serving
as Directors of the Company.
The number of shares subject to an option is subject to proportional
adjustment for any increase or decrease in the number of shares issued by the
Company without receipt of consideration by the Company, such as a stock
dividend or a stock split.
The options are non-qualified stock options under the Internal Revenue
Code of 1986. As a general rule, no tax is imposed on the optionee upon the
grant of an option, nor will the Company be entitled to a tax deduction by
reason of such grant. Generally, upon the exercise of an option, an optionee
will be treated as receiving compensation taxable as ordinary income in the year
of exercise in an amount equal to the excess of the fair market value of the
shares on the date of exercise over the exercise price. Thereafter, if the
holder holds the stock for a period of one year or less the sale will be treated
as subject to ordinary income tax rates. Stock held for a period exceeding one
year receives capital gain tax rate treatment. The Company will be entitled to a
tax deduction in an amount equal to the compensation recognized by the optionee.
Set forth below is certain information with respect to the options
granted as of May 4, 1998, subject to approval of the options by the
shareholders.
<TABLE>
<CAPTION>
New Plan Benefits
-----------------
1998 Stock Option Agreements
----------------------------
Number of Shares
----------------
Name and Position Dollar Value Pre-Split Post-Split
- ----------------- ------------ --------- ----------
<S> <C>
George C. Barker -0- (3) 5,000,000 (1) 500,000 (1)
Chairman of the Board, President
and Chief Executive Officer
16
<PAGE>
Joe R. Love -0- (3) 2,500,000 (2) 250,000 (2)
Director
Joe P. Foor -0- (3) 2,500,000 (2) 250,000 (2)
Director
Executive Group -0- (3) 5,000,000 (1) 500,000 (1)
Non-Executive Director Group -0- (3) 5,000,000 (2) 500,000 (2)
Non-Executive Officer -0- -0- -0-
</TABLE>
Employee Group
- ---------------------------------------------
(1) Mr. Barker's option vests and becomes exercisable in full at the end of
any quarter during any fiscal year when the cumulative "Operating
Profit Before Corporate Overhead" for such fiscal year to date equals
or exceeds $1,065.483.
(2) Vested immediately upon the date of grant, May 4, 1998, subject to
approval of the stock options by the shareholders of the Company at the
Annual Meeting.
(3) The option price is $0.075 per share, as the Common Stock is presently
constituted ($0.75 per share, after the effectiveness of the 1-for-10
reverse split). The dollar value of the option is equal to (a) the
value of one share of Common Stock in excess of $0.075 per share,
multiplied by (b) the number of shares covered by the option. On May 4,
1998, the date the options were granted, the bid and asked prices on
the Common Stock were approximately $0.15 and $0.30. However, there is
no established trading market in the Common Stock, and trades of the
Common Stock take place only sporadically. Therefore, the Board of
Directors has determined that the fair market value of the Common Stock
on such date was $0.075, as the Common Stock is presently constituted
($0.75 per share, after the effectiveness of the 1-for-10 reverse
split). Accordingly, the dollar value of the option is zero.
Vote Required for Ratification and Approval of the Stock Options
The stock option agreements must be ratified and approved by the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company present in person or represented by proxy at the forthcoming 1998
Annual Meeting of Shareholders. As of June 1, 1998, Mr. Barker owns of record or
beneficially 39,583,513 (80.17%) of the 49,099,069 outstanding Common Shares of
the Company and has informed the Company that he intends to vote all the
39,583,513 shares beneficially owned by him in favor of such proposal.
17
<PAGE>
PhyMed Employee Stock Ownership Plan
In 1993, PhyMed established an employee stock ownership plan ("ESOP")
for its employees. Such plan is qualified under the provisions of the Internal
Revenue Code of 1986 as a defined contribution retirement plan designed to
invest primarily in qualifying employer securities. This provides a means for
employees to have an ownership interest in their employer. Upon establishment,
the ESOP purchased certain shares of PhyMed from a shareholder for a cash down
payment and a promissory note payable in installments. PhyMed makes
contributions to the ESOP which enable it to make timely payments of principal
and interest on its note to the former shareholder. Mr. and Mrs. Barker own in
the aggregate approximately 70% of the vested interests of participants in the
ESOP. See "Item 11. Security Ownership of Certain Beneficial Owners and
Management-Possible Change of Control."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and the rules
promulgated thereunder require that directors and executive officers of the
Company and beneficial owners of greater than 10% of the Company's Common Stock
file various reports with the Securities and Exchange Commission (the "SEC").
The Company has reviewed its files and does not find that any Forms 3, 4 or 5
were furnished to the Company during or with respect to 1997. Based on inquiries
made by or on behalf of the Company, Management believes that for the fiscal
year ended December 31, 1997, reports were not timely filed by Richard A. Green,
Sr./Verde, Inc. or by Messrs. Bowes and Love with respect to the sale of control
of the Company in July 1997, nor by Messrs. Bowes, Love and Foor with respect to
the 3,000,000 shares of Common Stock the Board of Directors authorized the
Company to issue to them on December 31, 1997, for services during 1997. See
"Item 12. Certain Relationships and Related Transactions" for a description of
these transactions.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of June 1, 1998,
concerning the beneficial ownership of Common Stock by all Directors and
nominees, certain executive officers, all Directors and executive officers of
the Company, as a group, and each person who beneficially owns more than 5% of
the 49,099,069 outstanding shares of Common Stock, $.001 par value. Unless
otherwise indicated, each person named has sole voting and investment power over
the shares indicated.
<TABLE>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership (1) of Class (1)
------------------- ------------------------ ------------
<S> <C>
George C. Barker 68,915,409(2)(3)(4) 87.9%
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
Joe R. Love 5,117,143(5) 9.9%
18
<PAGE>
1601 N.W. Expressway, Suite 2101
Oklahoma City, Oklahoma
Joe P. Foor 4,554,080(6) 8.8%
3535 Northwest Parkway
Dallas, Texas 75225
Judith F. Barker 68,915,409(2)(3)(4) 87.9%
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
Marilyn Moss 10,000 (7)
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
All directors and officers 78,596,632 94.1%
as a group (5 persons)
</TABLE>
(1) In April 1998, the Board of Directors authorized, subject to
shareholder approval, a 1-for-10 reverse stock split, which includes
increasing the par value of the Common Stock from $.001 to $.01.
(2) Includes 30,924,620 outstanding shares owned directly by Mr. Barker and
8,658,893 outstanding shares owned by the Phy.Med., Inc. Employee Stock
Option Plan, as to which Mr. Barker is the sole trustee and has sole
voting power. Also includes shares the Company is still obligated to
issue to Mr. Barker (22,915,544 shares) and the ESOP (6,416,352 shares)
in connection with the Merger. Such shares would have been issued at
the time of the Merger but the Company did not have the necessary
authorized but unissued shares. See "Proposed 1-for-10 Reverse Stock
Split" below. Mr. and Mrs. Barker own in the aggregate approximately
70% of the vested interests of participants in the ESOP.
(3) Does not include shares which can be purchased upon the exercise of a
recently granted stock option. On May 4, 1998, the Board of Directors
granted Mr. Barker an option to purchase 5,000,000 shares of Common
Stock, as presently constituted (500,000 shares after the effectiveness
of the 1-for-10 reverse stock split), with vesting to be contingent
upon the attainment by the Company of certain financial objectives.
Therefore, it is not presently exercisable and will not be exercisable
within the next 60 days. For additional information, see "Item 10.
Executive Compensation-1998 Stock Option Grants."
(4) George C. Barker and Judith F. Barker are married. Mr. Barker is the
owner of record or has the power to vote all the outstanding shares
beneficially owned by him. Mrs. Barker is also deemed to be the
beneficial owner of the same shares. Mrs. Barker disclaims any
beneficial ownership of shares held by Mr. Barker as sole trustee of
the ESOP but allocated to the accounts of ESOP participants other than
Mr. or Mrs. Barker.
19
<PAGE>
(5) Includes (a) holdings of family members of Mr. Love, (b) 68,280 shares
issuable upon conversion of Series A Preferred Stock held by a
corporation controlled by Mr. Love, and (c) 2,500,000 shares which can
be purchased upon the exercise of a recently granted stock option. See
"Item 10. Executive Compensation-1998 Stock Option Grants."
(6) Includes (a) 26,667 shares issuable upon conversion of Series A
Preferred Stock held by Mr. Foor's wife, Anne Foor, and (b) 2,500,000
shares which can be purchased upon the exercise of a recently granted
stock option. See "Item 10. Executive Compensation-1998 Stock Option
Grants.'
(7) Less than 1%.
By virtue of his beneficial ownership of Common Stock, Mr. Barker may
be deemed to be a "parent" of the Company as such term is defined in the rules
and regulations of the Securities and Exchange Commission.
Contemplated 1-for-10 Reverse Stock Split
In connection with the Merger on April 3, 1998, George C. Barker,
individually, the Phy.Med., Inc. Employee Stock Ownership Plan (the "ESOP"),
acquired from the Company, in the aggregate, immediate ownership of and the
right to receive an aggregate of 68,915,409 authorized but unissued shares of
Common Stock, $.001 par value, of the Company, as presently constituted, which,
if all such shares were outstanding, would constitute 87.9% of the 78,430,965
shares of Common Stock the Company would then have outstanding.
The parties to the Merger Agreement contemplate a 1-for-10 reverse
stock split which will become effective shortly after the annual meeting of
shareholders. Upon the effectiveness of such reverse split, Mr. Barker and the
ESOP will own 6,941,540 shares of the 7,843,097 shares, $.01 par value,
outstanding (7,933,190 shares on a fully diluted basis). The Company will
continue to have 50,000,000 shares of Common Stock authorized.
The Company has 50,000,000 shares of Common Stock authorized for
issuance and, at the time of the Merger, had 9,916,487 shares issued and
outstanding or reserved for issuance. To the extent that the terms of the Merger
would have resulted in the issuance of more than 50,000,000 shares, the excess
over 50,000,000 shall not be issued until such time as the shareholders of the
Company have approved an appropriate amendment to the Company's Certificate of
Incorporation. Prior to such approval, Barker and the ESOP will continue to have
a contractual right, pursuant to the Merger and the Articles of Merger filed
with the Secretary of State of Texas at the time of the Merger, to receive such
excess shares, subject to such required shareholder approval.
In summary, Mr. Barker and the ESOP received an aggregate of 39,583,513
shares of the Company at the time of the Merger, the same being 80.6% of the
49,099,069 shares outstanding on the record date. Of such number, Barker,
individually, received 30,924,620 shares (approximately 63.8%) of the
outstanding shares, and the ESOP received 8,658,893 shares (approximately
17.9%).
20
<PAGE>
Barker and the ESOP continue to have a contractual right to receive, in
the aggregate, an additional 29,331,896 shares, which will result in their
having, collectively, 87.9% of the Common Stock of the Company. Of such
additional shares, 22,915,544 will be received by Barker, individually, and
6,416,352 shares will be received by the ESOP.
The parties to the Merger Agreement contemplate that the shareholders
of the Company will approve an amendment to the Company's Certificate of
Incorporation approving a 1-for-10 reverse stock split (including an increase in
the par value of the Common Stock from $.001 to $.01). Upon the effectiveness of
such reverse stock split, all outstanding shares of common stock of the Company,
including the shares which were issued to Barker and the ESOP upon the
effectiveness of the Merger, will represent one-tenth (1/10th) as many shares.
In addition, all shares reserved for issuance, including the shares which the
Company will still have a contractual obligation to issue to Barker and the
ESOP, will become rights to receive one-tenth (1/10th) as many shares. The
unissued shares due Barker and the ESOP from the Merger will then be immediately
issued because the Company will then have a sufficient number of authorized but
unissued shares to issue for this purpose.
Possible Change of Control
Prior to the Merger on April 3, 1998, there were 800 common shares of
PhyMed outstanding, of which 500 were owned by Mr. Barker, individually, and 300
were owned by the ESOP.
In the Merger, the 500 PhyMed common shares owned by Barker were
converted into immediate ownership of and the right to receive 54,230,788 shares
of Common Stock of the Company, and 140 of the 300 PhyMed common shares owned by
the ESOP were converted in like manner into 15,184,621 shares of Common Stock of
the Company. The remaining 160 PhyMed common shares held by the ESOP now
constitute the 20% of PhyMed common shares not owned by the Company.
The 800 shares of PhyMed owned by Barker and the ESOP at the time of
the Merger were pledged to Patrick Alan Luckett ("Luckett") to secure the
payment of (a) two promissory notes payable to the order of Luckett, which were
issued to him as partial payment for shares of PhyMed purchased from him, and
(b) a guaranty of such notes.
On September 21, 1993, Barker and Luckett owned all the then
outstanding common shares of PhyMed, Inc., each of them owning of 500 common
shares. On such date Luckett sold 200 of his shares to PhyMed and 300 shares to
the ESOP. The sales were for cash and promissory notes. One note was issued by
PhyMed in the original principal amount of $800,000 pursuant to the terms of a
Loan and Security Merger dated September 21, 1993, and the second promissory
note was issued by the ESOP in the original principal amount of $800,000. Both
notes were guaranteed by Barker. The PhyMed note was secured by the 200 shares
repurchased from Luckett by PhyMed; the ESOP note was secured by the 300 shares
the ESOP purchased from Luckett; and the 500 shares already owned by Barker were
pledged to secure his guaranty of the two notes.
21
<PAGE>
The aggregate of 68,915,409 shares of Common Stock of the Company
received and to be received by Barker and the ESOP as a result of the Merger
have been and will be substituted in the pledge for the 640 PhyMed shares which
were released from the pledge and converted into such shares of Common Stock of
the Company. The 20% of PhyMed still owned by the ESOP remains pledged for such
purpose.
As of June 1, 1998, the unpaid principal balance on the PhyMed note was
$115,070, and the ESOP note was $363,601.
Item 12. Certain Relationships and Related Transactions
On or about July 21, 1997, Richard A. Green, Sr., controlled the
Company through Verde, Inc. It owned 2,051,136 shares of Common Stock, and Mr.
Green was a Director and President of the Company. On or about July 21, 1997,
Verde, Inc. sold its holdings to Richard Bowes and Joe R. Love for $50,000 cash,
and Mr. Green resigned all positions with the Company.
In connection with the sale of control, the Company sold its wholly
owned subsidiary, Crescent Contractors, Inc., to Rustown Homes, Inc. on June 11,
1997, for $414.00. Also, on the same date, the Company sold its wholly owned
subsidiary Cresthaven, Inc. to Crestmont International, Inc. for $414.00. In
each case, the amount of the consideration constituted full reimbursement to the
Company of all expenditures paid on behalf of the subsidiary. In addition, in
each case the buyer was owned or partly owned by Richard A. Green, Sr. No gain
or loss was realized by the Company on these sales.
In March 1997, the Company sold all remaining items of restaurant
equipment it owned to Food Franchises, Inc. for an extension of credit of
$37,448.00. Food Franchises, Inc. was an affiliate Mr. Green. On July 7, 1997,
in connection with the sale of Mr. Green's control, the Company sold the
$37,448.00 receivable to Verde, Inc., in exchange for the assumption of
liabilities of the Company in the amount of $25,636.00. The Company recognized a
loss on the transaction of $11,812.00.
During the first six months of the year ending December 31, 1997,
International Green Team, Inc. ("IGT") managed the Company under a monthly fee
arrangement. IGT was an affiliate of Mr. Green and provided the Company with
office space and managerial, accounting and clerical services. The Company paid
IGT total fees of $15,600 and $24,000 for the years ended December 31, 1997 and
1996.
During 1997, Messrs. Joe R. Love, Joe P. Foor and an outside
consultant, Richard Bowes, rendered services to the Company, partly for services
rendered in connection with Board meetings and partly for consulting services
consisting of due diligence efforts regarding merger candidates. In
consideration of such services, on October 16, 1997, the Board of Directors
authorized the issuance of an aggregate of 3,000,000 shares, as presently
constituted, to such persons (1,000,000 shares to each of such persons). The
Company treated the shares as having been earned in full and issued at the end
of the year, December 31, 1997. The Company valued such services at $60,000 and
recorded that amount as an expense for 1997. The Common Stock was trading at
approximately $0.06 per share on December 31, 1997. The shares were valued at
$0.02 per share, on the basis of the market value of the stock, discounted for
being "restricted securities" and lack of liquidity, as well as the Company's
lack of earnings and book value.
22
<PAGE>
On March 31, 1998, the Company entered into a letter agreement with Joe
P. Foor and CCDC, Inc., a company controlled by Joe R. Love. Mr. Foor and CCDC,
Inc. (the "consultants") have agreed to provide certain specified consulting and
advisory services of a corporate development nature as the Company may need.
These include the identification, evaluation and negotiation of acquisitions,
strategic planning, optimization of capital structure, access to capital
markets, and similar services. The agreement is for a term of one year and will
continue after one year until terminated by either party upon 30 days' notice.
The Company will pay the consultants a $36,000 annual retainer, plus
out-of-pocket expenses. The consultants will also earn a transaction fee for
each acquisition or capital placement completed the Company completes. The
amount of the retainer will be credited against any transaction fees earned by
the consultants. The transaction fee will be based on the total amount paid by
the acquiring party or the total capital raised and will be a minimum of 3% of
such transaction amount. If greater than 3%, the transaction fee will be
determined by what is generally referred to as the "Lehman Formula," which is an
amount equal to the sum of:
5% of the first $1,000,000 of transaction amount;
4% of the second $1,000,000;
3% of the third $1,000,000;
2% of the fourth $1,000,000; and
1% of the remainder of the transaction amount.
The Company is currently seeking to raise additional capital for the
expansion of the business of PhyMed and has recently commenced a private
offering of securities. See "Item 1. Description of Business- Recent
Acquisition." The offering is being made to accredited investors only and seeks
to raise a minimum of $200,000 and a maximum of $3,000,000 from the sale of new
securities that are convertible into or exercisable to purchase Common Stock.
The consultants will earn a transaction fee on any capital the Company raises in
this securities offering.
George C. Barker owns a 50% interest in and is President of American
Medical Imaging Corporation ("AMIC"), which operates a mobile magnetic resonance
imaging ("AMRI") machine in west Dallas. PhyMed and AMIC have a business
relationship which is embodied in a Radiology Services Provider Agreement -
Contracted Services dated February 1, 1996. This agreement has a one year term
which renews automatically each year for one additional year unless terminated
by one of the parties. AMIC refers patients to PhyMed for MRI procedures AMIC is
unable to perform on its own MRI machine. PhyMed invoices AMIC directly for such
procedures at a discounted fee of $300.00 per procedure, and AMIC pays the
invoices directly to PhyMed upon receipt. PhyMed received revenues of $40,191.25
from AMIC in 1997 and no revenues in 1996.
Through PhyMed, the Company owns and operates PhyMed Diagnostic Imaging
Center in Dallas, Texas. PhyMed entered into a 10-year Management/Licensing
Agreement with Medical Imaging of Plano, Inc. ("MIPI") effective January 14,
1998 with respect to the operation of a new full service radiology center in
Plano, Texas, a suburb of Dallas, under the name of "PhyMed Diagnostic Imaging
Center Plano." The Company manages the new center, and licenses MIPI to use the
"PhyMed Diagnostic Imaging Center" name, in exchange for a monthly management
23
<PAGE>
fee of 3% of net sales. Mr. Barker owns 12.5% and is President of MIPI. Mr.
Barker has personally guaranteed for three years $200,000 of MIPI's obligations
under equipment leases for equipment used at the new center. The Company
contemplates negotiating to acquire MIPI or the center. However, negotiations
have not yet begun, and there is no assurance that such acquisition will take
place or, if it does, on terms that will be favorable to the Company.
George C. Barker d/b/a "A/G Partners" manages several physician
practices for a monthly fee. PhyMed does not have a direct relationship with A/G
Partners. One of the managed practices is The PRS Group, P.A., and Philip R.
Shalen, M.D. is the sole radiologist employed by it.
On January 1, 1996, PhyMed and The PRS Group, P.A. entered into a
10-year Radiology Services Agreement which provided that The PRS Group, P.A.
would provide the professional service component and PhyMed would provide the
technical component of the diagnostic radiological services rendered by PhyMed
at its Center. PHYMed and The PRS Group, P.A. each bill patients separately for
their components of the diagnostic services.
The 1996 Radiology Services Agreement also provided that The PRS Group,
P.A. would provide PhyMed with a Medical Director who would perform certain
enumerated services for a fee of $6,500 per month. Dr. Shalen served as the
Medical Director from January 1, 1996, until August 31, 1996, when the parties
terminated the position by mutual agreement.
