EXHIBIT 10.24
ASSET SALE AND PURCHASE AGREEMENT
SALE AND PURCHASE AGREEMENT
BY AND BETWEEN
ACME CORPUS CHIROPRACTIC CLINIC, LLC
LAREDO FAMILY ENTERPRISES, LLC
ACME CHIROPRACTIC CLINIC, LLC
AND
AMERICAN HEALTHCHOICE, INC
ASSET SALE AND PURCHASE AGREEMENT
This Sale and Purchase Agreement ("Agreement") dated as of September 1,
2000, by and between American HealthChoice, Inc., a New York Corporation
with its main offices located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ("Purchaser"), and Acme Corpus Chiropractic Clinic,
LLC, a Texas limited liability company, located ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ("Corpus"), Laredo Family Enterprises, LLC, located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ("Laredo"), Acme Chiropractic,
LLC, located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (San
▇▇▇▇▇▇) and all three collectively as ("Sellers").
INTRODUCTION
Sellers desire to sell and Purchaser desires to purchase all of the Assets
as set forth herein of Acme Corpus Chiropractic Clinic, LLC, Laredo Family
Enterprises, LLC, Acme Chiropractic, LLC (the "Companies") on the terms
and conditions set forth in this Agreement.
In consideration of the mutual promises of the parties; in reliance on the
representations, warranties, covenants, and conditions contained in this
Agreement; and for other good and valuable consideration, the parties agree
as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Accounting Period" shall mean the Period of September 1, 2000 to
August 31, 2001 and September 1, 2001 to August 31, 2002.
"Acquisition Documents" shall mean the documents described under
Section 2.7 herein.
"Action" shall mean any action, suit, litigation, complaint,
counterclaim, claim, petition, mediation contest, or administrative
proceeding, whether at law, in equity, in arbitration or otherwise, and
whether conducted by or before any Government or other Person.
"Assets" shall mean the Assets listed on Schedule 1.1 attached as part
of Exhibit "A" and shall not include any asset not so identified.
"Assumed Liabilities" shall mean (i) all obligations of Sellers that
accrue after the Closing under the terms of the Contracts, (ii) all
obligations of Sellers under the Contracts that accrue prior to the Closing
but which are not due for payment until after the Closing and which are
taken into account in computing the Purchase Price pursuant to Section 2.3,
(iii) obligations arising after the Closing under any Permits which are
assigned to Purchaser, (iv) all Property Taxes and all other obligations
with respect to the Assets that accrue after the Closing, (v) all accounts
payable as of September 1, 2000, except as provided for herein, (viii)
accrued vacation of Personnel assumed pursuant to Section 6.3(c), and (ix)
all contracts or leases for equipment and premises as set forth in Schedule
3.5 and employees in Schedule 3.13.
"Bankruptcy Proceeding" shall mean the Chapter 11 filing, Case No.
99-37314-HCA-11, filed on October 19, 1999 by Purchaser
"▇▇▇▇ of Sale and Assignment Agreement" shall mean an instrument in
substantially the form of Exhibit A hereto pursuant to which the Assets will
be transferred and assigned to Purchaser at the Closing and pursuant to
which Purchaser will assume the Assumed Liabilities.
"Business" shall mean the business of owning and operating the Clinics
as conducted prior to the Closing by Sellers.
"Clinics" shall mean the clinics: Acme Corpus Chiropractic Clinic, LLC,
a located ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇; Laredo Family
Enterprises, LLC, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇; Acme
Chiropractic, LLC, located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
"Closing" shall have the meaning set forth in Section 2.11 hereof.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to
any corresponding provision of future law.
"Consents" shall mean all consents, approvals, and estoppels of others
which are required to be obtained in order to effect the valid assignment,
transfer, and conveyance to Purchaser of the Material Contracts without
resulting in any default thereunder.
"Contracts" shall mean all contracts, agreements, real estate leases,
and leases of equipment or other personal property that relate exclusively
to the Business.
"Default" shall mean an event of default as defined in any contract or
other agreement or instrument, or any event which, with the passage of time
or giving of notice or both, would constitute an event of default or other
breach under such document or instrument.
"EBITDA" shall mean Net Clinic Collections less Clinic Expenses in
accordance with Generally Accepted Accounting Principles (GAAP).
"Effective Time" shall have the meaning set forth in Section 2.5
hereof.
"Financial Statements" shall mean the year-end financial statements or
any interim financial statements that the Sellers keep in their normal
course of business.
"Forum" shall mean any federal, state, local, municipal, or foreign
court, governmental agency, administrative body or agency, tribunal, private
alternative dispute resolution system, or arbitration panel.
"Government" shall mean any federal, state, local, municipal, or
foreign government or any department, commission, board, bureau, agency,
instrumentality, unit, or taxing authority thereof.
"Hazardous Material" shall mean all substances and materials designated
as hazardous or toxic as of the date hereof pursuant to any applicable
Environmental Law.
"Knowledge of Sellers" (or words of like effect) when used to qualify a
representation, warranty, or other statement shall mean the actual knowledge
of Sellers' executive officers.
"Leases" shall mean all of the existing leases as set forth on Schedule
3.5.
"Material Adverse Effect" or "Material Adverse Change" shall mean with
respect to the Purchased Assets any material adverse effect or change in the
condition (financial or otherwise), of the business, results of operations,
prospects, liabilities or the Purchased Assets, not of the Purchaser's
fault, that would prevent the Sellers from completing the transactions
contemplated by this Agreement, or any event or condition which would, with
the passage of time, constitute a Material Adverse Effect or Material
Adverse Change.
"Material Contracts" shall mean all Contracts that involve monetary
obligations of Sellers of more than $20,000 per year and that are not
cancelable by Sellers upon thirty days notice or less without penalty, a
list of which are set forth on Schedule 3.11.
"Minor Contracts" shall mean all Contracts that are not Material
Contracts.
"Net Clinic Collections" shall mean the greater of (i) sixty five (65%)
percent of patient ▇▇▇▇▇▇▇▇ or (ii) cash collections of patient ▇▇▇▇▇▇▇▇ for
the Accounting Period.
"Net Clinic Expense" shall mean expenses incurred by the clinic on an
accrual basis in accordance with GAAP. Clinic expenses include salaries and
wages, payroll taxes, health insurance premiums, contractor payments,
building rent and all other expenses attributable to the clinic. General
corporate expenses of Purchaser and expenses related to ▇▇. ▇▇▇▇▇▇▇'▇
employment are expressly not a clinic expense.
"Net Goal" shall mean Earnings Before Income, Taxes, Depreciation and
Amortization (EBITDA) to the Purchaser of One Million Five Hundred Thousand
Dollars ($1,500,000) for each Accounting Period of September 1, 2000 to
August 31, 2001 and for September 1, 2001 to August 31, 2002.
"Orders" shall mean all applicable orders, writs, judgments, decrees,
rulings, consent agreements, and awards of or by any Forum or entered by
consent of the party to be bound.
"Permits" shall mean all rights of Sellers under any license,
certificates of occupancy, and permits or approvals of any nature, from any
Government which relate exclusively to the Business, the Clinic, or the
Assets.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government, and any other legal entity.
"Personnel" shall mean all of the Physician and non-Physician employees
of Sellers employed at the Clinics, however in no way shall this definition
limit the assignment of the employment contracts assumed and assigned under
Schedule 3.13 and the Acquisition Documents.
"Physician" shall mean any individual who is a licensed chiropractor in
the state of Texas.
"Property Taxes" shall mean all ad valorem, real property, and personal
property taxes, all general and special private and public assessments, all
other property taxes, and all similar obligations pertaining to the Assets.
"Schedules" shall mean the numbered sections of the Schedule Section.
ARTICLE II - PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing Sellers shall sell, transfer,
and assign to Purchaser all of Sellers' right, title, and interest in and to
the Assets free and clear of any mortgage, security interest, lien, charge,
claim, or other encumbrance of any nature except the Assumed Liabilities,
and Purchaser shall purchase the Assets from Sellers for the Purchase Price
set forth in Section 2.3.
2.2 Assumption of Liabilities. As of the Effective Time, Purchaser
shall assume all of the Assumed Liabilities. Except for the Assumed
Liabilities, Purchaser does not hereby assume or agree to assume or pay any
obligations, liabilities, indebtedness, duties, responsibilities, or
commitments of Sellers or any other Person, of any nature whatsoever,
whether known or unknown, absolute or contingent, due or to become due.
Assumed Liabilities are set forth in Schedule 2.2.
2.3 Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be Six Million Dollars ($6,000,000), of which (i) Nine Hundred
Thousand ($900,000) shall be paid in cash at closing in a manner acceptable
to the Parties; and (ii) Five Million One Hundred Thousand Dollars
($5,100,000) shall be paid in equity at closing consisting of (a) Fourteen
Million shares (14,000,000) of American HealthChoice, Inc., (AHI) common
stock; and (b) two separate certificates, each for Ten Million Shares
(10,000,000), for the remaining balance of Twenty Million shares
(20,000,000) of American HealthChoice, Inc., (AHI) common stock.
2.4 Escrow Shares. The two certificates for the Twenty Million Shares
shall be placed in escrow (the "Escrow Shares") for possible redemption by
Purchaser. Until certain Escrow Shares are no longer redeemable by the
Purchaser and there are no adverse claims made by the Purchaser, and the
Escrow Shares have been beneficially held by Seller for at least two (2)
years, Purchaser agrees to give Seller a first lien security interest in the
Assets purchased pursuant to the Security Agreement and Financing Statement
attached hereto as Exhibit B (the "Security Agreement").
