1
EXHIBIT 10.1
2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into as of this 1st day of December, 1995, by and among Valley
Family Health Center, L.L.C., a Texas limited liability company (the
"Company"), American HealthChoice, Inc., a Delaware corporation ("AHC"), and
Xxxxx Xxxxxx, an individual resident of the State of Texas ("Xxxxxx"), Xxxxx
Xxxxxxx, D.C., an individual resident of the State of Texas ("Voracek"), and
X.X. Xxxxxx, D.C., an individual resident of the State of Texas ("Xxxxxx").
For purposes of this Agreement, Xxxxxx, Xxxxxxx and Xxxxxx are sometimes
referred to herein collectively as the "Members".
WITNESSETH:
WHEREAS, AHC desires to acquire all of the issued and outstanding
membership interests of the Company from the Members in exchange for newly
issued shares of voting common stock of AHC;
WHEREAS, the parties hereto intend for the transaction contemplated
herein to be a reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Members desire to effect an exchange of their membership
interests in the Company for newly issued shares of voting common stock of AHC
pursuant to the terms and provisions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants of the parties hereto, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Certain Defined Terms. When used in this agreement,
the following capitalized words and phrases shall have the following meanings
assigned to them:
(a) "Accounts Receivable" shall mean, with respect to the
Company, any right to payment for goods sold or services rendered in
the normal course of business of rendering professional services to
patients, whether in the form of accounts, notes, negotiable
instruments and chattel paper, and which exist as of the Closing Date.
Accounts Receivable shall specifically include charges for services
rendered to patients prior to the Closing Date but which have not yet
been billed.
(b) "33 Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
(c) "Affiliate" means, with respect to any specified
person, any other person who, directly or indirectly, owns or
controls, is under common ownership or control with, or is owned or
controlled by, such specified person.
(d) "Assets" shall mean, with respect to the Company, all
of the assets and properties, real, personal, and mixed, tangible and
intangible, of the Company, of every kind and description and wherever
situated as the same may exist on the Closing Date.
(e) "Balance Sheet" shall have the meaning set forth in
Section 3.1(o).
(f) "Balance Sheet Date" shall have the meaning set forth
in Section 3.1(c).
3
(g) "Closing" shall have the meaning set forth in Section
2.3.
(h) "Code" shall have the meaning set forth in the
recitals to this Agreement.
(i) "Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of
voting securities, by contract or otherwise.
(j) "Commission" means the United States Securities and
Exchange Commission.
(k) "Common Stock" shall mean the voting Common Stock, of
the par value of $0.001 per share, of AHC.
(l) "Encumbrances" shall mean all security interests,
liens, pledges, claims, charges, escrows, encumbrances, encroachments,
rights of first refusal, subleases, conditional sales agreements,
options, mortgages, indentures, easements, licenses, restrictions or
other covenants, agreements, understandings, obligations, defects or
irregularities affecting title to any of the Assets.
(m) "Environmental Laws" means any federal, state or
local law, ordinance or regulation pertaining to the protection of
human health or the environment, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C.Section Section 9601 et seq., Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section Section 11001 et seq.,
and the Resource Conservation and Recovery Act, 42 U.S.C. Section
Section 6901 et seq.
(n) "Hazardous Substances" shall include oil and
petroleum products, asbestos, polychlorinated biphenyls and urea
formaldehyde, and any other materials classified as hazardous or toxic
under any Environmental Laws.
(o) "Professional" or "Professionals" shall mean those
individuals who are employed by or under contract with the Company to
provide professional chiropractic services to patients of the Company.
(p) "Shares" shall mean shares of Common Stock to be
issued by AHC to the Members at the Closing pursuant to the terms and
provisions hereof.
(q) "Subsidiary" or "Subsidiaries" of any person means
any corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are
at the time directly or indirectly owned or controlled by such person
or one or more Subsidiaries of such person.
Section 1.2 Other Defined Terms. Any capitalized term not
specifically defined in Section 1.1 shall have the meaning provided for the
term in the section in this Agreement in which such term is first used.
Section 1.3 References. All references in this Agreement to
"Articles" and "Sections" shall be to articles and sections of this Agreement
unless otherwise noted. The words "hereof", "herein", "hereby", "hereinafter",
"heretofore", "hereunder" and words of similar import shall also refer to
material set forth in this Agreement as a whole and not to any particular
subdivision unless expressly so limited.