On September 1, 1997, the parties entered into a new 10-year Radiology
Services Agreement which contains substantially the same provisions as the 1996
agreement except that it omits the provisions providing for a Medical Director
and the remuneration associated with it.
PhyMed paid the PRS Group, P.A. $58,500 in 1997 and $78,000 in 1996 for
the services of the Medical Director. The parties do not pay each other anything
under any of the provisions of the new 1997 agreement.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Stock Purchase Agreement dated June 11, 1997, between the
Company and Rustown Homes, Inc.
10.2 Stock Purchase Agreement dated June 11, 1997, between the
Company and Krestmont International, Inc.
10.3 Agreement of Sale dated March 12, 1997, between the Company
and Food Franchises, Inc.
10.4 Agreement of Sale dated July 7, 1997, between the Company
and Verde, Inc.
24
<PAGE>
10.5 Employment Agreement dated October 1, 1993, between
Phy.Med., Inc. and George C. Barker (assumed by the Company
on April 3, 1998)
10.6 Stock Option Agreement dated May 4, 1998, between the
Company and George C. Barker.
10.7 Stock Option Agreement dated May 4, 1998, between the
Company and Joe R. Love.
10.8 Stock Option Agreement dated May 4, 1998, between the
Company and Joe P. Foor.
10.9 Letter agreement dated March 31, 1998, by and among the
Company and CCDC, Inc. and Joe Foor.
10.10 Management/Licensing Agreement dated January 14, 1998,
between Phy.Med., Inc. and Medical Imaging of Plano, Inc.
(This agreement is effective but not yet formally signed.)
10.11 Radiology Service Provider Agreement - Contracted Services
dated February 1, 1996, between Phy.Med., Inc. and American
Medical Imaging Incorporated.
10.12 Radiology Services Agreement dated January 1, 1996, between
Phy.Med., Inc. and The PRS Group, P.A. (This agreement was
terminated and replaced by Exhibit on September 1, 1997.)
10.13 Radiology Services Agreement dated September 1, 1997,
between Phy.Med., Inc. and the PRS Group, P.A.
(b) Reports on form 8-K
No report on Form 8-K was filed during the fourth (last) quarter of the
fiscal year ended December 31, 1997.
25
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TATONKA ENERGY, INC.
Registrant
Date: June 15, 1998 BY: /s/ George C. Barker
-----------------------
George C. Barker, President and Chief Executive Officer
(Principal Executive Officer, Principal Financial Officer
and Director)
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: June 15, 1998 BY: /s/ Joe R. Love
------------------
Joe R. Love, Director
Date: June 15, 1998 BY: /s/ Joe P. Foor
----------------
Joe P. Foor, Director
26
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Pages
-----
Report of Independent
Certified Public Accountants F-2
Financial Statements:
Balance Sheet - December 31, 1997 F-3
Statements of Operations -
Year ended December 31, 1997 and 1996 F-4
Statement of Stockholders' Equity -
Year ended December 31, 1997 and 1996 F-5
Statements of Cash Flows -
Year ended December 31, 1997 and 1996 F-6
Notes to Financial Statements F-7
27
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
Tatonka Energy, Inc.
We have audited the accompanying balance sheet of Tatonka Energy, Inc., as of
December 31, 1997, and the related statements of operations, stockholders'
equity and cash flows for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tatonka Energy, Inc., as of
December 31, 1997, and the results of its operations and its cash flows for each
of the two years in the period then ended in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Dallas, Texas
March 23, 1998, except for Note H, as to
which the date is April 3, 1998
F-2
<PAGE>
<TABLE>
<CAPTION>
Tatonka Energy, Inc.
BALANCE SHEET
December 31, 1997
ASSETS
<S> <C> <C>
Cash $ 116
----
Total assets $ 116
====
STOCKHOLDERS' EQUITY
Series "A" nonvoting preferred stock; authorized, 1,000,000 shares of $1
par value; issued and outstanding, 135,139 shares $ 135,139
Common stock; authorized, 50,000,000 shares of $.001 par value; issued,
8,540,556 shares 8,540
Additional paid-in capital 5,339,635
Accumulated deficit (5,480,488)
Treasury stock, at cost - 25,000 common shares (2,710)
-------
Total stockholders' equity $ 116
====
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
Tatonka Energy, Inc.
STATEMENTS OF OPERATIONS
Year ended December 31,
1997 1996
------ ------
Interest income $ 19 $ 3,069
Other income 7,448 --
--------- ---------
Total income 7,467 3,069
Costs and expenses
Depreciation 404 303
General and administrative 104,731 59,793
Loss on sale of receivable 11,812 --
--------- ---------
Total costs and expenses 116,947 60,096
--------- ---------
Net loss $(109,480) $ (57,027)
========= =========
Loss per common share
Basic $ (0.02) $ (0.01)
========= =========
Diluted $ (0.02) $ (0.01)
========= =========
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
<TABLE>
<CAPTION>
Tatonka Energy, Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1997 and 1996
Preferred stock Common stock Paid-in Accumulated Treasury stock
Shares Amount Shares Amount capital deficit Shares Amount Total
-------- -------- -------- -------- ---------- ------------- --------- -------- ------
<S> <C> <C> <C> <C>
Balance at
January 1,
1996 135,139 $ 135,139 5,540,556 $ 5,540 $ 5,282,635 $(5,313,981) 25,000 $ (2,710) $ 106,623
Net loss -- -- -- -- -- (57,027) -- -- (57,027)
-------- ----------- ----------- --------- ----------- ----------- ------- ----------- ----------
Balance at
December 31,
1996 135,139 135,139 5,540,556 5,540 5,282,635 (5,371,008) 25,000 (2,710) 49,596
Common stock
issued for
services -- -- 3,000,000 3,000 57,000 -- -- -- 60,000
Net loss -- -- -- -- -- (109,480) -- -- (109,480)
-------- ----------- ----------- --------- ----------- ----------- ------- ----------- ----------
Balance at
December 31,
1997 135,139 $ 135,139 8,540,556 $ 8,540 $ 5,339,635 $(5,480,488) 25,000 $ (2,710) $ 116
======== =========== =========== ========= =========== =========== ======= =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
Tatonka Energy, Inc.
STATEMENTS OF CASH FLOWS
Year ended December 31,
1997 1996
------ ------
<S> <C>
Cash flows from operating activities
Net loss $(109,480) $ (57,027)
Adjustments to reconcile net loss to net cash used
in operating activities
Common stock issued for services 60,000 --
Gain on sale of assets (7,448)
Loss on sale of receivables 11,512 --
Other 2,515 303
Changes in operating assets and liabilities
Construction in progress 32,081 (32,081)
Accrued expenses (733) 733
Accounts payable (16,182) 9,658
Advances from related party (15,899) 15,899
--------- ---------
Net cash used in operating activities (43,334) (62,515)
Cash flows from investing activities
Proceeds from sale of assets 24,636 (30,000)
--------- ---------
Net decrease in cash and cash equivalents (18,698) (92,515)
Cash at beginning of year 18,814 111,329
--------- ---------
Cash at end of year $ 116 $ 18,814
========= =========
</TABLE>
See Note E for noncash investing and financing activities.
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
Tatonka Energy, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
--------------------
The Company conducted oil and gas operations in the mid-continent region of
the United States until 1994 when it disposed of its oil and gas properties.
The lack of oil and gas related operations or revenue since 1994 and the
lack of any apparent prospects for future income producing activity in that
field warranted investigation and research efforts into new fields and
industries. In November 1996, the Company entered into a contract to perform
construction services for a motel to be built in Gainesville, Texas, but
discontinued this activity (Note E). At December 31, 1997, the Company had
no operations.
Use of Estimates
----------------
In preparing the company's financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE B - LIQUIDITY MATTERS
The Company has had losses in recent years, and had only nominal assets at
December 31, 1997. As discussed in Note H, the Company acquired a business
in exchange for common stock in April 1998.
NOTE C - INCOME TAXES
Deferred income tax assets arose from the following temporary differences at
December 31:
1997 1996
------ -----
Net operating loss carryforwards $ 121,300 $ 75,200
Property and equipment - 4,500
--- ------
121,300 79,700
Less valuation allowance (121,300) (79,700)
-------- -------
Net deferred tax asset $ - $ -
========= ========
The Company has net operating loss carryforwards of approximately $310,000
which will expire beginning in 2009. However, as a result of the Company's
ownership change (Note H), use of these carryforwards will be limited.
F-7
<PAGE>
<TABLE>
<CAPTION>
Tatonka Energy, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE C - INCOME TAXES - Continued
A reconciliation of income taxes computed at the federal statutory rate to
income tax expense is as follows:
1997 1996
------ -----
<S> <C>
Income tax benefit at statutory rate $ 41,600 $ 21,500
Net operating loss not providing a tax benefit (41,600) (21,500)
------- -------
$ - $ -
======== =======
</TABLE>
NOTE D - PREFERRED STOCK
The Company's Series A convertible preferred stock is nonvoting and has a
par value of $1. It has a 5% per annum noncumulative dividend which is only
payable if declared by the Board of Directors. Each preferred share is
convertible into 6.6667 common shares.
NOTE E - RELATED PARTY TRANSACTIONS
The Company sold its two wholly-owned subsidiaries to a former officer of
the Company for nominal consideration in 1997. No gain or loss was realized
by the Company on the sales.
Entities controlled by stockholders with controlling interests in the
Company have provided office space and managerial, accounting and clerical
services to the Company. The Company incurred fees for such services
totaling $15,600 and $24,000 for the years ended December 31, 1997 and 1996,
respectively.
The Company is obligated to issue 3,000,000 restricted shares of common
stock, valued at $60,000, to two officers of the Company and an outside
consultant for consulting services provided to the Company in 1997. The
shares are reflected as outstanding in the balance sheet at December 31,
1997.
In 1997, the Company sold a $37,448 receivable to a corporation controlled
by the former President of the Company for assumption of liabilities in the
amount of $25,636. The Company recognized a loss on the transaction of
$11,812.
F-8
<PAGE>
Tatonka Energy, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE F - LOSS PER COMMON SHARE
Loss per common share is based on the weighted average number of common
shares outstanding of 6,148,432 for 1997 and 5,515,556 for 1996 for both
basic and diluted per share computations. Series A nonvoting preferred stock
and common stock options are not included in the per share computations
because they are antidilutive.
In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128).
Retroactive application, which is required by SFAS No. 128, did not result
in a restatement of 1996 per share data.
NOTE G - STOCK OPTIONS
The Company granted stock options in July 1994 to certain directors and
employees to purchase 550,000 shares of the Company's common stock at
approximately $.11 per share. The options were exercisable on or before July
13, 1999, subject to termination clauses in the event employment or
directorship ceases. No options have been exercised, and all were cancelled
and revoked in 1996.
NOTE H - MERGER AND PLAN OF REORGANIZATION
Pursuant to an agreement and plan of reorganization and merger between the
Company and Phy. Med., Inc. (Phy. Med.), the Company acquired 80% of the
outstanding capital stock of Phy. Med. in exchange for 69,415,409 shares of
common stock on April 3, 1998. The merger, which results in the former Phy.
Med., stockholders owning approximately 87.5% of the outstanding common
stock of the Company, will be accounted for as a reverse acquisition
whereby Phy. Med. will be deemed to the acquiring company.
Unaudited financial information for Ply Med. as of December 31, 1997, and
for the year then ended is presented below:
Total assets $5,210,032
Stockholders' equity $ 203,554
Net revenue $3,884,043
Net earnings $ 183,348
F-9
<PAGE>
INDEX TO EXHIBITS
10.1 Stock Purchase Agreement dated June 11, 1997, between the
Company and Rustown Homes, Inc.
10.2 Stock Purchase Agreement dated June 11, 1997, between the
Company and Krestmont International, Inc.
10.3 Agreement of Sale dated March 12, 1997, between the Company
and Food Franchises, Inc.
10.4 Agreement of Sale dated July 7, 1997, between the Company
and Verde, Inc.
10.5 Employment Agreement dated October 1, 1993, between
Phy.Med., Inc. and George C. Barker (assumed by the Company
on April 3, 1998)
10.6 Stock Option Agreement dated May 4, 1998, between the
Company and George C. Barker.
10.7 Stock Option Agreement dated May 4, 1998, between the
Company and Joe R. Love.
10.8 Stock Option Agreement dated May 4, 1998, between the
Company and Joe P. Foor.
10.9 Letter agreement dated March 31, 1998, by and among the
Company and CCDC, Inc. and Joe Foor.
10.10 Management/Licensing Agreement dated January 14, 1998,
between Phy.Med., Inc. and Medical Imaging of Plano, Inc.
(This agreement is effective but not yet formally signed.)
10.11 Radiology Service Provider Agreement - Contracted Services
dated February 1, 1996, between Phy.Med., Inc. and American
Medical Imaging Incorporated.
10.12 Radiology Services Agreement dated January 1, 1996, between
Phy.Med., Inc. and The PRS Group, P.A.
10.13 Radiology Services Agreement dated September 1, 1997,
between Phy.Med., Inc. and the PRS Group, P.A.
28
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
------------------------
This Agreement is entered into this 11th day of June, 1997 by and
between Rustown Homes, Inc. ("Rustown") and Tatonka Energy, Inc. ("Tatonka").
Whereas, Crescent Contractors, Inc. is a wholly owned subsidiary of
Tatonka, and
Whereas, Rustown desires to purchase 100% of the stock of Crescent
Contractors, Inc.,
Both parties agree to the following:
Rustown will pay the sum total of $414.00, which represents the full
amount of expenditures Tatonka has expended on behalf of Crescent Contractors,
Inc., to Tatonka.
Tatonka hereby relinquishes 100% of the stock of Crescent Contractors,
Inc. to Rustown.
Both parties agree to all the terms above.
/s/ Gaylord Hall 6/11/97
---------------------------- --------
Rustown Homes, Inc. Date
/s/ R. A. Green, Sr. 6/11/97
---------------------------- -------
Tatonka Energy, Inc. Date
29
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
This Agreement is entered into this 11th day of June, 1997 by and
between Krestmont International, Inc. ("Krestmont") and Tatonka Energy, Inc.
("Tatonka").
WHEREAS, Cresthaven, Inc. is a wholly owned subsidiary of Tatonka, and
WHEREAS, Cresthaven, Inc. has no assets or liabilities, and
WHEREAS, Krestmont desires to purchase 100% of the stock of Cresthaven,
Inc.,
Both parties agree to the following:
Krestmont will pay the sum total of $414.00, which represents the full
amount of expenditures Tatonka has expended on behalf of Cresthaven, Inc. to
Tatonka.
Tatonka hereby relinquishes 100% of the stock in Cresthaven, Inc. to
Krestmont.
Both parties agree to all terms above.
/s/ [signature illegible], Vice President 6/11/97
----------------------------------------- --------
Krestmont International, Inc. Date
/s/ R. A. Green, Sr. 6/11/97
----------------------------------------- --------
Tatonka Energy, Inc. Date
30
EXHIBIT 10.3
AGREEMENT OF SALE
PARTIES
This is an Agreement between Food Franchises, Inc., located at 14106
Chicot Rd., #6, Mabeldale, Arkansas 72103, ("Buyer"), and Tatonka Energy, Inc.
("Seller") an Oklahoma corporation, with offices at 10850 Switzer Road, Suite
111, Dallas, Texas, (sometimes herein collectively referred to as the
"Parties").
REPRESENTATIONS AND AGREEMENT
Seller represents that it currently has good title to those items of
equipment listed on Exhibit "A" hereto ("Equipment"). Buyer agrees to purchase
the Equipment for the Purchase Price listed below. Seller represents that the
Equipment is free and clear of all claims, liens, or other encumbrances and is
fully transferrable, and agrees to sell, transfer and convey the Equipment to
Buyer, in consideration of the Purchase Price below.
PURCHASE PRICED:
Thirty Seven Thousand, Four Hundred and Forty-Eight and 25/100 Dollars
($37,488.25), such sum to be paid to Seller as follows: $5,000,00 on or before
March 18, 1997, and the balance on or before May 15, 1997. Buyer agrees that
Seller is extending credit during the period until final payment is received and
grants a security interest to Seller in all items listed on the attached
Exhibits and further gives permission for Seller to file a copy of this
Agreement, or other appropriate documentation, with the Secretary of State's
office, or other government agencies, to record and give public notice of the
security interest and lien hereby granted to Seller in the items listed in the
attached Exhibits.
EXHIBITS
The attached Exhibit "A" (two pages) and are fully incorporated herein.
SECURITY AGREEMENT
As stated above, Seller is granted a security interest in the items
listed in the attached Exhibits. To further secure Seller's position in the
above described transaction, and as security for any and all amounts which may
be loaned or advanced to Buyer by Seller or its Assignees in the future, Buyer
hereby grants and conveys to Seller a UCC Article 9 Security Interest in the
following property of Buyer, such property to be considered Collateral.
All items listed in the attached Exhibits (2 pages), consisting of
restaurant equipment and goods and supplies; all inventory of Buyer; all
accounts receivable, cash, checks and chattel paper of Buyer; all equipment of
Buyer; all proceeds of inventory, equipment, chattel paper or accounts
receivable of Buyer; all after-acquired inventory, equipment, accounts
receivable, chattel paper, cash, checks, or other property of Buyer where not
exempt by law.
31
<PAGE>
Buyer agrees and represents that there are no other liens, security
agreements, or indebtedness relating to the above described Collateral. Buyer
states that it has full authority to grant this security interest and that the
above listed Collateral is owned free and clear by Buyer.
In the event of a default in payment by Buyer of any amounts due on the
above described obligation, Seller may declare the entire obligation accelerated
and due and payable immediately, without further notice to Buyer.
Buyer will be considered in default for the purposes of this Agreement
should any of the following occur: Buyer fails to make a scheduled payment under
the terms above; Buyer becomes insolvent; Buyer ceases to do business for more
than three successive days (not including federal holidays). Buyer agrees to
execute and file any and all financing statements or other documents required by
Seller to perfect this Security Interest. Buyer waives all demand, notice,
protest and presentment for payment in connection with any collection efforts
which Seller may employ to collect the debt outlined above. Buyer agrees that
Seller does not have to exhaust all rights against Buyer before demanding
payment hereunder. Buyer agrees to be responsible for, pay for, and to indemnify
and hold Seller harmless for all collection fees, court costs, reasonable
attorneys fees, or any other amounts expended by Seller in collection efforts in
connection with the above described loan and debt. Buyer further assigns and
conveys to Seller any and all rights to any commissions, fees, rents or other
proceeds it may be entitled to receive in connection with the above described
Collateral and hereby appoints Seller as its agent to collect all such sums
should Buyer default in this loan. Buyer hereby conveys and assigns to Seller
any and all rights to insurance proceeds which it may have in connection with
the above described Collateral. Buyer agrees that it may not assign or transfer
its obligations hereunder without the express written consent of Seller. Buyer
waives any and all defenses which it may be able to assert against any assignee
of Seller. Should any part of this Agreement be unenforceable under applicable
law, at the sole election of Seller, the rest and remainder shall continue in
full effect and force. Buyer agrees to indemnify and hold harmless Seller, its
assigns, employees and agents from any and all liability, loss, damages, costs,
expenses, causes of action, suits, claims, demands or judgments which arise from
or in connection with this Agreement, including any and all punitive, exemplary,
incidental, consequential, or other damages.
32
<PAGE>
This Agreement will be governed in all things by the laws of the State
of Texas and the parties hereby submit themselves to the exclusive jurisdiction
of the courts of that State.
SIGNED
On this 12th day of March, 1997.
TATONKA ENERGY, INC. ("Seller")
By: /s/ Richard A. Green, Sr.
--------------------------------------
Richard A. Green, Sr., President
("Buyer")
By: /s/ James E. Wirtz President
------------------------ ---------
Authorized Agent Title
33
EXHIBIT 10.4
AGREEMENT OF SALE
This Agreement is entered into this 7th day of July, 1997 by and
between VERDE, INC. ("Verde") and TATONKA ENERGY, INC. ("Tatonka").
WHEREAS, Tatonka currently holds a Note Receivable in the amount of
$37,448.25 from Food Franchises, Inc., and
WHEREAS, Verde is willing to purchase said note for the sum total of
$25,635.96 by paying the liabilities of Tatonka listed below,
BOTH PARTIES AGREE TO THE FOLLOWING:
1. Tatonka hereby assigns to Verde any and all rights derived
from the March 12, 1997 Food Franchises, Inc. purchase of
restaurant equipment from Tatonka. Payment for that purchase
and any recourse resulting from non-payment is hereby assigned
to Verde.