2.5 Redemption. Seller agrees to allow redemption of the Escrow Shares,
at par value ($0.001), to enable the Purchaser to purchase back the Escrow
Shares based on the EBITDA for the first and second Accounting Periods.
Redemption, if applicable, shall be as follows:
(a) The Seller agrees that the Clinics, if managed and operated
properly, should return, an EBITDA to the Purchaser of One Million Five
Hundred Thousand Dollars ($1,500,000) (the "Net Goal") for the period of
September 1, 2000 to August 31, 2001 (the "First Accounting Period"), and
the same for the following year of September 1, 2001 to August 31, 2002
(the "Second Accounting Period").
(b) Seller retains the right to inspect the books of Purchaser at
any reasonable time, and Purchaser shall provide to Seller quarterly
reports in reasonable form detailing the financial position of each
Clinic.
(c) As of September 1, 2000, Seller shall be entitled beneficial
ownership of the Escrow Shares. However, should Seller's combined Clinic
EBITDAs for the First Accounting Period not reach the One Million Five
Hundred Thousand Dollar ($1,500,000) Net Goal, the Purchaser shall divide
the EBITDA number actually reached in the First Accounting Period by the
Net Goal and then multiply this number against half or Ten Million
(10,000,000) of the Escrow Shares to arrive at the Nonredeemable Shares
(((Actual EBITA / $1,500,000) * 10,000,000) = Nonredeemable Shares). The
Purchaser then shall have the right to purchase back from the Seller the
difference between the Ten Million Shares (10,000,000) minus the
calculated Nonredeemable Shares. Examples of this calculation are
attached in the form of Schedule 2.5(c). The Purchaser shall then pay
the Seller par value at one tenth of one percent (.001) for each Escrow
Share redeemed.
(d) For the Second Accounting Period of September 1, 2001 to
August 31, 2002, if applicable, the Purchaser shall be entitled to redeem
the remaining Escrow Shares on September 1, 2002, in the same manner as
set forth under Section 2.5(c) above.
(e) Purchaser agrees that Seller is in fact the beneficial holder
of the Escrow Shares as defined under the Securities Act of 1933, as
amended. The intent of the Escrow Agreement is not to retain any
ownership interests in the Escrow Shares but to only guarantee the right
to purchase back from Seller a prorated amount of shares should Seller
not meet the Net Goal.
2.6 Purchase Price Adjustment. Purchaser agrees to adjust the
purchase price for the Assets if the average price of the American
HealthChoice, Inc., (AHI) Common Stock remains below fifteen cents ($0.15)
per share during the preceding ninety trading days of the beginning of each
Accounting Period. Said Price Adjustment, if applicable, shall be made by
issuing additional AHI Common Shares to Seller, at Purchaser's cost, on a
prorated basis as follows:
(a) The price of the AHI Common Shares shall be determined by
average of the closing bid price of the Common Stock, as reported by Over
The Counter Bulletin Board (OTCBB) for the ninety trading days
immediately preceding the first adjustment date of September 1, 2001 (the
"First Adjustment Price") and for the second adjustment date of September
1, 2002 (the "Second Adjustment Price").
(b) The first Adjustment Date of September 1, 2001 will only
apply to the Fourteen Million Shares (14,000,000) issued under Section
2.3(ii)(a) and one certificate of Ten Million Escrow Shares under Section
2.3(ii)(b) after a determination for the amount of shares from the said
Ten Million Escrow Shares that are Nonredeemdable Shares under Section
2.5(c), for a combined amount of shares eligible for adjustment (the
"First Adjustable Shares"). The Purchaser shall then take the per share
difference of the First Adjustment Price and Fifteen Cents ($0.15) and
multiply this difference times the First Adjustable Shares to arrive at
the "First Net Adjusted Price." Purchaser shall then divide the First
Net Adjusted Price by the First Adjustment Price to determine the amount
of Adjusted Shares to be issued to Sellers for the First Purchase Price
Adjustment.
(c) The second Adjustment Date of September 1, 2002 will only
apply to the remaining certificate of Ten Million Escrow Shares under
Section 2.3(ii)(b) after a determination for the amount of Nonredeemdable
Shares under Section 2.5(d) (the "Second Adjustable Shares"). The
Purchaser shall then take the per share difference of the Second
Adjustment Price and Fifteen Cents ($0.15) and multiply this difference
times the Second Adjustable Shares to arrive at the "Second Net Adjusted
Price." Purchaser shall then divide the Second Net Adjusted Price by the
Second Adjustment Price to determine the amount of Adjusted Shares to be
issued to Sellers for the Second Purchase Price Adjustment.
(d) Seller Agrees that any Adjusted Shares issued shall be
restricted securities and not eligible for future adjustments.
2.7 Deliveries at the Closing. (a) At the Closing, Sellers shall
deliver to Purchaser the following:
(i) The ▇▇▇▇ of Sale and Assignment Agreement, duly executed by
Sellers;
(ii) Any other documents that Purchaser may reasonably request
prior to the Closing in order to effectuate the transactions
contemplated hereby.
(b) At the Closing Purchaser shall deliver to Sellers the following:
(i) The funds constituting the Asset Purchase Price;
(ii) The ▇▇▇▇ of Sale and Assignment Agreement, duly executed by
Purchaser;
(iii) The Escrow Shares in the name previously designated by Seller
to the Escrow Agent;
(iv) Employment Contract for ▇▇. ▇▇▇▇▇▇▇, DC;
(v) The Security Agreement; and
(vi) Any other documents that Sellers may reasonably request prior
to the Closing; and
2.8 Transfer of Operations. Purchaser shall be entitled to immediate
possession of, and to exercise all rights arising under, the Assets from
12:01 on September 1, 2000, and operation of the Assets shall transfer at
such time, except as otherwise provided herein. The risk of loss or damage
by fire, storm, flood, or other acts of God shall be in all respects upon
Sellers prior to the Effective Time and upon the Purchaser thereafter.
2.9 Employment Of ▇▇. ▇▇▇▇▇▇▇. To ensure proper management of the Assets
purchased, ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall receive an employment contract
attached as Exhibit C.
2.10 Closing. The closing of the transactions described in this Article
II (the "Closing") shall take place at the Purchaser's Irving, Texas, office
or other location that the Parties may mutually agree upon contemporaneous
with the execution hereof.
2.11 Allocation of Purchase Price. The Purchase Price shall be allocated
among the various Assets as set forth on Exhibit D hereof, which Exhibit
shall be prepared by the parties and attached hereto at Closing. Each party
hereby agrees that it will not take a position on any income tax return,
before any governmental agency charged with the collection of any income
tax, or in any judicial proceeding that is inconsistent with the terms of
this Section 2.11, The parties shall complete a Form 8594 as of the Closing
based upon Exhibit D.
2.12 Further Assurances. From time to time after the Closing at
Purchaser's request and expense, Sellers shall execute, acknowledge, and
deliver to Purchaser such other instruments of conveyance and transfer and
shall take such other actions and execute and deliver such other documents,
certifications, and further assurances as Purchaser may reasonably require
to vest more effectively in Purchaser, or to put Purchaser more fully in
possession of, any of the Assets, or to better enable Purchaser to complete,
perform and discharge the Assumed Liabilities. Each party hereto will
cooperate with the other and execute and deliver to the other party hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence, and confirm the intended purpose of this
Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to the limitations and exceptions set forth in this Agreement
and in the Schedules attached hereto, to the best of Sellers' knowledge,
Sellers hereby represents and warrants to Purchaser as follows:
3.1 Organization and Good Standing. Sellers are duly organized
validly existing and in good standing under the laws of the State of Texas.
Sellers have the corporate power to execute, deliver and perform this
Agreement and all other agreements, instruments and documents to be
delivered herewith or pursuant hereto and the consummation of the
transactions provided for herein and all such agreements, documents and
instruments are the valid and binding obligation of Sellers enforceable in
accordance with their respective terms.
3.2 Authorization. The execution, delivery and performance by
Sellers of this Agreement and the documents described in Section 2.7 to
which Sellers are or will become a party (collectively with this Agreement,
the "Acquisition Documents") will not violate any provision of law or result
in the breach of, or constitute a default under, or result in the creation
of any lien, charge or encumberance upon any of the Assets being sold. The
Acquisition Documents to which Sellers are a party have been or at Closing
will have been duly authorized by the required corporate action and will be
duly executed and delivered by Sellers and constitute or will constitute the
legal, valid and binding obligations of Sellers, enforceable in accordance
with their respective terms.
3.3 Litigation. There are no non-disclosed actions, suits, litigation,
claims, administrative or other proceedings ("Action") or governmental
investigations pending or, to Sellers' knowledge, which would prevent the
transaction contemplated by this Agreement. The consummation of the
transactions contemplated by this Agreement will not require any further
consent, approval, authorization or order of any court or governmental
authority.
3.4 Assets. Sellers will convey to Purchaser at Closing, good and
marketable title to all of the Assets, free and clear of all claims, liens,
agreements, security interests and encumbrances of any. The equipment and
machinery of Sellers are in good repair and operating condition and have
been maintained in the ordinary course of business. Assets are sold as is
where is.
3.5 Leases. Schedule 3.5 contains a complete and accurate description
of the terms of all Leases pursuant to which Sellers lease real or personal
property, including a general description of the leased property or items,
the term, the monthly rent, any and all renewal options, and any
requirements for the consent of third parties to assignments of the Leases.
