<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 19, 1999
Physicians Resource Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-13778 76-0456864
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
14800 Landmark Blvd., Suite 500, Dallas, TX 75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 892-7200
<PAGE>
Item 5. Other Events.
On March 19, 1999, Physicians Resource Group, Inc. (the "Company") entered
into a restructuring agreement (the "Restructuring Agreement") with Resurgence
Asset Management, LLC ("Resurgence"), which owns or manages approximately $92
million principal amount of the Company's $125 million principal amount of 6%
Convertible Subordinated Debentures due 2001(the "Debentures"). The
Restructuring Agreement between the Company and Resurgence is contingent on the
consummation by the Company of a restructuring by September 30, 1999. The
Company's overall restructuring would involve (i) the sale of practice assets
and interests in surgery centers to its affiliated practices and a concurrent
termination of management services agreements and execution of mutual releases
between the Company and such practices and (ii) the sale of certain interests in
surgery centers to a strategic partner. Upon consummation of the restructuring,
the Company intends to continue performing management services for certain
practices. The Company anticipates that its overall restructuring will be
conditioned on its ability to consummate agreements with providers and a
strategic partner, approval of the Company's shareholders, solicitation of
Debenture holders and a number of other conditions. No assurances can be
provided that the Company will be able to consummate its overall restructuring
or obtain necessary approvals or consents.
Under the terms of the Company's Restructuring Agreement with Resurgence,
the holders of $125 million principal amount of the Company's Debentures would
receive (i) $100 million principal amount in cash and/or notes from the
restructuring of the Company's relationships with its affiliated practices and
the sale to a strategic partner of certain interests in surgery centers and (ii)
an interest in the net proceeds of certain patent litigation. The Company has
agreed to pay $3.75 million in interest that was due on the Debentures on
December 1, 1998. In connection with the Restructuring Agreement, Resurgence
has loaned to the Company $3.75 million. This loan is evidenced by a secured
promissory note (the "Note") which bears interest at the rate of 20% per annum
and is due and payable in its entirety on September 30, 1999. Interest on the
Note is payable monthly beginning May 1, 1999. There is no prepayment penalty
for early retirement of the Note. The Note is secured by a pledge of an interest
in various of its subsidiaries.
A press release dated March 22, 1999 that was issued by the Company
regarding the Company's entering into the Debenture Restructuring Agreement is
filed as an exhibit to this report and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
(99.1) News release of Physicians Resource Group, Inc. dated
March 22, 1999.
(99.2) Letter Agreement dated March 19, 1999 between Physicians
Resource Group, Inc. and Resurgence Asset Management, Inc.
-2-
<PAGE>
(99.3) Promissory Note dated March 19, 1999 in the original
principal amount of $3,750,000 executed by Physicians
Resource Group, Inc. and payable to M.D. Sass Corporate
Resurgence Partners, L.P.
(99.4) Pledge and Security Agreement dated March 19, 1999 between
Physicians Resource Group, Inc., certain of its subsidiaries
and M.D. Sass Corporate Resurgence Partners, L.P.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHYSICIANS RESOURCE GROUP, INC.
Date: March 24, 1999 By: /s/ D. MEYER
-------------------------------------------
David Meyer, Chairman of the Board
-4-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
(99.1) News release of Physicians Resource Group, Inc. dated March 22, 1999.
(99.2) Letter Agreement dated March 19, 1999 between Physicians Resource Group,
Inc. and Resurgence Asset Management, Inc.
(99.3) Promissory Note dated March 19, 1999 in the original principal amount of
$3,750,000 executed by Physicians Resource Group, Inc. and payable to M.D.
Sass Corporate Resurgence Partners, L.P.
(99.4) Pledge and Security Agreement dated March 19, 1999 between Physicians
Resource Group, Inc., certain of its subsidiaries and M.D. Sass Corporate
Resurgence Partners, L.P.
</TABLE>
-5-
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
PHYSICIANS RESOURCE GROUP, INC.
ANNOUNCES DEBENTURE RESTRUCTURING AGREEMENT
DALLAS, TEXAS - March 22, 1999 - Physicians Resource Group, Inc. ("PRG" or
the "Company") today announced that it had entered into a restructuring
agreement (the "Restructuring Agreement") with Resurgence Asset Management, LLC
("Resurgence"), which owns or manages approximately $92 million principal amount
of the Company's $125 million principal amount of 6% Convertible Subordinated
Debentures due 2001(the "Debentures"). The Restructuring Agreement between the
Company and Resurgence is contingent on the consummation by the Company of a
restructuring by September 30, 1999. The Company's overall restructuring would
involve (i) the sale of practice assets and interests in surgery centers to its
affiliated practices and a concurrent termination of management services
agreements and execution of mutual releases between PRG and such practices and
(ii) the sale of certain interests in surgery centers to a strategic partner.
Upon consummation of the restructuring, the Company intends to continue
performing management services for certain practices. The Company anticipates
that its overall restructuring will be conditioned on its ability to consummate
agreements with providers and a strategic partner, approval of the Company's
shareholders, solicitation of Debenture holders and a number of other
conditions. No assurances can be provided that the Company will be able to
consummate its overall restructuring or obtain necessary approvals or consents.
Under the terms of the Company's Restructuring Agreement with Resurgence,
the holders of $125 million principal amount of PRG's Debentures would receive
(i) $100 million principal amount in cash and/or notes from the restructuring of
PRG's relationships with its affiliated practices and the sale to a strategic
partner of certain interests in surgery centers and (ii) an interest in the net
proceeds of certain patent litigation.
PRG is a provider of physician practice management services to eye care
practices and operates ambulatory surgery centers. Contact: Michael Yeary,
President (713) 629-5777 or Paul N. Silverstein, Andrews & Kurth L.L.P. (212)
850-2800.
Certain statements in this news release consist of forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. As such, they involve risks and uncertainties as
detailed from time to time in the reports filed by the Company with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K, as amended, for the year ended December 31, 1997.
<PAGE>
Exhibit 99.2
Resurgence Asset Management, LLC
10 New King Street
White Plains, NY 10604
March 19, 1999
Via Telecopy: (901) 767-1352
- ------------ --------------
Physicians Resource Group, Inc.
1430 East Massey Road
Memphis, Tenn. 38120
Attention: David Meyer
Chairman of the Board
Re: Restructuring Proposal for Debentures
-------------------------------------
Dear Dr. Meyer:
By their duly authorized signatures below, this letter agreement (the
"Agreement") confirms and memorializes the agreement of Resurgence Asset
Management, LLC, on behalf of itself and funds that it manages (collectively,
"RAM") and Physicians Resource Group, Inc. ("PRG") to a restructuring of the
Debentures (defined below), the essential terms of which are set forth herein
(the "Restructuring").
1. RAM represents and warrants that it is the beneficial owner of $91.896
million principal amount of 6% Convertible Subordinated Debentures issued by PRG
(the "Debentures"). RAM will, as soon as practicable, use reasonable efforts to
encourage other holders of Debentures to agree to and support the Restructuring.
RAM will reasonably apprise PRG's counsel concerning the specifics of such
efforts and the results thereof. Prior to the Closing Date, RAM shall have
caused Bondholders holding, including itself, in the aggregate, not less than
$116.896 million principal amount of Debentures to agree to the Restructuring
and be bound by this Agreement.