2. Verde agrees to pay the sum total of $25,635.96 as follows:
1. On July 15, 1997, Verde shall deposit $9,743.50 into
the Tatonka bank account. These funds shall be
specifically for the purpose of paying the following
outstanding bills:
Grant Thornton (auditing fees) $3,600.00
Securities Transfer $ 161.00
Montreal Trust $ 600.00
Rick Green (legal fees) $4,027.50
Payroll Taxes $1,355.00
TOTAL $9,743.50
2. Verde hereby assumes the following liabilities and
hereby assures prompt payment directly to the
parties:
Russell Richardson (legal fees) $5,218.75
Gerald McEvoy (C.P.A.) $ 425.00
IGT (mgmt fees for Feb., March,
May, June and July) $9,000.00
Charles E. Simon $ 48.71
Verde, Inc. (Rent) $1,200.00
---------
TOTAL $15,892.46
34
<PAGE>
Both parties agree to all terms and evidence such by signing below.
/s/ Richard A. Green, Sr. 7/7/97 /s/ Richard A. Green, Sr. 7/7/97
- -------------------------- ------ ------------------------- ------
VERDE, INC. Date TATONKA ENERGY, INC. Date
35
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
GEORGE C. BARKER
This employment agreement ("Agreement") is made and entered into as of this date
by and between PHYMED, Inc., a Texas corporation ("Corporation"), and GEORGE C.
BARKER, ("Executive").
WHEREAS, the Corporation and the Executive desire that the term of this
Agreement begin on October 1, 1993; and
WHEREAS, the Corporation desires to employ the Executive, currently serving as
Chairman of the Board, (which position he will continue to hold) as its
President and Chief Executive Officer and Executive is willing to accept such
employment by the Corporation, on the terms and subject to the conditions set
forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Duties. During the term of this Agreement, the Executive agrees to be
employed by and to serve the Corporation as its President and Chief Executive
Officer, and the Corporation agrees to employ and retain the Executive in such
capacities. In such capacity, the Executive shall render such managerial,
administrative and other services as are customarily associated with or incident
to such position and shall perform such other duties and responsibilities for
the Corporation as the Corporation may reasonably require, consistent with such
position. The Executive shall devote a substantial portion of his business time,
energy, and skill to the affairs of the Corporation as the Executive shall
report to the Corporation's board of directors.
The Corporation shall not appoint any individual to whom the Executive shall
report, or who shall have the right to supervise the Executive, provided,
however, that the Corporation's board of directors may appoint one or more
members of the board of directors to coordinate the reporting from the Executive
to the board of directors. In the event that the Corporation changes the
Executive's title, working conditions or specifies duties so that the
Executive's powers and duties are diminished or reduced, or include powers,
duties or working conditions which are not generally consistent with the title
of Chief Executive Officer, or if the Corporation changes the reporting
relationship so that the Executive reports to another officer or employee, other
than the Corporation's board of directors as a whole, then at any time
thereafter, at the Executive's option and upon thirty days notice, and provided
that such changes shall not have been rescinded or corrected to the reasonable
satisfaction of the Executive within said thirty day period, the Executive shall
have the right to terminate the employment relationship, and in such event, the
employment shall be deemed to have been terminated by the Corporation without
cause.
36
<PAGE>
Section 2. Term of Employment.
2.1 Definitions. For the purposes of this Agreement the following terms shall
have the following meanings:
2.1.1 "Termination For Cause" shall mean termination by the Corporation
of the Executive's employment by the Corporation by reason of the Executive's
willful dishonesty towards, fraud upon, or deliberate injury or attempted injury
to the Corporation, or by reason of the Executive's willful material breach of
this Agreement which has resulted in material injury to the Corporation.
2.1.2 "Termination Other Than For Cause" shall mean termination by the
Corporation of the Executive's employment by the Corporation (other than in a
Termination for Cause) and shall include constructive termination of the
Executive's employment by reason of material breach of this Agreement by the
Corporation, such constructive termination to be effective upon notice from the
Executive to the Corporation of such constructive termination.
2.1.3 "Voluntary Termination" shall mean termination by the Executive
of the Executive's employment by the Corporation other than (i) constructive
termination as described herein, (ii) "Termination Upon a Change in Control,"
and (iii) termination by reason of the Executive's death or disability as
described herein.
2.1.4 "Termination Upon a Change in Control" shall mean a termination
by the Executive of the Executive's employment with the Corporation within 120
days following a "Change in Control."
2.1.5 "Change in Control" shall mean (i) the time that the Corporation
first determines that any person and all other persons who constitute a group
(within the meaning of ' 13(d)(3) of the Securities Exchange Act of 1934
("Exchange Act")) have acquired direct or indirect beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or
more of the Corporation's outstanding securities, unless a majority of the
"Continuing Directors" approves the acquisition not later than ten (10) business
days after the Corporation makes that determination, or (ii) the first day on
which a majority of the members of the Corporation's board of directors are not
"Continuing Directors."
2.1.6 "Continuing Directors" shall mean, as of any date of
determination, any member of the Corporation's board of directors of the
Corporation who (i) was a member of that board of directors on [DATE], (ii) has
been a member of that board of directors for the two years immediately preceding
such date of determination, or (iii) was nominated for election or elected to
the Corporation's board of directors with the affirmative vote of the greater of
(x) a majority of the Continuing Directors who were members of the Corporation's
board of directors at the time of such nomination or election or (y) at least
[NUMBER] Continuing Directors.
37
<PAGE>
2.2 Initial Term. The term of employment of the Executive by the Corporation
shall be for a period of Ten years beginning with Effective Date October 1,
1993, unless terminated earlier pursuant to this Agreement. At any time prior to
the expiration of the Initial Term, the Corporation and the Executive may by
mutual written agreement extend the Executive's employment under the terms of
this Agreement for such additional periods as they may agree.
2.3 Termination For Cause. Termination For Cause may be effected by the
Corporation at any time during the term of this Agreement and shall be effected
by written notification to the Executive. Upon Termination For Cause, the
Executive shall promptly be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension play or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which the Executive is
a participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, from the date of termination
through the term of the Agreement. Additionally, Executive shall be paid market
value as of the date of termination for all shares of stock which he chooses to
sell to the Company. The right to sell shares to the Company shall exist for a
period of 90 days after the date of termination.
2.4 Termination Other Than For Cause. Notwithstanding anything else in this
Agreement, the Corporation may effect a Termination Other Than For Cause at any
time upon giving written notice to the Executive of such termination. Upon any
Termination Other Than For Cause, the Executive shall promptly be paid all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
the Corporation in which the Executive is a participant to the full extent of
the Executive's rights under such plans (including accelerated vesting, if any,
of awards granted to the Executive under the Corporation's stock option plan),
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, from the date of termination
through the period remaining on the contract term. Additionally, Executive shall
be paid market value as of the date of termination for all shares of stock which
he chooses to sell to the Company. The right to sell shares to the Company shall
exist for a period of 90 days after the date of termination.
2.5 Termination by Reason of Disability. If, during the term of this Agreement,
the Executive, in the reasonable judgment of the Corporation's board of
directors, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, the
Corporation shall have the right to terminate the Executive's employment
hereunder by written notification to the Executive and payment to the Executive
of all accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
the Corporation in which the Executive is a participant to the full extent of
the Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the date of termination, with the exception of medical
and dental benefits which shall continue through the expiration of this
Agreement, but the Executive shall not be paid any other compensation or
reimbursement of any kind, including without limitation, Severance Compensation.
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<PAGE>
2.6 Death. In the event of the Executive's death during the term of this
Agreement, the Executive's employment shall be deemed to have terminated as of
the last day of the month during which his death occurs and the Corporation
shall promptly pay to his estate or such beneficiaries as the Executive may from
time to time designate all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Corporation in which the Executive is a
participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, but the Executive's estate shall not be paid any other compensation
or reimbursement of any kind, including without limitation, Severance
Compensation.
2.7 Voluntary Termination. In the event of a Voluntary Termination, the
Corporation shall promptly pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which the Executive is
a participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind, including
without limitation, Severance Compensation.
2.8 Termination Upon a Change in Control. In the event of a Termination Upon a
Change in Control, the Executive shall immediately be paid all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of the
Corporation in which the Executive is a participant to the full extent of the
Executive's rights under such plans (including accelerated vesting, if any, of
any awards granted to the Executive under the Corporation's Stock Option Plan),
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all from the date of
termination through the term of the contract.
2.9 Notice of Termination. The Corporation may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to the Executive of such termination. The Executive may
effect a termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to the Corporation of such
termination.
Section 3. Salary, Benefits and Bonus Compensation.
39
<PAGE>
3.1 Base Salary. As payment for the services to be rendered by the Executive as
provided in Section 1 and subject to the terms and conditions of Section 2, the
Corporation agrees to pay to the Executive a "Base Salary" for the twelve (12)
calendar months beginning the Effective Date at the rate of $240,000 per annum
payable in 12 equal monthly installments of $20,000 per month. The Executive's
Base Salary shall be reviewed annually by the Compensation Committee of the
Corporation's board of directors ("Compensation Committee"), and the Base Salary
for each year (or portion thereof) beginning October 1, 1993 shall be determined
by the Compensation Committee which shall authorize an increase in the
Executive's Base Salary for such year in an amount which, at a minimum, shall be
equal to the cumulative cost-of-living increment on the Base Salary as report in
the "Consumer Price Index, Dallas, Texas, All Items," published by the U.S.
Department of Labor (using January 1, 1993 as the base date for computation).
3.2 Bonuses. The Executive shall be eligible to receive a discretionary bonus
for each year (or portion thereof) during the term of this Agreement and any
extensions thereof, with the actual amount of any such bonus to be determined in
the sole discretion of the Corporation's board of directors based upon its
evaluation of the Executive's performance during such year. All such bonuses
shall be reviewed annually by the Compensation Committee.
3.3 Additional Benefits. During the term of this Agreement, the Executive
shall be entitled to the following fringe benefits:
3.3.1 Executive Benefits. The Executive shall be eligible to
participate in such of the Corporation's benefits and deferred compensation
plans as are now generally available or later made generally available to
executive officers of the Corporation, including, without limitation, the
Corporation's Stock Option Plan, profit sharing plans, annual physical
examinations, dental and medical plans, personal catastrophe and disability
insurance, financial planning, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length of service
under any benefit plans or programs of the Corporation, the Executive's
employment with the Corporation will be deemed to have commenced on the
Effective Date.
3.3.2 Vacation. The Executive shall be entitled to two (2) weeks of
vacation during each year during the term of this Agreement and any extensions
thereof, prorated for partial years.
3.3.3 Stock Option. Any stock option rights granted to Executive shall
not be affected by this Employment Agreement.
3.3.4 Automobile Allowance. For the term of this Agreement and any
extensions thereof the Corporation shall provide the Executive with an
automobile of his choosing and all expenses related thereto.
3.3.5 Reimbursement for Expenses. During the term of this Agreement,
the Corporation shall reimburse the Executive for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by the
Executive in connection with his duties under this Agreement.
3.3.6 Other Benefits. The Corporation recognizes that Executive will be
expected to devote considerable time and effort on behalf of the Corporation.
Therefore, the Corporation shall provide at least one employee at the
Corporation's sole expense for the performance of duties as assigned by the
Executive.
40
<PAGE>
Section 4. Severance Compensation. In the event the Executive's employment is
terminated, the Executive shall be paid as severance compensation, in lieu of
Base Salary (at the rate payable at the time of such termination), for a period
of the greater of the remaining portion of the Initial Term or twelve (12)
months from the date of such termination provided. Notwithstanding anything in
this Section to the contrary, the Executive may in the Executive's sole
discretion, by delivery of a notice to the Corporation within thirty (30) days
following a Termination, elect to receive from Compensation a lump sum Severance
Compensation payment by bank cashier's check equal to the present value of the
flow of cash payments that would otherwise be paid to the Executive pursuant to
this Section. The Executive shall also be entitled to an accelerated vesting of
any awards granted to the Executive under the Corporation's Stock Option Plan to
the extent provided in the stock option agreement entered into at the time of
grant. The Executive shall continue to accrue retirement benefits and shall
continue to enjoy any benefits under any plans of the Corporation in which the
Executive is a participant to the full extent of the Executive's rights under
such plans, including any perquisites provided under this Agreement, through the
remaining term of this Agreement; provided, however, that the benefits under any
such plans of the Corporation in which the Executive is a participant, including
any such perquisites, shall cease upon re-employment by a new employer.
Section 5. Outside Activities of Executive. The Corporation acknowledges that
the Executive has commitments and business activities related to the management
of other health care related companies; A/G Partners, Medical Imaging of Plano,
and A.M.I.C. There shall be no restriction on the Executive's ability to fulfill
such commitments or engage in such business activities, provided that during the
term of the Executive's employment under this Agreement or for a period of six
months after the termination of such employment the Executive shall not divert
away from the Corporation, for officers personal benefit, or for the benefit of
an organization in which officer has a material financial interest, any
opportunity, arising during such period unless the Corporation's board of
directors have determined not to pursue such opportunity. Nothing in this
Agreement shall preclude the Executive from devoting time during reasonable
periods required for investing personal assets and/or those of family members in
such form or manner that will not violate this Agreement and these activities
will be permitted so long as they do not materially adversely affect the
performance of the Executive's duties and obligations to the Corporation.
Section 6. Payment Obligations. The Corporation's obligation to pay the
Executive the compensation and to make the arrangements provided herein shall be
unconditional, and the Executive shall have no obligation whatsoever to mitigate
damages hereunder. If litigation after a Change in Control shall be brought to
enforce or interpret any provision contained herein, the Corporation, to the
extent permitted by applicable law and the Corporations' articles of
incorporation and bylaws, hereby indemnifies the Executive for the Executive's
reasonable attorneys' fees and disbursements incurred in such litigation.
Section 7. Confidentiality. The Executive agrees that all confidential and
proprietary information relating to the Corporation's business shall be kept and
treated as confidential both during and after the term of this Agreement, except
as may be permitted in writing by the Corporation's board of directors or as
such information is within the public domain or comes within the public domain
without any breach of this Agreement.
Section 7. Withholdings. All compensation and benefits to the Executive
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
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<PAGE>
Section 8. Indemnification. In addition to any rights to indemnification to
which the Executive is entitled to under the Corporation's articles of
incorporation and bylaws, the Corporation shall indemnify the Executive at all
times during and after the term of this Agreement to the maximum extent
permitted under the Texas Business Corporation Act or any successor provision
thereof and any other applicable state law, and shall pay the Executive's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit or proceeding, to the
maximum extent permitted under such applicable state laws.
Section 9. Notices. Any notice under this Agreement shall be in writing and
shall be effective when actually delivered in person or three days after being
deposited in the U.S. mail, registered or certified, postage prepaid and
addressed to the party at the address stated in this Agreement or such other
address as either party may designate by written notice to the other.
addressed to the Corporation at:
----------------------
----------------------
addressed to GEORGE C. BAKER at:
----------------------
----------------------
addressed to Bruce B. Hart
10440 North Central Expressway
Suite 610
Dallas, TX 75231
or at any other address as any party may, from time to time, designate by notice
given in compliance with this section.
Section 10. No Release. Both parties agree that the termination of this
Agreement or the expiration of the term of this Agreement shall not release
either party from any obligations under Sections 3, 4, 6 and 9 herein.
Section 11. Waiver. Failure of either party at any time to require performance
of any provision of this Agreement shall not limit the party's right to enforce
the provision, nor shall any waiver of any breach of any provision be a waiver
of any succeeding breach of any provision or a waiver of the provision itself
for any other provision.
Section 12. Assignment. Except as otherwise provided within this Agreement,
neither party hereto may transfer or assign this Agreement without prior written
consent of the other party.
Section 13. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas with venue in the County of
Dallas.
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Section 14. Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
Section 14. Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
Section 15. Presumption. This Agreement or any section thereof shal not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
Section 16. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
Date:
PhyMed, Inc.
By: /s/ George C. Barker, President
------------------------------------
George C. Barker
43
EXHIBIT 10.6
STOCK OPTION AGREEMENT
George C. Barker
Stock Option Agreement made this 4th day of May, 1998, between Tatonka
Energy, Inc., an Oklahoma corporation ("Company") and George C. Barker,
("Optionee").
WHEREAS, The Company desires to provide the Optionee with an
opportunity to acquire a proprietary interest in the business of the Company
and, through stock ownership, an increased personal interest in its continued
success and progress:
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter set forth, and other good and valuable consideration, the Company
and Optionee agree as follows:
1. The Company hereby grants to the Optionee the option to purchase an
aggregate of 5,000,000 shares of Company's Common Stock, par value of $0.0001
(as presently constituted), on the terms and conditions hereinafter set forth,
at the purchase price of $0.075 per share as presently constituted (500,000
shares at $0.75 per share, after the effectiveness of the proposed 1-for-10
reverse stock split).
2. The Option shall be exercisable in whole or in part at any time, or
from time to time, after the end of any quarter in which the Company's
cumulative operating profits (before corporate overhead) exceed the sum of
$1,065,483 . Notice shall be given to the Company by the Employee of such
exercise of the Option as provided below.
3. (a) The Option shall be exercisable as to not less than 10,000
shares, as presently constituted (1,000 shares, after the effectiveness of the
proposed 1-for-10 reverse stock split), or a multiple thereof, or the remaining
shares covered by the Option if less than such minimum. Notice shall be given to
the Company by the Optionee of such exercise of the Option as provided below.
(b) The purchase price of any shares as to which the Option
shall be exercised shall be paid in full at the time of such exercise or, except
as hereinafter provided, may, at the election of the Optionee, be paid in
installments, in which case the first installment shall be paid at the time of
such exercise. In the event that the purchase price of such shares shall be paid
in full at the time of such exercise, such shares shall be issued as fully paid
and nonassessable shares. In the event, however, that the Optionee shall elect
to pay the purchase price of such shares in installments:
(i) such shares shall be issued as partly paid and assessable
shares,
(ii) the first installment shall be amount equal to not less
than 20% of such purchase price,
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(iii) the unpaid balance of such purchase price shall be paid
(without interest) in equal installments, the first installment at the end of 12
months commencing with the date of such exercise and subsequent installments at
the end of each successive 12-month interval until the balance is paid in full
(the Optionee to have the right of prepaying at any such time the latest
maturing installment or installments of such purchase price then remaining
unpaid), or may be prepaid in whole at any time, provided, however, that any
unpaid balance of the purchase price shall be due and payable forthwith upon any
termination of the Option as hereinafter provided,
(iv) each installment paid in respect of such shares after the
first installment shall be applied to the partial payment of such shares as
nearly as possible in an equal amount,
(v) such shares shall not be assigned or transferred (except
by will or operation of law) and the certificates issued therefor shall bear a
legend indicating that such share are not assignable or transferrable,
(vi) any dividend on the Common Stock shall be paid on such
shares in direct proportion to the percentage of the purchase price therefor
which shall have been paid by the record date for such dividend,
(vii) each certificate for such shares shall, immediately upon
issue, be delivered to the Company, endorsed in blank by the Optionee or
accompanied by a separate stock power so endorsed, in pledge as security for the
unpaid balance of the purchase price of the shares represented by such
certificate,
(viii) such shares shall be subject to assessment and call in
accordance with the laws of the State of Texas; further the Company shall have
the right, by notice to that effect, without the necessity of any such call or
assessment, to require the prepayment, in whole at any time or in part from time
to time of the unpaid balance of the purchase price of such shares or any of
them, whether or not prepayment shall be required of any other person holding
partly paid shares, and
(ix) when the balance of the purchase price of such shares
which shall be represented by any certificate shall have been paid in full, such
certificate shall be promptly released from pledge, stamped full paid,
nonassessable, and transferable, and delivered to the Optionee in person or my
certified mail, of if the Company so desires, such certificate shall be promptly
released from pledge and surrendered to the Company, and a new certificate for
full paid and nonassessable shares shall be promptly delivered to the Optionee
by certified mail in lieu thereof.