All the Leases are valid, binding and enforceable in accordance with their
terms and in full force and effect. Sellers have no knowledge of the
occurrence of any event of default by Sellers under the Leases which (which
with or without notice, lapse of time or both or the happening or occurrence
of any other event) would constitute a default thereunder on the part of
Sellers. Purchasers agree to reimburse Sellers for all lease deposits.
3.6 Compliance with Laws. To the Sellers' knowledge, the Sellers have
not violated and are in compliance with all laws, statutes, ordinances,
regulations, rules and orders of any foreign, federal, state or local
government and any other governmental department or agency, and any
judgment, decision, decree or order of any court or governmental agency,
department or authority, relating to the Assets or the Practice, including,
without limitation, Environmental Laws and the Medicare and Medicaid self-
referral ("▇▇▇▇▇"), fraud and abuse provisions of the Social Security Act or
any similar provisions of any other federal, state and local laws relating
to kickbacks, illegal referrals, illegal ▇▇▇▇▇▇▇▇ or the like. Sellers have
not received notice that, or otherwise been advised that, it is not in
compliance with any governmental or regulatory requirements.
3.7 Financial Information. Schedule 3.7 contains the financial
information pertaining to the Clinics, all of which is accurate and complete
in all material respects as management tools. Such financial information in
Schedule 3.7 have been prepared by Sellers' in-house accountant and audited
by an independent auditor for the twelve months ended December 31, 1999,
approved by Purchaser, and each such financial information represents fairly
in all material respects as of its date the financial position of the
Sellers. Said financial information shall also contain similar unaudited
financial records for the eight months ended August 31, 2000.
3.8 No Adverse Change. Since the date of the financial information
described in Schedule 3.7, there has been no Material Adverse Change in the
Assets, nor has there been any conducting of the Clinics other than in the
ordinary course of business.
3.9 Permits, Licenses, Certifications, and Authorizations. Sellers have
all necessary licenses, permits, certificates, authorizations, consents, and
approvals required by law or any governmental authority or agency for the
conduct of the Practice as and where presently conducted.
3.10 Contracts. (a) Each Material Contract is a valid agreement, without
any material default of Sellers thereunder, and to the knowledge of Sellers,
without any default on the part of any other party thereto. If an event of
default has occurred Sellers agree to remedy any default. To the knowledge
of Sellers, no event or occurrence has transpired which with the passage of
time or giving of notice or both will constitute a default under any
Material Contract. A list of each Material Contract and every amendment
thereto or other agreement or document relating thereto is set forth as
Schedule 3.10 to this Agreement. True and correct copies of the Material
Contracts (and any amendments thereto) have been or will be provided to
Purchaser at least five days prior to Closing.
(b) Except as set forth in Schedule 3.10, no Material Contract has
been assigned by Sellers or any interest granted therein by Sellers to any
third party, or is subject to any mortgage, pledge, hypothecation, security
interest, lien, or other encumbrance or claim, except the security interests
and liens in favor of the granting party, all of which shall be released or
assumed at or prior to Closing.
3.11 Non-Contravention. Subject to obtaining the consents to assignment
of the Material Contracts set forth on Schedule 3.10, the execution,
delivery and performance of this Agreement will not violate or result in a
breach of any term of Sellers' Articles of Incorporation or Bylaws, result
in a breach of any agreement or other instrument to which Sellers are a
party (except for defaults under Minor Contracts where the consent of the
other party or parties to such contract to the assignment thereof will not
be obtained) or violate any law or any order, rule, or regulation applicable
to Sellers of any Forum having jurisdiction over Sellers; and will not
result in the creation or imposition of any lien, charge, or encumbrance of
any nature whatsoever upon any of the Assets. Except as set forth on
Schedule 3.12 and except for consents required under Minor Contracts, and
approval by the Bankruptcy Court for the Northern District of Texas, Dallas
Division, the execution, delivery and performance of this Agreement and the
other Acquisition Documents executed in connection herewith, and the
consummation of the transactions contemplated hereby and thereby do not
require any filing with, notice to or consent, waiver or approval of any
third party, including but not limited to, any Forum.
3.12 Employment Contracts, Etc. Except as listed on Schedule 3.12,
Sellers are not a party to any written employment agreements related to the
employees at the Clinic (or any oral agreements providing for employment
other than employment "at will") or any deferred compensation agreements.
3.13 Employee Benefits. Schedule 3.13 hereto contains a true and
complete list of all the following agreements or plans of Sellers which
pertain to any of the Personnel:
3.14 Employees. Schedule 3.14 sets forth a list, by location, of the
Sellers' Personnel, stating with respect to each, the name, date of hire and
rate of compensation. Except as described in Schedule 3.14, to the
knowledge of Sellers, there are no claims or disputes pending with any
employee constituting Personnel regarding workers' compensation,
unemployment benefits, discrimination (including discrimination based on any
disability).
3.15 No Other Agreements to Sell Assets. Neither Sellers nor any of
Sellers' employees have any commitment or legal obligation, absolute or
contingent, to any other person or firm other than Purchaser to sell, assign
or transfer any of the Assets or to enter into or cause the entering into of
any agreement with respect to any of the foregoing.
3.16 Utilities. The Clinic is supplied with utilities (including water,
sewage, disposal, electricity, gas and telephone) and other utility services
necessary for the operation of the Clinic as currently operated. Sellers
will consent to the transfer and assignment of the utility ▇▇▇▇ and deposits
for the utilities. Purchaser agrees to reimburse Sellers for the Utility
Deposits.
3.17 Accounts Receivable. The Accounts Receivable, to the best of
Sellers' knowledge represent bona fide claims of Sellers against debtors for
gross sales and services performed or other charges, on a accrual basis,
arising on, or before the date of this Agreement, and said Accounts
Receivable are subject to no known defenses, counterclaims or rights of
setoff, except for contractual adjustments, bad debt reserve and adjustments
done in the ordinary course of Sellers' business. However, the both parties
agree that they are very familiar with the chiropractic personal injury
business and recognize that personal injury account collections are
difficult and are subject to disagreements with attorneys, insureds, and
patients. Therefore, to assist with collection of the Accounts Receivable
assets, and for both parties to obtain the benefits of this Agreement,
Purchaser will retain ▇▇. ▇▇▇▇▇▇▇ to oversee the Clinics and be entitled to
redemption of shares as set forth herein.
3.18 Material Misstatements Or Omissions. No representations or
warranties by Sellers in this Agreement, nor any document, exhibit,
statement, certificate or schedule furnished to Purchaser pursuant of this
Agreement, or in connection with the transactions contemplated by this
Agreement, to the best of Sellers' knowledge, contains or will contain any
untrue statement of material fact, or omits to state any material fact
necessary to make the statements or facts contained therein not misleading.
To the best of Sellers' knowledge, Sellers have disclosed all events or
conditions materially affecting the Assets.
3.19 Taxes. Sellers hereby warrants that it shall remain full liable for
any and all federal, state, and local taxes, together with any penalties,
interest, and other amounts pertaining to the Sold Assets prior to and
including the Closing Date. There are no known disputes as to taxes payable
by Sellers that might affect the sold Assets except as it relates to
Personal Property Tax and Sellers specifically acknowledges that they will
be responsible for this tax, and if need be, pay any disputed Personal
Property Tax so as not to affect the Assets. Purchaser shall be liable for
all taxes accruing after the Closing Date.
3.20 Medical Records. Sellers have maintained the confidentiality of all
the Medical Records as required by and in conformance with all applicable
federal and state laws and regulations. Sellers have not transferred any
Medical Records to any individual or entity against the request of any
patient prohibiting Sellers from transferring his or her patient information
or records.
ARTICLE IV - COVENANTS OF SELLERS
4.1 Transfer of Licenses and Permits. Sellers shall use commercially
reasonable efforts to assist Purchaser with the assumption, transfer, or
reissuance of any and all Permits required for the operation of the Clinics,
which in good faith it was not able to obtain prior to the Date of Closing.
4.2 Liabilities of Sellers. All liabilities of Sellers related to the
Assets that are not Assumed Liabilities will be paid by Sellers as they come
due, which due date may be extended if the liability is contested by Sellers
in good faith or does not effect the transferability of the Asset. In the
event liability affects the Asset and is contested, Sellers shall
immediately notify Purchaser in writing as to the reason for the contest.
4.3 Agreements Respecting Employees of Sellers. Sellers and Purchaser
shall cooperate in the transition of coverage of retained Personnel from
Sellers' health, medical, life insurance, and other welfare plans, to plans
maintained by Purchaser. Sellers shall handle all matters concerning the
health, medical, life insurance, and other welfare plans of any Personnel
not retained by Purchaser, including but not limited to Cobra notification.
Purchaser agrees to provide Sellers a list within one week of Closing of
any Personnel it does not retain.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
5.1 Due Diligence. Purchaser represents that it has completed its due
diligence and acknowledges that it has had full opportunity to review the
clinic book and financial reports, management, operations, and the audits,
without any problems or hindrance.
5.2 Authority. Purchaser has the corporate power to execute, deliver
and perform this Agreement and all other agreements, instruments and
documents to be delivered herewith or pursuant hereto and the consummation
of the transactions provided for herein and all such Agreements, documents
and instruments are the valid and binding obligation of Purchaser
enforceable in accordance with their respective terms. All requisite
corporate action has been taken by Purchaser to authorize (i) the execution,
delivery and performance of this Agreement and all other agreements,
instruments and documents to be delivered herewith or pursuant hereto and
(ii) the consummation of the transactions provided for herein.
