EXHIBIT 10.25
LOAN AGREEMENT
Belair Capital Group, Ltd., (herein called "Lender", a Nevada Limited
Liability Company, and American HealthChoice, Inc., (herein called
"Borrower") with its principal place of business located at ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, enter into the following loan agreement
(the "Agreement").
I. LOAN
Subject to the terms and conditions stated in this loan agreement, Lender
will lend up to the amount of One Million Dollars ($1,000,000.00) of which
Nine Hundred Thousand Dollars $900,000.00 has been lent, with the intent of
the Lender to lend another One Hundred Thousand ($100,000.00), to Borrower.
The indebtedness is to be evidenced by a note in the form of the note set
out in "Exhibit A" of this agreement (the "Note"), in the principal amount
of $900,000 and a second Note in the Amount of $100,000, with interest at
Eight percent (8%) annually.
II. PREPAYMENT
The Borrower shall, as part of the consideration for Lender entering into
and loaning funds, issue to the Lender Ten Million (10,000,000) shares of
Borrower's common stock, par value of $0.001 per share, as restricted
securities per Security Exchange Commission Rule 144. The Borrower will
have the right to prepay the loan in whole or in part, however all amounts
shall be paid in full to Lender by August 31, 2002. Parties agree that fair
market value for said shares, as of September 1, 2000, is two-and-a-half
cents ($0.025) per share.
III. SECURITY
As security for this loan, Borrower will create a third priority security
interest in all tangible and intangible property of the Borrower, and as
more fully defined in the Security Agreement attached as "Exhibit B," (the
"Collateral) and executing the Security Agreement and taking all steps
necessary to perfect that interest, including filing a valid financing
statement, and paying any necessary expenses and fees. Lender acknowledges
that there is a security interest already granted to certain clinic/entities
in an agreement dated September 1, 2000, and in an agreement with certain
Debenture holders dated August 23, 2000.
IV. USE OF PROCEEDS
The proceeds of this loan are to be used to acquire certain clinic assets as
set forth in an Asset Sale And Purchase Agreement dated September 1, 2000
and for working capital purposes.
V. REPRESENTATIONS OF BORROWER
Borrower represents as follows:
(a) Borrower is a New York corporation in good standing.
(b) Borrower is authorized by its constituent documents and applicable law
to enter into this agreement.
(c) All information provided by Borrower to Lender, including financial
reports, is true and correct.
(d) There are no security interests in or financing statements covering any
asset of Borrower except as specified in "Exhibit C."
(e) This Agreement and the shares issued hereunder in no way violate any
other condition or obligation of Borrower.
VI. CONDITIONS PRECEDENT TO LOAN
Lender is obligated to make the loan provided for in this agreement only
after receiving all of the following in a form satisfactory to lender: Board
resolution authorizing this Agreement and its related documents and the
validity of this transaction; an inventory of Borrower's assets, an executed
Note(s), and a Security Agreement.
VII. AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that it will:
(a) Keep accurate financial records of all business operations, and provide
Lender, upon written demand, with unaudited financial statements 30 days
after the close of each quarter and audited statements 90 days after the
close of the fiscal year.
(b) Properly use and maintain the collateral offered in connection with this
loan agreement, maintaining insurance of a type and in amounts agreeable to
Lender.
(c) Permit inspections of its books, records, premises, and assets by Lender
upon reasonable notice.
(d) Promptly notify Lender of any threatened litigation or change in
business conditions that may adversely affect Borrower.
VIII. NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that it will not:
(a) Encumber or permit any mortgages, security interests, or other
encumbrances to be assessed against the Collateral as security for this
Agreement.
(b) Increase salaries of any officers by more than five percent (5%) during
the term of this loan, except with prior consent of Lender.
(c) Declare any dividends or distributions without written consent of
Lender.
IX. EVENTS OF DEFAULT
The occurrence of any or all of the following events or conditions will be
an event of default:
1). Any failure by debtor to make a payment or perform an obligation when
due;
2). Breach or failure by borrower to perform any term or condition of this
obligation;
3). Dissolution or insolvency or filing of any bankruptcy proceedings by or
against Borrower.
4). Entry of a judgment against Borrower for more than One Hundred Thousand
Dollars.
X. REMEDIES
On the occurrence of any event of default, all obligations under this loan
will immediately become due and payable on demand of Lender without
presentation, demand for payment, notice of dishonor, protest, or notice of
protest of any kind, all of which are expressly waived by the Borrower.