2. On the date the Restructuring is consummated (the "Closing Date"),
beneficial owners of the outstanding $125 million principal amount of Debentures
(the "Bondholders"), who tender or exchange (or cause the record holders to
tender or exchange) their Debentures or who are otherwise bound by the
Restructuring, will receive in exchange for, or in full satisfaction of, such
Debentures including all unpaid interest accrued thereon (but excluding the
interest identified in paragraph "3" of this Agreement) their Pro Rata Share
(defined below) of the consideration set forth in each of subparagraphs (a), (b)
and (c) below:
<PAGE>
(a) From the sale to Providers of practices, practice assets, direct
and indirect interests in ASCs and repayment of prior loans (the "Provider
Sales"), at the option of PRG (i) $80 million in cash, (ii) beneficial interest
in $80 million principal amount of notes from one or more physicians or
physician practice groups or associations who have previously entered into
management service agreements with PRG or its subsidiaries ("Providers"), which
notes shall be repaid in 36 equal monthly installments of principal and interest
(all notes given to PRG shall collectively be referred to as the "Notes") or
(iii) any combination of the consideration set forth in (i) and (ii) that equals
an aggregate of $80 million in cash and beneficial interest in principal amount
of Notes. The Notes shall bear interest at the rate of ten per cent (10%) per
annum and shall be secured by substantially all tangible assets of the Provider
or practice group entity which executes such Note, but excluding any interest of
any Provider in any ambulatory surgery center ("ASC") and assets that cannot be
pledged due to existing contractual restrictions with lessors, landlords or
other third parties not under the control of PRG, its subsidiaries or such
Providers. If a Provider who executes a Note has an interest in any ASC ("ASC
Interest"), any such Provider shall execute a "negative pledge," in form and
substance reasonably satisfactory to PRG and RAM, pursuant to which such
Provider shall agree not to pledge or otherwise encumber such Provider's ASC
Interest after the Closing Date. Such "negative pledge" shall terminate (x) if
there is no monetary default under the Notes (excluding any default that has
been cured within the applicable grace period provided in the Notes) within the
first anniversary of the Closing Date and (y) in any event, as to Notes of
particular Providers or practice groups, when such Notes are paid in full. Any
Notes of Providers that are practice groups or associations will be jointly and
severally guaranteed by each physician owner /stockholder of such practice group
(such physicians being referred to as "Guarantors"). The Notes and guarantees
shall be in form and substance reasonably acceptable to PRG and RAM. PRG will
use its reasonable efforts to enable Bondholders to receive, on the Closing
Date, $40 million in cash in lieu of beneficial interests in $40 million
principal amounts of Notes. All Notes, whether delivered to PRG before or after
the Closing Date, shall be payable to (or endorsed or transferred to) and placed
in a trust (the "CLO Trust") and shall be structured as and styled "Guaranteed
Collateralized Loan Obligation Notes" or the like ("CLOs"), in form and
substance reasonably acceptable to PRG and RAM. RAM, subject to PRG's reasonable
approval, shall have the right to select the trustee and servicing agent for the
CLO Trust. The Bondholders will be given a beneficial interest in Notes having a
principal amount of $80 million minus the amount of cash from the Provider Sales
paid by PRG to Bondholders (the "Bondholder Beneficial Interest") and PRG will
be given a beneficial interest in the balance of the Notes (the "PRG Beneficial
Interest"). Interest and principal received by the CLO Trust on the Notes shall
be paid pro rata to the holders of the Bondholder Beneficial Interest and the
PRG Beneficial Interest monthly; provided, however, if there is insufficient
cash flow on a monthly basis from principal and interest payments on the Notes,
cash shall be paid on the Bondholder Beneficial Interest in an amount equal to
the amount payable on the original principal amount of the Bondholder Beneficial
Interest (or such lower principal amount caused solely as a consequence of
monthly principal pay downs on the Bondholder Beneficial Interest), including
any past due amounts of principal and interest, prior to the monthly payments on
the PRG Beneficial Interest being paid. Principal pre-payments (in excess of
regularly scheduled monthly payments on the Notes) shall be applied and paid to
the Bondholder Beneficial Interest. To the extent the aggregate consideration
received by PRG in respect of the Provider Sales exceeds $80 million principal
amount in cash and Notes(the "Excess Consideration"),
<PAGE>
the CLO Trust shall, on the Closing Date be funded with Notes and cash, in the
aggregate principal amount of the lesser of (x) 110% of the principal amount of
the Bondholder Beneficial Interest or (y) the principal amount of the Bondholder
Beneficial Interest plus the Excess Consideration. Notwithstanding the
foregoing, all Notes and cash received by PRG from Provider Sales after the
Closing Date shall be placed in the CLO Trust until the aggregate principal
amount of the cash and Notes in the CLO Trust exceeds 110% of the principal
amount of the Bondholder Beneficial Interest, after which time PRG may retain
cash received from Provider Sales and all Notes shall be payable to the CLO
Trust. (For avoidance of doubt, and by way of example only, if on the Closing
Date there is $80 million principal amount of Notes in the CLO Trust and on the
following day PRG receives an aggregate principal amount of $10 million from
Provider Sales, $5 million in cash and $5 million principal amount of Notes, the
$5 million principal amount of Notes and $3 million of cash shall be placed in
the CLO Trust.) Provided there is no impact on PRG, the makers of the Notes or
the PRG Beneficial Interest, and with PRG's consent, not to be unreasonably
withheld, the Bondholders shall have reasonable discretion to structure the
Bondholder Beneficial Interest in a variety of different ways as to cash flow to
the holders of the Bondholder Beneficial Interest. At the Bondholders' request,
PRG shall use reasonable efforts to structure the CLO Trust in a manner such
that the certificates of beneficial interest therein can be freely and publicly
traded, provided the Bondholders bear the incremental cost involved; provided,
however, that PRG gives no assurances that such certificates will be freely or
publicly traded on the Closing Date or thereafter.
(b) $20 million in cash from the proceeds of an acquisition by a
strategic partner of interests in ASCs or ASC assets (the "ASC Interest Sale")
on the Closing Date.
(c) fifty percent (50%) of PRG's interest in the net proceeds (net of
all pre-Closing Date, not to exceed $1.3 million of documented expenses, and
post-Closing Date legal and related expenses) from the prosecution or settlement
of a lawsuit being prosecuted by PRG asserting on behalf of PRG (and others)
violations of patents relating to surface sculpturing lasers (the "Laser Patent
Litigation"). After the Closing Date, PRG shall fund not less than the first
$250,000 in connection with the prosecution of such action. RAM and/or
Bondholders shall fund the next $250,000 for the prosecution of the action. (Any
funding in excess of $500,000 shall be borne equally by PRG and the
Bondholders.) Notwithstanding the foregoing, if the Post Closing Date cost and
expense of prosecuting the Laser Patent Litigation is less than $250,000, PRG
shall only pay the amount of such actual cost and expense and RAM and the other
Bondholders shall have no funding obligation. To the extent either PRG, on the
one hand, or any of the Bondholders, on the other hand, determines not or
otherwise fails, to fund its respective funding share, such person (including
respective successors and assigns) shall forfeit all legal, beneficial or
ownership interest in the proceeds of Laser Patent Litigation. If RAM funds its
respective funding share, but other Bondholders fail to fund their respective
shares of such expenses, RAM shall have the right to fund the non-funding
person's funding share and, in such event, the non-funding person shall forfeit
all of its right title and interest in and to the proceeds of the Laser Patent
Litigation and the Litigation Trust (defined below) to RAM. In the event RAM
does not fund the funding share of the non-funding person, as set forth
immediately above, then PRG shall have the right to fund such non-funding
person's funding share and, in such event, such non-funding person shall forfeit
all of its right, title and interest in and to the proceeds of the Laser Patent
Litigation and the Litigation Trust
<PAGE>
to PRG. Any settlement, disposition or determination with respect to the
prosecution of the Laser Patent Litigation (including any determination not to
prosecute the action) shall be subject to (x) the joint control of PRG and RAM
so long as RAM retains beneficial ownership in not less than 10% of the
Bondholders' share of the beneficial interests in the Litigation Trust (defined
below) or (y) if RAM ceases to hold such beneficial ownership, consent of 51% of
the Bondholders, which consent shall not be unreasonably withheld or delayed.
PRG's right, title and interest in and to its share of the proceeds of the Laser
Patent Litigation will be transferred to a litigation trust (the "Litigation
Trust"), in form and substance reasonably acceptable to PRG and RAM, with
Bondholders receiving 50% of all the beneficial interests in such trust. PRG and
RAM shall each appoint two trustees to the Litigation Trust, each of whom shall
be reasonably acceptable to PRG and RAM. PRG shall designate David Meyer as one
of its trustees. Should any of such trustees resign, become incapacitated or
otherwise be unable to continue to serve in such capacity, the remaining trustee
designated by PRG or RAM, as the case may be, shall appoint a successor. At the
Bondholders' request, PRG shall use reasonable efforts to structure the
Litigation Trust in a manner such that the certificates of beneficial interest
therein can be freely and publicly traded provided the Bondholders bear the
incremental cost involved; provided, however, that PRG gives no assurances that
such certificates will be freely or publicly traded on the Closing Date or
thereafter.
For purposes of this letter agreement, "Pro Rata Share" shall mean the
proportionate interest of each Bondholder in the foregoing consideration
determined by multiplying such aggregate consideration by the ratio of aggregate
principal amount of Debentures held by such Bondholder to the aggregate
principal amount of all Debentures outstanding on the date of this Agreement.
3. The amount of interest originally due, without penalty or surcharge,
on the Debentures on December 1, 1998 in the amount of $3.75 million will be
paid within one (1) business day after PRG's receipt of the RAM Loan (defined
below). PRG shall borrow the $3.75 million necessary to make such payment from
RAM or its designee pursuant to the loan documents collectively annexed hereto
as Exhibit "A" (the "RAM Loan"). The RAM Loan shall have a one per cent (1%)
origination fee, interest at the rate of twenty percent (20%) per annum, no pre-
payment penalty and no personal guarantees.
4. Prior to the Termination Date (defined below), RAM and any other
Bondholder agreeing to be bound by the terms of this Agreement shall not,
directly or indirectly, sell, assign, hypothecate, grant an option on, or
otherwise dispose of (collectively "Transfer") any of the Debentures held by it
(as identified on page 1 of this Agreement) to any other person ("Transferee")
and shall maintain all voting rights with respect thereto; provided, however,
that RAM (and any other Bondholder agreeing to be bound by this Agreement) shall
be entitled to Transfer any or all of its Debentures if such Transferee agrees
to be bound by the terms of this Agreement in the form annexed hereto as Exhibit
"B" or in form and substance otherwise acceptable to PRG.
5. RAM's agreement to this proposal is subject to (i) verification, to
RAM's reasonable satisfaction, of the creditworthiness of the Providers and
Guarantors, (ii) completion of the Restructuring on or before the September 30,
1999 (the "Termination Date") and (iii) PRG's
<PAGE>
payment on a current basis of the Bondholders' reasonable expenses, including
reasonable legal fees and disbursements incurred in connection with the
Restructuring, in the maximum aggregate amount of $300,000 ($75,000 of which
shall be placed in escrow with RAM's counsel on or before two(2) business days
after the date this Agreement is executed).
6. RAM and PRG agree to execute all appropriate instruments and documents
consistent with this Agreement in form and substance reasonably acceptable to
PRG and RAM and necessary to implement the terms of this Agreement.
7. Upon (A) receipt or other appropriate deposit of the consideration set
forth in paragraphs 2(a), (b) and (c) of this Agreement and the satisfaction of
such other agreements of PRG set forth herein, including PRG's obligations under
Section 2 of this Agreement, and (B) PRG's payment of the outstanding reasonable
out-of-pocket costs, fees and expenses of the Indenture Trustee for the
Debentures in an amount not to exceed $25,000, the Bondholders will deliver or
cause to be delivered to PRG or a designee of PRG all Debentures beneficially
owned by Bondholders (and in the case of RAM, together with other Bondholders
agreeing to be bound by this Agreement in the principal amount of not less than
$ 116.896 million) with all appropriate instruments of transfer duly executed.
8. On the Closing Date, PRG shall deliver to the Bondholders an opinion
of PRG's counsel covering (A) the due and valid formation of the CLO Trust and
the Litigation Trust, (B) that all requisite consents to the Restructuring have
been obtained, (C) that all necessary approvals to the validity, authorization
and implementation of the Restructuring have been obtained and (D) subject to
the following proviso, that the Restructuring does not violate applicable state
or federal securities and health care law and regulations; provided, however,
that if either (x) PRG determines not to provide the legal opinion identified in
subparagraph "D" of this Paragraph 8 or (y) the legal opinion identified in
subparagraph "D" of this Section 8 is not in form and substance reasonably
acceptable to RAM, then, in such event, RAM shall have no obligation to close
the Restructuring unless RAM determines to its reasonable satisfaction that the
Restructuring does not violate applicable state and federal securities and
health care laws and regulations.