5.3 Adverse Claims. Other than the Bankruptcy Proceeding, there are no
actions, suits, claims, administrative or other proceedings, or governmental
investigations pending or, to Purchaser's knowledge, threatened against
Purchaser which question or seek to prevent consummation of the transaction
herein contemplated, whether at law or in equity, or before any federal,
state, local, foreign or other governmental department, agency or
instrumentality.
5.4 Governmental and Other Consents. Other than the Bankruptcy
Proceeding, no consent, authorization, or approval of, or exemption by, or
filing with, any court or governmental body or authority is required in
connection with the execution, delivery and performance by Purchaser of this
Agreement or of any of the instruments or agreements herein referred to, or
the taking of any action herein contemplated. .
5.5 Disclosure. No representation or warranty made in this Agreement or
as provided herein contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein
not misleading. Purchaser also acknowledges that all relationships with the
Sellers have been disclosed to the AHI board and approved accordingly.
5.6 Non-Contravention. The execution and delivery of this Agreement and
the ▇▇▇▇ of Sale and Assignment Agreement by Purchaser do not and the
consummation by Purchaser of the transactions contemplated hereby and
thereby will not violate any law or agreement applicable to it.
5.7 Validity. This Agreement has been duly executed and delivered by
Purchaser, and constitutes the legal, valid, and binding obligation of
Purchaser, enforceable against it in accordance with its terms, subject to
general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
affecting the enforcement of creditors' rights. When the ▇▇▇▇ of Sale and
Assignment Agreement has been executed and delivered in accordance with this
Agreement, it will constitute the legal, valid, and binding obligation of
Purchaser, enforceable in accordance with its terms.
ARTICLE VI - COVENANTS OF PURCHASER
6.1 Purchaser Performance. After the Closing Date, Purchaser shall
promptly pay as they become due and otherwise perform all obligations under
the Assumed Liabilities and otherwise perform and fulfill all other
obligations with respect to the Assets pertaining to the period after the
Closing Date.
6.2 Confidentiality. In connection with the negotiation of this
Agreement, Sellers may disclose Confidential Information, as defined below
to Purchaser. Purchaser further agrees to maintain the confidentiality of
any and all Confidential Information of Sellers and not disclose any
Confidential Information to any Person other than such Person to whom
Confidential Information must be disclosed to effect the transactions and
who are bound by appropriate non-disclosure agreements or obligations.
Purchaser shall not use such Confidential Information for financial gain or
in any manner adverse to Sellers, except that Purchaser may use such
Confidential Information in connection with the ordinary course of operation
of the Clinic after Closing. The foregoing obligations shall not apply to
(i) any information which was known by Purchaser prior to its disclosure by
Sellers; (ii) any information which was in the public domain prior to the
disclosure thereof, (iii) any information which comes into the public domain
through no fault of Purchaser; (iv) any information which is disclosed to
Purchaser by a third party, other than an affiliate, having the legal right
to make such disclosure; or (iv) any information which is required to be
disclosed by Order of any Forum. For purposes of this Section,
"Confidential Information" shall mean any and all technical, business, and
other information which is (a) possessed or hereafter acquired by Sellers
and disclosed to Purchaser and (b) derives economic value, actual or
potential, from not being generally known to Persons other than Sellers,
including, without limitation, technical or non-technical data,
compositions, devices, methods, techniques, drawings, inventions, processes,
financial data, financial plans, product plans, lists of actual or potential
customers or suppliers, information regarding the business plans and
operations of Sellers, and the existence of discussions and negotiations
between the parties hereto relating to the terms hereof The restrictions of
this Section shall expire three years from the date hereof with respect to
any confidential business information that does not constitute a trade
secret under applicable law.
6.3 Sellers' Employees. (a) Purchaser shall, in its sole discretion,
offer employment to all Personnel upon terms and conditions substantially
similar to those provided by Sellers; however, Purchaser shall not be
required to provide any employee benefit provided by Sellers and shall be
free to initiate its own program of employee benefits.
(b) Purchaser shall maintain employee records transferred to Purchaser
hereunder for a period of not less than five (5) years and during that
period will afford Sellers reasonable access to such records during
Purchaser's normal business hours. Purchaser shall maintain the
confidentiality of such records and limit access thereto in accordance with
the law in a manner consistent with Purchaser's treatment of its employee
records.
ARTICLE VII - INDEMNIFICATION
7.1 Purchaser Claims. (a) Sellers shall indemnify and hold harmless
Purchaser, its officers, directors, agents, successors, assigns or
affiliates, from and against any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages not including
punitive, special or consequential damages or attorney fees, suffered or
incurred by any such party by reason of or arising out of any of the
following:
(i) the material breach by such Sellers of any representation or
warranty contained herein;
(ii) the non-fulfillment of any material covenant or agreement of such
Sellers contained herein; and
(iii) any liability or obligation of the Sellers not included in the
Assumed Liabilities;
(b) The amount of any liability of Sellers under this Section 7.1 shall
be computed net of any tax benefit to Purchaser from the matter giving rise
to the claim for indemnification hereunder and net of any insurance proceeds
received by Purchaser with respect to the matter out of which such liability
arose.
(c) The representations and warranties of Sellers contained in this
Agreement, the Schedules, or any certificate delivered by or on behalf of
Sellers pursuant to this Agreement or in connection with the transactions
contemplated herein shall survive the consummation of the transactions
contemplated herein and shall continue in full force and effect for a period
of one year ("Survival Period"). Anything to the contrary notwithstanding,
the Survival Period shall be extended automatically to include any time
period necessary to resolve a written claim for indemnification which was
made in reasonable detail before expiration of the Survival Period but not
resolved prior to its expiration, and any such extension shall apply only as
to the claims so asserted and not so resolved within the Survival Period.
Liability for any such item shall continue until such claim shall have been
finally settled, decided, or adjudicated.
(d) Purchaser shall provide written notice to Sellers of any claim for
indemnification under this Article as soon as practicable. Purchaser shall
make commercially reasonable efforts to mitigate any damages, expenses, etc.
resulting from any matter giving rise to liability of Sellers under this
Article.
(e) Notwithstanding any other provision of this Article VII, the
aggregate principal amount of the obligation of Sellers under this Article
VII shall not exceed the cash amount received and the return of equity
issued.
7.2 Defense of Third Party Claims. With respect to any claim by
Purchaser under Section 7.1, relating to a third party claim, Purchaser
shall provide Sellers with prompt written notice thereof in accordance with
Section 12.4 and Sellers may defend, in good faith and at its expense, by
legal counsel chosen by it, and Purchaser, at its expense, shall have the
right to participate in the defense of any such third party claim. So long
as Sellers are defending in good faith any such third party claim, Purchaser
shall not settle or compromise such third party claim. In any event
Purchaser shall cooperate in the settlement or compromise of, or defense
against, any such asserted claim.
7.3 Sellers' Claims. Purchaser shall indemnify and hold harmless
Sellers against, and in respect of, any and all damages, claims, losses,
liabilities, and expenses, including punitive, special or consequential
damages or attorney fees, which may arise out of: (i) any breach or
violation by Purchaser of any covenant set forth herein or any failure to
fulfill any obligation set forth herein, including, but not limited to the
obligation to satisfy the Assumed Liabilities; (ii) any breach of any of the
representations or warranties made in this Agreement by Purchaser; or (iii)
any claim by any Person for any brokerage or finder's fee or commission in
respect of the transactions contemplated hereby as a result of Purchaser's
dealings, agreement, or arrangement with such Person.
ARTICLE VIII - SETTLEMENTS OF DISPUTES
8.1 Settlement of Disputes. (a) Arbitration. All disputes with
respect to any claim for indemnification under this Article VIII and all
other disputes and controversies of every kind and nature between the
parties hereto arising out of or in connection with this Agreement shall be
submitted to arbitration pursuant to the following procedures:
(i) After a dispute or controversy arises, either party may,
in a written notice delivered to the other party, demand such
arbitration in accordance with the rules of the American Arbitration
Association ("AAA").
(ii) The arbitration hearing shall be held in Dallas, Texas
at a location designated by the AAA. The Commercial Arbitration Rules
of the AAA shall be used and the substantive laws of the State of Texas
(excluding conflict of laws provisions) shall apply;
(iii) An award rendered by the AAA pursuant to this
Agreement shall be final and binding on all parties to the proceeding,
shall deal with the question of costs of the arbitration and all
related matters, shall not award punitive or consequential damages, and
judgment on such award may be entered by either party in a court of
competent Jurisdiction; and
(iv) Except as set forth in subsection (b) below, the parties
stipulate that the provisions of this Section 8.1 shall be a complete
defense to any suit, action or proceeding instituted in any federal,
state, or local court or before any administrative tribunal with
respect to any controversy or dispute arising out of this Agreement.
The arbitration provisions hereof shall, with respect to such
controversy or dispute, survive the termination or expiration of this
Agreement.
(b) Emergency Relief. Notwithstanding anything in this Section 8.1 to
the contrary, either party may seek from a court any provisional remedy that
may be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy.
8.2 Exclusive Remedies. The rights and remedies of the parties under
this Article VIII shall be the sole and exclusive rights and remedies that
either party may seek for any misrepresentation, breach of warranty, or
failure to fulfill any covenant or agreement under this Agreement, except
that either party may seek specific performance or injunctive relief.