4
ARTICLE 2
EXCHANGE
Section 2.1 Terms of Exchange. Based upon the representations,
warranties, covenants and agreements contained in this Agreement, and subject
to the terms and conditions hereof:
(a) At the Closing, the Members shall transfer and
exchange with AHC all of the outstanding membership interests of the
Company (collectively, the "Membership Interests") so as to make AHC
the sole holder thereof, free and clear of all Encumbrances;
(b) At the Closing, in exchange for the Membership
Interests, AHC shall issue and deliver to the Members certificates for
an aggregate of 360,000 shares of Common Stock (the "Shares"),
registered in the names of the Members in amounts determined on a pro
rata basis for the Membership Interests exchanged.
Section 2.2 The Shares. The Shares shall be "restricted
securities", as defined in Rule 144 promulgated under the "33 Act". The
parties hereto agree that the exchange rate shall be $2.25 per Share.
Section 2.3 Closing. The consummation of the exchange
contemplated herein (the "Closing") shall take place at 0000 X. Xxxxxx Xxxx
Xxxx, Xxxxx 000, Xxxxxx, Xxxxx on or before January 5, or such other time and
place as shall be mutually agreed upon. The date on which the Closing occurs
is referred to as the "Closing Date."
Section 2.4 Closing Events. At the Closing, AHC and the Members
shall deliver such instruments of transfer as the other party shall reasonably
require to effect the exchange contemplated herein.
Section 2.5 Post Closing Events. After the Closing:
(a) AHC will file within six (6) months of the date
hereof with the Commission a registration statement with respect to
shares of Common Stock; and
(b) In connection with any such registration, AHC shall
give to Xxxxxx prompt notice of AHC's intent to do so. Upon the
written request of Xxxxxx given within 30 days after receipt of such
notice, AHC shall cause to be included in such registration 27,000
shares of the Shares delivered hereunder to Xxxxxx. Furthermore, any
expenses incurred in connection with the inclusion of such shares of
Xxxxxx in such registration (other than underwriting commissions and
discounts) shall be borne by AHC. The right granted in this Section
to Xxxxxx is applicable only with respect to the initial registration
of shares of AHC's common stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Company and
Members. The Company and, to the best knowledge (but without any
investigation) of each Member, the Members, severally, hereby represent and
warrant to AHC, with the intention that AHC shall rely thereon in performing
hereunder, as follows:
(a) Authority. The Company has the power to own the
Assets and to carry on its business as now conducted.
5
(b) Validity of Agreement. This Agreement constitutes
the binding obligations of the Company enforceable in accordance with
its terms. Neither the execution hereof nor the performance by the
Company of this Agreement will result in a violation or breach of (I)
any term or provision of, nor constitute a default under, any
agreement, indenture, mortgage, deed of trust or other contract or
agreement to which the Company is a party or by which the Company or
the Company's properties (including the Assets) are bound or (ii) any
law of the State of Texas.
(c) Absence of Certain Changes. Since September 30, 1995
(the "Balance Sheet Date") the Company has not:
(1) incurred any obligations or
liabilities (absolute or contingent), except current
liabilities (including, without limitation, payroll) incurred
in the ordinary course of business, not to exceed $20,000.00
in the aggregate;
(2) mortgaged, pledged or subjected
(whether or not voluntarily) to any lien, charge or other
encumbrance, any of the Company's assets, other than inchoate
liens, charges and encumbrances arising by operation of law
incidental to its business operations or the ownership of the
Company's properties and assets which were not incurred in
connection with the borrowing of money, or the obtaining of
advances or credit, and which do not in the aggregate
materially impair the use thereof in the conduct of the
Company's operations:
(3) sold, assigned or transferred or
agreed to sell, assign or transfer any of the Assets or
cancelled any debts or claims, except in each case in the
ordinary course of business and as permitted hereby;
(4) sold, assigned, or transferred or
agreed to sell, assign or transfer any trade names, or other
intangible assets, or permitted existing rights with respect
thereto to lapse;
(5) suffered any extraordinary loss or
waived or permitted to lapse any right of substantial value;
(6) made any capital expenditures;
(7) failed to comply in all material
respects with any applicable local, state or federal law, rule
or regulation; or
(8) suffered any event or condition of
any character, materially and adversely affecting its
business, properties or prospects.