9. In consideration of RAM's agreements set forth herein, and unless PRG
determines not to pursue or proceed with the Restructuring, in whole or in part,
PRG agrees to use reasonable efforts to negotiate, execute and deliver (i)
agreements with Providers that would enable the Providers to provide cash or
Notes and guarantees in the amount and in such form as is contemplated in
subparagraph 2(a) and (ii) agreements with a strategic partner sufficient to
provide the consideration to Bondholders contemplated in subparagraph 2(b),
which in each case contemplates a Closing Date on or prior to the Termination
Date. PRG gives no assurances that it will be able to obtain agreements from
Providers or any strategic partner. Should PRG determine not to pursue the
Restructuring for any reason, PRG shall give prompt written notice to RAM of any
such determination.
10. This Agreement is intended to be an agreement (enforceable in
accordance with its terms) between RAM, PRG, any other Bondholder or other
person who agrees in writing to be bound
<PAGE>
by this Agreement. Each party hereto acknowledges and agrees that the other
parties will act in reliance on the agreements of each party set forth herein.
RAM acknowledges and agrees that any damages to PRG resulting from any breach of
this Agreement by RAM may not be capable of determination and, accordingly, PRG
may, in addition to any other remedy available to it, seek to enforce this
Agreement through all available equitable remedies, including specific
performance.
11. RAM (and any other Bondholder who agrees in writing with PRG or RAM to
be bound by this Agreement) represent and warrant to PRG that this Agreement has
been duly authorized and is a valid and binding obligation of RAM (or other
Bondholder).
12. PRG represents and warrants that this Agreement has been duly
authorized and is a valid and binding obligation of PRG.
13. RAM acknowledges that (i) PRG may determine to effect or implement the
Restructuring through reorganization proceedings, including without limitation,
under Chapter 11 of the United States Bankruptcy Code, (ii) in the event of any
such Chapter 11 proceedings, prior to PRG's abandonment of or determination not
to pursue the Restructuring, the agreements made herein are enforceable and
constitute an integral part of a Chapter 11 plan for PRG and (iii) in the event
the consideration and other economic terms of the Restructuring set forth in
this Agreement are set forth in PRG's Chapter 11 plan, RAM (and any other
Bondholder who agrees to be bound by this Agreement) shall vote to accept, and
shall support, such Chapter 11 plan. Notwithstanding the foregoing, (x) the
treatment of Debentures in any such Chapter 11 plan shall be consistent with the
terms of this Agreement and the disclosure statement, in so far as it describes
the Restructuring, RAM and the Bondholders, shall be in form and substance
reasonably acceptable to RAM and the Bondholders, and (y) subject to the
approval of the bankruptcy court presiding over any such Chapter 11 proceedings,
PRG shall pay the reasonable attorneys' fees of counsel to the Bondholders for
work performed in such proceedings in the amount of up to $200,000.
14. RAM shall have the right to terminate this Agreement on two (2)
business days notice to PRG (i) if either PRG or David Meyer notifies RAM in
writing of their intention not to pursue, or otherwise to abandon, their
respective efforts to consummate the Restructuring, (ii) if the Closing Date of
the Restructuring has not occurred on or before the Termination Date or (iii) in
the event of any material breach by PRG of any representation or covenant made
by it in this Agreement. Unless PRG notifies RAM and/or the Bondholders that (x)
it has determined not to pursue, or otherwise to abandon the Restructuring, or
(y) that the milestones set forth below are not attainable, PRG shall use its
reasonable efforts to achieve the following milestones on or before the
following dates:
(a) execute definitive agreements to sell the practices or practice
assets to the Providers by April 30, 1999;
(b) execute an agreement with a strategic partner by April 30, 1999;
(c) commence solicitation of Bondholders' consent to the
Restructuring (including an exchange offer or the like, if necessary or
appropriate) by May 30, l999;
<PAGE>
(d) form the CLO Trust and Litigation Trust by May 30, 1999; and,
(e) obtain the requisite vote of all shareholders of PRG by
July 15, 1999.
15. This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
together shall constitute one agreement binding all of the parties hereto.
Transmission by telecopier of an executed counterpart of this Agreement shall be
deemed to constitute due and sufficient delivery of such counterpart.
RESURGENCE ASSET MANAGEMENT,
LLC
By:
-------------------------------------
Title:
-----------------------
AGREED and ACCEPTED
as of the date written above:
PHYSICIANS RESOURCE GROUP, INC
By:
----------------------------
David Meyer
Chairman of the Board
cc: Paul N. Silverstein, Esq.
<PAGE>
Exhibit 99.3
PROMISSORY NOTE
---------------
$3,750,000.00 March 19, 1999
FOR VALUE RECEIVED, PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation
("Borrower"), hereby promises to pay to the order of M.D. SASS CORPORATE
--------
RESURGENCE PARTNERS, L.P., a Delaware limited partnership ("Lender"), at its
------
principal place of business located at 10 New King Street, White Plains, New
York, the principal sum of Three Million Seven Hundred Fifty Thousand and No/100
Dollars ($3,750,000.00), on or before the Maturity Date (as hereinafter
defined), together with interest on the unpaid principal balance of this Note
from day to day outstanding, as hereinafter provided.
This Note is secured by the Pledge Agreement (hereinafter defined).
Section 1. Definitions. Any capitalized term used and not otherwise
--------- -----------
defined herein shall have the meaning given such term in the Pledge Agreement.
As used herein the following terms shall have the respective meanings set forth
below:
"Applicable Rate" means a per annum rate of interest equal to twenty
---------------
percent (20%).
"Business Day" means a day other than a Saturday, Sunday or other day on
------------
which national banks in New York, New York are closed.
"Loan" means the Loan made by Lender to Borrower evidenced by this Note.
----
"Loan Documents" means this Note, the Pledge Agreement and all other
--------------
documents evidencing, securing or executed in connection with the Loan, and all
supplements, modifications, amendments and restatements thereof.
"Maturity Date" means September 30, 1999.
-------------
"Pledge Agreement" means that certain Pledge and Security Agreement of even
----------------
date herewith, executed by Borrower and certain of its subsidiaries in favor of
Lender covering various capital stock and other equity ownership interests of
Borrower and certain of Borrower's Subsidiaries, and all supplements,
modifications and amendments thereof.
Section 2. Interest Rate and Payments.
--------- --------------------------
(a) Commencing on the date of this Note and continuing until the Loan is
paid in full, interest on the outstanding principal balance of the Note shall
accrue at a rate per annum equal to the the Applicable Rate. Interest on this
Note shall be calculated at a daily rate equal to 1/360 of the annual percentage
rate which this Note bears.
(b) Commencing on May 1 , 1999, and continuing on the first (1st) day of
each successive calendar month thereafter until the Loan is paid in full,
Borrower shall pay to Lender all accrued but unpaid interest on this Note.
(c) The entire unpaid principal balance of this Note, together with all
accrued unpaid interest hereon and any other fees or amounts owing hereon, shall
be due and payable in full on the Maturity Date.
Page 1
<PAGE>
Section 3. Commitment Fee. Borrower shall on the date this Note is
--------- --------------
executed pay to Lender in immediately available funds a commitment fee for the
Loan in the amount of $37,500.00. Borrower and Lender acknowledge and agree
that such fee is a bona fide commitment fee paid for Lender's commitment to
advance the proceeds of the Loan.
Section 4. Representations and Warranties.
--------- ------------------------------
(a) Capacity. The Borrower is a corporation duly organized, validly
--------
existing and in good standing under the laws of the state of its domicile.
(b) Authorization. The execution, delivery and performance of this
-------------
Note and the other Loan Documents by the Borrower has been duly authorized by
all requisite action.
(c) Binding Obligations. This Note is and the other Loan Documents,
-------------------
when executed and delivered to Lender, will be, legal, valid and binding upon
the Borrower, enforceable in accordance with its respective terms, subject only
to principles of equity and laws applicable to creditors generally, including
bankruptcy laws.
(d) No Conflicting Law or Agreement. The execution, delivery and
-------------------------------
performance of this Note and the other Loan Documents by the Borrower does not
constitute a breach of or default under, and will not violate or conflict with,
any provisions of the corporate charter or other constituent documents of the
Borrower.
(e) No Consent Required. The execution, delivery, and performance of
-------------------
this Note and the other Loan Documents by the Borrower do not requires the
consent or approval of or the giving of notice to any person except for those
consents which have been duly obtained and arc in full force and effect on the
date hereof.
(f) Further Assurances. The Borrower shall promptly cure any defects
------------------
in the creation, issuance, or delivery of the Loan Documents. The Borrower at
its expense will execute (or cause to be executed) and deliver to Lender upon
request all such other and further documents, agreements, and instruments in
compliance with or accomplishment of the covenants and agreements applicable to
it in the Loan Documents, or to evidence further and to describe more fully any
Collateral intended as security for the obligations or to correct any omissions
in the Loan Documents, or to state more fully the obligations and agreements set
out in any of the Loan Documents, or to perfect, protect, or preserve any
encumbrances created pursuant to any of the Loan Documents, or to make any
recordings, to file any notices, or to obtain any consents, all as may be
reasonably necessary or appropriate in connection therewith.
Section 5. General Provisions.
--------- ------------------
Whenever any payment shall be due under this Note on a day which is not a
Business Day, the date on which such payment is due shall be extended to the
next succeeding Business Day.