ARTICLE IX - CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Sellers at the Closing shall be subject to the
satisfaction of the following conditions precedent at Closing (each of
which may be waived by Sellers):
9.1 All representations and warranties of Purchaser contained herein
shall be true and correct in all material respects on the Closing Date as if
made on such date. All agreements of Purchaser contained herein shall have
been complied with in all material respects;
9.2 Purchaser shall execute, and deliver to Sellers the Security
Agreement (in the form of Exhibit B);
9.3 Purchaser shall execute, and deliver to Sellers an Employment
Contract;
ARTICLE X - CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligations Of Purchaser at the Closing shall be subject to the
satisfaction of the following conditions precedent at Closing (each of which
may be waived by Purchaser):
10.1 Representations. All representations and warranties of Sellers
contained Closing Date as if made on such date.
10.2 Instruments of Conveyance and Transfer: Purchaser shall receive
from Sellers such bills of sale, endorsements, assignments, and other good
and sufficient instruments of conveyance and transfer as are effective to
transfer Sellers' title to the Assets to Purchaser as provided for in this
Agreement and immediately following the Closing, Sellers shall take or cause
to be taken all such steps as are necessary to put Purchaser in actual
possession and operating control of the Assets free and clear of all liens
and encumbrances.
10.3 Third Party Approvals. All required consents, authorizations or
approvals, or exemptions by any governmental authority or third party shall
have been obtained or made.
10.4 Accrued Vacation and Sick Pay. Evidence satisfactory to Purchaser
that all vacation and sick pay and other employee benefits ("Benefits") for
non-contract employees or "at will" employees, which Sellers employed and
are entitled to Benefits as a result of services provided to Sellers for the
period ending on August 31, 2000, have been paid or otherwise satisfied in
full.
ARTICLE XI - JOINT OBLIGATIONS
The parties further agree as follows:
11.1 Further Assurances. Sellers and Purchaser agree that they will,
upon request of the other at any time after the Closing Date and without
further consideration, execute and deliver such other documents and
instruments and take such other action as may reasonably be requested to
carry out more effectively the purpose and intent of this Agreement.
11.2 Transition. Sellers agree to take any reasonable action requested
by Purchaser in order to promote the smooth transition of the Asset sale.
ARTICLE XII - MISCELLANEOUS
12.1 Expenses. (a) Each party hereto shall pay its own legal,
accounting, and similar expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement, and
the consummation of the transactions contemplated hereby.
12.2 Contents of Agreement, Parties in Interest, etc. This Agreement
sets forth the entire understanding of the parties hereto with respect to
the transactions contemplated hereby and constitutes a complete statement of
the terms of such transaction. This Agreement shall not be amended or
modified except by written instrument duly executed by each of the parties
hereto. Any and all previous agreements and understandings between the
parties regarding the subject matter hereof, whether written or oral, are
superseded by this Agreement. Neither party has been induced to enter into
this Agreement in reliance on, and has not relied upon, any statement,
representation, or warranty of the other party not set forth in this
Agreement, or any certificate delivered pursuant to this Agreement.
12.3 Assignment and Binding Effect. Purchaser may not assign the right
to receive any of the Assets at Closing to any third party that would in any
way affect Sellers' rights and security hereunder. Subject to the
foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
successors and assigns of Sellers and Purchaser.
12.4 Notices. Any notice, request, demand, waiver, consent, approval,
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given only if delivered personally or sent by
telecopy or by first class registered or certified United States Mail, with
proper postage prepaid, as follows:
If to Purchaser, to:
American HealthChoice, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Sellers, to:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, D.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With copy to:
Dr. ▇▇▇▇ ▇▇▇▇▇▇▇▇, D.C.
5005 Nacahuita
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or to such other address or person as the addressee may specified in a
notice given to the sender as provided herein. Such notice, request,
demand, consent, approval or other communication will be deemed to have been
given as of the date actually delivered, or if mailed, four days after
deposit in the U. S. Mail properly addressed with adequate postage affixed.
12.5 TEXAS LAW TO GOVERN. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. VENUE SHALL BE DALLAS COUNTY
TEXAS.
12.6 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement, and
shall not affect in any way the meaning or interpretation of this Agreement.
12.7 Schedules and Exhibits. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
12.8 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.9 Public Announcements. Purchaser and Sellers will coordinate with
each other all press releases relating to the transactions contemplated by
this Agreement and, except to the extent required by law, refrain from
issuing any press release, publicity statement, or other public notice
relating to this Agreement or the transactions contemplated hereby without
providing the other party reasonable opportunity to review and comment
thereon.
12.10 Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event that any
ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party
hereto by virtue of the authorship of any of the provisions of this
Agreement.
12.11 Time. Time is and shall be of the essence of this Agreement.
12.12 Fax Signatures. This Agreement and any agreement or document
contemplated hereby may be signed and delivered by a party by facsimile,
such facsimile shall be deemed to be an original signature.
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first above written.
PURCHASER:
AMERICAN HEALTHCHOICE, INC.
______________________________
▇▇. ▇.▇. ▇▇▇▇▇▇, Chairman and CEO
SELLERS:
LAREDO FAMILY ENTERPRISES, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
SELLER
CORPUS CHIROPRACTIC CLINIC, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
_______________________________
Dr. ▇▇▇▇ ▇▇▇▇▇▇▇▇, D.C., Member
ACME CHIROPRACTIC CLINIC, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
EXHIBIT TABLE OF CONTENTS
EXHIBIT TITLE
------- -----
A ▇▇▇▇ of Sale and Assignment Agreement with Asset
List and Assumed Liabilities
B Security Agreement
C Allocation of Purchase Price
D Joint letter to at-will employees terminating
employment with Clinics and hired by Purchaser.
E Assignment and Assumption Agreements with
landlord and equipment leases.
F Independent Contractor Agreement for ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
EXHIBIT A
▇▇▇▇ OF SALE AND ASSIGNMENT AGREEMENT
FOR VALUE RECEIVED, Acme Corpus Chiropractic Clinic, LLC, Laredo Family
Enterprises, LLC, Acme Chiropractic, LLC , Texas entities ("Sellers"),
pursuant to that certain Asset Purchase Agreement dated September 1, 2000
(the "Asset Purchase Agreement"), between Sellers and American HealthChoice,
Inc., ("Purchaser"), hereby bargains, sells, transfers, assigns, conveys,
and delivers to Purchaser and its successors and assigns, all of Sellers'
right, title, and interest in, to, and under the Assets, free and clear of
any mortgage, security interest, lien, charge, claim, or other encumbrance
of any nature except the Assumed Liabilities (as set forth in Schedule 1.1
and attached hereto), including without limitation all of Sellers' rights
under the Material Contracts (as defined in Section 1.1 of the Asset
Purchase Agreement).
TO HAVE AND TO HOLD, all and singular, the Assets forever.
Purchaser hereby assumes and agrees in due course to pay and fully
satisfy and perform all of Sellers' obligations under the Assumed
Liabilities (as defined in Asset Purchase Agreement) when the same shall
become due and payable.
IN WITNESS WHEREOF, the Sellers and Purchaser have caused this ▇▇▇▇ of
Sale and Assignment Agreement to be duly executed and delivered as of this
___ day of ______, 2000.
PURCHASER:
American HealthChoice, Inc.
_________________________________
▇▇. ▇.▇. ▇▇▇▇▇▇, Chairman and CEO
SELLERS:
LAREDO FAMILY ENTERPRISES, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
CORPUS CHIROPRACTIC CLINIC, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
_______________________________
Dr. ▇▇▇▇ ▇▇▇▇▇▇▇▇, D.C., Member
ACME CHIROPRACTIC CLINIC, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
Exhibit B
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of September 1, 2000 between
American HealthChoice, IncObligor a New York corporation,
(the "Obligor"), and Acme Corpus Chiropractic Clinic, LLC,
a Texas limited liability company, located ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ("Corpus"), Laredo
Family Enterprises, LLC, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ("Laredo"), Acme Chiropractic, LLC,
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, (San ▇▇▇▇▇▇) and all three collectively as the
"Secured Party."
WHEREAS, the Obligor has purchased certain assets from Secured Party
pursuant to the Asset Sale And Purchase Agreement and still has certain
contractual and financial obligations (Collectively "Obligations") to the
Secured Party valued at Three Million Dollars ($3,000,000) which the Parties
intend that the Obligations be paid by the Obligor or by guaranteeing
certain dollar amounts and if the Obligor is then still solvent, then said
Obligations shall be retired through the issuance of Shares of the Obligor's
Common Stock to the Secured Party as set forth in the Asset Sale And
Purchase Agreement; and
WHEREAS, as a condition precedent to the execution of the Asset Sale And
Purchase Agreement, the Obligor shall execute a Security Agreement as
security for the full and punctual payment and performance of all of the
liabilities and obligations due to Secured Party under the Asset Sale And
Purchase Agreement between the Secured Party and the Obligor.
NOW, THEREFORE, the parties hereby agree as follows:
1. Grant of Security Interest
(a) As collateral security for the due and punctual payment and
performance of the "Obligations" (as hereafter defined), Obligor hereby
assigns, grants and transfers to Secured Party a continuing security
interest in the "Collateral" (as hereafter defined), whether now existing or
hereafter acquired.