(d) Contracts. A copy of all written contracts,
agreements or commitments of any type which relate to its business
operations has been delivered to AHC, and there has not been any
material default, nor has any event occurred which, with notice or the
lapse of time or action by a third party, could result in a material
default, in any obligation to be performed by the Company under any of
such contracts or any material oral contracts, agreements or
commitments of any type which relate to the business operations of the
Company, and the Company has not waived any material rights under any
such contracts.
(e) Compensation and Benefits. AHC has been furnished
with a list of all current employees, consultants and medical
personnel of the Company, together with the current job title and
remuneration (compensation, bonus, salary and benefits) for each such
person. There are
6
no benefit plans, including health, life and pension plans, maintained
by the Company for personnel employed thereby.
(f) Licenses. AHC has been furnished with a list of all
governmental and other licenses relating to the operations of the
Company ("Company Operations") (including, as to each such license,
the name of the licensee and licensor, a description of the subject
matter of the license, the termination date, if any, or notice
requirement with respect to termination and renewal options),
including, without limitation, the current licenses of each of the
Company's professionals ("Professionals") who provide services to
patients of the Company and for whom a license to provide such service
is required under the laws of the State of Texas. All such licenses
are in full force and effect and there have not been and there
currently are not any material defaults or deficiencies thereunder by
any party; and no event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other
event) would constitute a material default or deficiency thereunder.
(g) Personal Property. AHC has been furnished with a
complete and correct list and description of all equipment used in
connection with the Company's Operations, and the Company has good
title to such equipment, free and clear of all Encumbrances (other
than such Encumbrances of record or as has been disclosed to AHC).
(h) Tax Returns and Audits. The Company has filed all
income, franchise and other tax returns required to be filed
(including those owing to the United States or any other governmental
unit or any subdivision thereof) on or before the date hereof, and no
taxes are owed for any period of time prior to the Closing.
(i) Litigation. Except as disclosed to AHC, there are
no, and there have not been in the past five (5) years, any
investigations, inquiries, actions, suits or proceedings relating to
medical matters (excluding disputes with Medicare, Medicaid or other
third party reimbursement programs or payors) or non-medical matters
pending or, to the knowledge of the Company and the Members,
threatened against the Company or to which the Company is a party or
affecting the Company's business, licenses, permits, Assets or
properties by or before any governmental unit, agency or court and, to
the knowledge of the Company and each Member no substantive basis
exists for any such action.
(j) Insurance Coverage. The Company and each
Professional maintains a policy or policies of malpractice and
liability insurance covering the Company's Operations and the
Professional, respectively.
(k) Material Liabilities. There are no facts in
existence on the date hereof and known to the Company or the Members
which might reasonably serve as a basis for any material liabilities
or obligations not disclosed in this Agreement or in Exhibits or
financial statements previously delivered to AHC, except for
commitments and obligations incurred in the ordinary course of
business, consistent with past practices, accruing after the date of
said financial statements.
(l) No Finders or Brokers. The Company has not engaged
any finder or broker in connection with the transactions contemplated
hereunder. The Company, and each Member, jointly and severally, will
indemnify and hold AHC harmless against any claims (and attorneys'
fees and expenses in the defense thereof) of any person, firm or
corporation for finders' fees, brokers' fees, brokerage commissions,
sales commissions or the like alleged in connection with the
transactions contemplated hereunder due to acts of the Company.
7
(m) Material Misstatements or Omissions. No
representation, warranty, undertaking or agreement by the Company in
this Agreement, the Exhibits or financial statements delivered
previously to AHC, or in any other document, statement, certificate or
schedule furnished or to be furnished to AHC pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements or facts
contained therein not misleading.
(n) Business Entities. The Company has no Subsidiaries.
(o) Financial Statements. The balance sheet of the
Company at September 30, 1995 (the "Balance Sheet"), and the balance
sheet(s) of the Company at September 30, 1994 and for the year to date
through November, 1995, and the related statements of income and
changes in financial position for the periods then ended, have been
delivered to AHC (such financial statements and the related notes
being herein called the "Financial Statements"). The Financial
Statements are prepared on the cash basis of accounting on a
consistent basis throughout the periods involved, and on that basis,
the Financial Statements are true, complete and accurate in all
material respects and present fairly the assets, liabilities and
financial condition of the Company at the respective dates thereof and
the results of Company Operations for the periods ended. The Company
has paid or has properly recorded on the Financial Statements all
actually known and undisputed refunds, discounts or adjustments which
have become due pursuant to any Third Party Payor Claim (as defined
herein) and the Company has no material liability to any Third Party
Payor (as defined herein) with respect thereto, except as has been
reserved for in the Balance Sheet.