Lender will have all remedies provided by the Texas Business and Commerce
Code, as well as all other remedies available at law or equity, and provided
under this loan agreement and related agreements and instruments.
XI. WAIVER
Lender's failure or delay to exercise any right or privilege under this
agreement will not operate as a waiver of any such right or privilege or any
further exercise of the right or privilege.
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,
Note(s), and Security 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 Binding Effect. 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 the Lender and Borrower.
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 Borrower, to:
American HealthChoice, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Lender, to:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, D.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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 Exhibits. All Exhibits 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 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.
12.10 Time. Time is and shall be of the essence of this Agreement.
12.11 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.
BORROWER:
AMERICAN HEALTHCHOICE, INC.
______________________________
▇▇. ▇.▇. ▇▇▇▇▇▇, Chairman and CEO
LENDERS:
BELAIR CAPITAL GROUP, LTD.
______________________________
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.C., President and
Member
EXHIBIT A
PROMISSORY NOTE
$1,000,000.00 Irving, Texas September 1, 2000
FOR VALUE RECEIVED, the undersigned American HealthChoice, Inc.,
(herein called "Maker") promises to pay unto the order of Belair Capital
Group, Ltd., (herein called "Payee" which term herein in every instance
shall refer to any owner or holder of this Note) the sum of ONE MILLION
DOLLARS ($1,000,000.00) together with interest on the principal hereof from
time to time outstanding from the date of advancement until paid, at the
rate of eight percent (8%) per annum (but in no event to exceed the maximum
lawful rate of interest permitted by applicable usury laws). The principal
and interest hereunder shall be payable in lawful money of the United States
of America at the address of Payee as Payee may designate hereafter in
writing.
Maker and payee hereby agree that any payment made by Maker to Payee
shall not be applied to the amounts due under this Note unless such payment
is made in accordance herewith. Accrued interest and the full principal
amount of this note is and shall be due and payable in a single installment
on August 30, 2002.
Maker may prepay this note in whole or in part at any time without being
required to pay any penalty or premium for such privilege. All prepayments
hereunder, whether designated as payments of principal or interest, shall be
applied first to accrued and unpaid interest and then installments of
principal in the inverse order of their stated maturity.
Maker and any and all sureties, guarantors and endorsers of this note
and all other parties now or hereafter liable hereon, severally waive grace,
demand, presentment for payment, protest, notice of any kind (including, but
not limited to, notice of protest, notice of intention to accelerate and
notice of acceleration) and diligence in collecting and bringing suit
against any party hereto, and agree to all extensions and partial payments,
with or without notice, before or after maturity, to any substitution,
exchange or release of any security now or hereafter given for this note, to
the release of any party primarily or secondarily liable hereon, and that it
will not be necessary for Payee, in order to enforce payment of this note,
to first institute or exhaust Payee's remedies against Maker or any other
party liable therefor or against any security for this note.
In the event of default hereunder or under any of the instruments
securing payment hereof and this note is placed in the hands of an attorney
for collection (whether or not suit is filed), or if this note is collected
by suit or legal proceeding or through the probate court or bankruptcy
proceedings, Maker agrees to pay all reasonable attorneys' fees and all
expenses of collection and costs of court.