(i) "Obligations" shall mean the full and punctual payment and
performance of all of the Obligor's liabilities and obligations presently
existing or hereafter incurred under the Asset Sale And Purchase Agreement
Asset Sale And Purchase Agreement, as the same may be amended from
time to time, including without limitation, Obligor's obligations under this
Security Agreement and the Asset Sale And Purchase Agreement, as and when
due, whether at the date of maturity, or upon acceleration thereof, or
otherwise, and all fees, prepayment penalties, expenses, charges and other
amounts of any kind payable under the Asset Sale And Purchase Agreement.
(ii) "Collateral" shall mean and include all right, title and interest,
including, but not limited to, accounts receivables, of Obligor in and to
all Assets that were sold to Obligor under the Asset Sale And Purchase
Agreement and all receivables and value for services rendered from the
Clinic locations or replacement Clinic locations of the Assets sold. Said
Assets shall include: all vehicles, furniture and fixtures, machinery,
computers, office, communications and other equipment in all of its forms,
wherever located, now or hereafter existing (all such foregoing items being
the "Equipment"); and all other tangible personal property now owned or
hereafter acquired by Obligor and wherever located, all replacements and
substitutions therefore or accessions thereto; all accounts, contract
rights, chattel paper, instruments, general intangibles and other
obligations of any kind now or hereafter existing arising out of or in
connection with the sale or lease of goods or the rendering of services, and
all rights now or hereafter existing in and securing or otherwise relating
to any such accounts, contract rights, chattel paper, instruments, general
intangibles or obligations (any and all such accounts, contract rights,
chattel paper, instruments, general intangibles and obligations being the
"Receivables" and any and all contracts related to the sale or lease of
goods or providing of services by the Obligor being the "Related
Contracts"); proceeds of insurance from any "key man" life insurance, if
any, insuring any of the principal officers of the Obligor; all inventory as
defined in S9-109 of the Uniform Commercial Code ("Inventory") and all other
goods, accounts, chattel paper, uncertificated securities, documents and
instruments and general intangibles of any nature now or hereafter existing;
whether or not the transfer of any of the foregoing is governed by the
Uniform Commercial Code; and all proceeds and products of all the foregoing,
including without limitation, proceeds of insurance policies insuring the
foregoing (whether or not the Secured Party is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing.
2. Sale of the Collateral. Obligor covenants that for so long as any
part of the Obligations remain outstanding, it shall not permit any of the
Equipment, Inventory, Account Receivables (except for such Inventory or
Accounts Receivables as is sold in the regular course of business or
consigned inventory and Equipment being repaired or in transit) to be
located at any other location, other than where it was sold, without giving
Secured Party at least thirty (30) days' prior written notice and without
prior thereto complying with all action required by Section 6.
3. Right of Obligor to Possession. Unless and until an Event of
Default shall occur, Obligor shall have the right to possess the Collateral
(except for such portion of the Collateral with respect to which possession
by the Secured Party is required for perfection under the Uniform Commercial
Code or other governing law of the jurisdiction whose laws govern perfection
with respect to such portion of the Collateral) and use the Collateral for
any lawful purpose not inconsistent with this Security Agreement.
4. Obligor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Obligor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as
if this Security Agreement had not been executed, (b) the exercise by the
Secured Party of any of the rights hereunder or under any of the Asset Sale
And Purchase Agreement shall not release the Obligor from any of its duties
or obligations under the contracts and agreements included in the
Collateral, and (c) the Secured Party shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Security Agreement, nor shall the Secured Party be obligated
to perform any of the obligations or duties of the Obligor thereunder or to
take any action to collect or enforce any claim for payment assigned
thereunder.
5. Representations and Warranties of Obligor.
Obligor hereby represents and warrants as follows:
(a) Obligor hereby confirms its representations and warranties under
the Asset Sale And Purchase Agreement of even date herewith between the
Obligor and the Clinics. The chief place of business and chief executive
office of the Obligor and the office where the Obligor keeps its records
concerning the Receivables, as hereinafter defined, or other accounts or
general intangibles (the Receivables, accounts and general intangibles to be
defined as "Accounts") are located at the address of where the Assets were
sold or at Obligor's main office. Schedule "A" attached hereto summarizes
all of the Equipment and Inventory, as hereinafter defined, of the initial
Assets being purchased by Obligor.
(b) This Security Agreement creates a valid and perfected first
priority security interest in the Collateral securing the payment of the
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been or will promptly be
duly taken.
(c) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
either (i) for the grant by the Obligor of the security interest granted
hereby or for the execution, delivery or performance of this Security
Agreement by the Obligor or (ii) for the perfection of or the exercise by
the Secured Party of its rights and remedies hereunder; except that in
jurisdictions which have adopted the Uniform Commercial Code and whose laws
govern perfection of a security interest with respect to any portion of the
Collateral, filing or other required action in accordance with such
jurisdiction's Uniform Commercial Code is required.
6. Covenants of Obligor.
Obligor hereby covenants that so long as the Obligations remain
outstanding:
(a) Obligor shall, at its sole cost and expense, keep and maintain the
insurable Collateral insured for its replacement value against loss or
damage by fire, theft, explosion and all other hazards and risks ordinarily
insured against with insurers acceptable to the Secured Party. The Obligor
shall notify Secured Party within five (5) days of any insurance claim made
and/or any occurrence causing a material loss or decline in value of the
Collateral and the estimated (or actual, if available) amount of such loss
or decline. Obligor will not settle or adjust any insurance claims without
the prior written consent of the Secured Party.
(b) Except with the prior written consent of Secured Party, Obligor
shall not sell, offer to sell, lease or otherwise transfer, or grant any
lien or security interest in, or otherwise encumber, the Collateral.
(c) Obligor shall maintain the Collateral in good condition and repair,
reasonable wear and tear excepted, and shall pay the cost of repairs to or
maintenance of the same. Obligor shall at all times keep the Collateral free
of any liens, mortgages, pledges, security interests or encumbrances (other
than as herein provided), shall not waste or destroy the Collateral or any
portion thereof and shall not use the Collateral in violation of any
applicable statute, ordinance, regulation or policy of insurance thereon.
(d) Obligor shall permit Secured Party, its agents and representatives,
upon reasonable notice to Obligor, to examine and inspect the Collateral,
wherever located, at any reasonable times.
(e) Obligor shall promptly pay when due all taxes, levies and
assessments of whatever nature imposed on the Collateral or for its use
except as contested in good faith and adequately reserved against.
(f) The Obligor shall continue to collect, at its own expense, all
amounts due or to become due the Obligor under the Accounts. In connection
with such collections, the Obligor may take (and, at the Secured Party's
direction, shall take) such action as the Obligor or the Secured Party may
deem necessary or advisable to enforce collection of the Accounts; provided,
however, that the Secured Party shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default or an event
which, with the giving of notice or the lapse of time, or both, would become
an Event of Default and upon written notice to the Obligor of its intention
to do so, to notify the account debtors or obligors under any Accounts of
the assignment of such Accounts to the Secured Party and to direct such
account debtors or obligors to make payment of all amounts due or to become
due to the Obligor thereunder directly to the Secured Party and, upon such
notification and at the expense of the Obligor, to enforce collection of any
such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Obligor might have
done. After receipt by the Obligor of the notice from the Secured Party
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including instruments) received by the Obligor in respect of the
Accounts shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of the Obligor and shall be
forthwith paid over to the Secured Party in the same form, as so received
(with any necessary endorsement) to be held as cash collateral and applied
as provided for herein under Remedies, the Obligor shall not adjust, settle
or compromise the amount or payment of any Account or release wholly or
partly any account Obligor or obligor thereof, or allow any credit or
discount thereon.
(g) Upon an event of Default or at any time thereafter, Obligor shall
execute and deliver to Secured Party written assignments of all of its
Receivables no less often than biweekly. Obligor shall keep accurate and
complete records of its Receivables and on the last day of each month from
and after the date hereof, Obligor shall deliver to Secured Party, in form
and substance acceptable to Secured Party, a detailed aged trial balance of
all then existing Receivables specifying the face value and dates of
invoice(s) for each account Obligor (as defined in S9-105 of the Uniform
Commercial Code) identified by name and address obligated on a Receivable so
listed and upon demand copies of customer statements and, the original copy
of all documents, including, without limitation, repayment histories and
present status reports, relating to the Receivable so scheduled and such
other matters and information relating to the status of then existing
Receivables as Secured Party shall request.
7. Filing.
(a) Obligor shall, concurrently with the execution hereof, execute such
financing statements as Secured Party may require so as fully to perfect the
security interest granted hereby. Obligor shall, on demand, furnish to
Secured Party such further information, shall execute and deliver or join in
executing and delivering to Secured Party such financing statements and
other documents, and shall do all such other acts and things as Secured
Party may at any time reasonably request to perfect and maintain a valid
security interest in the Collateral as security for the Obligations.
(b) Secured Party is hereby authorized, at its option, to file one or
more financing statements, continuation statements and amendments thereto
with respect to any Collateral under the Uniform Commercial Code in any
jurisdiction, without the signature of Obligor where authorized by law.
Secured Party will provide the Obligor with a copy of any such filing
concurrently with the making thereof.
8. Secured Party May Perform. If the Obligor fails to perform any
agreement contained herein including, but not limited to the maintenance of
insurance as required by this Agreement, the Secured Party may itself
perform, or cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be payable by the
Obligor.
9. Secured Party's Duties. The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as
to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Collateral.