All principal, interest and other sums payable under this Note shall be
paid, not later than 2:00 p.m. (Eastern Standard Time) on the day when due, in
New York, New York, in immediately available funds in lawful money of the United
States of America via wire transfer to the account set forth on the annexed wire
instructions. Any payment under this Note or under any other Loan Document
other than in the required amount in good, unrestricted U.S. funds immediately
available to the holder hereof shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is actually
received by the holder hereof in such funds and shall be made and accepted
subject to the condition that any check or draft may be handled for collection
in accordance with the practice of the collecting bank or banks.
Borrower shall be entitled to prepay this Note in whole or in part at any
time without premium or penalty. All payments made as scheduled on this Note,
and any prepayments on this Note (except as provided in Section 12 of the
Page 2
<PAGE>
Pledge Agreement), shall be applied, to the extent thereof, first to accrued but
unpaid interest and the balance to unpaid principal.
The occurrence of any one of the following shall be an "Event of Default":
----------------
(a) Any principal, interest or other amount of money due under this Note is
not paid in full when due, regardless of how such amount may have become due; or
(b) The making of any representation or warranty by Borrower or any of the
Subsidiary Pledgors (under and as defined in the Pledge Agreement) in the Loan
Documents that was false or incorrect in any material respect when made, which
results in a material adverse effect on Borrower and its Subsidiaries taken as a
whole; or
(c) Borrower or any Subsidiary Pledgor shall default in the due performance
or observance by it of any term, covenant or agreement in this Note or the
Pledge Agreement, and such default shall continue unremedied for a period of ten
(10) days after written notice from Lender thereof to Borrower and the failure
to perform will result in a material adverse effect on the Borrower and its
Subsidiaries taken as a whole.
Any Event of Default under this Note shall constitute an Event of Default under
the Pledge Agreement and any other Loan Document. Upon the occurrence of an
Event of Default, the holder hereof shall have the right, at its option, to
declare the unpaid principal balance and all accrued unpaid interest on this
Note at once due and payable (and upon such declaration, the same shall be at
once due and payable), to foreclose any liens and security interests securing
payment hereof and to exercise any of its other rights, powers and remedies
under this Note, under any other Loan Document, or at law or in equity.
Neither the failure by the holder hereof to exercise, nor delay by the
holder hereof in exercising, the right to accelerate the maturity of this Note
or any other right, power or remedy upon any default shall be construed as a
waiver of such default or as a waiver of the right to exercise any such right,
power or remedy at any time. No single or partial exercise by the holder hereof
of any right, power or remedy shall exhaust the same or shall preclude any other
or further exercise thereof, and every such right, power or remedy may be
exercised at any time and from time to time. All rights and remedies provided
for in this Note and in any other Loan Document are cumulative of each other and
of any and all other rights and remedies existing at law or in equity, and the
holder hereof shall, in addition to the rights and remedies provided herein or
in any other Loan Document, be entitled to avail itself of all such other rights
and remedies as may now or hereafter exist at law or in equity for the
collection of the indebtedness owing hereunder, and the resort to any right or
remedy provided for hereunder or under any such other Loan Document or provided
for by law or in equity shall not prevent the concurrent or subsequent
employment of any other appropriate rights or remedies. Without limiting the
generality of the foregoing provisions, the acceptance by the holder hereof from
time to time of any payment under this Note which is past due or which is less
than the payment in full of all amounts due and payable at the time of such
payment, shall not (i) constitute a waiver of or impair or extinguish the rights
of the holder hereof to accelerate the maturity of this Note or to exercise any
other right, power or remedy at the time or at any subsequent time, or nullify
any prior exercise of any such right, power or remedy, or (ii) constitute a
waiver of the requirement of punctual payment and performance, or a novation in
any respect.
If the holder of this Note retains an attorney in connection with any
default or at maturity or to collect, enforce or defend this Note or any other
Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or
other proceeding, or if Borrower sues the holder in connection with this Note or
any other Loan Document and does not prevail, then Borrower agrees to pay to
holder, in addition to principal and interest, all reasonable costs and expenses
incurred by such holder in trying to collect this Note or in any such suit or
proceeding, including reasonable attorneys' fees.
Page 3
<PAGE>
Borrower and any other party hereafter liable for the payment of this Note
in whole or in part, hereby severally (i) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest, notice of
intent to accelerate, notice of acceleration and all other notice (except only
for any notices which are specifically required by this Note or any other Loan
Document), filing of suit and diligence in collecting this Note or enforcing any
of the security herefor; (ii) agree to any substitution, subordination, exchange
or release of any such security or the release of any party primarily or
secondarily liable hereon; (iii) agree that the holder hereof shall not be
required first to institute suit or exhaust its remedies hereon against Borrower
or others liable or to become liable hereon or to enforce its rights against
them or any security herefor; and (iv) consent to any extension or postponement
of time of payment of this Note for any period or periods of time and to any
partial payments, before or after maturity, and to any other indulgences with
respect hereto, without notice thereof to any of them.
This Note may not be changed, amended or modified except in a writing
expressly intended for such purpose and executed by the party against whom
enforcement of the change, amendment or modification is sought.
Any notice required or which any party desires to give under this Note
shall be given and be effective as provided in Section 13 of the Pledge
----------
Agreement.
The proceeds of this Note will be used solely for the purpose set forth in
Section 3 of the debenture restructuring agreement between Borrower and Lender,
dated March 16, 1999.
Time shall be of the essence in this Note with respect to Borrower's
obligations hereunder.
AS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE COMMERCIAL LOAN
TRANSACTION CONTEMPLATED BY THE LOAN DOCUMENTS AND EVIDENCED HEREBY, BORROWER
AND LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY OF ANY OR ALL ISSUES
ARISING IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BETWEEN BORROWER AND LENDER OR
THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IN RESPECT OF ANY MATTER ARISING OUT OF,
UNDER OR CONNECTED IN ANY MANNER WHATSOEVER WITH THIS NOTE OR THE OTHER LOAN
DOCUMENTS.
THIS NOTE, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE
GOVERNED BY NEW YORK LAW (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND
APPLICABLE UNITED STATES FEDERAL LAW. THE PARTIES AGREE THAT THE LAWS OF THE
STATE OF NEW YORK SHALL GOVERN ANY ISSUE RELATING TO THIS NOTE, ANY OF THE OTHER
RELATED DOCUMENTS AND THE TRANSACTIONS TO WHICH THIS NOTE RELATES, INCLUDING THE
VALIDITY OR ENFORCEABILITY OF THIS NOTE AND ANY OTHER AGREEMENT RELATING TO THE
TRANSACTION OR A PROVISION OF THIS NOTE OR ANY OTHER RELATED AGREEMENT. THE
PARTIES ACKNOWLEDGE AND AGREE THAT THE TRANSACTIONS TO WHICH THIS NOTE RELATES
BEAR A REASONABLE RELATION TO THE STATE OF NEW YORK, AND THAT THE LAWS, OTHER
THAN CONFLICT OF LAWS RULES, OF NEW YORK SHALL GOVERN ANY ISSUE REGARDLESS OF
WHETHER THE APPLICATION OF THAT LAW IS CONTRARY TO A FUNDAMENTAL OR PUBLIC
POLICY OF THE STATE OF TEXAS OR OF ANY OTHER JURISDICTION.
THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
------------------------------------------------------------------
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE LOAN AND MAY NOT BE
- ---------------------------------------------------------------------
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
- --------------------------------------------------------------------------------
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
- -------------- ----------------------------------------------------------
WITH RESPECT TO THE LOAN.
- ------------------------
Page 4
<PAGE>
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date
first above written.
PHYSICIANS RESOURCE GROUP, INC.,
a Delaware corporation
By:
------------------------------------------
Name(print):
---------------------------------
Title:
---------------------------------------
Page 5
<PAGE>
Exhibit 99.4
PLEDGE AND SECURITY AGREEMENT
-----------------------------
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement") is made and
----------------
executed as of the 19th day of March, 1999, by and between PHYSICIANS RESOURCE
GROUP, INC., a Delaware corporation ("Borrower"), and those Subsidiaries of
--------
Borrower now or at any future time executing this Agreement on the signature
pages hereof or on any amendments or supplements hereto as listed on Schedule A
----------
hereto, as Schedule A may be amended or supplemented from time to time
----------
("Subsidiary Pledgors") (Borrower and the Subsidiary Pledgors being sometimes
- ---------------------
referred to herein individually as a "Pledgor" and collectively as "Pledgors"),
------- --------
in favor of M.D. SASS CORPORATE RESURGENCE PARTNERS, L.P. ("Lender").
------
WHEREAS:
A. Pursuant to that certain Promissory Note (the "Note") of even date
----
herewith in the original principal amount of $3,750,000.00, executed by Borrower
and payable to Lender, Lender has made a loan (the "Loan") to Borrower upon the
----
terms and conditions set forth therein; and
B. In consideration for the Loan, and in order to provide collateral
security for the payment thereof, Lender has requested, and it is a condition of
the Loan, that Pledgors enter into this Pledge Agreement pursuant to which each
Pledgor will pledge the outstanding capital stock and other equity interests now
or hereafter owned by it; and
C. Each Pledgor has determined that valuable benefits will be derived by
it as a result of the extension of credit made to Borrower pursuant to the Loan.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and, Pledgors covenant and agree with Lender as
follows:
16. Definitions. In addition to terms expressly defined in other
-----------
provisions of this Pledge Agreement, the following terms as used herein have the
following meanings:
Business Day means any day other than Saturday, Sunday or other day that
------------
banks in New York, New York are required or authorized by law to close.
Distribution means the retirement, redemption, purchase or other
------------
acquisition for value of any of the Pledged Shares, the declaration or payment
of any dividend or other distribution on or with respect to the Pledged Shares,
and any other payment made with respect to the Pledged Shares.
Event of Default means a default in payment when due of any interest or
----------------
principal on the Note, or any other amount due and payable thereunder or under
this Pledge Agreement, or any other Event of Default under and as defined in the
Note.
Loan Documents means this Pledge Agreement, the Note, all related financing
--------------
statements, and any and all other agreements, documents or instruments
evidencing, securing or pertaining to
Page 1
<PAGE>
the Loan, as the same may be supplemented, modified, amended, renewed, extended,
rearranged, restated or replaced from time to time.