It is the intention of the parties hereto to comply with applicable
usury laws (now or hereafter enacted); accordingly, notwithstanding any
provision to the contrary in this note, or in any of the documents securing
payment hereof or otherwise relating hereto, in no event shall this note or
such documents require the payment or permit the collection of interest in
excess of the maximum amount permitted by such laws. If any such excess of
interest is contracted for, charged, taken, reserved or received under this
note or under the terms of any of the documents securing payment hereof or
otherwise relating hereto, or in the event the maturity of the indebtedness
evidenced by this note is accelerated in whole or in part, or in the event
that all or part of the principal or interest of this note shall be prepaid,
so that under any of such circumstances the amount of interest contracted
for, charged, taken, reserved or received under this note or under any of
the instruments securing payment hereof or otherwise relating hereto, on the
amount of principal actually outstanding from time to time under this note
shall exceed the maximum amount of interest permitted by applicable usury
laws, now or hereafter enacted, then in any such event (i) the provisions of
this paragraph shall govern and control, (ii) any such excess which may have
been collected at final maturity of said indebtedness either shall be
applied as a credit against the then unpaid principal amount hereof or
refunded to Maker, at Payee's option, and (iii) upon such final maturity,
the effective rate of interest shall be automatically reduced to the maximum
lawful rate allowed under applicable usury laws as now or hereafter
construed by the courts having jurisdiction thereof. Without limiting the
foregoing, all calculations of the rate of interest contracted for, charged,
taken, reserved or received under this note or under such other documents
which are made for the purpose of determining whether such rate exceeds the
maximum lawful rate, shall be made, to the extent permitted by law, by
amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged, taken, reserved or received from Maker or
otherwise by Payee in connection with such indebtedness.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE APPLICABLE LAWS
OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA. THE
COUNTY OF DALLAS, TEXAS SHALL BE THE PROPER PLACE OF VENUE TO ENFORCE
PAYMENT OF THIS NOTE. MAKER IRREVOCABLY AGREES THAT THE STATE DISTRICT
COURTS OR UNITED STATES DISTRICT COURT IN DALLAS COUNTY, TEXAS SHALL BE THE
EXCLUSIVE COURTS FOR ANY LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS NOTE.
To the extent that the interest rate laws of the State of Texas are
applicable to this note and unless changed in accordance with law, the
applicable interest rate ceiling is the indicated (weekly) ceiling
determined in accordance with Article 5069-1.04(a)(1) of the Texas Revised
Civil Statutes, as amended, or to any successor to such statute.
Any check, draft, money order or other instrument given in payment of
all or any portion thereof may be accepted by Payee and handled in
collection in the customary manner, but the same shall not constitute
payment hereunder or diminish any rights of Payee except to the extent that
actual cash proceeds of such instrument are unconditionally received by
Payee.
Maker represents and warrants to Payee and to all other owners and
holders of any indebtedness evidenced hereby that all loans evidenced by
this note are for business, commercial, investment or other similar purpose
and not primarily for personal, family, household or agricultural use, as
such terms are used or defined in Texas Revised Civil Statutes, Article
5069-1.04, Texas Credit Code and Regulation Z promulgated by the Board of
Governors of the Federal Reserve System and under Titles I and V of the
Consumer Credit Protection Act.
This note is issued pursuant to and is secured by that certain Security
Agreement of even date herewith (the "Security Agreement") by and among
Maker and Payee. Reference is made to the Security Agreement for certain
provisions relating to the acceleration of maturity hereof upon the
occurrence of certain events specified therein and for all other pertinent
purposes.
EXECUTED the date first above written.
American HealthChoice, Inc.
__________________________
▇▇. ▇.▇. ▇▇▇▇▇▇, D.C., President
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
__________________________
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement" or the "Security Agreement")
is executed as of September 1, 2000, by and between American HealthChoice,
Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
called the "Debtor"), and Belair Capital Group, Ltd., a Nevada Limited
Liability Company, (hereinafter called the "Secured Party").
1. Security Interest. Subject to the terms and provisions of this
Security Agreement, Debtor grants to Secured Party a continuing general lien
on and security interest in and to, and grants, bargains, sells, transfers
and assigns to Secured Party, the hereinafter described Collateral to secure
the payment and performance of the hereinafter described obligation (the
"Security Interest").
2. Obligation. This Security Agreement and the Security Interest
granted hereby secure the following described obligations (collectively, the
"Obligation"):
a. The payment and performance by Debtor of its indebtedness and
obligations under that certain Promissory Note in the original
principal amount of Nine Hundred Thousand Dollars ($900,000.00) (the
"Note") dated of even date herewith, executed by Debtor and payable to
the order of Secured Party, and all extensions, modifications,
increases and renewals thereof and substitutions therefor made or given
from time to time;
b. All costs incurred by Secured Party to obtain, preserve and
enforce this Security Agreement, collect the Obligation, and maintain
and preserve the Collateral, including specifically, but without
limitation, all taxes, assessments, reasonable attorneys' fees and
legal expenses and expenses of sale; and
c. All indebtedness, obligations and liabilities of Debtor to
any person to the extent of any participation or interest therein
created for or held by such person, or granted to such person, by
Secured Party.
3. Unless otherwise provided in any instrument evidencing the
Obligation, the Obligation shall bear interest at the rate or rates set
forth in the Note, but not in excess of the highest rate permitted by
applicable law, from date of accrual of the Obligation until paid.