10. Remedies.
(a) Upon the occurrence of an Event of Default or at any time
thereafter, Secured Party shall have the right to declare the entire amount
on the Obligation to be immediately due and owing. In addition thereto,
Secured Party shall have all the remedies of a secured party under all
applicable laws including, without limitation, the Uniform Commercial Code,
and/or as a Purchase Money Secured Creditor, as then in effect in all
applicable jurisdictions. Such remedies shall include, without limitation
thereof, the right to take possession of the Collateral, and for that
purpose Secured Party may enter on any premises on which the Collateral or
any part thereof may be situated and remove the same therefrom. Secured
Party may require Obligor to make the Collateral available to Secured Party
at a place designated by Secured Party that is reasonably convenient to both
parties. Secured Party may (without precluding the exercise of any other
right or remedy) sell the Collateral or any portion thereof at one or more
public or private sales or proceedings, for cash, upon credit or for future
delivery, as Secured Party may deem appropriate provided that the Secured
Party acts in a commercially reasonable manner. Upon consummation of any
such sale, Secured Party shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold,
together with all rights applicable thereto. Each such purchaser at any such
sale or proceeding shall hold the property sold absolutely free from any
claim or right on the part of Obligor, and Obligor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which
it now has or may at any time in the future have under any rule or law or
statute now existing or hereafter enacted. To the extent that notice of sale
shall be required to be given by any applicable law, Secured Party shall
give Obligor at least ten (10) days' notice of Secured Party's intention to
make any such public or private sale or disposition (which notice Obligor
agrees shall be deemed reasonable and sufficient notification for purposes
of the Uniform Commercial Code). Such notice, in case of public sale, shall
state the time and place fixed for such sale, and, in the case of a private
sale or other disposition, shall state the time after which the same is to
be made. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may fix
in the notice of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as Secured Party may (in its sole and absolute discretion)
determine. Secured Party may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase for its own
account of the whole or any part of the Collateral. Secured Party may,
without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. In case the sale of
all or any part of the Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by Secured Party until the sale price
is paid by the purchaser or purchasers thereof. The Secured Party shall not
incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. As an alternative to
exercising the power of sale conferred upon Secured Party herein, Secured
Party may proceed by a suit or suits at law or in equity to foreclose this
Security Agreement and to sell the Collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of competent
jurisdiction. The proceeds of any such sale shall be paid as follows:
First: to the payment of the costs and expenses of such sale,
including the out-of-pocket expenses of Secured Party and the
reasonable fees and out-of-pocket expenses of counsel employed in
connection therewith, and to the payment of any advances made by
Secured Party for the account of Obligor hereunder and the payment of
all costs and expenses incurred by Secured Party in connection with the
administration and enforcement of this Security Agreement, to the
extent that such advances, costs and expenses shall not have been
reimbursed by Secured Party to Obligor;
Second: to the payment or prepayment in full of the Obligations
and any other sums due hereunder or under the Obligation or the Asset
Sale And Purchase Agreement; and
Third: the balance (if any) of such proceeds shall be paid to
Obligor, its successors or assigns, or as a court of competent
jurisdiction may direct.
Secured Party's rights and remedies under this Security Agreement are
cumulative and not exclusive of any other right or remedy which it may have
under the Uniform Commercial Code or any other provision of law; nothing
herein contained shall limit or otherwise affect any other existing or
future lien, security interest or right to which Secured Party may be
entitled.
(b) Secured Party is hereby appointed the attorney-in-fact for Obligor,
with full power of substitution, for the purpose of taking, if any Event of
Default shall occur and provided that Secured Party has given the Obligor
notice of the Event of Default, any action and executing any instrument, in
the name of Obligor or otherwise, which Secured Party may at any time or
times deem necessary or appropriate in order better to confirm and enforce
Secured Party's rights, powers and remedies hereunder or with respect to the
Collateral or any part thereof. This power, being coupled with an interest
is irrevocable.
(c) Neither the failure nor the delay on the part of Secured Party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power
or privilege preclude any other or future exercise of any other right, power
or privilege of Secured Party. Secured Party may proceed against any of the
Collateral in the first instance without proceeding against any other
Collateral, Obligor or any other person and without resorting to any
guaranty, security or other right whatsoever which may be held by or on
behalf of Secured Party at any time in connection with any of the
Obligations, or to any other remedies at the same time or at different
times.
11. Indemnity. Obligor agrees to indemnify and hold harmless Secured
Party from and against any and all claims, demands, losses, judgments and
liabilities or penalties of whatsoever kind or nature, and to reimburse
Secured Party for all costs and expenses, including filing fees, growing out
of or resulting from this Security Agreement or the exercise by Secured
Party of any right or remedy granted to it hereunder except claims, losses
or liabilities resulting from the Secured Party's gross negligence or
willful misconduct. In no event shall Secured Party be liable for any
matter or thing in connection with this Security Agreement, except claims,
losses or liabilities resulting from the Secured Party's gross negligence or
willful misconduct.
12. Termination. This Security Agreement shall continue and remain in
full force and effect until all the Obligations have been paid or satisfied
in full. Thereupon, this Security Agreement shall terminate and Secured
Party shall reassign and redeliver to the Obligor or such other persons as
Obligor shall designate, without warranty or recourse and at the expense of
Obligor, against receipt, such of the Collateral, if any, as remains in
Secured Party's possession and has not been sold or otherwise applied by
Secured Party in accordance with the terms hereof, together with appropriate
instruments of reassignment and release, including such termination
statements as may be required.
13. Modification of Asset Sale And Purchase Agreement. This Security
Agreement shall remain and continue in full force and effect notwithstanding
any modification, extension or renewal of the Asset Purchase And Sale
Agreement or any other Transaction Paper, the release or exchange of any
guaranty, collateral or other rights relating to the Obligations, and any
other indulgences or forbearances, events, actions, omissions or matters
whatsoever, all of which may occur, be made, done or granted without the
consent of or notice to Obligor.
14. General Provisions.
(a) Any notice required to be given under this Security Agreement
shall be in writing and shall be deemed duly given when delivered
personally; when given by cable or telex and confirmed by letter; or three
calendar days after having been mailed by registered or certified mail
(airmail if mailed overseas), return receipt requested. Notice shall be
addressed as follows:
If to Obligor:
American HealthChoice, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Secured Party:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, DC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Such address of any party hereto may be changed by notice given to the other
parties in accordance with this Section.
(b) Secured Party shall not, by any failure or delay in exercising any
right, power or privilege or otherwise, be deemed to have waived any of its
rights or remedies hereunder.
(c) This Security Agreement constitutes the parties' final and entire
agreement, and supersedes all oral negotiations and prior writings in
respect of the subject matter hereof and thereof.
(d) The terms and provisions of this Security Agreement shall be
binding upon, and the benefits thereof shall inure to, the parties hereto
and their respective successors and permitted assigns; provided, however,
that Obligor may not assign any of its rights or obligations hereunder
without the prior written consent of Secured Party. This Security Agreement
shall create a continuing security interest in the Collateral and shall
remain in full force and effect as provided herein. Without limiting the
generality of the foregoing clauses, the Seller (as defined under the Asset
Sale And Purchase Agreement) may assign or otherwise transfer the
Obligations held by it to any other person or entity and such other person
or entity shall thereupon become vested with all the benefits in respect
thereof granted to the Secured Party herein or otherwise.
(e) Neither this Security Agreement nor any provisions hereof may be
amended, modified, waived, discharged or terminated orally, nor may any of
the Collateral be released or the pledge or the security interest created
hereby extinguished, except by an instrument in writing duly signed by or on
behalf of Secured Party hereunder. Section headings used in this Security
Agreement are for convenience only and shall not affect the meaning or
construction hereof.
(f) Any provision of this Security Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate such provision or render such provision
unenforceable in any other jurisdiction.
(g) The Obligor will upon demand pay to the Secured Party the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the
Secured Party may incur in connection with (i) the perfection of the
security interest granted hereby, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the
rights of the Secured Party hereunder or (iv) the failure of the Obligor to
perform or observe any of the provisions hereof.
(h) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REFERENCE
TO SUCH STATE' S RULES AS TO CHOICE OF LAWS) EXCEPT TO THE EXTENT THAT THE
LOCATION OF THE COLLATERAL REQUIRES APPLICATION OF THE LAW OF ANOTHER
JURISDICTION.
(i) This Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be the original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Security Agreement as of the day and year first above
written.
OBLIGOR:
AMERICAN HEALTHCHOICE, INC.
By: ________________________________
▇▇. ▇.▇. ▇▇▇▇▇▇, President & CEO
SECURED PARTY:
LAREDO FAMILY ENTERPRISES, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
CORPUS CHIROPRACTIC CLINIC, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
ACME CHIROPRACTIC CLINIC, LLC
_____________________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President
and Member
EXHIBIT C
ALLOCATION OF PURCHASE PRICE
Gross Allocation
--------- ---------
San ▇▇▇▇▇▇ Receivables 950,600 500,000
Laredo Receivables 1,982,800 1,000,000
Corpus Christi Receivables 1,198,800 600,000
Clinic Equipment 50,000 50,000
Goodwill 3,850,000
--------- ---------
Total 4,182,200 6,000,000
========= =========
EXHIBIT F
INDEPENDENT CONTRACTOR AGREEMENT
THIS INDEPENDENT CONTRACTOR AGREEMENT ("Agreement") is made effective
as of the 1st day of September, 2000, between AHC Chiropractic Clinics,
Inc., a Texas corporation, (hereinafter called the "Company"), and ▇▇. ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, D.C. (hereinafter called the "Contractor").