(c) In the event that there shall be a default in the payment
when due hereunder of any installment, or of any call, assessment, or prepayment
required by the Company, with respect to any partly paid shares, and such
default shall not be cured within thirty days after written notice thereof by
the Company, the Company shall have the right to take such of the following
actions as it shall deem desirable in its sole discretion:
(i) To cancel the Option and all other options granted to the
Optionee under the Company's "Stock Option Agreement";
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<PAGE>
(ii) To take by forfeiture all right, title, and interest
of the Optionee in and to such partly paid shares;
(iii) To (A) determine that the unpaid balance of the purchase
price of all partly paid shares issued hereunder is immediately due and payable,
without further demand or notice of any kind, in which case such balance shall
thereupon be due and payable; (B) sell, as full paid, nonassessable, and
transferable shares, all shares then pledged hereunder, either at the Stock
Exchange or any public or private sale, without further notice or advertising of
any kind, and buy all or any part of such shares at such sale free from any
right or equity of redemption; (C) charge the Optionee with the entire expense
of such sale; and (D) apply the proceeds of such sale against the balance of the
purchase price owed for all partly paid shares issued hereunder and the expense
of such sale, with the remainder, if any, to be paid over to the Optionee;
provided, however, that if such proceeds shall not be sufficient to liquidate
such balance and expenses in full, the Optionee shall remain liable to the
Company for any unliquidated portion of such balance and expense; and
(iv) To take such other action (including extending the time
for payment of such installment, call, assessment, or prepayment) as shall be
permitted by law. The rights granted to the Company hereunder shall be in
addition to and not in lieu of any other rights or remedies the Company may have
as a result of such default.
(d) Anything herein contained to the contrary notwithstanding,
the purchase price of any shares as to which the Option shall be exercised after
the termination of the Optionee's employment (by retirement, death, or
otherwise) shall be paid in full at the time of exercise of the Option with
respect to such shares.
4. The Option may not be assigned, transferred (except as aforesaid),
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provision hereof, and the levy of any attachment or
similar process upon the Option, shall be null and void and without effect. The
Company shall have the right to terminate the Option, in the event of any such
assignment, transfer, pledge, hypothecation, other disposition of the Option, or
levy of attachment or similar process, by notice to that effect to the person
then entitled to exercise the Option, provide, however, that termination of the
Option thereunder shall not prejudice any rights or remedies which the Company
or a subsidiary corporation may have under this Agreement or otherwise.
5. (a) Subject to the terms and conditions of this Agreement, the
Option shall be exercisable by notice to the Company. Each such notice shall
state the election to exercise the Option and the number of shares in respect of
which it is being exercised,
(ii) state whether the shares in respect of which the Option
is being exercised are being paid for in full or will be paid for in
installments,
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(iii) be signed by the person or persons exercising the Option
and, in the event that the Option is being exercised by any person or persons
other than the Optionee, be accompanied by proof, satisfactory to counsel for
the Company, of the right of such person or persons to exercise the Option, and
(iv) be accompanied by a check payable to the order of the
Company in an amount equal to the purchase price of the shares in respect of
which the Option is being exercised or the first installment of such purchase
price, depending upon whether such shares are being paid for in full or will be
paid for in installments.
The Option shall not be deemed to have been exercised unless all the
preceding provisions of this paragraph shall have been complied with, and for
all purposes of this Agreement the date of the exercise of the Option with
respect to any particular shares shall be the date on which such notice, proof
(if required), and check shall have all been mailed by certified mail or
delivered to the Company. The certificate or certificates for the shares as to
which the Option shall have ben so exercised shall be registered in the name of
the persons or persons so exercising the Option and shall be delivered to or
upon the written order of the person or persons exercising the Option within
fifteen days after receipt by the Company of such notice, proof (if required),
and check. Such delivery shall be made at the office of the Company, or at such
other place as the Company shall thereof have designated by notice.
(b) In the event that the purchase price of any shares as to
which the Option shall be exercised shall be payable in installments, each
installment shall be accompanied by a notice to the Company of the payment of
such installment.
6. Each notice relating to this Agreement shall be in writing and
delivered in person or by certified mail to the Company at its office, attention
of the Secretary. All notices to the Optionee or other person shall be delivered
to the Optionee or such other person or persons at the Optionee's address below
specified.
7. Neither this Option nor the shares of Common Stock issuable upon
exercise hereof, have been registered under the Securities Act of 1933, as
amended, or any state securities laws. The Optionee, by accepting this Option,
represents and warrants that he is acquiring this Option for his own account for
investment and not with a view to or for sale in connection with any
distribution thereof except in conformity with the provisions of the Securities
Act of 1933, as amended, and the Rules and Regulations promulgated thereunder,
and applicable state securities laws, and further agrees that this Option may
not be sold or transferred in the absence of an effective registration statement
under the Securities Act of 1933, and applicable state securities laws, or an
opinion of counsel which opinion and which counsel shall be satisfactory to the
Company to the effect that there is an exemption from such registration. In
addition, the Optionee agrees to deliver to the Company a similar written
statement in the form of the Investment Letter attached hereto with respect to
any shares of Common Stock purchased upon the exercise of this Option unless
such shares have at the time of issuance been registered under the Securities
Act of 1933, as amended, and applicable state securities laws, or the Optionee
can demonstrate the availability of federal and state exemptions from
registration and qualification not requiring same.
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<PAGE>
8. Any dispute or disagreement which shall arise under; as a result of,
or in any way relate to the interpretation or construction of this Agreement
shall be determined by the by arbitration under the rules of the American
Arbitration Association, under the rules of that body. Any such determination
made hereunder shall be final, binding and conclusive for all purposes.
9. This Agreement shall be governed by the laws of the State of Texas.
10. This Agreement shall inure to the benefit of and be binding upon
each successor and assign of the Company. All obligations imposed upon the
Optionee, and all rights granted to the Company, hereunder or as stipulated in
the Plan shall be binding upon the Optionee's heirs, legal representatives and
successors.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name by its President and attested by its Secretary on the day
and year first above written, and the Optionee has hereunto set his hand and
seal on the day and year specified below.
TATONKA ENERGY, INC.
By
---------------------------
George C. Barker, President
Attest:
- ------------------------------
, Secretary
-----------------------------
George C. Barker, Optionee
-----------------------------
Address
Date:
48
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Investment Letter
To: PhyMed, Inc.
(formerly, Tatonka Energy, Inc.)
In connection with my purchase of shares of Common Stock of PhyMed,
Inc. pursuant to the exercise of a Stock Option Agreement, I hereby represent
that I am acquiring said shares for my own account for investment and not with a
view to or for sale in connection with any distribution of said shares.
Dated: , 199
------------ ---
------------------------------------
(Signature)
------------------------------------
(Printed or Typed Name)
49
EXHIBIT 10.7
STOCK OPTION AGREEMENT
Joe R. Love
Stock Option Agreement made this 4th day of May, 1998, between Tatonka
Energy, Inc., an Oklahoma corporation ("Company") and Joe R. Love, ("Optionee").
WHEREAS, The Company desires to provide the Optionee with an
opportunity to acquire a proprietary interest in the business of the Company
and, through stock ownership, an increased personal interest in its continued
success and progress:
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter set forth, and other good and valuable consideration, the Company
and Optionee agree as follows:
1. The Company hereby grants to the Optionee the option to purchase an
aggregate of 2,500,000 shares of Company's Common Stock, par value of $0.0001
(as presently constituted), on the terms and conditions hereinafter set forth,
at the purchase price of $0.075 per share as presently constituted (250,000
shares at $0.75 per share, after the effectiveness of the proposed 1-for-10
reverse stock split).
2. The Option shall be exercisable in whole or in part at any time, or
from time to time, upon notice given to the Company by the Optionee of such
exercise of the Option as provided below.
3. (a) The Option shall be exercisable as to not less than 10,000
shares, as presently constituted (1,000 shares, after the effectiveness of the
proposed 1-for-10 reverse stock split), or a multiple thereof, or the remaining
shares covered by the Option if less than such minimum. Notice shall be given to
the Company by the Optionee of such exercise of the Option as provided below.
(b) The purchase price of any shares as to which the Option
shall be exercised shall be paid in full at the time of such exercise or, except
as hereinafter provided, may, at the election of the Optionee, be paid in
installments, in which case the first installment shall be paid at the time of
such exercise. In the event that the purchase price of such shares shall be paid
in full at the time of such exercise, such shares shall be issued as fully paid
and nonassessable shares. In the event, however, that the Optionee shall elect
to pay the purchase price of such shares in installments:
(i) such shares shall be issued as partly paid and assessable
shares,
(ii) the first installment shall be amount equal to not less
than 20% of such purchase price,
50
<PAGE>
(iii) the unpaid balance of such purchase price shall be paid
(without interest) in equal installments, the first installment at the end of 12
months commencing with the date of such exercise and subsequent installments at
the end of each successive 12-month interval until the balance is paid in full
(the Optionee to have the right of prepaying at any such time the latest
maturing installment or installments of such purchase price then remaining
unpaid), or may be prepaid in whole at any time, provided, however, that any
unpaid balance of the purchase price shall be due and payable forthwith upon any
termination of the Option as hereinafter provided,
(iv) each installment paid in respect of such shares after the
first installment shall be applied to the partial payment of such shares as
nearly as possible in an equal amount,
(v) such shares shall not be assigned or transferred (except
by will or operation of law) and the certificates issued therefor shall bear a
legend indicating that such share are not assignable or transferrable,
(vi) any dividend on the Common Stock shall be paid on such
shares in direct proportion to the percentage of the purchase price therefor
which shall have been paid by the record date for such dividend,
(vii) each certificate for such shares shall, immediately upon
issue, be delivered to the Company, endorsed in blank by the Optionee or
accompanied by a separate stock power so endorsed, in pledge as security for the
unpaid balance of the purchase price of the shares represented by such
certificate,
(viii) such shares shall be subject to assessment and call in
accordance with the laws of the State of Texas; further the Company shall have
the right, by notice to that effect, without the necessity of any such call or
assessment, to require the prepayment, in whole at any time or in part from time
to time of the unpaid balance of the purchase price of such shares or any of
them, whether or not prepayment shall be required of any other person holding
partly paid shares, and
(ix) when the balance of the purchase price of such shares
which shall be represented by any certificate shall have been paid in full, such
certificate shall be promptly released from pledge, stamped full paid,
nonassessable, and transferable, and delivered to the Optionee in person or my
certified mail, of if the Company so desires, such certificate shall be promptly
released from pledge and surrendered to the Company, and a new certificate for
full paid and nonassessable shares shall be promptly delivered to the Optionee
by certified mail in lieu thereof.
(c) In the event that there shall be a default in the payment
when due hereunder of any installment, or of any call, assessment, or prepayment
required by the Company, with respect to any partly paid shares, and such
default shall not be cured within thirty days after written notice thereof by
the Company, the Company shall have the right to take such of the following
actions as it shall deem desirable in its sole discretion:
(i) To cancel the Option and all other options granted to the
Optionee under the Company's "Stock Option Agreement";
(ii) To take by forfeiture all right, title, and interest
of the Optionee in and to such partly paid shares;
51
<PAGE>
(iii) To (A) determine that the unpaid balance of the purchase
price of all partly paid shares issued hereunder is immediately due and payable,
without further demand or notice of any kind, in which case such balance shall
thereupon be due and payable; (B) sell, as full paid, nonassessable, and
transferable shares, all shares then pledged hereunder, either at the Stock
Exchange or any public or private sale, without further notice or advertising of
any kind, and buy all or any part of such shares at such sale free from any
right or equity of redemption; (C) charge the Optionee with the entire expense
of such sale; and (D) apply the proceeds of such sale against the balance of the
purchase price owed for all partly paid shares issued hereunder and the expense
of such sale, with the remainder, if any, to be paid over to the Optionee;
provided, however, that if such proceeds shall not be sufficient to liquidate
such balance and expenses in full, the Optionee shall remain liable to the
Company for any unliquidated portion of such balance and expense; and
(iv) To take such other action (including extending the time
for payment of such installment, call, assessment, or prepayment) as shall be
permitted by law. The rights granted to the Company hereunder shall be in
addition to and not in lieu of any other rights or remedies the Company may have
as a result of such default.
(d) Anything herein contained to the contrary notwithstanding,
the purchase price of any shares as to which the Option shall be exercised after
the termination of the Optionee's employment (by retirement, death, or
otherwise) shall be paid in full at the time of exercise of the Option with
respect to such shares.
4. The Option may not be assigned, transferred (except as aforesaid),
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provision hereof, and the levy of any attachment or
similar process upon the Option, shall be null and void and without effect. The
Company shall have the right to terminate the Option, in the event of any such
assignment, transfer, pledge, hypothecation, other disposition of the Option, or
levy of attachment or similar process, by notice to that effect to the person
then entitled to exercise the Option, provide, however, that termination of the
Option thereunder shall not prejudice any rights or remedies which the Company
or a subsidiary corporation may have under this Agreement or otherwise.
5. (a) Subject to the terms and conditions of this Agreement, the
Option shall be exercisable by notice to the Company. Each such notice shall
state the election to exercise the Option and the number of shares in respect of
which it is being exercised,
(ii) state whether the shares in respect of which the Option
is being exercised are being paid for in full or will be paid for in
installments,
(iii) be signed by the person or persons exercising the Option
and, in the event that the Option is being exercised by any person or persons
other than the Optionee, be accompanied by proof, satisfactory to counsel for
the Company, of the right of such person or persons to exercise the Option, and
52
<PAGE>
(iv) be accompanied by a check payable to the order of the
Company in an amount equal to the purchase price of the shares in respect of
which the Option is being exercised or the first installment of such purchase
price, depending upon whether such shares are being paid for in full or will be
paid for in installments.
The Option shall not be deemed to have been exercised unless all the
preceding provisions of this paragraph shall have been complied with, and for
all purposes of this Agreement the date of the exercise of the Option with
respect to any particular shares shall be the date on which such notice, proof
(if required), and check shall have all been mailed by certified mail or
delivered to the Company. The certificate or certificates for the shares as to
which the Option shall have ben so exercised shall be registered in the name of
the persons or persons so exercising the Option and shall be delivered to or
upon the written order of the person or persons exercising the Option within
fifteen days after receipt by the Company of such notice, proof (if required),
and check. Such delivery shall be made at the office of the Company, or at such
other place as the Company shall thereof have designated by notice.
(b) In the event that the purchase price of any shares as to
which the Option shall be exercised shall be payable in installments, each
installment shall be accompanied by a notice to the Company of the payment of
such installment.
6. Each notice relating to this Agreement shall be in writing and
delivered in person or by certified mail to the Company at its office, attention
of the Secretary. All notices to the Optionee or other person shall be delivered
to the Optionee or such other person or persons at the Optionee's address below
specified.
7. Neither this Option nor the shares of Common Stock issuable upon
exercise hereof, have been registered under the Securities Act of 1933, as
amended, or any state securities laws. The Optionee, by accepting this Option,
represents and warrants that he is acquiring this Option for his own account for
investment and not with a view to or for sale in connection with any
distribution thereof except in conformity with the provisions of the Securities
Act of 1933, as amended, and the Rules and Regulations promulgated thereunder,
and applicable state securities laws, and further agrees that this Option may
not be sold or transferred in the absence of an effective registration statement
under the Securities Act of 1933, and applicable state securities laws, or an
opinion of counsel which opinion and which counsel shall be satisfactory to the
Company to the effect that there is an exemption from such registration. In
addition, the Optionee agrees to deliver to the Company a similar written
statement in the form of the Investment Letter attached hereto with respect to
any shares of Common Stock purchased upon the exercise of this Option unless
such shares have at the time of issuance been registered under the Securities
Act of 1933, as amended, and applicable state securities laws, or the Optionee
can demonstrate the availability of federal and state exemptions from
registration and qualification not requiring same.
8. Any dispute or disagreement which shall arise under; as a result of,
or in any way relate to the interpretation or construction of this Agreement
shall be determined by the by arbitration under the rules of the American
Arbitration Association, under the rules of that body. Any such determination
made hereunder shall be final, binding and conclusive for all purposes.
53
<PAGE>
9. This Agreement shall be governed by the laws of the State of Texas.
10. This Agreement shall inure to the benefit of and be binding upon
each successor and assign of the Company. All obligations imposed upon the
Optionee, and all rights granted to the Company, hereunder or as stipulated in
the Plan shall be binding upon the Optionee's heirs, legal representatives and
successors.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name by its President and attested by its Secretary on the day
and year first above written, and the Optionee has hereunto set his hand and
seal on the day and year specified below.
TATONKA ENERGY, INC.
By ------------------------------
George C. Barker, President
Attest:
- ------------------------------
, Secretary
---------------------------------
Joe R. Love, Optionee
---------------------------------
Address
Date:
54
<PAGE>
Investment Letter
To: PhyMed, Inc.
(formerly, Tatonka Energy, Inc.)
In connection with my purchase of shares of Common Stock of PhyMed,
Inc. pursuant to the exercise of a Stock Option Agreement, I hereby represent
that I am acquiring said shares for my own account for investment and not with a
view to or for sale in connection with any distribution of said shares.
Dated: , 199
------------ --
------------------------------------
(Signature)
-----------------------------------
(Printed or Typed Name)
55
EXHIBIT 10.8
STOCK OPTION AGREEMENT
Joe P. Foor
Stock Option Agreement made this 4th day of May, 1998, between Tatonka
Energy, Inc., an Oklahoma corporation ("Company") and Joe P. Foor, ("Optionee").
WHEREAS, The Company desires to provide the Optionee with an
opportunity to acquire a proprietary interest in the business of the Company
and, through stock ownership, an increased personal interest in its continued
success and progress:
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter set forth, and other good and valuable consideration, the Company
and Optionee agree as follows:
1. The Company hereby grants to the Optionee the option to purchase an
aggregate of 2,500,000 shares of Company's Common Stock, par value of $0.0001
(as presently constituted), on the terms and conditions hereinafter set forth,
at the purchase price of $0.075 per share as presently constituted (250,000
shares at $0.75 per share, after the effectiveness of the proposed 1-for-10
reverse stock split).
2. The Option shall be exercisable in whole or in part at any time, or
from time to time, upon notice given to the Company by the Optionee of such
exercise of the Option as provided below.
3. (a) The Option shall be exercisable as to not less than 10,000
shares, as presently constituted (1,000 shares, after the effectiveness of the
proposed 1-for-10 reverse stock split), or a multiple thereof, or the remaining
shares covered by the Option if less than such minimum. Notice shall be given to
the Company by the Optionee of such exercise of the Option as provided below.
(b) The purchase price of any shares as to which the Option
shall be exercised shall be paid in full at the time of such exercise or, except
as hereinafter provided, may, at the election of the Optionee, be paid in
installments, in which case the first installment shall be paid at the time of
such exercise. In the event that the purchase price of such shares shall be paid
in full at the time of such exercise, such shares shall be issued as fully paid
and nonassessable shares. In the event, however, that the Optionee shall elect
to pay the purchase price of such shares in installments:
(i) such shares shall be issued as partly paid and assessable
shares,
(ii) the first installment shall be amount equal to not less
than 20% of such purchase price,
(iii) the unpaid balance of such purchase price shall be paid
(without interest) in equal installments, the first installment at the end of 12
months commencing with the date of such exercise and subsequent installments at
56
<PAGE>
the end of each successive 12-month interval until the balance is paid in full
(the Optionee to have the right of prepaying at any such time the latest
maturing installment or installments of such purchase price then remaining
unpaid), or may be prepaid in whole at any time, provided, however, that any
unpaid balance of the purchase price shall be due and payable forthwith upon any
termination of the Option as hereinafter provided,
(iv) each installment paid in respect of such shares after the
first installment shall be applied to the partial payment of such shares as
nearly as possible in an equal amount,
(v) such shares shall not be assigned or transferred (except
by will or operation of law) and the certificates issued therefor shall bear a
legend indicating that such share are not assignable or transferrable,
(vi) any dividend on the Common Stock shall be paid on such
shares in direct proportion to the percentage of the purchase price therefor
which shall have been paid by the record date for such dividend,
(vii) each certificate for such shares shall, immediately upon
issue, be delivered to the Company, endorsed in blank by the Optionee or
accompanied by a separate stock power so endorsed, in pledge as security for the
unpaid balance of the purchase price of the shares represented by such
certificate,
(viii) such shares shall be subject to assessment and call in
accordance with the laws of the State of Texas; further the Company shall have
the right, by notice to that effect, without the necessity of any such call or
assessment, to require the prepayment, in whole at any time or in part from time
to time of the unpaid balance of the purchase price of such shares or any of
them, whether or not prepayment shall be required of any other person holding
partly paid shares, and
(ix) when the balance of the purchase price of such shares
which shall be represented by any certificate shall have been paid in full, such
certificate shall be promptly released from pledge, stamped full paid,
nonassessable, and transferable, and delivered to the Optionee in person or my
certified mail, of if the Company so desires, such certificate shall be promptly
released from pledge and surrendered to the Company, and a new certificate for
full paid and nonassessable shares shall be promptly delivered to the Optionee
by certified mail in lieu thereof.