Person means an individual, a corporation, a limited liability company, a
------
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
Subsidiary means, for any Person, any corporation, partnership or other
----------
entity (a) of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
(including that of a general partner) is at the time directly or indirectly
owned, by or the management is otherwise controlled by such Person and any
Subsidiaries of such Person and (b) the financial statements of which are
consolidated with Borrower's financial statements in accordance with GAAP. The
term Subsidiary shall include Subsidiaries of Subsidiaries (and so on). Unless
otherwise qualified, references to "Subsidiary" or "Subsidiaries" herein shall
refer to those of Borrower and its Subsidiaries.
17. Representations and Warranties.
------------------------------
(a) Capacity. The Pledgors are duly organized, validly existing and
--------
in good standing under the laws of their respective states of domicile.
(b) Authorization. The execution, delivery and performance of this
-------------
Pledge Agreement and the other Loan Documents by the Pledgors has been duly
authorized by all requisite action.
(c) Binding Obligations. This Pledge Agreement is and the other Loan
-------------------
Documents, when executed and delivered to Lender, will be, legal, valid and
binding upon the Pledgors, enforceable in accordance with its respective terms,
subject only to principles of equity and laws applicable to creditors generally,
including bankruptcy laws.
(d) No Conflicting Law or Agreement. The execution, delivery and
-------------------------------
performance of this Pledge Agreement and the other Loan Documents by the
Pledgors does not constitute a breach of or default under, and will not violate
or conflict with, any provisions of the corporate charter or other constituent
documents of the Pledgors.
(e) No Consent Required. The execution, delivery, and performance of
-------------------
this Pledge Agreement and the other Loan Documents by the Pledgors do not
require the consent or approval of or the giving of notice to any person except
for those consents which have been duly obtained and arc in full force and
effect on the date hereof.
(f) Percentage of Ownership of Issuers and other Entities. The
-----------------------------------------------------
Pledged Interests represent the percentage ownership interest in each of the
Companies (as hereinafter defined) as set forth in Schedule A hereto.
(g) No Other Classes of Interest. In the case of the Pledged Stock,
----------------------------
each Company has only one class of stock authorized, and in the case of other
Companies, the interests pledged under this Agreement represent an undivided
senior interest in the equity of the respective Company.
Page 2
<PAGE>
(h) No Options. No Company has any options, warrants or convertible
----------
debt instruments outstanding that could require the issuance of additional stock
or additional equity interests.
(i) All Subsidiaries. Except for the entities listed on Schedule "B"
----------------
hereto (the "Excluded Subsidiary"), the entities listed on Exhibit "A"
constitute all of Borrower's Subsidiaries.
18. Pledge. Upon the terms hereof, each Pledgor hereby pledges and
------
assigns to Lender, and grants to Lender a security interest in and to, all of
the following, and all of the rights, titles and interests of such Pledgor
therein (all of the following being sometimes referred to herein as the "Pledged
-------
Interests"): (a) all of the issued and outstanding shares of capital stock or
- ---------
other equity interests of any type, including without limitation partnership
interests (general or limited) or limited liability company member interests,
now owned or hereafter acquired by such Pledgor (collectively, the "Pledged
-------
Shares"), including without limitation the shares and other interests described
- ------
in Exhibit A attached hereto and incorporated herein by reference for all
---------
purposes, as Exhibit A may be amended or supplemented from time to time (each of
---------
the entities in which a Pledgor has a stock or other ownership interest as set
forth on Exhibit A being sometimes referred to herein as a "Company", and all of
--------- -------
them collectively as the "Companies"); provided however, that all capital stock
---------
of, and other equity interests in, the Excluded Subsidiaries (as listed in
Schedule "B" hereto) shall not be covered by this Pledge Agreement and shall be
excluded from the Pledged Shares and Pledged Interests hereunder; (b) all cash,
securities, dividends, and other property at any time and from time to time
receivable or otherwise distributed in respect of or in exchange for any or all
of the shares and interests described in clause (a) hereof and any other
property substituted or exchanged therefor; and (c) any and all proceeds from or
other sums arising from or by virtue of, and all dividends and distributions
(cash or otherwise) payable and/or distributable with respect to, all or any of
the shares and interests described in the preceding clauses (a) and (b) hereof.
19. Secured Obligation. The pledge, assignment and security interest
------------------
herein granted (the "Security Interest") shall secure the prompt and complete
-----------------
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Note and all the obligations of Borrower
thereunder and of the Pledgors under this Pledge Agreement (the "Obligations").
-----------
Upon full payment and performance of the Obligations, the Security Interest
shall, at the request and expense of the Pledgors, be released by Lender.
20. Representations and Warranties; Related Covenants. Pledgors
-------------------------------------------------
represent, warrant, covenant and agree to and with Lender that: (a) each Pledgor
is the legal and beneficial owner of the Pledged Shares issued by each of the
Companies designated for such Pledgor on Exhibit A; (b) all of the Pledged
---------
Shares currently issued by each of the Companies are, and the Pledged Shares
hereafter created or acquired shall be at the time of creation or acquisition of
such additional shares, duly authorized and issued, fully paid and non-
assessable, and all documentary, stamp or other taxes or fees owing in
connection with the issuance, transfer and/or pledge thereof have been paid; (c)
no dispute, right of set off, counterclaim or defense exists with respect to all
or any part of the Pledged Interests; (d) the Pledged Interests are free and
clear of all liens, mortgages, pledges, charges, security interests or other
encumbrances, options, warrants, puts, calls and other rights of third persons,
and restrictions, other than (i) the Security Interest, and (ii) restrictions on
transferability imposed by applicable state and federal securities laws; (e)
Pledgors have full corporate or other applicable power, right and authority to
pledge the Pledged Interests for the purposes and upon the terms set out herein,
and the execution, delivery and performance of this Pledge Agreement are not in
contravention of any indenture, agreement or undertaking to which any Pledgor is
a party or by
Page 3
<PAGE>
which any Pledger is bound; and (f) the original stock certificates (and the
original of any certificates representing any other certificated equity
interests) representing all of the Pledged Shares shall be delivered to Lender,
together with a duly executed blank stock power for each certificate.
21. Covenants.
---------
(a) Further Acts, Assurances. Pledgors covenant and agree to from
------------------------
time to time promptly execute and deliver to Lender all such other assignments,
certificates, supplemental writings and financing statements as Lender
reasonably requests in order to evidence or perfect the Security Interest.
Pledgors further agree that if any Pledgor shall at any time acquire any
additional shares of the capital stock of any class of any of the Companies, or
any additional interests of ownership of any kind of any Subsidiary, and whether
such acquisition shall be by purchase, exchange, reclassification, dividend or
otherwise, such Pledgor shall as soon as practically possible, (and without the
necessity for any request or demand by Lender) deliver the certificates
representing such shares or interests to Lender, in the same manner and with the
same effect as described in Sections 1 through 5 hereof. Upon delivery, such
---------- -
shares or evidences of ownership shall thereupon constitute Pledged Interests
and shall be subject to the Security Interest herein created, for the purposes
and upon the terms and conditions set forth in this Pledge Agreement, the Note
and the other Loan Documents. The Borrower shall promptly cure any defects in
the creation, issuance, or delivery of the Loan Documents. The Borrower at its
expense will execute (or cause to be executed) and deliver to Lender upon
request all such other documents, agreements, and instruments in compliance with
or for the accomplishment of the covenants and agreements applicable to Borrower
in the Loan Documents, or to evidence further and to describe more fully any
Pledged Interests intended as security for the Obligations or to correct any
omissions in the Loan Documents, or to state more fully the Obligations and
agreements set out in any of the Loan Documents, or to perfect, protect, or
preserve any encumbrances created pursuant to any of the Loan Documents, or to
make any recordings, to file any notices, or to obtain any consents, all as may
be reasonably necessary or appropriate in connection therewith.
(b) No Transfer or Hypothecation. Subject to Section 12 hereof,
---------------------------- ----------
Pledgors will not, without the prior written consent of Lender, transfer,
assign, dispose of any right, title or interest of Pledgors, or any of them, in
the Pledged Interests, or any part thereof, or create directly or indirectly any
other security interest or otherwise encumber any of the Pledged Interests, or
permit any of the Pledged Interests to ever be or become subject to any warrant,
put, option or other rights of third Persons or any attachment, execution,
sequestration or other legal or equitable process, or any security interest or
encumbrance of any kind, except the Security Interest.
(c) Enforcement. Pledgors will enforce or secure in the name of
-----------
Lender the performance of each and every obligation, term, covenant, condition
and agreement relating to the Pledged Interests by any other party thereunder to
be performed, and Pledgors shall appear in and defend any action or proceeding
arising under, occurring out of or in any manner connected with the Pledged
Interests, and upon request by Lender, Pledgors will do so in the name and on
behalf of Lender, but at the expense of Pledgors, and Pledgors shall pay all
costs and expenses of Lender, including, but not limited to, attorneys' fees and
disbursements, in any action or proceeding in which Lender may appear.
(d) Inspection. Excluding materials subject to (x) attorney client
----------
privilege, work product and similarly protected materials and (y) information
which is subject to a confidentiality agreement with a third party that requires
such third party's consent for disclosure, Pledgors shall
Page 4
<PAGE>
allow Lender to inspect all records of Pledgors relating to the Pledged
Interests, and to make and take away copies of such records during normal
business hours.
(e) Changes. Pledgors shall promptly notify Lender of any material
-------
change in any fact or circumstance warranted or represented by any Pledgor in
this Pledge Agreement or in any other writing furnished by any Pledgor to Lender
in connection with the Pledged Interests or this Pledge Agreement.
(f) Claims. Pledgors shall promptly notify Lender of any claim,
------
action or proceeding affecting title to the Pledged Interests, or any part
thereof, or the Security Interest, and at the request of Lender, appear in and
defend, at Pledgors' expense, any such action or proceeding.