WITNESSETH
WHEREAS, the Company owns and operates various health care service
businesses (all such businesses hereinafter being referred to collectively
as the "Business"); and
WHEREAS, it is the desire of the Company to engage the services of the
Contractor to perform for the Company, management, consulting and
marketing services, regarding the general administrative and management
functions for the operation of the health care service clinics as an
independent contractor and not as an Employee.
WHEREAS, it is also the desire of the Company to engage the services of
the Contractor to serve as its Compliance Officer to ensure that all of
its health care service clinics are in compliance with all applicable
state and federal laws and regulations related to the Company's marketing
efforts.
NOW, THEREFORE, in consideration of the covenants and agreements herein
made, the parties hereto agree as follows:
A. Recitals: The above recitals are incorporated by reference herein and
made a part thereof as if set forth herein verbatim.
B. Term and Duties
1. This Agreement shall be deemed to have commenced as of the date first
above written and shall continue for a period of one (1) year
thereafter.
2. In relation to the Contractor's marketing duties, the Contractor
agrees to (1) act as marketing and public relations liaison for the
Company; (2) meet with key personnel in the industrial sector to
promote professional and medical services rendered by the Company;
(3) negotiate commitments from the maquila-med sector in order to
provide quality health care for United States and Mexico manufacturing
plants; (4) provide marketing, advertising, promotion and seminar
expertise to stimulate personal injury accounts; (5) will promote
the business to attorneys and paralegals; and (6) ensure that the
Company stays in compliance with all applicable state and federal laws
and regulations in relation to marketing the services of its clinics.
3. During the term of the Agreement hereunder and except for illness,
reasonable vacation periods and reasonable leaves of absence, the
Contractor shall devote the Contractor's time, attention, skill and
efforts to the faithful performance of the Contractor's duties
hereunder and the furtherance of the Company's business.
4. Further, the Contractor will make himself available to consult
with officers of the Company, the Board of Directors, physicians,
chiropractors and the administrative staff, at reasonable times,
concerning matters pertaining to management and operation of the
clinics, the organization of the administrative staff, the fiscal
policy of the clinic, and, in general, concerning any problem of
importance concerning the business affairs of the clinics and the
Company.
C. Compensation
1. For all services rendered by Contractor hereunder, the Company
shall pay Contractor the sum of Sixty Thousand Dollars ($60,000.00)
per year, payable in equal monthly installments by the 20th of each
month. No deductions shall be made from Contractor's compensation
for any taxes and governmentally required withholdings.
2. In addition to such compensation as is to be payable to the
Contractor as stated above in Section 1, the Contractor shall be
entitled to receive a performance bonus defined as follows:
a. For the year ended September 30, 2001, the Contractor shall
receive a Twenty Thousand Dollar ($20,000.00) performance bonus if
the Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") of American HealthChoice, Inc. for the fiscal year
ended September 30, 2001, exceeds One Million Dollars
($1,000,000.00). The calculation, derived from the audited
financial statements, shall be approved by the Compensation
Committee and shall be payable on December 31, 2001.
C. Benefits
1. So long as group health insurance is generally available in the
marketplace, and subject to such exclusions and underwriting
conditions as the insurer may impose, the Company shall pay the cost
of group health insurance for the Contractor and his dependents.
The insurance provided for Contractor shall be the same as that
provided for the Employees of the Company, as the same may be
modified from time to time. This Agreement does not guarantee
Contractor's insurability; rather; it merely requires the Company to
pay for the Contractor's insurance on the same basis as for the
Employees of the Company so long as it is commercially available,
until termination thereof.
2. The Contractor shall be reimbursed in accordance with Company
policies for any and all necessary and reasonable travel and out-of-
pocket expenses incurred by the Contractor directly related to his
duties.
F. Termination of Agreement
1. This Agreement shall be terminated upon the happening of the first
of any of the following events:
a. Whenever the Company and the Contractor mutually agree to
terminate this Agreement; or
b. Upon the death of the Contractor; or
c. If the Contractor violates any provision of this Agreement and
is given written notice of the same, and fails or refuses to
cure same within thirty (30) days after notice thereof from the
Company (cure may be effected by written acknowledgment of such
violation if it is not a continuing course of conduct); or
d. Any behavior which is repeated or persistent following written
notice from the Company and which is egregious or materially
adverse to the normally harmonious and productive conduct of
the Company's Businesses.
G. Disclosure of Confidential Information; Patient Records: The Contractor
acknowledges that as a result of the Contractor's association with the
Company, the Contractor will be making use of, acquiring and/or adding to
confidential information of a special and unique nature and value,
relating to such matters as the Company's confidential reports, lists of
referring physicians, third-party and direct payor contracts, contracts
with managed care plans, lists of patients and the fees paid by such
patients, and other confidential matters. As material inducement to
Company to enter into this Agreement, and to pay to the Contractor the
compensation referred to in Section C hereof, the Contractor covenants
and agrees that the Contractor shall not, at any time during or following
the term of this Agreement, directly or indirectly, divulge, disclose or
make any use of, for any purpose whatsoever, any confidential information
which has been obtained by or disclosed to the Contractor as a result of
or otherwise in connection with the Contractor's provision of services
hereunder. Such information of a confidential nature includes, but is
not limited to, referral source information, medical records, scans,
patient charts, patient ledgers, records of amount received from patients
patient lists, other financial records of the Company and of patients,
any and all insurance. Medicare and other such records, and any other
information of a private, internal or confidential nature pertaining
to the Company's Businesses, functions or operations, including,
without limitation, the nature of its contractual relationships. In
accordance with the foregoing, the Contractor further agrees that the
Contractor will at no time retain or remove from the premises of the
Company records of any kind or description whatsoever for any purpose
unconnected with the strict performance of the Contractor's association
with the Company for any reason, the Contractor will promptly return to
the Company all lists, books and records of or pertaining to the
Company's patients and Businesses, and all other property belonging to
the Company, in the Contractor's custody, control or possession.
In the event of a breach or threatened breach acted upon by the
Contractor of any of the provisions of this Section 1, the Company, in
addition to and not in limitation of any other rights, remedies or
damages available to the Company at law or in equity, shall be entitled
to preliminary and permanent injunctive relief in order to prevent or to
restrain any such breach by the Contractor, or by the Contractor's
partners, agents, representatives, servants, Company, Contractors and/or
any and all persons, directly or indirectly, acting for or with the
Contractor. The provisions of this Section I shall survive the
termination of this Agreement.
H. Notices: Any notice or document required or desired to be given to
either party herein shall be in writing and shall be deemed given (a)
when sent registered mail, return receipt requested and postage prepaid,
addressed to the party at the address indicated below (or such other
address as that party may hereafter designate); or (b) when delivered
personally to that party at said address:
If to the Company: AHC Chiropractic Clinics, Inc.
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If to the Contractor: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C.
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I. Miscellaneous
1. Further Assurances: At any time, and from time to time, each party
will execute such additional instruments and take such action as may
be reasonably requested by the other party to carry out the intent
and purposes of this Contract.
2. Costs' and Expenses: Each party hereto agrees to pay its own costs
and expenses incurred in negotiating this Agreement.
3. Time: Time is of the essence.
4. Entire Agreement: This Contract constitutes the entire agreement
between the parties hereto with respect to the subject matter
hereof. It supersedes all prior negotiations, letters and
understandings relating to the subject matter hereof.
5. Amendment: This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing
signed by the party or parties against whom enforcement of any such
amendment, supplement or modification is sought.
6. Assignment: This Agreement may not be assigned to any party hereto
without prior written consent of the other party.
7. Choice of Law Venue, Jurisdiction: This Agreement will be
interpreted, construed and enforced in accordance with the laws of
the State of Texas. Both parties agree that venue is Dallas County,
Texas and both parties agree to submit to jurisdiction in State of
Texas.
8. Headings: The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
9. Pronouns: All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as
the context may require.
10. Number and Gender: Words used in this Agreement, regardless of the
number and gender specifically used, shall be deemed and construed
to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context indicates is
appropriate.
11. Construction: The parties hereto participated in the preparation
of this Agreement; therefore, this Agreement shall be construed
neither against nor in favor of any of the parties hereto, but
rather in accordance with the fair meaning thereof.
12. Effect of Waiver: The failure of any party at any time or times to
require performance of any provision of this Agreement will in no
manner affect the right to enforce the same. The waiver by any
party of any breach of any provision of this Agreement will not be
construed to be a waiver by any such party of any succeeding breach
of that provision or a waiver by such party of any breach of any
other provision.
13. Severabilily: The invalidity, illegality or unenforceability of
any provision or provisions of this Agreement will not affect any
other provision of this Agreement, which will remain in full force
and effect, nor will the invalidity, illegality or unenforceability
of a portion of any provision of this Agreement affect the balance
of such provision. In the event that any one or more of the
provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in
any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had
never been contained herein.
14. Enforcement: Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at
all trial and appellate levels, expenses and costs.
15. Binding Nature: This Agreement will be binding upon and will inure
to the benefit of any successor successors of the parties hereto.
16. No Third-Party Beneficiaries: No person shall be deemed to possess
any third-party beneficiary right pursuant to this agreement. It is
the intent of the parties hereto that no direct benefit to any
third-party is intended or implied by the execution of this
Agreement.
17. Counterparts: This Agreement maybe executed in one or more
counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CONTRACTOR: COMPANY:
AHC Chiropractic Clinics, Inc.
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▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C. Dr. J. ▇▇▇ ▇▇▇▇▇▇, President