4. Collateral. The Security Interest granted hereby covers the
following collateral (the "Collateral"): All accounts, including but not
limited to accounts receivable, inventory, equipment, goods, merchandise,
materials, goods in process, and other tangible personal property, all
intangible personal rights and property, all insurance policies relating in
whole or in part to any of the foregoing, all of the foregoing now owned and
all hereafter acquired by Debtor or hereafter arising in favor of Debtor,
all Proceeds (as hereinafter defined), all substitutions for and
replacements of and all additions and accessions to any of the foregoing,
all guaranties and security therefor, and all the rights, title and interest
of Debtor in and to all books and records relating in whole or in part to
any of the foregoing.
5. As used herein, the then "Proceeds" shall have the meaning
assigned to it under the Uniform Commercial Code of the State of Texas (the
"Code") and, to the extent not otherwise included, shall include, but not be
limited to, (i) any and all proceeds of any insurance, causes and rights of
action, settlements thereof, judicial and arbitration judgments and awards,
and indemnity, warranty or guaranty payments payable to Debtor from time to
time with respect to any of the Collateral, (ii) any and all payments (in
any form whatsoever) made or due and payable to Debtor from time to time in
connection with any patient treatments, requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by
Clinic employees or any governmental department, commission, board, bureau,
authority, agency or body (domestic or foreign), (iii) all claims of the
Debtor for losses or damages arising out of or related to or for any breach
of any agreements, covenants, representations or warranties or any default
under any of the foregoing Collateral (without limiting any direct or
independent rights of Secured Party with respect to this Collateral), and
(iv) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
6. Portions of the Collateral may constitute accounts, general
intangibles or contract rights, and all records concerning such Collateral
are and will be located at the offices of the Debtor in Irving, Dallas
County, Texas or if necessary, individual clinic locations.
7. Debtor's Warranties. Debtor hereby represents and warrants to
Secured Party as follows:
a. Financing Statements. No financing statement covering the
Collateral or any Proceeds thereof is on file in any public office,
except for those represented on Exhibit C of the Loan Agreement.
b. Ownership Free of Encumbrances. Except for the Security
Interest granted hereby, Debtor to the extent it was given good title
by secured party now owns good title to the Collateral, free from any
lien, security interest, claim or encumbrance, except for any claim by
secured party or secured parties on Exhibit C of the Loan Agreement.
c. Accounts. All books, records and documents relating to the
Collateral are and will be genuine and in all respects what they
purport to be; each account is valid and subsisting and arises out of a
bona fide sale of services actually rendered or goods sold and
delivered by Debtor to the account debtor named in the account and the
amount of the account represented as owing is the correct amount
actually and unconditionally owing except for normal cash discounts.
d. First Lien on Collateral. Except for those liens represented
on Exhibit C of the Loan Agreement, the Security Interest granted to
the Secured Party pursuant to this Security Agreement constitutes and
creates a valid and continuing lien on and security interest in the
Collateral in favor of the Secured Party, and except for the
subordination of rights to those under Exhibit C, said Security
Interest shall be prior to all other liens, encumbrances, security
interests, chattel mortgages, privileges, statements of assignment and
rights of others, and is enforceable as such as against any third
parties, including, without limitation, any owner of real property in
any state where any of the Collateral is or may hereafter be located
and as against any purchaser of such real property and any present or
future creditor obtaining a lien on such real property. All action
necessary or desirable to perfect the Security Interest in each item of
the Collateral in each state in which any item of Collateral is or will
be located has been or will forthwith be duly taken.
e. Power and Authority. Debtor has full power, authority and
legal right to pledge all of the Collateral pursuant to this Security
Agreement.
g. Due Authorization, Execution and Delivery. This Security
Agreement has been duly authorized, executed and delivered by Debtor
and constitutes the legal, valid and binding obligation of Debtor
enforceable in accordance with its terms.
h. Consents. No consent of any other party (including, without
limitation, creditors of Debtor) and no consent, license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority,
domestic or foreign, is required to be obtained by Debtor in connection
with the execution, delivery or performance of this Security Agreement.
i. No Conflict. The execution, delivery and performance of this
Security Agreement will not violate any provision of any applicable law
or regulation or of any order, judgment, writ, award or decree of any
court, arbitrator or governmental authority, domestic or foreign, or of
the certificate of incorporation or bylaws of Debtor or of any
securities issued by Debtor, or of any mortgage, indenture, lease,
contract, or other agreement, instrument or undertaking to which Debtor
is a party or which purports to be binding upon Debtor or upon any of
its assets and will not result in the creation or imposition of any
lien, charge or encumbrance on or security interest in any of the
assets of Debtor except as contemplated by this Security Agreement.