(g) Costs. Pledgors shall promptly pay to Lender the amount of all
-----
reasonable costs and expenses of Lender, including but not limited to reasonable
attorneys' fees, incurred by Lender in connection with this Pledge Agreement and
the enforcement of the rights of Lender hereunder.
(h) Additional Ownership Interests. Each Pledgor shall receive any
------------------------------
additional ownership or equity interests, earned, issued or delivered as a
result of ownership of the Pledge Interests in trust for Lender and shall
deliver the same together with stock powers executed in blank (if applicable)
immediately to Lender upon receipt. Such additional ownership or equity
interests shall become part of the Pledged Interests hereunder upon issuance.
(i) No Further Encumbrances. No Grantor shall sell or transfer any
-----------------------
or all of the Pledged Interests or grant or suffer the attachment of any
encumbrance to any or all of the Pledged Interests, except as permitted by the
Loan Documents.
22. Conversions; etc. Should the Pledged Interests, or any part thereof,
----------------
ever be in any manner converted by any of the Companies into another property of
the same or another type or any money or other proceeds ever be paid or
delivered to Pledgors as a result of Pledgors' rights in the Pledged Interests,
then in any such event (except as otherwise provided herein), all such property,
money and other proceeds shall be and/or become part of the Pledged Interests,
and Pledgors covenant forthwith to pay or deliver to Lender all of the same
which is susceptible of delivery; and at the same time, if Lender deems it
necessary and so requests, Pledgors will properly endorse or assign the same to
Lender. Without limiting the generality of the foregoing, Pledgors hereby agree
that the shares of capital stock of the surviving corporation in any merger or
consolidation involving any of the Companies or any of the Pledged Interests
shall be deemed to constitute the same property as the Pledged Interests. With
respect to any such property of a kind requiring an additional security
agreement, financing statement or other writing to perfect a security interest
therein in favor of Lender, Pledgors will forthwith execute and deliver to
Lender such documentation as Lender shall request to create and perfect the
liens and security interests of Lender intended to be created herein.
23. Payments on the Pledged Interests. With respect to any instruments or
---------------------------------
warrants that are or become part of the Pledged Interests, Lender, without
notice to Pledgors, shall have the right at any time and from time to time,
after the occurrence and during the continuance of an Event of Default, to
notify and direct each of the Companies to thereafter make all payments on such
Pledged Interests directly to Lender, regardless of whether any Pledgor was
previously making collections thereon, and, with respect to such instruments or
warrants that are stock certificates, shares of capital or permanent reserve
fund stock or beneficial interest, or other securities, Lender shall have
Page 5
<PAGE>
authority, after the occurrence and during the continuance of an Event of
Default, without further notice to Pledgors, either to have them registered in
Lender's name, or in the name of Lender's nominee, or, with or without
registration, to demand of each of the Companies, and to receive a receipt for,
any and all distributions payable with respect thereto, regardless of the medium
in which paid and whether they be ordinary or extraordinary. Each of the
Companies shall be fully protected in relying on the written statement of Lender
that it then holds the Security Interest which entitles it to receive such
payment. The receipt of Lender for such payment shall be full acquittance
therefor to each of the Companies, and Pledgors agree, at the request of Lender
to execute and deliver a letter to each of the Companies acknowledging this
right of Lender; provided, that the failure of any Pledgor to execute and
deliver such letter shall not affect or limit the rights of Lender set forth
herein.
24. Preservation of Pledged Interests. Lender shall not have any
---------------------------------
responsibility for or obligation or duty with respect to all or any part of the
Pledged Interests or any matter or proceeding arising out of or relating
thereto, including, without limitation, any obligation or duty to collect any
sums due in respect thereof or to protect or preserve any rights against prior
parties or any other rights pertaining thereto, it being understood and agreed
that Pledgors shall be responsible generally for the preservation of all rights
in the Pledged Interests.
25. Collection of the Loan. Lender shall not be liable for any failure to
----------------------
use due diligence in the collection of any and all amounts due and owing under
the Note or any other Loan Documents, or any part thereof.
26. Rights of Parties Before and After the Occurrence of an Event of
----------------------------------------------------------------
Default.
- -------
(a) Exercising Rights Prior to an Event of Default. Unless and until an
----------------------------------------------
Event of Default shall occur and be continuing,
(i) Each Pledgor shall be entitled to receive all cash dividends,
inter-company distributions or advances paid to such Pledgor in respect of
or attributable to the Pledged Interests owned by such Pledgor and any and
all other Distributions, except as provided in the following sentence.
Notwithstanding the foregoing, Lender shall be entitled to receive, whether
or not an Event of Default has occurred, any and all Distributions of
stock, whether as a result of a stock dividend, stock split or otherwise.
All such Distributions of stock and, after and during the continuance of an
Event of Default, shall if received by any Person other than Lender, be
held in trust for the benefit of Lender and shall forthwith be delivered to
Lender (accompanied by proper instruments of assignment and/or stock and/or
bond powers executed by the applicable Pledgor in accordance with Lender's
instructions) to be held subject to the terms of this Pledge Agreement.
Any cash proceeds of the Pledged Interests which come into the possession
of Lender may, at Lender's option, be applied in whole or in part to the
Obligations (to the extent then due), be released in whole or in part to or
on the written instructions the applicable Pledgor, or be retained in whole
or in part by Lender as additional security for the payment and performance
of the Obligations. Lender shall not be obligated to make any investment
of such proceeds or shall have any liability to Pledgors for any loss which
may result therefrom. All interest and other amounts earned from any
investment of such proceeds may be dealt with by Lender in the same manner
as other cash proceeds.
Page 6
<PAGE>
(ii) Each Pledgor shall have the right to vote and give consents with
respect to all of the Pledged Interests owned by it and to consent to,
ratify, or waive notice of any and all meetings; provided that such right
-------- ----
shall in no case be exercised for any purpose contrary to, or in violation
of, any of the terms or the provisions of this Pledge Agreement, the Note
or any other Loan Document.
(b) Exercising Rights After the Occurrence of an Event of Default. Upon
-------------------------------------------------------------
the occurrence and during the continuance of an Event of Default, Lender,
without the consent of Pledgors, may:
(i) At any time vote or consent in respect of any of the Pledged
Interests, and authorize any Pledged Interests to be voted and such
consents to be given, ratify and waive notice of any and all meetings, and
take such other action as shall seem desirable to Lender, in its
discretion, to protect or further the interests of Lender in respect of any
of the Pledged Interests as though it were the outright owner thereof, and,
each Pledgor hereby irrevocably constitutes and appoints Lender its sole
proxy and attorney-in-fact, with full power of substitution to vote and act
with respect to any and all Pledged Interests standing in the name of such
Pledgor or with respect to which such Pledgor is entitled to vote and act.
The proxy and power of attorney herein granted are coupled with interests,
are irrevocable, and shall continue throughout the term of this Pledge
Agreement;
(ii) In respect of any Pledged Interests, join in and become a party
to any plan of recapitalization, reorganization or readjustment (whether
voluntary or involuntary) as shall seem desirable to Lender in respect of
any such Pledged Interests, and deposit any such Pledged Interests under
any such plan; make any exchange, substitution, cancellation or surrender
of such Pledged Interests required by any such plan and take such action
with respect to any such Pledged Interests as may be required by any such
plan or for the accomplishment thereof; and no such disposition, exchange,
substitution, cancellation or surrender shall be deemed to constitute a
release of Pledged Interests from the Security Interest of this Pledge
Agreement;
(iii) Receive all payments of whatever kind made upon or with respect
to any Pledged Interests; and
(iv) Transfer into its name, or into the name or names of its
nominee or nominees, all or any of the Pledged Shares or the Pledged
Interests.
(c) Right of Sale After the Occurrence of an Event of Default. Upon the
---------------------------------------------------------
occurrence and during the continuance of an Event of Default, Lender may sell,
without recourse to judicial proceedings, by way of one or more contracts, with
the right (except at private sale) to bid for and buy, free from any right of
redemption, the Pledged Shares and any other of the Pledged Interests, or any
part thereof, upon fifteen (15) days' notice (which notice is agreed to be
reasonable notice for the purposes hereof) to Borrower and the applicable
Pledgor of the time and place of sale, for cash, upon credit or for future
delivery, at Lender's option in its discretion:
(i) At public sale, including a sale at any broker's board or
exchange; or
(ii) At private sale in any manner which will not require the Pledged
Interests, or any part thereof, to be registered in accordance with The
Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder, or any other law or regulation, at the
Page 7
<PAGE>
best price reasonably obtainable by Lender at any such private sale or
other disposition in the manner mentioned above. Lender is also hereby
authorized, but not obligated, to take such actions, give such notices,
obtain such consents, and do such other things as Lender may deem required
or appropriate in the event of sale or disposition of any of the Pledged
Interests. Pledgors understand that Lender may in its discretion approach a
restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Pledged Interests, or any
portion thereof, than would otherwise be obtainable if the same were
registered and sold in the open market. Pledgors agree (A) that in the
event Lender shall so sell the Pledged Interests, or any portion thereof,
at such private sale or sales, Lender shall have the right to rely upon the
advice and opinion of any member firm of a national securities exchange as
to the best price reasonably obtainable upon such a private sale thereof
(any expense borne by Lender in obtaining such advice to be paid by
Pledgors as an expense related to the exercise by Lender of its rights
hereunder), and (B) that such reliance shall be conclusive evidence that
Lender handled such matter in a commercially reasonable manner. Lender
shall be under no obligation to take any steps to permit the Pledged
Interests to be sold at a public sale or to delay a sale to permit the
Companies to register the Pledged Interests for public sale under The
Securities Act of 1933 or applicable state securities law.
In case of any sale by the Lender of the Pledged Interests on credit or for
future delivery, the Pledged Interests sold may be retained by Lender until the
selling price is paid by the purchaser, but Lender shall incur no liability in
case of failure of the purchaser to take up and pay for the Pledged Interests so
sold. In case of any such failure, such Pledged Interests so sold may be again
similarly sold.