(c) In the event that there shall be a default in the payment
when due hereunder of any installment, or of any call, assessment, or prepayment
required by the Company, with respect to any partly paid shares, and such
default shall not be cured within thirty days after written notice thereof by
the Company, the Company shall have the right to take such of the following
actions as it shall deem desirable in its sole discretion:
(i) To cancel the Option and all other options granted to the
Optionee under the Company's "Stock Option Agreement";
(ii) To take by forfeiture all right, title, and interest
of the Optionee in and to such partly paid shares;
57
<PAGE>
(iii) To (A) determine that the unpaid balance of the purchase
price of all partly paid shares issued hereunder is immediately due and payable,
without further demand or notice of any kind, in which case such balance shall
thereupon be due and payable; (B) sell, as full paid, nonassessable, and
transferable shares, all shares then pledged hereunder, either at the Stock
Exchange or any public or private sale, without further notice or advertising of
any kind, and buy all or any part of such shares at such sale free from any
right or equity of redemption; (C) charge the Optionee with the entire expense
of such sale; and (D) apply the proceeds of such sale against the balance of the
purchase price owed for all partly paid shares issued hereunder and the expense
of such sale, with the remainder, if any, to be paid over to the Optionee;
provided, however, that if such proceeds shall not be sufficient to liquidate
such balance and expenses in full, the Optionee shall remain liable to the
Company for any unliquidated portion of such balance and expense; and
(iv) To take such other action (including extending the time
for payment of such installment, call, assessment, or prepayment) as shall be
permitted by law. The rights granted to the Company hereunder shall be in
addition to and not in lieu of any other rights or remedies the Company may have
as a result of such default.
(d) Anything herein contained to the contrary notwithstanding,
the purchase price of any shares as to which the Option shall be exercised after
the termination of the Optionee's employment (by retirement, death, or
otherwise) shall be paid in full at the time of exercise of the Option with
respect to such shares.
4. The Option may not be assigned, transferred (except as aforesaid),
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provision hereof, and the levy of any attachment or
similar process upon the Option, shall be null and void and without effect. The
Company shall have the right to terminate the Option, in the event of any such
assignment, transfer, pledge, hypothecation, other disposition of the Option, or
levy of attachment or similar process, by notice to that effect to the person
then entitled to exercise the Option, provide, however, that termination of the
Option thereunder shall not prejudice any rights or remedies which the Company
or a subsidiary corporation may have under this Agreement or otherwise.
5. (a) Subject to the terms and conditions of this Agreement, the
Option shall be exercisable by notice to the Company. Each such notice shall
state the election to exercise the Option and the number of shares in respect of
which it is being exercised,
(ii) state whether the shares in respect of which the Option
is being exercised are being paid for in full or will be paid for in
installments,
(iii) be signed by the person or persons exercising the Option
and, in the event that the Option is being exercised by any person or persons
other than the Optionee, be accompanied by proof, satisfactory to counsel for
the Company, of the right of such person or persons to exercise the Option, and
58
<PAGE>
(iv) be accompanied by a check payable to the order of the
Company in an amount equal to the purchase price of the shares in respect of
which the Option is being exercised or the first installment of such purchase
price, depending upon whether such shares are being paid for in full or will be
paid for in installments.
The Option shall not be deemed to have been exercised unless all the
preceding provisions of this paragraph shall have been complied with, and for
all purposes of this Agreement the date of the exercise of the Option with
respect to any particular shares shall be the date on which such notice, proof
(if required), and check shall have all been mailed by certified mail or
delivered to the Company. The certificate or certificates for the shares as to
which the Option shall have ben so exercised shall be registered in the name of
the persons or persons so exercising the Option and shall be delivered to or
upon the written order of the person or persons exercising the Option within
fifteen days after receipt by the Company of such notice, proof (if required),
and check. Such delivery shall be made at the office of the Company, or at such
other place as the Company shall thereof have designated by notice.
(b) In the event that the purchase price of any shares as to
which the Option shall be exercised shall be payable in installments, each
installment shall be accompanied by a notice to the Company of the payment of
such installment.
6. Each notice relating to this Agreement shall be in writing and
delivered in person or by certified mail to the Company at its office, attention
of the Secretary. All notices to the Optionee or other person shall be delivered
to the Optionee or such other person or persons at the Optionee's address below
specified.
7. Neither this Option nor the shares of Common Stock issuable upon
exercise hereof, have been registered under the Securities Act of 1933, as
amended, or any state securities laws. The Optionee, by accepting this Option,
represents and warrants that he is acquiring this Option for his own account for
investment and not with a view to or for sale in connection with any
distribution thereof except in conformity with the provisions of the Securities
Act of 1933, as amended, and the Rules and Regulations promulgated thereunder,
and applicable state securities laws, and further agrees that this Option may
not be sold or transferred in the absence of an effective registration statement
under the Securities Act of 1933, and applicable state securities laws, or an
opinion of counsel which opinion and which counsel shall be satisfactory to the
Company to the effect that there is an exemption from such registration. In
addition, the Optionee agrees to deliver to the Company a similar written
statement in the form of the Investment Letter attached hereto with respect to
any shares of Common Stock purchased upon the exercise of this Option unless
such shares have at the time of issuance been registered under the Securities
Act of 1933, as amended, and applicable state securities laws, or the Optionee
can demonstrate the availability of federal and state exemptions from
registration and qualification not requiring same.
8. Any dispute or disagreement which shall arise under; as a result of,
or in any way relate to the interpretation or construction of this Agreement
shall be determined by the by arbitration under the rules of the American
Arbitration Association, under the rules of that body. Any such determination
made hereunder shall be final, binding and conclusive for all purposes.
59
<PAGE>
9. This Agreement shall be governed by the laws of the State of Texas.
10. This Agreement shall inure to the benefit of and be binding upon
each successor and assign of the Company. All obligations imposed upon the
Optionee, and all rights granted to the Company, hereunder or as stipulated in
the Plan shall be binding upon the Optionee's heirs, legal representatives and
successors.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name by its President and attested by its Secretary on the day
and year first above written, and the Optionee has hereunto set his hand and
seal on the day and year specified below.
TATONKA ENERGY, INC.
By --------------------------
George C. Barker, President
Attest:
- ------------------------------
, Secretary
-----------------------------
Joe P. Foor, Optionee
-----------------------------
Address
Date:
60
<PAGE>
Investment Letter
To: PhyMed, Inc.
(formerly, Tatonka Energy, Inc.)
In connection with my purchase of shares of Common Stock of PhyMed,
Inc. pursuant to the exercise of a Stock Option Agreement, I hereby represent
that I am acquiring said shares for my own account for investment and not with a
view to or for sale in connection with any distribution of said shares.
Dated: , 199
----------- -- ------------------------------------
(Signature)
------------------------------------
(Printed or Typed Name)
61
EXHIBIT 10.9
March 31, 1998
Phy.Med., Inc.
Attn: Mr. George C. Barker
9603 White Rock Trail, Suite 100
Dallas, TX 75238
Re: Corporate Development Consulting and Advisory Services
Gentlemen:
This letter sets forth the agreement between Tatonka Energy, Inc., an Oklahoma
Corporation and parent company of Phy.Med., Inc. (the "Company", which term
shall any subsidiaries), and Joe Foor, a Texas resident ("Foor") and CCDC, Inc.
(Foor and CCDC, Inc. are together, "Consultants"), with respect to certain
consulting and advisory services to be provided by Consultants to the Company
from time to time. Consultants hereby agree to provide the Company from time to
time throughout the term of this agreement, corporate development services,
including the identification, evaluation and negotiation of acquisitions,
strategic planning, optimization of capital structure, access to capital
markets, and such other similar services as the Company may require from time to
time.
The Company agrees to pay Consultants an annual retainer for this engagement in
the amount of $36,000.00, payable in monthly installments of $3,000.00, due on
the first day of each month (the "Retainer"). In addition to the retainer,
Consultants are to be reimbursed by the Company for out-of-pocket expenses
("Expenses") incurred for such matters as travel, printing and reproduction,
outside computer time charges, postage, delivery services, facsimiles, outside
expert and consultant fees, long-distance telephone charges, local
transportation and the like. Outstanding disbursements will be identified and
billed separately or upon billing for consulting and advisory services.
Consultants in their discretion may require the advance payment of Expenses.
consultants shall be entitled to a transaction fee (the "Transaction Fee") for
each completed acquisition or capital placement by the Company during the term
of this agreement, based on the total amount paid by the acquiring party or the
total capital raised (the "Transaction Amount"). The Transaction Amount shall
include, in the case of acquisitions, payments for covenants not to compete,
earnouts or similar arrangements and debt of the acquired company. The
Transaction Amount shall include, in the case of capital placements, the
aggregate issue price of any equity or debt and the strike price of any rights,
warrants or options issued in connection with the placement.
62
<PAGE>
The Transaction Fee for each transaction completed shall be equal to the greater
of (A) 3% of the total transaction and (B) the sum of (i) 5% of the first
$1,000,000 of the Transaction Amount, (ii) 4% of the portion of the Transaction
Amount in excess of $1,000,000 up to and including $2,000,000 of the Transaction
Amount, (iii) 3% of the portion of the Transaction Amount in excess of
$2,000,000 up to and including $3,000,000 of the Transaction Amount, (iv) 2% of
the portion of the Transaction Amount in excess of $3,000,000 up to and
including $4,000,000 of the Transaction Amount, and (v) 1% of the portion of the
Transaction Amount in excess of $4,000,000. Each Transaction Fee shall be
payable upon the closing of the transaction to which it relates. The sum of the
Retainer shall be deducted from any Transaction Fees otherwise due and payable.
Consultants reserves the right to charge interest at the rate of 1.5% per month
from the invoice date if invoices are not paid within 30 days.
The term of this agreement shall be one year commencing on the date hereof and
shall continue thereafter from year to year until terminated by either party
upon the giving of 30 days written notice thereof to the other.
This agreement shall be governed by and construed in accordance with the laws of
the State of Texas, without giving effect to its conflicts of laws principles.
No provision of this agreement may be modified, amended or waived except by a
writing signed by each party hereto.
The undersigned have caused this letter to be duly executed and delivered,
intending to be bound by the terms and conditions hereof.
CCDC, Inc.
By: /s/ Joe R. Love
----------------------
Joe R. Love
/s/ Joe Foor
----------------------
Joe Foor
Tatonka Energy, Inc.
By: /s/ George C. Barker, President
-------------------------------
George C. Barker, President
63
EXHIBIT 10.10
MANAGEMENT/LICENSING AGREEMENT
This MANAGEMENT/LICENSING AGREEMENT (this "AGREEMENT") is made and entered into
by and between Phy.Med., Inc., a Texas corporation ("Manager") ("Licensor "and
MEDICAL IMAGING OF PLANO, INC. d.b.a. PHYMED DIAGNOSTIC IMAGING CENTER PLANO,
(the "Center") ("Licensee")
WHEREAS, Manager is in the business of operating medical diagnostic imaging
Centers and providing management services to medical and other health care
practitioners in the conduct of their professional operations; and
WHEREAS, Center is engaged in the operation of an outpatient medical diagnostic
imaging center doing business in the State of Texas; and Center desires to
secure the management expertise of Manager in order to conduct its Center in a
more cost-effective manner;
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
AGREEMENTS contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. TERM. This AGREEMENT shall be for a term of ten (10) years commencing on the
effective date set forth below, unless sooner terminated as provided elsewhere
in this AGREEMENT (the "Initial Term"). At the end of the Initial Term, the term
of this AGREEMENT shall be extended for consecutive twelve (12) month periods
(each such period is referred to as a "renewal term'), upon the same terms and
conditions, unless either party gives the other party written notice to the
contrary at least thirty (30) days prior to the end of the Initial Term or any
renewal term.
2. MANAGEMENT SERVICES. The Center hereby grants to Manager the right to
supervise and direct the day-to-day management and operation of the Center, and
Manager agrees to provide such services, upon the terms and conditions of this
Agreement. Without limiting the generality of the foregoing, the Center grants
to Manager the right, and Manager agrees, to perform the following services on
behalf of the Center;
(a) to manage the administrative and business operations of the Center as
Manager determines to be customary and usual in the operation of comparable
medical diagnostic imaging center rendering comparable services;
(b) to hire, promote, discharge, and supervise the work of such medical,
technical, business, administrative, and maintenance personnel as Manager shall
deem necessary or advisable in the management of the Center pursuant to this
AGREEMENT;
64
<PAGE>
(c) to hire, promote and discharge as shall be appropriate and reasonably
required by the nature of the Center such physician and non-physician medical
and technical personnel as Manager shall deem necessary or advisable in the
operation of the Center; provided, however, that the Center shall maintain
complete responsibility for supervising the actions of nursing personnel and
medical technicians. Center agrees to save and hold Manager harmless for all
acts or omissions of nursing personnel and medical technicians under the
direction or supervision of a physician. Manager shall exercise reasonable care
in the initial selection of such personnel and technicians; however, Center will
not be obligated to accept the services of individuals deemed by the Center to
be unqualified to perform technical or patient care services.
(d) to adopt such reasonable rules, policies and procedures as may be
appropriate for the orderly operation of the Center and the delivery of
administrative, clerical and other management services. Center hereby agrees to
abide by such rules, policies and procedures and to cooperate with Manager in
causing all personnel to abide by same;
(e) to procure medical and non-medical supplies and equipment which Manager and
Center deem necessary for the operation of the Center from such suppliers and on
such terms as Manager may determine; Center shall promptly notify Manager if any
supplies or equipment are defective or otherwise unsatisfactory for their
intended use. Manager expressly disclaims any warranties of merchantability or
fitness for a particular use with respect to supplies and equipment provided.
(f) to install and maintain systems for accounting, auditing, and medical
records maintenance;
(g) as agent for the Center, to promptly deposit in banking institutions
selected by Center, in a separate account, in the Center's name and for the
Center's benefit, all moneys received by Manager as revenues from the Center or
otherwise for or on behalf of the Center;
(h) to fulfill the obligations of Center under any existing lease affecting
medical or business equipment located in the Center, including payment of rental
when due, and to secure insurance as required by any such lease AGREEMENT, but
only to the extent of the funds in the Center. Any such lease shall be reviewed
and acknowledged in writing by Manager prior to the execution of this AGREEMENT;
(i) to make or install, or cause to be made or installed, at the expense of
Center, and in the name of the Center, all mutually agreed alterations,
replacements, additions and improvements in and to the office facilities
excluding, however, extraordinary capital replacements, additions or repairs;
(j) to assist in the application for all licenses and permits required of the
Center or Manager in connection with the management and operation of the Center;
(k) to cause, at the request and expense of Center, such other acts and things
to be done as shall be reasonable and necessary for the efficient and
cost-effective operation of the Center.
(l) to contract, on behalf of the Center, with a qualified radiologist for the
performance of procedures, for the supervision of physician and non-physician
technical staff and to perform the duties and responsibilities of a medical
director.
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(m) to act as an agent for the Center in the conduct of all financial and legal
affairs, to include the engagement of legal, accounting and other professionals,
execution of binding contracts and agreements, loan documents, pledging of
center assets for purposes of loan and other financial arrangements as the
Manager deems appropriate in the operation of the Center.
3. Employees. Manager shall not be liable to employees employed by Center for
their wages, fringe benefits or other compensation. Center shall be responsible
for payment of the total aggregate compensation, including fringe benefits,
payable with respect to such employees. The term "fringe benefits" as used
herein shall mean and include Center's contribution of FICA, FUTA, unemployment
compensation and other employment taxes, worker's compensation, group life and
accident and health insurance premiums, incentive bonuses and other similar
benefits agreed to by Manager on behalf of the Center.
4. Fee. As compensation for all services rendered by Manager under this
AGREEMENT, the Center shall pay to Manager at its principal office (or at such
other place, if any, as Manager from time to time may designate in a written
notice to the Center) a monthly management fee (the "Management Fee") equal to
THREE PERCENT (3%) OF THE NET SALES, said amount to be paid in arrears on or
before the tenth (10th) day of the month following, every month during the term
of this AGREEMENT. The formula for determining the Management Fee is not
intended and shall not be interpreted or applied as permitting the Manager to
share in the Center's fees. It is acknowledged as the parties' negotiated
AGREEMENT as to the reasonable fair market value of the services furnished by
Manager pursuant to this AGREEMENT, considering the nature and volume of the
services required and the risks assumed by the Manager.
5. Payment of Expenses. Center shall be responsible for making payment of all
operating expenses attributable to the operation of Center unless payment is
specifically assumed by Manager as an obligation pursuant to this AGREEMENT.
6. Performance of Duties of Manager. (a) Manager is an independent contractor,
and not an employee or partner of the Center. As an independent contractor,
Manager shall not act or attempt to act, or in any manner assume or create any
obligation on behalf of or in the name of the Center or any of its affiliates,
or otherwise bind the Center or any of its affiliates in any manner, other than
as specifically authorized in this AGREEMENT or otherwise authorized in writing
by the Center.
(b) Manager shall devote its best efforts to the operation of the Center in a
reasonable manner and shall perform its services and obligations hereunder
diligently and according to the local standards. It is expressly acknowledged
that Manager is engaged in operating a similar medical diagnostic imaging center
in Dallas and is providing management services to the medical profession and is
in no way restricted or restrained from pursuing such other business activities.
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7. Books and Records. (a) Business Records. Manager shall prepare and furnish to
the Center an unaudited statement of revenue and expenses of the Center for each
calendar month during the term of this AGREEMENT on or before the 25th day of
the calendar month immediately following the month for which the statement is
being prepared. Manager shall accord to the Center, and its accountants,
attorneys and agents, the right to examine or inspect any and all books or
records relating to the Center at all reasonable times during the term of this
AGREEMENT. Books and records of the Center may be kept at the Center or at such
other location as Manager may determine.
(b) Medical Records. Manager and Center shall cooperate with the Center to
assure preparation of appropriate medical records concerning medical services
provided by the Center. Manager shall maintain such medical records at the
Center in accordance with prudent record keeping procedures and as required by
law.
(c) Confidentiality of Records. Manager and Center agree to take all reasonable
precautions to prevent the unauthorized disclosure of any and all books and
records kept and/or maintained by Manager under the terms of this AGREEMENT and
to keep such books and records confidential except as otherwise provided by law
or in subparagraph (d) of this Paragraph.
(d) Disclosure of Records to Governmental Agencies. to the extent required by
section 1861(v)(1)(l) of the Social Security Act, the parties hereto, upon
proper request, shall allow the United States Department of Health and Human
Services, the Comptroller General of the United States, or their duly authorized
representatives access to this AGREEMENT, and to all books, documents and
records necessary to verify the nature and extent of the cost of services
provided by either party under this AGREEMENT at any time during the term of
this AGREEMENT and for an additional period of four (4) years following the last
date services are furnished under this AGREEMENT. In the event that either party
carries out any of its obligations under this AGREEMENT through an AGREEMENT
with an organization related to it, such party shall require that a clause
substantially to the effect of this subparagraph be included in that AGREEMENT.
8. Liability Insurance. (a) Manager shall maintain throughout the term of this
AGREEMENT, at its sole expense, professional liability insurance coverage on
Manager and its employees in the minimum amount $500,000.00 for each occurrence
and One Million Dollars $1,000,000.00 in the aggregate.
(b) The Center shall maintain, at its sole expense, throughout the term of this
AGREEMENT and for a period not less than three (3) years commencing on the date
of the termination of this AGREEMENT, professional liability insurance covering
(i) the Center in the minimum amount of $1,000,000 dollars for each occurrence
and $3,000,000 dollars in the aggregate, and (ii) covering each physician
rendering medical services at the Center, whether they are members of the Center
or employees of the Center, or independent contractors, in the minimum amount of
$1,000,000 dollars for each occurrence and $3,000,000 dollars in the aggregate.
Such insurance shall be obtained from an insurance carrier whose A.H. Best
rating is A or better and contain an endorsement to the effect that the policy
shall not be canceled or materially changed without at least 30 days prior
written notice to Manager. The Center shall provide to Manager upon request a
certificate of insurance of such coverage.
9. Events of Default. (a) The Center shall be in default under this AGREEMENT
upon the occurrence of any of the following events:
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(i) failure of the Center to comply with any term or condition of this
AGREEMENT within fifteen days after written notice of such
noncompliance by Manager.