8. Debtor's Covenants.
a. Ownership of Collateral. At the time Debtor pledges, sells,
assigns, transfers to Secured Party or grants to Secured Party a
Security Interest in any Collateral or any interest therein, Debtor
shall, subject to any claim existing by secured party, be the absolute
owner thereof and shall have the absolute right to pledge, sell, assign
or transfer the same. Debtor shall defend the Collateral against all
claims and demands of all persons at any time claiming the same or any
interest therein adverse to Secured Party.
b. Maintenance. Debtor shall keep the Collateral free from
liens and security interests other than the Security Interest created
hereby or under Exhibit C of the Loan Agreement, and shall not create
or suffer to exist any lien or security interest in Collateral
hereafter acquired except for the Security Interest hereby granted or
under Exhibit C of the Loan Agreement. Debtor shall pay all costs
necessary to obtain, preserve, defend and enforce the Security
Interest, collect on Obligation, and preserve, defend, enforce and
collect the Collateral, including specifically, but without limitation,
the payment of taxes, assessments, reasonable attorneys' fees and legal
expenses, and expenses of sales. Whether the Collateral is or is not
in Secured Party's possession, and without any obligation to do so,
Secured Party may, at its option, pay any such costs and expenses,
discharge encumbrances on the Collateral, and pay for insuring the
Collateral. Debtor agrees to reimburse Secured party on demand for any
payments so made and until such reimbursement, the amount of any such
payment shall be a part of the Obligation. Debtor shall, at its sole
expense, maintain the Collateral in first class repair, condition and
appearance and shall comply with industry standards, applicable laws
and regulations, and requirements for enforcing warranty claims.
c. Information and Inspection. Debtor shall furnish to Secured
Party any reports and other information with respect to the Collateral
requested by Secured Party, will allow Secured Party to inspect the
Collateral at any time and wherever located, and will allow Secured
Party to inspect and copy, or will furnish Secured Party with copies
of, all records relating to the Collateral and the Obligation. Debtor
shall furnish to Secured Party such information as Secured Party may
request to identify notes receivable, accounts receivable, chattel
paper, general intangibles and contract rights assigned hereunder at
the times and in the form and substance requested by Secured Party.
d. Additional Documents. Debtor shall furnish Secured Party
with financing statements upon request and Debtor shall sign any other
documents or instruments furnished by Secured Party which are necessary
in the judgment of Secured Party to obtain, maintain and perfect the
Security Interest in any applicable jurisdiction and to assist Secured
Party in complying with the Federal Assignment of Claims Act, where
necessary to enable Secured Party to become an assignee under such Act,
and any expense of Secured Party so incurred shall be a part of the
Obligation. In this regard, Debtor agrees to execute all such
collateral chattel and/or other mortgages, assignments of accounts
receivable and any and all other financing statements and security
devices as Secured Party may request to perfect or continue perfection
of the Security Interest under the laws of any state in which the
Collateral is located.
e. Parties Liable on Collateral. Debtor will take all necessary
steps to preserve the liability of account debtors, obligors and
secondary parties to any obligations that are part of the Collateral.
Secured Party shall have the duty to preserve such liability but it may
do so, and any expense of Secured Party so incurred shall be a part of
the Obligation.
f. Modification of Accounts or Contract Rights. Debtor will not
agree to any material modification of any of the terms of any notes or
accounts receivable, contract rights, chattel paper or other
instruments evidencing or pertaining to Collateral assigned hereunder
other than in the ordinary course of business, without the prior
written consent of Secured Party.
g. Right of Secured Party to Notify Account and Contract
Debtors. Upon the occurrence of an Event of Default (as hereinafter
defined), Secured Party shall have the right to notify persons
obligated on any instruments, accounts, or contracts which are part of
the Collateral to take payment thereof directly to Secured Party and to
take control of all proceeds of any of the Collateral. Until such time
as Secured Party elects to exercise such rights, Debtor, as the agent
of Secured Party, shall collect and enforce all such instruments,
accounts or contracts. The cost of such collection and enforcement,
including, without limitation, attorneys' fees and expenses, shall be
done by Debtor, whether the same is incurred by Secured Party or
Debtor. If paid by Secured Party, such payment shall become part of
the Obligation.
h. Books of Account. Debtor will, at all times, maintain
accurate books and records with respect to the Collateral. Secured
Party is hereby given the right to audit the books and records of
Debtor relating to said Collateral at any time, and from time to time,
as Secured Party deems proper.
i. Location of Instruments, Accounts Receivable and Contracts.