In connection with the sale of the Pledged Interests, Lender is authorized,
but not obligated, to limit prospective purchasers to the extent deemed
necessary or desirable by Lender to render such sale exempt from the
registration requirements of The Securities Act of 1933, as amended, and any
applicable state securities laws, and no sale so made in good faith by Lender
shall be deemed not to be "commercially reasonable" because so made. If Lender
determines to exercise its right to sell all or any of the Pledged Interests,
and if in the opinion of a reputable law firm selected by Lender, it is
necessary or advisable to have such securities registered under the provisions
of such Act, or any similar law relating to the registration of securities,
Pledgors agree, at their own expense, to (i) execute and deliver all such
instruments and documents, and to do or cause to be done such other acts and
things as may be necessary or, in the opinion of a reputable law firm selected
by Lender, advisable to register such securities under the provisions of such
Act or any applicable similar law relating to the registration of securities,
and Pledgors will cause the registration statement relating thereto to become
effective and to remain effective for such period as Lender shall request, and
to make all amendments thereof and/or to the related prospectus which, in the
opinion of a reputable law firm selected by Lender, are necessary or desirable,
all in conformity with the requirements of such Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto; (ii)
qualify such securities under state "blue sky" or securities laws and obtain the
necessary approval of any tribunal to the sale of such securities; and (iii)
indemnify and hold harmless, and to cause each of the Companies to agree to
indemnify and hold harmless, Lender, any underwriters (and any Person
controlling any of the foregoing), and their respective employees, officers,
agents, attorneys, and accountants (collectively, the "Indemnified Parties")
-------------------
from and against any loss, liability, claim, damage and expense (including
without limitation, fees of counsel incurred in connection therewith) under such
Act or otherwise, insofar as such loss, liability, claim, damage or expense
arises out of or is based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered
Page 8
<PAGE>
under such Act or other securities laws, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or is based upon any omission or any alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading, such indemnification to remain operative regardless of any
investigation made by or on behalf of any Indemnified Party.
(d) Other Rights After an Event of Default. Upon the occurrence and during
--------------------------------------
the continuance of an Event of Default, Lender, at its election, may exercise
any and all rights available to a secured party under the Uniform Commercial
Code as enacted in the State of New York or other applicable jurisdiction, as
amended, in addition to any and all other rights afforded hereunder or under the
Note, at law, in equity or otherwise.
(e) Application of Proceeds. Except as provided in Section 12 hereof, any
------------------------ ----------
and all proceeds ever received by Lender from any disposition of the Pledged
Interests, or any part thereof or the exercise of any other right pursuant
hereto shall be applied first to any unpaid fees or expenses owing by Borrower
to Lender, then to accrued, unpaid interest on the Note, and then to the
principal balance of the Note.
27. Sale and Transfers. Notwithstanding anything to the contrary
------------------
expressed or implied herein or in the Note or any other Loan Document, Pledgors
shall be entitled to sell and transfer, before or after an Event of Default, any
of the Pledged Interests or any and all assets of any Pledgor or of any Company
pursuant to a bona fide agreement with any third-party (including without
limitation a physician practice for which Borrower or any Pledgor provides
management services), and such Pledged Interests and/or assets shall upon such
transfer be released from the Security Interest and any other claims or
interests of Lender; provided, however, that fifty percent (50%) of the net cash
-------- -------
proceeds (to Borrower or the applicable Pledgor from such sale (after payment of
customary expenses, commissions, and attorneys' fees incurred in connection
therewith (and net of any notes payable by Borrower or any other Pledgor and
past due management fees paid in cash)) must be paid to Lender to be applied
against the principal balance of the Note. In connection with any such sale,
Lender agrees to provide, at the sole cost of Borrower, such partial release
instrument and/or and UCC release(s) as may be reasonably requested by Borrower
to effect or evidence such release, and to return any subject stock
certificate(s) to the applicable Pledgor.
28. Notices. All notices, requests and other communications to any party
-------
hereunder or under the Note or any other Loan Document shall be in writing
(including facsimile, telecopy or similar writing), may be personally served or
sent by facsimile, telecopier, mail or the express mail service of the United
States Postal Service, Federal Express or other equivalent overnight or
expedited delivery service, and (a) if given by personal service, facsimile. or
telecopier (confirmed by telephone), it shall be deemed to have been given upon
receipt; (b) if sent by facsimile or telecopier without telephone confirmation,
it shall be deemed to have been given twenty-four (24) hours after being given;
(c) if sent by mail, it shall be deemed to have been given upon the earlier of
(i) actual receipt, or (ii) three (3) Business Days after deposit in a
depository of the United States Postal Service, first class mail, postage
prepaid; (d) if sent by Federal Express, the express mail service of the United
States Postal Service or other equivalent overnight or expedited delivery
service, it shall be deemed given upon the earlier of (i) actual receipt or (ii)
twenty-four (24) hours after delivery to such overnight or expedited delivery
service, delivery charges prepaid, and properly addressed to Lender or Borrower.
For purposes hereof, the addresses and facsimile and telephone numbers of each
party shall be as set forth on the signature pages hereof. Any party may, by
proper
Page 9
<PAGE>
written notice hereunder to the other parties, change the address to which
notices shall thereafter be sent to it.
29. Right to File as Financing Statement. Lender shall have the right at
------------------------------------
any time to execute and file this Pledge Agreement as a financing statement, but
the failure of Lender to do so shall not impair the validity or enforceability
of this Pledge Agreement or the Security Interest.
30. Waiver of Certain Rights. (a) To the full extent that it may
------------------------
lawfully so agree Pledgors agree that Pledgors will not at any time plead, claim
or take the benefit of any appraisement, valuation, stay, extension, moratorium
or redemption law now or hereafter in force in order to prevent or delay the
enforcement of this Pledge Agreement, or the absolute sale of all or any part of
the Pledged Interests or the possession thereof by any purchaser at any sale
hereunder, and Pledgors hereby waive the benefit of all such laws to the extent
Pledgors lawfully may do so. Each right, power and remedy of Lender provided for
in this Pledge Agreement or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power or remedy provided for in this Pledge Agreement or
now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise or beginning of the exercise by Lender of any one or more of such
rights, power or remedies shall not preclude the simultaneous or later exercise
by Lender of any or all such other rights, powers or remedies. No failure or
delay on the part of Lender to exercise any such right, power or remedy and no
notice or demand which may be given to or made upon Pledgors by Lender with
respect to any such remedies shall operate as a waiver thereof, or limit or
impair Lender's right to take any action or to exercise any power or remedy
hereunder, under the Note or under any of the other Loan Documents, without
notice or demand, or prejudice its rights as against Pledgors in any respect.
(b) Except for any notices required hereunder, or pursuant to specific
provisions of the Note or any other Loan Document, each Pledgor hereby waives
diligence, presentment, demand, protest and notice of any kind whatsoever in
respect of the Note (including, without limitation, notice of intent to
accelerate and of acceleration), as well as any requirement that Lender exhaust
any right or remedy or take any action in connection with the Note or any of the
other Loan Documents before exercising any right or remedy under this Pledge
Agreement. The obligations of Pledgors hereunder shall not be affected or
impaired by reason of the happening from time to time of any of the following,
although without notice to or the consent of Pledgors:
(i) the renewal or extension of the maturity of or the acceptance
of partial payments with respect to any and all amounts due and owing under
the Note or any other Loan Document, or any part thereof;
(ii) the alteration in any manner of the terms of the Note or any of
the other Loan Documents or any part thereof either as to the maturities
thereof, rates of interest, methods of payment, parties thereto or
otherwise;
(iii) the waiver by Lender of the performance or observance by any
Pledgor of any of its agreements, covenants, terms or conditions contained
herein or in the Note or in any of the other Loan Documents;
(iv) the voluntary or involuntary liquidation, dissolution, sale of
all or substantially all of the assets, marshaling of assets and
liabilities, receivership,
Page 10
<PAGE>
conservatorship, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, winding up, or other similar
proceedings affecting any Pledgor;
(v) the release by operation of law or otherwise of any of the
other obligors from the performance or observance of any of the agreements,
covenants, terms or conditions contained in the Note or in any of the other
Loan Documents (except to the extent, if any, that the obligations of
Pledgors hereunder are specifically affected pursuant to or in connection
with any such release); or
(vi) the release of any security for the Notes, whether under this
Pledge Agreement or any of the other Loan Documents (except to the extent,
if any, that the obligations of Pledgors hereunder are specifically
affected pursuant to or in connection with any such release).
31. Amendments. Subject to Section 23 hereof, this Pledge Agreement may
---------- ----------
be amended only by an instrument in writing executed jointly by Pledgors and
Lender and supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.
32. Multiple Counterparts. This Pledge Agreement may be executed in any
---------------------
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which shall constitute, collectively, one agreement, and
separate counterpart signature pages signed by any signatories hereto may be
assembled together to make a fully signed agreement; but, in making proof of
this agreement, it shall not be necessary to produce or account for more than
one such counterpart.
33. Parties Bound; Assignment. This Pledge Agreement shall be binding on
-------------------------
Pledgors and Pledgors' successors and assigns and shall inure to the benefit of
Lender and its successors and assigns.
34. Invalid Provisions. If any provision of this Pledge 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, this Pledge
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and the remaining
provisions hereof 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 a part of this Pledge Agreement
a provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
35. No Control by Lender. Notwithstanding anything herein to the
--------------------
contrary, this Pledge Agreement, the Note and the other Loan Documents, and the
transactions contemplated hereby and thereby, do not and will not constitute,
create or have the effect of constituting or creating, directly or indirectly,
the actual or practical ownership of any of the Companies by Lender, or control,
affirmative or negative, direct or indirect, by Lender over the management or
any other aspect of the day-to-day operation of the Companies, which ownership
and control remains exclusively and at all times in each of the Pledgors and/or
the Companies.