(ii) dissolution of the Center.
(iii) bankruptcy of the Center.
(b) Manager shall be in default under this AGREEMENT upon the occurrence of any
of the following events:
(i) failure of Manager to comply with any term or condition of this
AGREEMENT within fifteen days after written notice of such noncompliance to
Manager by the Center; and
(ii) bankruptcy of Manager.
(c) For purposes of this paragraph (the bankruptcy of an entity shall be deemed
to have occurred when that entity(i) makes a general assignment for the benefit
of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the
subject of an order for relief or is declared insolvent in any federal or state
bankruptcy or insolvency proceeding; (iv) files a written petition or answer
seeking a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law; (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against that entity in a proceeding of the type described in parts (i)
through (iv) of this subparagraph; (vi) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator (vii) or 120 days expire after
the date of the commencement of a proceeding against that entity seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any law if the proceeding has not been
previously dismissed, or 90 days expire after the date of the appointment,
without the entity's consent or acquiescence, of a trustee, receiver, or
liquidator of that entity if the appointment has not previously been vacated or
stayed, or 90 days expire after the date of expiration of a stay, if the
appointment has not previously been vacated.
(d) Upon the occurrence of an event of default of the Center as provided in
subparagraph (a) of this paragraph, Manager shall have the right to terminate
its obligations under this AGREEMENT and to pursue any other remedies available
at law or equity, and Manager's termination of its obligations under this
AGREEMENT shall not constitute a waiver or forfeiture of any rights or remedies
that Manager may have including Manger's right to compensation.
(e) Upon the occurrence of an event of default of Manager as provided in
subparagraph (b) of this paragraph, the Center shall have the right to terminate
this AGREEMENT and to pursue any other remedies available at law or equity
against Manger.
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10. Termination. Either party may terminate this AGREEMENT at any time, without
cause, upon 45 days' advance written notice to the other. Upon termination of
this AGREEMENT, either at the expiration of its term as provided in Paragraph 1,
or upon an event of default as provided in Paragraph 9, or as provided in this
Paragraph:
(a) Manager shall deliver to the Center as received any moneys due the Center
under this AGREEMENT but received by Manager more than 30 days after such
termination, less any amounts due Manager, including the Management Fee;
(b) Manager shall deliver to the Center all materials and supplies, copies of
books and records, keys, contracts and documents, and such other accountings,
paper and records pertaining to the Center and this AGREEMENT as the Center
shall reasonably request;
(c) The obligations of the parties hereto with respect to this AGREEMENT shall
cease and terminate, except as to obligations of either party which shall have
heretofore accrued or arisen, or except as otherwise herein provided.
(d) If the Center terminates this AGREEMENT for any; then the Center shall be
obligated to pay Manager the balance of the fees due as if the Agreement was
still in full effect for the time remaining under the original term of ten
years.
11. Power of Attorney. The Center hereby constitutes and appoints Manager and
its authorized representatives (and any successor thereto by assignment,
election, or otherwise and the authorized representatives thereof) with full
power of substitution as its true and lawful agent and attorney-in-fact, with
full power and authority in its name, place, and stead (i) to bill patients and
collect accounts receivable, (ii) on behalf of the Center, to receive and give
receipts for all insurance, Medicare, and Medicaid payments payable to the
Center, (iii) to take possession of, endorse in the name of the Center, and
deposit in the Center's bank account any cash, notes, checks, money orders, or
other instruments received by Manager or the Center relating to the operation of
the Center, (iv) to pledge receivables and other Center assets for purposes of
obtaining financing and obtaining equipment for the Center as the Manager solely
deems appropriate, and (v) to contract with third parties on behalf of the
Center for the purposes of procuring equipment, office space, supplies
professional consultants, attorneys an accounting professionals as the Manager
solely deems appropriate.
12. Relationship of the Parties. Nothing in this AGREEMENT shall be construed as
creating a COMPANY between Manager and the Center and in no event shall Manager
participate in or be responsible for the profits or losses of the Center. Except
to the extent that Manager may act as billing, collecting and disbursing agent
for the Center, neither party is the agent of the other. Center shall require
any employee or independent contractor who works in conjunction with Center
under this AGREEMENT to expressly abide by each and every term and condition of
this AGREEMENT and to evidence such AGREEMENT in writing as required by Manager.
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13. Standard of Care. Although Manager's obligation to obtain office facilities,
equipment, supplies and services is limited to the quantity and quality
ordinarily required by members of the same profession as Center, according to
the generally accepted standards of care prevailing in the local community,
Center is not restricted to such standard and is at all times free to equip
Center according to higher or more specialized standards; however, Center shall
be responsible for making separate arrangements for any extraordinary
requirements for office facilities, equipment, services or supplies resulting
from such choice to Center according to such higher or more specialized
standards.
14. Limitation of Liability. Manager shall not be liable for any claim or demand
on account of damages arising out of, or in any manner connected with, any
injuries suffered by persons receiving care provided by, or authorized by
Center, unless such injury is approximately caused by proven negligence on the
part of the Manager. Center shall not be liable for any claim or demand arising
out of the acts or omissions of the Manager, except to the extent, if any, that
Center is negligent in exercising direct professional supervision and direction
of those of the Manager's employees who are assigned to assist the Center in the
care of patients. The amount of Manager's liability for any default in its
obligations hereunder shall be limited to the amount of the consideration paid
or payable by Center to Manager hereunder, and no incidental or consequential
damages in excess of such amount may be recovered.
15. Grant of License. Licensor grants to Licensee a non-exclusive license, to
use the name "PHYMED DIAGNOSTIC IMAGING CENTER" and any logo's existing or
created by Licensor, in connection with its business and advertising until the
expiration or cancellation of this Agreement. Upon written notice to Licensor,
Licensee shall have the right to extend the terms of this Agreement to any other
entity operating under the authority and control of Licensee in accordance with
the provision hereinafter set forth.
16. Approval by Licensor. All operations, training programs, medical procedures,
advertising and promotional materials shall be submitted by Licensee to Licensor
for Licensor's approval prior to any release thereof by Licensee. If disapproval
is not received by Licensee within ten days after receipt of such material or
matters by Licensor, such right of approval shall be deemed waived and such
material shall be considered approved. Licensor's rights are hereby restricted
solely to the material and matter covered by this paragraph. Such approvals by
Licensor shall not be unreasonably withheld, and once such approvals have been
obtained further approval need not be obtained for future or repeat use. No
procedures or materials shall be used or continued without the approval of
Licensor as herein provided.
17. Inspection. The Licensee will permit duly authorized representatives of the
Licensor to inspect, on the premises of the Licensee, at all reasonable times,
the operations of the Licensee.
18. Indemnity. the Licensor assumes no liability to the Licensee or to third
parties with respect to the performance of the procedures, training or treatment
conducted under the license, and the Licensee hereby indemnifies and holds
harmless the Licensor against all losses, damages and expenses, including
attorneys' fees, incurred as result of or related to claims of third persons
involving the delivery of health care to patients or training to health care
providers.
19. Miscellaneous.
(a) Prohibited Activities. Manager shall not provide or otherwise engage in
services which constitute the unauthorized practice of medicine under applicable
Texas Law.
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(b) Communications to be given under this AGREEMENT by any party to the other
shall be deemed to have been duly given if given in writing and personally
delivered, sent by telegram, telex, or telecopy, or sent by mail, registered or
certified, postage prepaid with return receipt requested, at the address
specified beside each party's signature at the end of this AGREEMENT. Notices
delivered personally or by telegram, telex, or telecopy shall be deemed
communicated as of 10:00 a.m. on the third business day after mailing. Any party
may change its address for notice hereunder by giving notice of such change in
the manner provided in this paragraph.
(c) Entire AGREEMENT. This AGREEMENT supersedes any and all other Agreements,
either oral or written, between the parties with respect to the subject matter
hereof and contains all of the covenants and agreements between the parties.
(d) Modification and Waiver. No change or modification of this AGREEMENT shall
be valid or binding upon the parties unless such change or modification shall be
in writing and signed by all the parties. No waiver of any term or condition of
this AGREEMENT shall be enforceable unless it shall be in writing signed by the
party against which it is sought to charged. The waiver by any party of a breach
of any provision of this AGREEMENT by any other shall not operate or be
construed as a waiver of any subsequent breach by such other party.
(e) Governing Law. This AGREEMENT, and the rights and obligations of the parties
hereto, shall be governed by and construed in accordance with the laws of the
State of Texas and shall be performable in Dallas County, Texas. Venue of any
litigation arising hereunder shall be in a court of competent jurisdiction in
Dallas County, Texas.
(f) Counterparts. This AGREEMENT may be executed in counterparts, each of which
shall constitute an original, but all of which shall constitute one and the same
document. Any counterpart evidencing signature by one party that is delivered by
telecopy by such party to the other party hereto shall be binding on the sending
party when such telecopy is sent, and such sending party shall within ten days
thereafter deliver to the other party a hard copy of such executed counterpart
containing the original signature of such party or its authorized
representative.
(g) Costs. If any action at Law or in equity is necessary to enforce or
interpret the terms of this AGREEMENT, the prevailing party shall be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which it may be entitled.
(h) Assignment. No party may assign any rights or delegate any duties under this
AGREEMENT without the prior written consent of the other party hereto, which
consent may be withheld in that party's sole discretion.
(i) Binding Effect. This AGREEMENT shall be binding upon the parties hereto,
together with their respective successors, and permitted assigns.
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(j) Severability. If any provision of this AGREEMENT is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable and this AGREEMENT shall be
construed and enforced as if such illegal, invalid or unenforceable provision
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 herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this AGREEMENT, a provision as similar
in its terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
(k) Language. Whenever the context requires, references in this AGREEMENT to the
singular number shall include the plural, the plural number shall include the
singular, and words denoting gender shall include the masculine, feminine, and
neuter. Section headings in this AGREEMENT are for convenience of reference only
and shall not be considered in construing or interpreting this AGREEMENT.
(l) Further Actions. Each party to this AGREEMENT shall perform any and all
further acts and execute and deliver any and all documents and instruments that
may be reasonably necessary to carry out the provisions of this AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this AGREEMENT to be executed and
effective this 14th day of January, 1998.
FOR THE MANAGER: FOR THE CENTER:
By: By:
--------------------------- -----------------------
George C. Barker, President
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EXHIBIT 10.11
RADIOLOGY SERVICE PROVIDER AGREEMENT
CONTRACTED SERVICES
This Agreement is made and entered into February 1, 1996, by and between
AMERICAN MEDICAL IMAGING INCORPORATED (hereinafter referred to as"AMIC"), a
corporation organized under the laws of the State of Texas and Phy.Med., Inc.
(hereinafter referred to as "PHYMED").
WITNESSETH
WHEREAS, PHYMED desires to provide radiological services for AMIC patients in
accordance with the terms of the Agreement, and;
WHEREAS, AMIC is a texas corporation which is involved in the provision of
diagnostic radiological services, and;
WHEREAS, AMIC desires to contract with a diagnostic radiological center to
provide services to its patients that it is unable to provide at its centers,
and;
WHEREAS, PHYMED desires to provide those services to AMIC's patients under the
terms of this Agreement.
NOW THEREFORE, for in consideration of the mutual covenants and promises
expressed herein, the adequacy of which is forever acknowledged and confessed,
the parties agree to as follows:
ARTICLE I
OBLIGATIONS OF AMIC
1.01 Provision of Marketing Services. AMIC agrees to provide
marketing services associated with patients referred by
AMIC.
1.02 Referral of Procedures. AMIC shall refer only patients for MRI
procedures for which it does not have appropriate physician or
equipment services available at its Dallas site.
ARTICLE II
OBLIGATIONS OF PHYMED
2.01 Services. PHYMED agrees to provide MRI services to patients
of AMIC on as scheduled basis without discrimination.
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2.02 Records. PHYMED shall maintain records and information
including, but not limited to, information relating to the
provision of PhyMed Services in accordance with general
standards applicable to such records. PHYMED will make such
records available to other medical providers, subject to
applicable confidentiality requirements, when such records are
necessary for treating a referred patient, and that such
records shall be retained for at least five (5) years from
date of service. Records are to be available for review during
normal business hours.
2.03 Rules & Regulations. PHYMED will comply with policies and
procedures identified in AMIC Rules & Regulations for
evaluating and ensuring quality of care and cost containment.
2.04 Policies and Procedures. PHYMED agrees to comply with all
Administrative Policies and Procedures relating to the
delivery of medical services, and also to comply with all
applicable State and Federal laws and regulations relating to
Health Care Organizations or to Ancillary Service Providers
performance of Covered Services under this Agreement.
2.05 Malpractice Coverage. PHYMED shall maintain professional
liability policies for a minimum of $500,000 dollars per
occurrence and $1,000,000 dollars in aggregate, unless the
parties otherwise designate in writing. In addition, PHYMED at
their sole cost and expense, agrees to maintain such policies
of general and professional liability insurance and other
insurance as necessary to ensure PHYMED and PHYMED's
employees, agents, and representatives against claims for
damages arising from personal injuries or death occasioned
directly or indirectly in connection with the performance of
any services provided hereunder, the use of any property and
facilities provided by PHYMED, and activities performed by
PHYMED in connection with this Agreement.
2.06 Non-Discrimination. PHYMED will neither differentiate nor
discriminate in the treatment of patients who are referred by
AMIC. PHYMED will neither differentiate nor discriminate in
the treatment of referred patients because of race, color,
national origin, ancestry, religion, sex, marital status, or
age. PHYMED will render services to referred patients in the
same manner, in accordance with the same standards, and within
the same time availability as offered other patients.
ARTICLE III
REIMBURSEMENT FOR PROVISION
OF COVERED SERVICES
3.01 PHYMED Agrees to Seek Payment Only from AMIC. PHYMED warrants
that they shall seek payment only from AMIC. PHYMED agrees to
accept the payment from AMIC, referenced in Exhibit A hereto,
as payment in full for those health services determined by
AMIC to be Covered Services, and will not un der any
circumstances seek payment from any patient. PHYMED
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understands the prohibition against billing patient for
services covered by this Agreement.
3.02 PHYMED Statement and Claims Submission. when billing fee for
service, PHYMED agrees to submit to AMIC statements for
Covered Services rendered to referred patient, including a
full itemization of treatments given. Statements must include
all necessary provider and insurance identification, including
patient member name and number; provider name; date of
service, diagnostic code; procedure code; and copies of any
required referral authorization forms. Such billings shall be
on the HFCA 1500 Form, UB-92 or other such form as approved by
AMIC. PHYMED shall be compensated those amounts set forth in
Exhibit A of this Agreement, which is attached hereto and
incorporated by this reference. All billings must be
accompanied by proper authorization. Claims must be submitted
within sixty (60) days of the date of service for payment to
be made.
ARTICLE IV
MUTUAL AGREEMENTS
4.01 Term. This Agreement shall commence on the date set forth
above and shall continue in effect for one (1) year,
automatically renewing at each anniversary date for an
additional one (1) year period unless terminated by either
PHYMED or AMIC under the termination provisions set forth
below or by the giving of written notice to the other party at
least ninety days prior to the end of such term indicating an
intent not to renew.
4.02 Termination Without Cause. This Agreement may be terminated
without cause by either party hereto, upon ninety (90) days
written notice to the other party.
4.03 Termination For Cause.
(a) Notwithstanding any other provision of this Agreement, the
AMIC shall have the right to terminate this Agreement
immediately upon the occurrence of any of the following
events: (1) PHYMED ceases to have an unrestricted license to
practice, an unrestricted DEA authorization number, and DPS
Registration; (2) PHYMED fails to maintain the insurance
coverage required under this Agreement; (3) PHYMED's quality
assurance or utilization record falls below the standards
required under any quality assurance or utilization review
program established by the AMIC or by any Health Plan; (4) a
bankruptcy or insolvency proceeding is initiated by or
against PHYMED; (5) PHYMED commits a material breach under
this Agreement and such breach is not cured within thirty
(30) days of written notice given by the AMIC to PHYMED; (6)
any statement or representation made by PHYMED to AMIC shall
prove to have been false or misleading in any material
respect when made; (7) PHYMED commits a material breach
under any Managed Care Contract and the AMIC determines, in
its sole judgment, that such breach impairs the ability of
PHYMED to perform under this Agreement; (8) PHYMED fails to
meet the credentialing criteria established by the AMIC for
Ancillary Service Provider's area of practice; or (9) PHYMED
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engages in conduct which, in the reasonable judgment of the
AMIC, is damaging to the name and reputation of the AMIC and
its other members.
(b) PHYMED may terminate this Agreement in the event that AMIC
fails to make payments to PHYMED as provided in this Agreement
and in accordance with the applicable Managed Care Contract
and such default has not been cured within thirty (30) days
after receipt of written notice of such default from PHYMED.
4.04 Assignment. This Agreement may not be assigned or transferred
in any way by the PHYMED without the prior written consent of
the AMIC. The AMIC may not assign this Agreement without the
consent of PHYMED unless the assignment is to an entity which
is formed for purposes of entering into a Management Services
Agreement with Princeton Integrated Physicians Association.
4.05 Independent Contractors. None of the provisions of this
Agreement are intended to create, nor shall any be designated
or construed to create any relationship between PHYMED and
AMIC other than that of independent entities contracting with
each other hereunder solely for effecting the provisions of
this Agreement. Neither of the parties hereto, nor any of
their respective representatives, shall be construed to be the
agent, employee, or representative of the other.
4.06 Controlling Law. This Agreement shall be governed in all
respects by the Laws of the State of Texas and by the laws of
the Federal Government. The invalidity or unenforceability of
any terms or conditions hereof shall in no way affect the
validity or enforceability of any other term or provision.
4.07 Use of Ancillary Provider Name. AMIC may list the names,
addresses, phone numbers and ancillary provider names in a
general list of participating providers (Provider Directory)
which is distributed to referring physicians, potential
referring physicians and other participating providers.
4.08 Amendments or Modifications of Agreement. this Agreement
constitutes the entire understanding of the parties hereto.
Amendments or modifications of this Agreement shall be
mutually agreed to in writing by AMIC and PHYMED. In the event
that AMIC wishes to amend or modify this Agreement, AMIC may
deliver said Amendment or Modification to PHYMED in accordance
with Article V 5.09 of this Agreement. PHYMED shall have
twenty (20) days to respond to AMIC in accordance with Article
V 5.09. If no response is received from PHYMED within twenty
(20) days of receipt of Amendment or Modification, it shall be
deemed that PHYMED has approved such Amendment or
Modification. In the event AMIC is required to amend this
Agreement in order to comply with changes required by the duly
constituted regulatory authorities of the State of Texas or
the Federal Government, AMIC shall furnish PHYMED written
notice of any such Amendments and PHYMED shall be bound by
such Amendments.
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4.09 Notices. Any and all notices required to be given pursuant to
the terms of this Agreement must be given in writing and
delivered by United States mail, postage prepaid, return
receipt requested at the following addresses listed below by
the appropriate signature line.
4.10 Waivers of Default. The waiver by either party of one or more
defaults on the part of the other party in the performance of
obligations under this Agreement will not be construed to
operate as a waiver of any subsequent defaults. All such
waivers must be set forth specifically in writing and signed
by the waiving party.
4.11 Confidentiality of Contract and Proprietary Information. Both
parties agree that this contract is private between both
contracting parties. The contract is not to be disseminated by
either party other than to regulatory agencies that have a
right to review.
4.12 No Third Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended or should be construed to
confer upon any person or entity other than the parties of
this Agreement, any right, remedy or claim by reason of this
Agreement as third party beneficiaries. The terms of this
Agreement are for the sole benefit of the parties and their
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year above set forth.
PHYMED AMIC
By: By:
/s/ George C. Barker /s/ P. Shalen
------------------------- ----------------------------
Signature Signature
President Vice President
------------------------- ---------------------------
Title Title
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SCHEDULE A
ANCILLARY SERVICE REIMBURSEMENT
1. Reimbursement for Ancillary Services.
C. Contracted Rate. AMIC shall pay PHYMED at flat rate per MR of
$300.00.
D. Terms of Payment. PHYMED shall submit an invoice by the 5th
day of the month following the state of service for AMIC
patients. AMIC shall make prompt payment to PHYMED for these
services within ten working days of the date of the invoice
aforementioned.