Debtor shall give Secured Party written notice of each office of Debtor
in which records of Debtor pertaining to accounts and contracts which
are Collateral are kept, or will be kept, in any of said office,
offices, location, or locations. Except as such notice is given, all
records of Debtor pertaining to accounts and contracts are and shall be
kept at Debtor's address as shown at the beginning hereof or at the
appropriate Clinic. At the Secured Party's request, Debtor shall cause
to be marked conspicuously all documents constituting the Collateral
with a legend in form and substance satisfactory to Secured Party
indicating that such document is subject to the Security Interest.
j. Notice of Changes. Debtor will notify Secured Party of any
material change occurring in or to the Collateral, of a change in
Debtor's mailing address, or in any material change in any fact or
circumstance warranted or represented by Debtor in this Security
Agreement or furnished to Secured Party, or if any Event of Default
occurs, prior to or immediately following the occurrence thereof.
k. Use and Disposition of Collateral. Debtor will not use the
Collateral illegally or encumber the same without the prior written
consent of Secured Party. Without the prior written consent of Secured
Party, Debtor will not sell, lease, transfer, hypothecate, anticipate
or otherwise dispose of the Collateral, except as follows:
i. Debtor shall make any replacements, betterments and
improvements that may be required under the terms of this Security
Agreement or the Loan Agreement; and
ii. Debtor may sell inventory in the ordinary course of
business for fair value (including the giving of trade discounts
in arms length transactions) and may dispose of machinery and
equipment which in the opinion of the board of directors of Debtor
is not necessary for the proper operation of Debtor's business
provided that such disposition would not materially and adversely
affect the interest of the Secured Party or the ability of Debtor
to meet its obligations as they become due.
l. Possession of Collateral. Upon the written request of
Secured Party, Debtor will transfer possession of all instruments,
securities, documents, and chattel paper (including the original,
executed copies of leases, or other agreements for rental, of machinery
and equipment by the Debtor as lessor) which are part of the Collateral
to the Secured Party immediately. Debtor hereby waives presentment,
demand, notice of dishonor, protest, and notice of protest, notice of
intent to accelerate, notice of acceleration and all other notices with
respect thereto. Receipt of chattel paper (including leases and rental
agreements as aforesaid) shall be evidenced by the signature of the
Secured Party on the face of such document and only the document
containing the receipt therefor executed by the Secured Party on the
face thereof shall evidence the monetary obligations of the lessee or
other obligee hereunder and thereunder.
m. Insurance. From and after the date of this Security
Agreement and until the Obligation is paid in full, Debtor will, at its
expense, maintain at all times insurance on the Collateral against such
risks, in such amounts, in such form and with such insurance companies
as are specified or as shall be reasonably satisfactory to Secured
Party.
n. Inventory. Secured Party's Security Interest in
inventory shall continue through all steps of treatment and collections
and attach without further action to raw materials, work in process,
finished goods, returned goods and proceeds, refunds, etc. resulting
from the sale or disposition of such inventory. All inventory is or
will be kept at the offices of the Debtor specified herein for records
concerning the Collateral. Debtor will notify Secured Party in writing
of any changes in or additions to the location(s) set forth.
Notwithstanding the foregoing, it is understood and agreed that if for
any reason inventory is at any time kept or located at locations other
than those above listed or hereafter consented to by Secured Party,
Secured Party shall nevertheless have and retain a security interest
therein. No inventory shall be removed from such locations, except for
the purpose of sales, leases or other uses in the ordinary course of
business; but a sale in the ordinary course of business shall not
include any transfer or sale in satisfaction, partial or complete, of a
debt owed by the Debtor.