36. Paragraph Headings. The paragraph headings used in this Pledge
------------------
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
Page 11
<PAGE>
37. Consent to Jurisdiction. Each Pledgor hereby irrevocably submits to
------------------------
the jurisdiction of any Federal court sitting in New York County over any action
or proceeding arising out of or relating to this Pledge Agreement, the Note or
any of the other Loan Documents, and each Pledgor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such Federal court. Each Pledgor also irrevocably consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to such Pledgor at the address shown on the signature page hereof.
Each Pledgor agrees that a final judgment on any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
38. Agreement to Supplement. Pledgors acknowledge and agree that this
-----------------------
Pledge Agreement may be amended and supplemented from time to time to (a) add
additional Pledgors, and (b) specifically include a description of all Pledged
Interests subject hereto subsequent to the date hereof, and Lender shall be
entitled to supplement Schedule A and/or Exhibit A from time to time, without
---------- ---------
any action or joinder of the Pledgors, to reflect the addition of all such
additional Pledgors and/or Pledged Interests. Lender shall have a valid first
priority security interest in all additional Pledged Shares or other Pledged
Interests that come into existence after the date hereof, whether or not
reflected on a supplement to Schedule A and/or Exhibit A. Pledgors hereby agree
---------- ---------
to execute, deliver to Lender and cause the filing of all stock certificates,
stock powers, financing statements and other documents and to take such further
action as deemed necessary in Lender's discretion with respect to each such
additional Pledged Shares to ensure the rights of Lender hereunder with respect
thereto.
39. Governing Law. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THE PARTIES AGREE THAT THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
ANY ISSUE RELATING TO THIS PLEDGE AGREEMENT ANY OF THE OTHER RELATED DOCUMENTS
AND THE TRANSACTIONS TO WHICH THIS PLEDGE AGREEMENT RELATES, INCLUDING THE
VALIDITY OR ENFORCEABILITY OF THIS PLEDGE AGREEMENT AND ANY OTHER AGREEMENT
RELATING TO THE TRANSACTION OR A PROVISION OF THIS NOTE OR ANY OTHER RELATED
AGREEMENT. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE TRANSACTIONS TO WHICH
THIS PLEDGE AGREEMENT RELATES BEAR A REASONABLE RELATION TO THE STATE OF NEW
YORK, AND THAT THE LAWS, OTHER THAN CONFLICT OF LAWS RULES, OF NEW YORK SHALL
GOVERN ANY ISSUE REGARDLESS OF WHETHER THE APPLICATION OF THAT LAW IS CONTRARY
TO A FUNDAMENTAL OR PUBLIC POLICY OF THE STATE OF TEXAS OR OF ANY OTHER
JURISDICTION.
40. Complete Agreement. THIS PLEDGE AGREEMENT AND THE NOTE REPRESENT THE
------------------
FINAL AGREEMENT BY AND AMONG PLEDGORS AND LENDER WITH RESPECT TO THE LOAN AND
THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF PLEDGORS AND LENDER. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN PLEDGORS AND LENDER.
Page 12
<PAGE>
EXECUTED effective as of the date first above written.
ADDRESS FOR ALL PLEDGORS: PLEDGORS:
- ------------------------ --------
c/o Physician Resource BORROWER:
Group,Inc. --------
14800 Landmark Blvd.,
Suite 500 PHYSICIAN RESOURCE GROUP, INC., a Delaware
Dallas, Texas 75240 Corporation
Attn: Lane Edenburn
Telephone:(972) 892-7200 By:
Fax:(972) 892-7299 -----------------------------------------
Name: Mike Yeary
Title: President
SUBSIDIARY PLEDGORS:
-------------------
___________________________________
Mike Yeary, in his capacity as Vice
President of each of the following
Subsidiary Pledgors:
PRG PAYROLL, INC.
PHYSICIANS RESOURCE GROUP I, LTD.
PRG HOLDINGS, INC.
PHYSICIANS RESOURCE GROUP INVESTMENTS, INC.
PHYSICIANS RESOURCE GROUP REALTY, INC.
PRG REALTY II, INC.
PRG SURGERY, INC.
EYECORP, INC.
SOUTHERN TENNESSEE SURGERY CENTER, INC.
THE EYEPA, INC.
EYECARE RESOURCE, INC.
JOHNNY JUSTICE, INC.
RIVERGATE ANESTHESIA, INC.
RIVERGATE SURGICAL CENTER, INC.
AMERICAN OPHTHALMIC, INC.
AMERICAN OPHTHALMIC OF ALABAMA, INC.
AMERICAN OPHTHALMIC OF DOTHAN, INC.
AMERICAN OPHTHALMIC OF LAS VEGAS, INC.
AMERICAN OPHTHALMIC OF NEVADA, INC.
AMERICAN OPHTHALMIC OF RENO, INC.
AMERICAN OPHTHALMIC OF TEXAS, INC.
AMERICAN OPHTHALMIC OF SAN ANTONIO, INC.
Page 13
<PAGE>
AMERICAN OPHTHALMIC OF SOUTHEAST TEXAS, INC.
AMERICAN OPHTHALMIC OF TEMPLE, INC.
AMERICAN OPHTHALMIC OF CENTRAL FLORIDA, INC.
AMERICAN OPHTHALMIC OF CORAL GABLES, INC.
AMERICAN OPHTHALMIC OF TALLAHASSEE, INC.
CENTRAL FLORIDA EYE SURGERY ASSOCIATES, INC.
FORT LAUDERDALE EYE INSTITUTE, INC.
AOI NETWORK, INC.
GLENDALE EYE INC.
AMERICAN SURGERY CENTERS OF ALABAMA, INC.
AMERICAN SURGERY CENTERS OF GLENDALE, INC.
AMERICAN SURGERY CENTERS OF SARASOTA, INC.
AMERICAN SURGERY CENTERS OF SOUTH FLORIDA, INC.
AMERICAN SURGERY CENTERS OF CORAL GABLES, INC.
AMERICAN SURGERY CENTERS OF TALLAHASSEE, LTD.
AMERICAN SURGERY CENTERS OF TALLAHASSEE, INC.
AMERICAN SURGERY CENTER OF LAS VEGAS, INC.
AMERICAN SURGERY CENTERS OF SAN ANTONIO, INC.
CENTRAL TEXAS DAY SURGERY CENTER, LTD.
AMERICAN SURGERY CENTERS OF TEMPLE, INC.
PRG ARIZONA, INC.
PRG ARIZONA II, INC.
PRG ARKANSAS, INC.
PRG CALIFORNIA, INC.
PRG CALIFORNIA I, INC.
PRG CALIFORNIA II, INC.
PRG CALIFORNIA III, INC.
PRG CALIFORNIA IV, INC.
SUPERIOR EYE CARE, INC.
PRG CALIFORNIA VI, INC.
PRG FLORIDA, INC.
G.C.R. INVESTORS
CENTRAL FLORIDA EYE ASSOCIATES
Page 14
<PAGE>
PRG FLORIDA I, INC.
PRG FLORIDA II, INC.
PRG FLORIDA IV, INC.
PRG FLORIDA V, INC.
PRG FLORIDA VI, INC.
PRG FLORIDA VII, INC.
PRG FLORIDA VIII, INC.
PRG FLORIDA IX, INC.
PRG FLORIDA X, INC.
PRG FLORIDA XI, INC.
PRG FLORIDA XII, INC.
MELBOURNE EYE ASSOCIATES, INC.
MELBOURNE EYE ASSOCIATES OF BREVARD, INC.
PRG FLORIDA XIII, INC.
PRG FLORIDA XIV, INC.
PRG GEORGIA, INC.
PRG ILLINOIS I, INC.
PRG ILLINOIS II, INC.
PRG ILLINOIS III, INC.
PRG ILLINOIS IV, INC.
PRG KENTUCKY, INC.
PRG KENTUCKY I, INC.
PRG LOUISIANA, INC.
PRG NEVADA, INC.
PRG NEVADA I, INC.
PRG NEVADA II, INC.
PRG NEVADA III, INC.
PRG NEVADA IV, INC.
PRG NEVADA CBO V, INC.
PRG NEW JERSEY, INC.
PRG NEW JERSEY II, INC.
PRG NEW YORK, INC.
PRG NORTH CAROLINA, INC.
PRG OHIO, INC.
PRG OHIO II, INC.
PRG OHIO III, INC.
PRG OHIO, L.P.
PRG OHIO IV, INC.
PRG OHIO V, INC.
PRG OHIO VI, INC.
PRG OKLAHOMA, INC.
PRG OKLAHOMA I, INC.
PRG PENNSYLVANIA, INC.
PRG SOUTH CAROLINA, INC.
PRG TENNESSEE, INC.
PRG TENNESSEE I, INC.
PRG TENNESSEE II, INC.
PRG TENNESSEE III, INC.
Page 15
<PAGE>
SUN VALLEY ACQUISITION CORPORATION
TEXAS PRG, INC.
TEXAS PRG I, INC.
TEXAS PRG II, INC.
TEXAS PRG III, INC.
TEXAS PRG IV, INC.
TEXAS PRG V, INC.
TEXAS PRG VI, INC.
TEXAS PRG VII, INC.
TEXAS PRG VIII, INC.
TEXAS PRG IX, INC.
TEXAS PRG X, INC.
TEXAS PRG XI, INC.
TEXAS PRG XII, INC.
MT. PLEASANT SURGICAL CENTER, LTD.
TEXAS PRG XIII, INC.
TEXAS PRG XV, INC.
TEXAS PRG XVII, INC.
TEXAS PRG XVIII, INC.
TEXAS PRG XIX, INC.
Page 16
<PAGE>
ADDRESS: LENDER:
- ------- ------
M.D. Sass Corporate M.D. SASS CORPORATE RESURGENCE
Resurgence Partners, L.P. PARTNERS, L.P., a Delaware Limited Partnership
10 New King Street
White Plains, New York By:_____________________________
_________________________ Name_____________________
Attn:____________________ Title_____________________
Telephone:_______________
Fax:____________________
Page 17