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EXHIBIT 10.12
RADIOLOGY SERVICES AGREEMENT
This Radiology Services Agreement (this AAgreementA) is made and entered into
this 1st day of September, 1997 by and among Phy.Med., Inc., a Texas corporation
("PHYMED") and The PRS Group, PA., a Texas professional association (PRS), to be
effective as of the 1st day of September, 1997 (the "Effective Date").
RECITAL
A. PHYMED owns and operates an imaging center for the performance of
radiology services located on White Rock Trail in the City of Dallas, Dallas
County, Texas and anticipates owning and operating in the future one or more
additional imaging centers in Dallas and/or Tarrant County, Texas (the Center on
White Rock Trail and any new, other or additional imaging centers owned by
PHYMED and located in Dallas or Tarrant County, Texas shall be referred to
herein collectively as the "Center");
B. PA is engaged in the delivery of radiology services through its
member and physician employees (each a ARadiologist" and collectively the
"Radiologists"), each of whom is a physician specializing in the field of
radiology, qualified and duly licensed to practice medicine in the State of
Texas;
C. PHYMED desires to enter into an agreement with PA whereby PA,
through its member and contracted or employed physicians, will be the exclusive
provider of radiology services at the Center; and
D. The parties desire to enter into this Agreement in order to set
forth a full statement of their respective duties and responsibilities.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties, each intending to be legally bound
hereby, agree as follows:
1. ENGAGEMENT OF PA
1.1 Scope of Engagement. PHYMED hereby engages PA, and PA hereby
agrees, to provide professional Radiology Services in the Center in accordance
with the terms of this Agreement. As used in this Agreement, the term "Radiology
Services" shall include, but not necessarily be limited to, the performance,
reading, and interpretation of x-rays and other radiographic and imaging
procedures, diagnostic ultrasound, CT scanning, fluoroscopic examinations,
mammography, magnetic resonance imaging ("MRI"), inpatient and outpatient
interventional procedures, and nuclear radiologic services.
1.2 Term of Agreement. This Agreement shall be effective as of the
Effective Date, and continue for a term of ten (10) years (the "Primary Term"),
unless earlier terminated pursuant to the provisions of this Agreement. The term
of this Agreement shall be extended for additional five (5) year periods (each
an "Extended Term"), whether one or more, commencing on the expiration of the
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Primary Term and on the expiration of each succeeding Extended Term, unless (i)
at least six (6) months before the expiration of the Primary Term or any
Extended Term, as applicable, either party delivers to the other written notice
of its election not to renew this Agreement, or (ii) either party is in material
default of its obligations hereunder. For the purposes of this Section, a
material default by PA or PHYMED shall not be deemed to exist unless and until
the notice requirements set forth in Section 9.1 are satisfied and the time to
cure the default has elapsed without PHYMED or PA, as applicable, taking the
action necessary to cure such default. The provisions of this Section relating
to extension of the term of this Agreement shall not in any way negate the right
of either party to terminate this Agreement in accordance with the provisions of
Section 9 hereof.
2. RELATIONSHIP OF PARTIES
2.1 Independent Contractor Status. In performing its responsibilities
pursuant to this Agreement, it is understood and agreed that PA, any
Radiologists, and any non-physician employees of PA performing services
hereunder are at all times acting as independent contractors of PHYMED. Neither
party is a partner, joint-venturer, or employee of the other. PHYMED shall
neither have nor exercise any control or direction over the medical judgment of
PA or the Radiologists, nor over the methods or manner by which PA or the
Radiologists perform their work and functions under this Agreement as they
relate to the diagnosis or treatment of any disease, disorder, defect or injury.
2.2 Compensation and Benefits. Neither PA, its employees performing
services in the Center, nor any Radiologist shall be entitled to any salary or
other compensation from PHYMED, or to any employee benefits provided by PHYMED.
Except for the fees for billing and collection provided for in Section 5,
neither PHYMED nor its employees shall be entitled to any salary or other
compensation from PA, or to any employee benefits provided by PA.
2.3 Compliance With Laws and Regulations. The parties recognize that
this Agreement is subject to, and agree to comply with, applicable local, state,
and federal statutes, rules and regulations. Any provisions of applicable
statutes, rules or regulations that invalidate any term of this Agreement, that
are inconsistent with any term of this Agreement, or that would cause one or
both of the parties hereto to be in violation of law shall be deemed to have
superseded the terms of this Agreement; provided, however, that the parties
shall use their best efforts to accommodate the terms and intent of this
Agreement to the greatest extent possible consistent with the requirements of
applicable statutes, rules and regulations and negotiate in good faith toward
amendment of this Agreement if required to comply with applicable law.
3. DUTIES OF PA.
3.1 Radiologist Services.
a. Services to be offered. PA shall provide professional Radiology
Services to the patients of the Center consistent with the skill, training and
expertise of the Radiologists and with sound medical judgment.
b. Schedule of Coverage. PA will provide adequate on-site professional
coverage for radiology services in the Center during the normal business hours
of the Center.
c. Physician Staffing. PA shall provide as many Radiologists as are
necessary for the timely, proper, and efficient provision of the Radiology
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Services in the Center. PA may provide physicians who are not members or
employees of PA, but are engaged by PA under contract to provide such physician
services to the Center (who shall also in such capacity be deemed Radiologists).
Each Radiologist must possess all necessary qualifications, training,
experience, and current licensure in the State of Texas to perform the duties
that are required of the Radiologists hereunder.
d. Additional Radiologists. To expand further the diagnostic and
treatment capabilities of the Center, the PA shall meet periodically with PHYMED
to assess whether additional radiologists or specialists in subspecialties of
radiology are needed at the Center. PHYMED will cooperate in the recruitment of
such persons if and when required in the judgment of the PA and PHYMED. Any such
radiologists will be available for appropriate procedures and interpretation in
accordance with this Agreement.
3.2 Equipment. PA shall consult with PHYMED with respect to the
selection of additional and replacement equipment for the Center. The PA shall
assist PHYMED in its efforts to ensure that all radiology equipment provided at
the Center is calibrated, accredited, licensed, and inspected (as applicable),
and that such equipment complies with all applicable regulatory requirements.
Pursuant to Section 4 hereof, PHYMED shall bear the expense of all such
calibration, accreditation, licensing, and inspection by qualified personnel.
3.3 Records. PA, through the Director, shall keep and maintain (or
cause to be kept and maintained) appropriate records relating to the
professional services rendered under this Agreement. PA shall permit PHYMED
personnel reasonable access to records, reports, and claims necessary to assure
compliance with the terms of this Agreement.
3.4 Performance of Duties. The Radiologists shall perform their duties
under this Agreement in accordance with such standards of professional ethics
and practice as may from time to time be applicable during the term of this
Agreement.
3.5 Insurance. PA shall have and shall maintain, and shall cause each
of the radiologists to have and maintain, at its or their expense, with such
companies and coverage shall be reasonably satisfactory to PHYMED, professional
liability (medical malpractice) insurance covering the PA and the Radiologists
for malpractice claims made during and after termination of this Agreement based
on conduct alleged to have occurred during the term of this Agreement, with
limits not less than $500,000.00 for each claim and $1,000,000.00 in the,
aggregate for the policy year. Such insurance shall not be cancelable except
upon at least thirty (30) days prior written notice to PA, with a copy of such
notice to be delivered contemporaneously to PHYMED. PA shall furnish or cause to
be furnished to PHYMED certificates of insurance evidencing the existence of
such coverage or before the Effective Date, and shall during the term hereof,
upon demand, furnish evidence of continuing coverage.
3.6 Reimbursement. PA, as appropriate, shall be reimbursed for
reasonable out-of-pocket marketing and other business-related expenses incurred
on behalf of PHYMED. The PA agrees to maintain records and submit reports for
reimbursement of said expenses following the established policies of PHYMED for
payment of such expenses for its own employees. PHYMED reserves the right to
change and/or modify the reimbursement policies for marketing and
business-related expenses from time to time as it deems appropriate and in the
best interest of the Center.
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4. DUTIES OF PHYMED
4.1 General. PHYMED shall furnish for the performance of PA's
responsibilities hereunder and the outside medical services and business
activities permitted hereby, such space, utilities, services, equipment,
supplies, and non-physician personnel as may be necessary or appropriate,
including but not limited to the following:
(a) Facilities. PHYMED shall provide and maintain, at its own cost,
the Center and all such facilities, furniture, and fixtures as are necessary or
appropriate for the proper and efficient operation of the Center. PHYMED shall
keep and maintain the Center and all such facilities, furniture, and fixtures in
good order and repair. PHYMED shall be responsible for and pay all real and
personal property lease payments, expenses, taxes and insurance related to
operation of the Center or any such facilities, furniture, or fixtures, or any
portion thereof.
(b) Equipment. PHYMED shall provide, install at the Center, and
maintain, at its own cost, such radiology equipment as it deems necessary or
appropriate for the proper and efficient operation of the Center. The type,
quantity, and brand of all such equipment shall be determined by PHYMED upon
consultation with the PA. PHYMED agrees to investigate teleradiology equipment
for the transmission of CT scans, sonography and plain film studies, and MRI
studies. PHYMED shall bear the expense of all calibrations, accreditation's,
licensing, and inspections by qualified personnel relating to such equipment.
PHYMED shall, at its own cost, keep and maintain such equipment in good order
and repair or replace such equipment or any part of it that becomes worn out or
obsolete.
(c) Supplies. PHYMED shall provide, at its own cost, such drugs and
supplies, including chemicals, x-ray film, papers, stationery, and similar
items, as are necessary or appropriate for the proper and efficient operation of
the Center. The type, quantity, and brand of all such supplies shall be as
determined by PHYMED in consultation with the PA.
(d) Personnel. PHYMED shall employ, at its own cost, all
technologists, nurses, and professional (nonphysician) and nonprofessional
personnel to be assigned to the Center. The number and qualifications of such
personnel shall be appropriate to accomplish the proper and efficient operation
of the Center, and PHYMED shall consult with the PA regarding the number,
qualifications, and assignments of such personnel. PHYMED agrees to provide, at
its own cost, adequate nonphysician personnel for the Center during all hours of
on-site coverage.
(e) Support Services. PHYMED shall provide, at its own cost, such
janitorial, ordinary laundry, administrative, accounting, engineering, and
purchasing, messenger and medical records services, utilities for light and
power, and refuse disposal as may be necessary for the proper and efficient
operation of the Center.
4.2 Insurance. PHYMED shall have and shall maintain, at its expense,
with such companies and coverage as shall be reasonably satisfactory to PA,
liability insurance covering PHYMED for any and all claims made during and after
termination of this Agreement based on conduct alleged to have occurred during
the term of this Agreement with limits of not less than $500,000.00 for each
claim and $1,000,000.00 in the aggregate for each policy year. Such insurance
shall not be cancelable except upon thirty (30) days prior written notice to
PHYMED, with a copy of such notice to be delivered contemporaneously to PA.
PHYMED shall furnish to PA certificates of insurance evidencing the existence of
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such coverage on or before the Effective Date of this Agreement, and shall
during the term hereof, upon demand, furnish evidence of continuing coverage.
4.3 Exclusivity. Both parties agree that the relationship under this
Agreement is built upon mutual exclusivity. Therefore, during the term of this
Agreement, PHYMED shall not retain or engage in any manner, and shall not allow,
any Physician or other professional not affiliated with, hired or designated by
PA to perform any duties required to be performed by PA pursuant to this
Agreement, including, but not limited to, the reading of any images taken by
equipment located on or off the premises of the Center; provided, however, that
the foregoing shall not prevent PHYMED from allowing other non-radiologist
physicians to have access to any property, equipment or staff of the Center for
the purposes of rendering medical services of any nature to their patients.
During the term of this Agreement, PA shall not perform for any other person or
entity any duties required to be performed by PA pursuant to this Agreement,
including, but not limited to, the reading of any images for any center,
hospital or any other healthcare facility; provided, however, that the foregoing
shall not prevent PA from engaging part-time or temporary radiologists for
purposes of meeting the terms under this Agreement that may be engaged in
providing radiological services to other centers, hospitals or other healthcare
facilities. Both parties have the right to waive this exclusivity with an
expressed written consent.
5. COMPENSATION BILLING AND FINANCIAL ARRANGEMENTS
5.1 PA and Radiologist Compensation. PA shall be solely responsible for
(a) establishing its fees, and (13) billing and collection (whether directly or
through an agent) of fees for the professional component of the Radiology
Services rendered pursuant to this Agreement.
5.2 PHYMED Charges. PHYMED shall establish the amounts to be charged to
patients for the technical (non-professional) component of the Radiology
Services rendered in the Center, and PHYMED shall be solely responsible for
billing and collection for such services.
5.3 Access to Records. The parties agree to permit each other's
accountants and other representatives reasonable access during normal working
hours to billing, patient, and reimbursement records relating to the operations
of the Center for purposes of, and to the extent necessary to perform, billing,
collection and accounting functions, subject to the provisions of law relating
to confidentiality of patient records. PA and PHYMED each agree to cooperate
with the other, and with the agent(s) of the other, in an effort to promote
efficient, coordinated billing for services rendered at the Center.
6. OUTSIDE ACTIVITIES. This Agreement permits PA and the Radiologists to perform
business activities outside the scope of this Agreement and other than for
PHYMED, provided PA complies with its obligations under this Agreement. Such
outside activities may be conducted on the premises of the Center, using such
space, utilities, and supplies furnished pursuant to this Agreement as shall be
required so long as the outside activities in no way infringe upon or materially
adversely affect the performance of the radiology services called for by this
Agreement.
7. USE OF PREMISES.
7.1 No Lease. Nothing contained in this Agreement shall be construed by
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the parties hereto to constitute a lease to PA of any particular or specific
portion of the premises of the Center, and insofar as PA may use a portion of
said premises, PA does so as a licensee only, and PHYMED shall at all times have
full and free access to the same.
7.2 Additions. Alterations. Improvements or Repairs. No additions,
alterations, improvements or repairs shall be made by PA to any space,
facilities or equipment furnished to PA by PHYMED unless PA has received prior
written permission therefor from PHYMED. Such permission shall not be
unreasonably withheld. Any equipment or movable improvements paid for by PA
shall remain the property of PA.
8. RECORDS AND REPORTS
8.1 Medical Records and Reports. All parties will generate medical
records and reports pertaining to patients treated, which records and reports
shall be kept in the format determined by PHYMED upon consultation of the PA.
All medical records shall be maintained in a form and for the period of time
required by applicable law.
8.2 Notice of Request. If any party is requested to disclose any books,
documents, or records relevant to this Agreement for the purpose of an audit or
investigation, such party shall notice the other parties to this Agreement of
the nature and scope of such request and shall make all books, documents, or
records so disclosed available to the other parties upon written request.
9.0 TERMINATION
9.1 Termination for Cause. Either party may terminate this Agreement if
the other party materially breaches any provisions of this Agreement, upon seven
(7) days prior written notice to the other party; provided, however, that the
party which desires to terminate this Agreement has given the breaching party
written notice of such material breach along with written notice of the
intention to terminate this Agreement, and such breach has not been cured within
the applicable notice period provided for in this sentence. The notice of breach
under this Section shall specify with reasonable particularity the nature and
extent of the alleged material breach.
9.2 Termination for Insolvency. Either party may terminate this
Agreement immediately (i) if either PHYMED or PA is adjudicated bankrupt or
becomes insolvent; (ii) if either PHYMED or PA institutes or consents to any
voluntary bankruptcy or other similar arrangement; or (iii) if a receiver or
trustee is appointed for either PHYMED or PA for any similar reasons.
9.3 Termination as to a Radiologist. PHYMED may terminate the right of
any Radiologist to provide services under this Agreement, effective immediately
upon notice, in the event of the expulsion, suspension or imposition of
disciplinary action against the Radiologist by the Texas State Board of Medical
Examiners.
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9.4 Optional Termination. PHYMED or PA may terminate this Agreement
upon six (6) months prior written notice to the other without cause.
9.5 Termination By Mutual Consent. The parties may terminate this
Agreement before the expiration of any term by mutual written agreement.
10. ASSIGNMENT. PA shall not, without the prior written consent of PHYMED,
assign any rights or delegate any duties not permitted to be assigned or
delegated under this Agreement; provided, however, that PA may delegate the
responsibility for performing certain of its duties and obligations to provide
Radiology Services to the Radiologists in accordance with this Agreement. PHYMED
may, with prior the prior written consent of PA, assign its rights or delegate
its duties hereunder to any entity that operates or assumes some or all of the
facilities and functions of the Center. Any attempted assignment in
contravention of this Section shall be void and shall constitute a material
breach of this Agreement.
11. AMENDMENT. This Agreement may be amended only by an instrument in
writing signed by the parties hereto and PA.
12. NOTICE. Whenever, under the terms of this Agreement, written notice is
required or permitted to be given such notice shall be deemed to have been
delivered upon receipt if personally delivered, or on the third business day
after this notice is deposited in the United States mail in a properly stamped
envelope, certified mail, return receipt requested, addressed to the party to
whom it is to be given at the address set forth below:
TO PHYMED: TO PA:
PHYMED, Inc. The PRS Group, P.A.
9603 White Rock Trail, Suite 100 9603 White Rock Trail, Suite 100
Dallas, Texas 75238 Dallas, Texas 75235
Attention: George C. Barker Attention: Philip R. Shalen, M.D.
13. MISCELLANEOUS
13.1 Entire Agreement. This Agreement sets forth the entire
understanding and agreement between the parties and shall be binding upon the
parties, their subsidiaries, affiliates, successors, and permitted assigns. Any
and all prior negotiations, agreements, and understandings are superseded
hereby.
13.2 Section Heading. The headings preceding the text of the several
sections of this Agreement are inserted solely for convenience of reference and
shall not constitute a part of this Agreement, nor shall they affect the meaning
or construction, of any section hereof.
13.3 Governing Law. This Agreement shall be construed and enforced
pursuant to the laws of the State of Texas.
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13.4 Severability. All provisions of this Agreement shall be considered
severable from the remainder and in the event that any provision should be
determined to be unenforceable as written for any reason, such determination
shall not adversely affect the remainder of this Agreement.
13.5 Counterparts. This document may executed in multiple counterparts,
each of which when taken together shall constitute but one and the same
instrument.
13.6 Agreement to Benefit Only PHYMED / PA.. No provision of this
Agreement is intended to benefit any person or entity, including, but not
limited to, any Radiologist who is not a party to this Agreement, nor shall any
person or entity not a party to this Agreement have any right to seek to enforce
any right or remedy with respect hereto.
IN WITNESS WHEREOF, the said parties have executed this Agreement by their
respective duly authorized representatives or personally, as the case may be.
Phy.Med., INC.
By: /s/ George C. Barker
-------------------------------
George C. Barker
President
Date: 9/1/97
-----------------------------
THE PRS GROUP, PA
By: /s/ Philip R. Shalen, M.D.
-------------------------------
Philip R. Shalen, M.D.
Managing Partner
Date: 9/1/97
-----------------------------
86
EXHIBIT 10.13
DRAFT OF: January 16, 1996
RADIOLOGY SERVICES AGREEMENT
This Radiology Services Agreement (this "Agreement") is made and entered
into this 1st day of January, 1996 by and among PHY.MED, Inc., a Texas
corporation ("PHYMED") and The PRS Group, P.A., a Texas professional association
(PA) to be effective as of the 1st day of January, 1996 (the "Effective Date").
RECITALS
A. PHYMED owns and operates an imaging center for the performance of
radiology services located on White Rock Trail in the City of Dallas, Dallas
County, Texas and anticipates owning and operating in the future one or more
additional imaging centers in Dallas and/or Tarrant County, Texas (the Center on
White Rock Trail and any new, other or additional imaging centers owned by
PHYMED and located in Dallas or Tarrant County, Texas shall be referred to
herein collectively as the "Center");
B. PA is engaged in the delivery of radiology services through its member
and physician employees (each a "Radiologist" and collectively the
"Radiologists"), each of whom is a physician specializing in the field of
radiology, qualified and duly licensed to practice medicine in the State of
Texas;
C. PHYMED desires to enter into an agreement with PA whereby PA, through
its member and contracted or employed physicians, will be the exclusive provider
of radiology services at the Center and will provide a Medical Director for the
Center; and
D. The parties desire to enter into this Agreement in order to set forth a
full statement of their respective duties and responsibilities.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties, each intending to be legally bound
hereby, agree as follows:
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1. ENGAGEMENT OF PA
1.1 Scope of Engagement. PHYMED hereby engages PA, and PA hereby agrees, to
provide professional Radiology Services in the Center in accordance with the
terms of this Agreement. As used in this Agreement, the term "Radiology Services
shall include, but not necessarily be limited to, the performance, reading, and
interpretation of x-rays and other radiographic and imaging procedures,
diagnostic ultrasound, CT scanning, fluoroscopic examinations, mammography,
magnetic resonance imaging ("MRI"), inpatient and outpatient interventional
procedures, and nuclear radiologic services.