9. Rights and Powers of Secured Party. Secured Party may, in its
discretion, upon the occurrence and continuance of an Event of Default
hereunder, do any one or more of the following: Require Debtor to give
possession or control of the Collateral to Secured Party; take physical
possession of the Collateral and maintain it on Debtor's premises, in a
third party location or at such other place as to which Secured Party may
remove the Collateral or any part thereof, endorse as Debtor's agent any
instruments, securities, or chattel paper in the Collateral; contact account
debtors directly to verify information cashed by Debtor; take control of
proceeds, including stock received as dividends or by reason of stock
splits, and use cash proceeds to reduce any part of the Obligation; take any
action Debtor is required to take or any other necessary action to obtain,
preserve, and enforce this Security Agreement, and maintain and preserve the
Collateral, without notice to Debtor, and add costs of same to the
Obligation (but Secured Party is under no duty to take any such action);
release Collateral in its possession to Debtor, temporarily or otherwise;
designate from time to time a certain percent of the Collateral as the loan
value and require Debtor to maintain the Obligation at or below such figure;
take control of funds generated by the Collateral such as cash dividends and
interest, and use same to reduce any part of the Obligation; vote any stock
which is part of the Collateral; use cash collateral to reduce any part of
the Obligation; and exercise all other rights which an owner of such stock
may exercise and exercise all rights which account holders or obligees may
exercise with respect to any of the Collateral. Secured Party may at any
time in its discretion transfer any of the Collateral or evidence thereof
into its own name or that of its nominee and receive the proceeds therefrom
and hold the same as security for the Obligation, or, following the
occurrence and continuance of an Event of Default, but shall be under no
duty to, demand, collect, receipt for, settle, compromise, adjust, ▇▇▇ for,
foreclose, or realize upon Collateral, in its own name or in the name of
Debtor, as Secured Party may determine. Secured Party shall not be liable
for any act or omission on the part of Secured Party, its officers, agents,
or employees, except willful misconduct and gross negligence. The foregoing
rights and powers of Secured Party shall be in addition to, and not a
limitation upon, any rights and powers of Secured Party given by law,
custom, elsewhere by this Security Agreement, the Loan Agreement or
otherwise.
10. Default.
a. Events of Default. Debtor shall be in default under this
Security Agreement upon the happening of any of the following events or
conditions ("Event of Default"):
i. Debtor shall default in the timely payment or performance
of any obligation, covenant or liability contained herein or
secured hereby; or
ii. Any representation or warranty contained herein shall be
false or misleading in any material respect when made.
b. Remedies of Secured Party Upon Default. When an Event of
Default occurs, and at any time thereafter, Secured Party may declare
the Obligation or any part thereof immediately due and payable and may
proceed to enforce payment of the same and to exercise any and all of
the rights and remedies provided by the Code as well as all other rights
and remedies possessed by Secured Party under this Security Agreement or
otherwise. Secured Party may require Debtor to assemble the Collateral
and make it available to Secured Party at any place to be designated by
the Secured Party which is reasonably convenient to all parties. Unless
the Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Secured Party will give Debtor
reasonable notice of the time and place of any public sale thereof or of
the time after which any private sale or any other intended disposition
is to be made. Expenses of retaking, holding, preparing for sale,
selling, leasing and the like shall include Secured Party's reasonable
attorneys' fees and legal expenses. Secured Party shall be entitled to
immediate possession of the Collateral and shall have authority to enter
upon any premises upon which the same may be situated and remove the
same therefrom. If Secured Party disposes of the Collateral, or any
portion thereof, following default, the proceeds of such disposition
available to satisfy the Obligation shall be applied by Secured Party to
the Obligation in such order and in such manner as Secured Party in its
discretion shall decide. Debtor also agrees to pay all costs of Secured
Party, including attorneys' fees, incurred with respect to the
collection of the Obligation and the enforcement of the rights and
remedies of Secured Party hereunder. Debtor hereby waives presentment,
demand, protest or any notice (to the extent permitted by applicable
law) of any kind in connection with this Security Agreement or any
Collateral.
11. General.
a. Assignment of Collateral by Secured Party. The Secured Party
may assign all or any part of the Obligation, and may assign, transfer,
or deliver to any transferee of any of the Obligation any or all of the
Collateral, and thereafter Secured Party shall be fully discharged from
all responsibility with respect to the Collateral so assigned,
transferred or delivered. Such transferee shall be vested with the
powers and rights of the Secured Party hereunder with respect to such
Collateral, but the Secured Party shall retain all rights and powers
hereby given with respect to any of the Collateral not so assigned or
transferred.
b. Waiver. No delay on the part of the Secured Party in exercising
any power or right shall operate as a waiver thereof, nor shall any
single or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or right.