1.2 Term of Agreement. This Agreement shall be effective as of the
Effective Date, and continue for a term of ten (10) years (the "Primary Term"),
unless earlier terminated pursuant to the provisions of this Agreement. The term
of this Agreement shall be extended for additional five (5) year periods (each
an "Extended Term") whether one or more, commencing on the expiration of the
Primary Term and on the expiration of each succeeding Extended Term, unless (i)
at least six (6) months before the expiration of the Primary Term or any
Extended Term, as applicable, either party delivers to the other written notice
of its election not to renew this Agreement, or (ii either party is in material
default of its obligations hereunder. For the purposes of this Section, a
material default by PA or PHYMED shall not be deemed to exist unless and until
the notice requirements set forth in Section 10.1 are satisfied and the time to
cure the default has elapsed without PHYMED or PA, as applicable, taking the
action necessary to cure such default. The provisions of this Section relating
to extension 0 the term of this Agreement shall not in any way negate the right
of either party to terminate this Agreement in accordance with the provisions of
Section 10 hereof.
2. RELATIONSHIP OF PARTIES
2.1 Independent Contractor Status. In performing its responsibilities
pursuant to this Agreement, it is understood and agreed that PA, any
Radiologists, and any non-physician employees of PA performing services
hereunder are at all times acting as independent contractors of PHYMED. Neither
party is a partner joint-venturer, or employee of the other. PHYMED shall
neither have nor exercise and control or direction over the medical judgment of
PA or the Radiologists, nor over the methods or manner by which PA or the
Radiologists perform their work and conjunction under this Agreement as they
relate to the diagnosis or treatment of any disease disorder, defect or injury.
2.2 Compensation and Benefits. Except for the medical directorship fee
provided for in Section 3.2, neither PA, its employees performing services in
the Center nor any Radiologist shall be entitled to any salary or other
compensation from PHYMED, or to any employee benefits provided by PHYMED. Except
for the fees for billing and collection provided for in Section 6, neither
PHYMED nor its employees shall be entitled to any salary or other compensation
from PA, or to any employee benefits provided by PA.
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2.3 Compliance With Laws and Regulations. The parties recognize that this
Agreement is subject to, and agree to comply with, applicable local, state, and
federal statutes, rules and regulations. Any provisions of applicable statutes,
rules o regulations that invalidate any term of this Agreement, that are
inconsistent with an term of this Agreement, or that would cause one or both of
the parties hereto to be in violation of law shall be deemed to have superseded
the terms of this Agreement provided, however, that the parties shall use their
best efforts to accommodate the terms and intent of this Agreement to the
greatest extent possible consistent with the requirements of applicable
statutes, rules and regulations and negotiate in good fait] toward amendment of
this Agreement if required to comply with applicable law.
3. MEDICAL DIRECTOR
3.1 Appointment and Duties. PA shall appoint a member of PA to serve as the
Medical Director (the "Director") of the Center for the term of this Agreement.
As of the Effective Date, Philip R. Shalen, M.D. is the sole member of the
Association, and he shall be the Director as of the Effective Date. The
Director, with the cooperation] of PHYMED, shall in general be responsible for
the direction and supervision of the professional services performed in the
Center. His duties shall include:
a. ensuring that PA and its members and employed Radiologists an any
other party providing services on behalf of PA adhere to the provisions of this
Agreement;
b. coordinating the provision of radiology services in the Center to
promote and maintain the effective operation of the Center;
c. establishing any operating rules appropriate to the efficient
operation of the Center;
d. assisting in the selection and evaluation of the performance
C non-physician personnel provided by PHYMED for the operation of the Center;
e. participating in planning for the future needs of PHYMED with
respect to operation of the Center, including the responsibility of being
informed as to matters of new technology and methodology of testing and
diagnosis, and advising PHYMED as to the future needs of and responsibilities to
the medical community served by the Center;
f. fostering appropriate and cost-effective use of radiology services
a the Center, which may be accomplished through the development of general
guideline for the identification and implementation of new and/or additional
radiology service scheduling of procedures, assisting in the identification and
reporting of any obsolete or defective equipment, and identifying conditions not
conducive to the proper functioning of the Center;
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g. providing information to, and assisting and conferring with
PHYMED regarding, the establishment and monitoring of budgets for the Center and
other financial matters relating to the Center; and
h. overseeing compliance by the Radiologists with obligations for
the creation and maintenance of appropriate medical records and the provision of
and information and reports required to be supplied to PHYMED by PA or the
Radiologists
3.2 Compensation. PHYMED shall pay to PA, in arrears, the sum of Six
Thousand Five Hundred and No/OO Dollars ($6,500.00) per month or any part
thereof as the fee for the services of the Director.
3.3 Adjustment to Compensation. As of the Effective Date, PHYMED owns and
operates only one diagnostic imaging center located in Dallas County or Tarrant
County, Texas (the Center located on White Rock Trail in Dallas, Texas). If
subsequent to the Effective Date, PHYMED operates any one or more additional
imaging facilities covered by this Agreement, the operation of which requires
the Director to (a) devote additional time to his duties as Director, or (1))
undertake additional duties as Director the compensation for the services of the
Director will be reviewed and adjusted to account fairly for the increased
responsibilities created by the operation of such additional Center(s).
3.4 Reimbursement. PA or the Director, as appropriate, shall be reimbursed
for reasonable out-of-pocket marketing and other business-related expenses
incurred on behalf of PHYMED. The Director agrees to maintain records and submit
reports for reimbursement of said expenses following the established policies of
PHYMED for payment of such expenses for its own employees. PHYMED reserves the
right to change and/or modify the reimbursement policies for marketing and
business-related expenses from time to time as it deems appropriate and in the
best interest of the Center.
3.5 Substitute Medical Director. In the event during the term of this
Agreement Philip R. Shalen loses his status as a member of PA or for any other
reason for a period of one hundred eighty (180) consecutive days by reason of
absence, illness or disability is unable to perform the duties of the Director
under this Agreement, PA shall appoint a substitute Director from among the
members of PA, provided that if there be no other members of PA, the substitute
Director shall be appointed from among the employed Radiologists.
4. DUTIES OF PA
4.1 Radiology Services.
a. Services to be Offered. PA shall provide professional Radiology
Services to the patients of the Center consistent with the skill, training and
expertise of the Radiologists and with sound medical judgment.
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b. Schedule of Coverage. PA will provide adequate on-site profession
coverage for radiology services in the Center during the normal business hours
of the Center.
c. Physician Staffing. PA shall provide as many Radiologists as a]
necessary for the timely, proper, and efficient provision of the Radiology
Services in tk Center. PA may provide physicians who are not members or
employees of PA, but a] engaged by PA under contract to provide such physician
services to the Center (wk shall also in such capacity be deemed Radiologists).
Each Radiologist must possess a necessary qualifications, training, experience,
and current licensure in the State Texas to perform the duties that are required
of the Radiologists hereunder.
d. Additional Radiologists. To expand further the diagnostic and treatment
capabilities of the Center, the Director shall meet periodically with PHYMED to
assess whether additional radiologists or specialists in subspecialties of
radiology are needed at the Center. PHYMED will cooperate in the recruitment of
such persons and when required in the judgment of the Director and PHYMED. Any
such radiologists will be available for appropriate procedures and
interpretation accordance with this Agreement.
4.2 Administration. PA, through the Director, shall be in charge of
professional services at the Center with authority to direct the professional
activity at the Center.
4.3 Equipment. PA, through the Director, shall consult with PHYMED with
respect to the selection of additional and replacement equipment for the Center.
The Director also shall report to and assist PHYMED in its efforts to ensure
that all radiology equipment provided at the Center is calibrated, accredited,
licensed, and inspected (as applicable), and that such equipment complies with
all applicable regulatory requirements. Pursuant to Section 5 hereof, PHYMED
shall bear ti expense of all such calibration, accreditation, licensing, and
inspection by qualified personnel.
4.4 Records. PA, through the Director, shall keep and maintain (or cause be
kept and maintained) appropriate records relating to the professional services
rendered under this Agreement. PA shall permit PHYMED personnel reasonable
access to records, reports, and claims necessary to assure compliance with the
terms of the Agreement.
4.5 Performance of Duties. The Radiologists shall perform their duties
under this Agreement in accordance with such standards of professional ethics
and practice as may from time to time be applicable during the term of this
Agreement.
4.6 Insurance. PA shall have and shall maintain, and shall cause each of
the radiologists to have and maintain, at its or their expense, with such
companies and coverage's shall be reasonably satisfactory to PHYMED,
professional liability (medical malpractice) insurance covering the PA and the
Radiologists for malpractice claims made during and after termination of this
Agreement based on conduct alleged to have
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occurred during the term of this Agreement, with limits not less than
$500,000.00 for each claim and $1,000,000.00 in the aggregate for the policy
year. Such insurance shall not be cancelable except upon at least thirty (30)
days prior written notice to PA, wit a copy of such notice to be delivered
contemporaneously to PHYMED. PA shall furnish or cause to be furnished to PHYMED
certificates of insurance evidencing the existence of such coverage on or before
the Effective Date, and shall during the term hereof, up demand, furnish
evidence of continuing coverage.
5. DUTIES OF PHYMED.
5.1 General. PHYMED shall furnish for the performance of PA's
responsibilities hereunder and the outside medical services and business
activities permitted hereby, such space, utilities, services, equipment,
supplies, and non-physician personnel as may be necessary or appropriate,
including but not limited to the following:
(a) Facilities. PHYMED shall provide and maintain, at its own cost the
Center and all such facilities, furniture, and fixtures as are necessary or
appropriate for the proper and efficient operation of the Center. PHYMED shall
keep and maintain the Center and all such facilities, furniture, and fixtures in
good order and repair. PHYMED shall be responsible for and pay all real and
personal property lease payments, expenses, taxes and insurance related to
operation of the Center or any such facilities, furniture, or fixtures, or any
portion thereof.
(13) Equipment. PHYMED shall provide, install at the Center, an
maintain, at its own cost, such radiology equipment as is necessary or
appropriate for the proper and efficient operation of the Center. The type,
quantity, and brand of a. such equipment shall be determined by PHYMED upon
consultation with the Director. PHYMED agrees to investigate teleradiology
equipment for the transmission of CT scans, sonography and plain film studies,
and MRI studies. PHYMED shall bear the expense of all calibrations,
accreditation's, licensing, and inspections by qualified personnel relating to
such equipment. PHYMED shall, at its own cost, keep and maintain such equipment
in good order and repair or replace such equipment or an part of it that becomes
worn out or obsolete.
(c) Supplies. PHYMED shall provide, at its own cost, such drugs and
supplies, including chemicals, x-ray film, papers, stationery, and similar
items) as are necessary or appropriate for the proper and efficient operation of
the Center. The type quantity, and brand of all such supplies shall be as
determined by PHYMED in consultation with the Director.
(d) Personnel. PHYMED shall employ, at its own cost, a. technologists,
nurses, and professional (nonphysician) and nonprofessional personnel to be
assigned to the Center. The number and qualifications of such personnel shall be
appropriate to accomplish the proper and efficient operation of the Center, an
PHYMED shall consult with the Director regarding the number, qualifications, an
assignments of such personnel. PHYMED agrees to provide, at its own cost,
adequate nonphysician personnel for the Center during all hours of on-site
coverage.
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(e) Support Services. PHYMED shall provide, at its own cost, such
janitorial, ordinary laundry, administrative, accounting, engineering,
purchasing, in house messenger and medical records services, utilities for light
and power, and refuse disposal as may be necessary for the proper and efficient
operation of the Center.
5.2 Insurance. PHYMED shall have and shall maintain, at its expense, with
such companies and coverage's as shall be reasonably satisfactory to PA,
liability insurance covering PHYMED for any and all claims made during and after
termination of this Agreement based on conduct alleged to have occurred during
the term of this Agreement with limits of not less than $500,000.00 for each
claim and $1,000,000.00 in the aggregate for each policy year. Such insurance
shall not be cancelable except upon thirty- (30) days prior written notice to
PHYMED, with a copy of such notice to be delivered contemporaneously to PA.
PHYMED shall furnish to PA certificates o insurance evidencing the existence of
such coverage on or before the Effective Date o this Agreement, and shall during
the term hereof, upon demand, furnish evidence o continuing coverage.
5.3 Exclusivity. Both parties agree that the relationship under this
Agreement is built upon mutual exclusivity. Therefore, during the term of this
Agreement PHYMED shall not retain or engage in any manner, and shall not allow,
any Physician or other professional not affiliated with, hired or designated by
PA to perform any duties required to be performed by PA or the Medical Director
pursuant to this Agreement, including, but not limited to, the reading of any
images taken by equipment located on or off the premises of the Center;
provided, however, that the foregoing shall not prevent PHYMED from allowing
other non-radiologist physicians to have access to any property, equipment or
staff of the Center for the purposes of rendering medical services of any nature
to their patients. During the term of this Agreement, PA shall not perform for
any other person or entity any duties required to be performed by PA or the
Medical Director pursuant to this Agreement, including, but not limited to, the
reading of any images for any center, hospital or any other healthcare facility;
provided however, that the foregoing shall not prevent PA from engaging
part-time or temporary radiologists for purposes of meeting the terms under this
Agreement that may b engaged in providing radiological services to other
centers, hospitals or other healthcare facilities. Both parties have the right
to waive this exclusivity with an expressed written consent.
6. COMPENSATION. BILLING AND FINANCIAL ARRANGEMENTS
6.1 PA and Radiologist Compensation. PA shall be solely responsible for (a
establishing its fees, and (13) billing and collection (whether directly or
through an agent) of fees for the professional component of the Radiology
Services rendered pursuant to this Agreement.
6.2 PHYMED Charges. PHYMED shall establish the amounts to be charge to
patients for the technical (non-professional) component of the Radiology Service
rendered in the Center, and PHYMED shall be solely responsible for billing and
collection for such services.
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6.3 Access to Records. The parties agree to permit each other's accountant
and other representatives reasonable access during normal working hours to
billing patient, and reimbursement records relating to the operations of the
Center for purposes of, and to the extent necessary to perform, billing,
collection and accounting functions, subject to the provisions of law relating
to confidentiality of patient records PA and PHYMED each agree to cooperate with
the other, and with the agent(s) of the other, in an effort to promote
efficient, coordinated billing for services rendered at the Center.
7. OUTSIDE ACTIVITIES. This Agreement permits PA and the Radiologists to
perform business activities outside the scope of this Agreement and other than
for PHYMED, provided PA complies with its obligations under this Agreement. Such
outside activities may be conducted on the premises of the Center, using such
space utilities, and supplies furnished pursuant to this Agreement as shall be
required so long as the outside activities in no way infringe upon or materially
adversely affect the performance of the administrative and radiology services
called for by this Agreement
8. USE OF PREMISES.
8.1 No Lease. Nothing contained in this Agreement shall be construed by the
parties hereto to constitute a lease to PA of any particular or specific portion
of the premises of the Center, and insofar as PA may use a portion of said
premises, PA does so as a licensee only, and PHYMED shall at all times have full
and free access to the same.
8.2 Additions. Alterations, Improvements or Repairs. No additions
alterations, improvements or repairs shall be made by PA to any space,
facilities or equipment furnished to PA by PHYMED unless PA has received prior
written permission therefor from PHYMED. Such permission shall not be
unseasonably withheld. Any equipment or movable improvements paid for by PA
shall remain the property of PA.
9. RECORDS AND REPORTS
9.1 Medical Records and Reports. All parties will generate medical records
and reports pertaining to patients treated, which records and reports shall be
kept in the format determined by the Director upon consultation of PHYMED. All
medical records shall be maintained in a form and for the period of time
required by applicable law.
9.2 Notice of Request. If any party is requested to disclose any books
documents, or records relevant to this Agreement for the purpose of an audit or
investigation, such party shall notify the other parties to this Agreement of
the nature and scope of such request and shall make all books, documents, or
records so disclosed available to the other parties upon written request.
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10. TERMINATION
10.1 Termination for Cause. Either party may terminate this Agreement if
the other party materially breaches any provisions of this Agreement, upon seven
(7) day prior written notice to the other party; provided, however, that the
party which desire. to terminate this Agreement has given the breaching party
written notice of such material breach along with written notice of the
intention to terminate this Agreement and such breach has not been cured within
the applicable notice period provided for ii this sentence. The notice of breach
under this Section shall specify with reasonable particularity the nature and
extent of the alleged material breach.
10.2 Termination for Insolvency. Either party may terminate this Agreement
immediately (i) if either PHYMED or PA is adjudicated bankrupt or becomes
insolvent (ii) if either PHYMED or PA institutes or consents to any voluntary
bankruptcy or other similar arrangement; or (iii) if a receiver or trustee is
appointed for either PHYMED or PA for any similar reasons.
10.3 Termination as to a Radiologist. PHYMED may terminate the right of any
Radiologist to provide services under this Agreement, effective immediately upon
notice, in the event of the expulsion, suspension or imposition of disciplinary
action against the Radiologist by the Texas State Board of Medical Examiners.
10.4 Optional Termination. PHYMED or PA may terminate this Agreement upon
six (6) months prior written notice to the other without cause.
10.5 Termination By Mutual Consent. The parties may terminate this
Agreement before the expiration of any term by mutual written agreement.
11. ASSIGNMENT. PA shall not, without the prior written consent of PHYMED
assign any rights or delegate any duties not permitted to be assigned or
delegated under this Agreement; provided, however, that PA may delegate the
responsibility for performing certain of its duties and obligations to provide
Radiology Services to the Radiologists in accordance with this Agreement. PHYMED
may, with the prior written consent of PA, assign its rights or delegate its
duties hereunder to any entity that operates or assumes some or all of the
facilities and functions of the Center. An attempted assignment in contravention
of this Section shall be void and shall constitute a material breach of this
Agreement.
12. AMENDMENT. This Agreement may be amended only by an instrument in
writing signed by the parties hereto and PA.
13. NOTICE. Whenever, under the terms of this Agreement, written notice
required or permitted to be given such notice shall be deemed to have been
delivered upon receipt if personally delivered, or on the third business day
after this notice deposited in the United States mail in a properly stamped
envelope, certified mail return receipt requested, addressed to the party to
whom it is to be given at the address set forth below:
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<PAGE>
TO PHYMED:
PHYMED, Inc
9603 White Rock Trail, Suite 300
Dallas, Texas 75238
Attention: George C. Barker .
TO PA:
The PRS Group, P.A.
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
Attention: Philip R. Shalen, M.D.
14.14. MISCELLANEOUS
14.1 Entire Agreement. This Agreement sets forth the entire understanding
and agreement between the parties and shall be binding upon the parties, their]
subsidiaries, affiliates, successors, and permitted assigns. Any and all prior
negotiations, agreements, and understandings are superseded hereby.
14.2 Section Heading. The headings preceding the text of the several
section' of this Agreement are inserted solely for convenience of reference and
shall no constitute a part of this Agreement, nor shall they affect the meaning
or construction of any section hereof.
14.3 Governing Law. This Agreement shall be construed and enforced
pursuant to the laws of the State of Texas.
14.4 Severability. All provisions of this Agreement shall be considered
severable from the remainder and in the event that any provision should be
determined to be unenforceable as written for any reason, such determination
shall not adverse affect the remainder of this Agreement.
14.5 Counterparts. This document may executed in multiple counterparts,
each of which when taken together shall constitute but one and the same
instrument.
14.6 Agreement to Benefit Only PHYMED, PA. and the Director. No provision
of this Agreement is intended to benefit any person or entity, including, but
not limited to, any Radiologist who is not a party to this Agreement, nor shall
any person or entity not a party to this Agreement have any right to seek to
enforce any right or remedy with respect hereto.
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IN WITNESS WHEREOF, the said parties have executed this Agreement b their
respective duly authorized representatives or personally, as the case may be.
PHY.MED, INC.
By: /s/ George C. Barker
---------------------------------
Name: George C. Barker
Title: President
Date: 1/25/96
THE PRS GROUP, P.A.
By: /s/ Philip R. Shalen
Name: Philip R. Shalen
Title: President
Date: 1/25/96
MEDICAL DIRECTOR
/s/ Philip R. Shalen, M.D.
---------------------------------
Philip R. Shalen, M.D.
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