No waiver by Secured Party of any right hereunder or of any Event of
Default by Debtor shall be binding upon Secured Party unless in writing,
and no failure by Secured Party to exercise any right hereunder or
waiver of any Event of Default of Debtor shall operate as a waiver of
any other or further exercise of such right or of any further Event of
Default.
c. Parties Bound. The rights of Secured Party hereunder shall
inure to the benefit of its successors and assigns. The terms of this
Security Agreement shall be binding upon the successors and assigns of
the parties hereto. All representations, warranties and agreements of
Debtor shall bind Debtor's successors and assigns. This Security
Agreement shall constitute a continuing agreement, applying to all
future transactions of a character contemplated at the date of this
Security Agreement.
d. Definitions. Unless the context indicates otherwise,
definitions in the Code apply to words and phrases in this Agreement; if
Code definitions conflict, Article 9 definitions apply.
e. Notice. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered personally
or sent by registered or certified mail, postage prepaid, to the
applicable party at its address given or at such other address as shall
be furnished in writing by such party to the other, and shall be deemed
to have been given as of the date so delivered or three (3) days after
deposited in the United States Mail. Notice mailed in accordance with
this section at least five (5) days prior to the related action (or if
the Code elsewhere requires a longer period, such longer period) shall
be deemed reasonable.
f. Modifications. No provision hereof shall be modified or
limited except by a written agreement expressly referring hereto and to
the provision so modified or limited and signed by all parties to this
Security Agreement, and without limiting the foregoing, no course of
conduct, usage of trade or law merchant shall modify or limit any
provision hereof.
g. Severabilily. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
h. Financing Statement. Secured Party is authorized on
behalf of Debtor as Debtor's agent and attorney in fact, for such
purpose, to complete and sign one or more financing statements with
respect to any Collateral covered by this Security Agreement and to file
the same in an appropriate office or place. A carbon, photographic or
other reproduction of this Security Agreement or of any financing
statement prepared in conjunction herewith is sufficient as a financing
statement.
i. APPLICABLE LAW. THIS SECURITY AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO
THE EXTENT THAT THE VALIDITY AND PERFECTION OF THE SECURITY INTEREST, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED
BY THE LAWS OF THE JURISDICTION OTHER THAN THE STATE OF TEXAS.
12. Limitation on Agreements. All agreements between Debtor and
Secured Party, whether now existing or hereafter arising and whether written
or oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of the maturity of the
Obligation or otherwise, shall the amount paid, or agreed to be paid, to
Secured Party for the use, forbearance, or detention of the money to be
loaned under the Note or otherwise or for the payment or performance of any
covenant or obligation contained herein, or in any other document
evidencing, securing or pertaining to the Obligation or the Collateral,
exceed the maximum amount, if any, permissible under applicable law. If
from any circumstances whatsoever interest would otherwise be payable to
Secured Party in excess of the maximum lawful amount, the interest payable
to Secured Party shall be reduced to the maximum amount permitted under
applicable law, and if from any such circumstance the Secured Party shall
ever receive as interest or otherwise an amount which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal amount owing on account of the
Obligation or on account of any other principal indebtedness of the Debtor
to the Secured Party, and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance principal of the Obligation
and such other indebtedness, such excess shall be refunded to the Debtor.
All sums paid or agreed to be paid to the Secured Party for the use,
forbearance or detention of the indebtedness of the Debtor to the Secured
Party shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full of the principal (including the period of any renewal
or extension thereof) so that the interest on account of such indebtedness
shall not exceed the maximum amount permitted by applicable law. The term
"applicable law" as used in this Section 9 shall mean the laws of the State
of Texas or the laws of the United States, whichever laws allow the greater
rate of interest, as such laws now exist or may be changed or amended or
come into effect in the future. The terms and provisions of this Section
shall control and supersede every other provision of all agreements between
the Debtor and the Secured Party.
EXECUTED the date first above written.
SECURED PARTY:
_____________________________
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, D.C.
Beliar Capital Group, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
DEBTOR:
_____________________________
▇▇. ▇.▇. ▇▇▇▇▇▇, Chairman and CEO
American HealthChoice, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
_______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
American HealthChoice, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