(p) Environmental Matters. The Company is in compliance
with all federal, state and local Environmental Laws applicable to
Company Operations, including, without limitation, those respecting
hazardous or biomedical materials and/or wastes. The Company has not
engaged in any storage, holding, release, emission, discharge,
generation, processing, disposition, handling or transportation of any
Hazardous Substances, except as permitted by law.
(q) Compliance with Medicare/Medicaid Programs. The
Company and each of its Professionals, where necessary, is qualified
for participation in the Medicare and Medicaid reimbursement programs
and is a party to provider agreements for such programs which are in
full force and effect with no events of default having occurred
thereunder. Neither the Company nor any Professional has been
convicted of, or pledge guilty or nolo contendere to, patient abuse or
neglect, or any other Medicare or Medicaid reimbursement
program-related offense. Neither the Company nor any Professional has
(I) committed any offense which may serve as the basis for suspension
or exclusion from the Medicare and Medicaid reimbursement programs,
including, but not limited to, defrauding a government program, loss
of a license to provide health care services, and failure to provide
quality care, or (ii) engaged in any prohibited reassignment of
Medicare or Medicaid reimbursement program accounts receivable.
(r) Filing of Third Party Payor Claims. The Company has
timely filed all claims or other reports required to be filed prior to
the Closing Date with respect to the purchase of services by third
party payors ("Third Party Payors"), including, but not limited to,
the Medicare and Medicaid reimbursement programs, except where the
failure to file would not, individually or in the aggregate, result in
a material adverse effect. All such claims or reports ("Third Party
Payor Claims") are complete and accurate in all material respects.
There are not pending any appeals, overpayment determinations,
adjustments, challenges, audits, litigation, or notices of intent to
reopen Medicare and/or Medicaid claims, determinations or other
reports required to be filed by the Company in order to be paid by a
Third Party Payor for services rendered.
8
(s) Fraud and Abuse. To the best of the Company's
knowledge after due inquiry, neither the Company nor any persons
and/or entities providing professional services for the Company have
engaged in any activities which are prohibited under Section 1320a-7b
of Title 42 of the United States Code, or the regulations promulgated
thereunder, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct, including, but
not limited to, the following:
(1) knowingly and willfully making or causing to
be made a false statement or representation of a material fact
in any applicable for any benefit or payment;
(2) knowingly and willfully making or causing to
be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment;
(3) failure to disclose knowledge by a claimant
of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or
on behalf of another, with intent to fraudulently secure such
benefit or payment; and
(4) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe, or
rebate), directly or indirectly, overtly or covertly, in cash
or in kind, or offering to pay or receive such remuneration
(I) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part by
the Medicare or Medicaid reimbursement programs, or (ii) in
return for purchasing, leasing, or ordering or arranging for
or recommending, purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be made in
whole or in part by the Medicare or Medicaid reimbursement
programs.
(t) Obligations to Patients. Except as disclosed
previously to AHC, the Company has no obligation to deliver services
after the Closing Date with respect to which the Company has received
or will receive payment (in total or in part), including, without
limitation, any capitalization payments, before the Closing Date and
no contractual commitments to deliver free services or services at a
discount.
(u) Compliance with Certain Laws. Except as disclosed in
writing to AHC prior to the date hereof, neither the Company nor any
Professional has received any notices of material violations of any
federal, state and local laws, regulations and ordinances relating to
Company Operations or the Assets, including, without limitation, the
Occupational Safety and Health Act and the Americans with Disabilities
Act, and no notice of any pending inspection or violation of any such
law, regulation or ordinance has been received by the Company.
(v) Third Party Payor Relationship. Except as previously
disclosed to AHC, the Company and each of the Professional has a good
relationship with those Third Party Payors with whom the Company has
contracted for services and none of such Third Party Payors has
notified the Company that it intends to discontinue its relationship
with the Company or to deny any Third Party Payor Claims submitted
thereto for payment, nor has the Company or any Professional been the
subject of any patient complaint or grievance filing pursuant to
applicable payor procedures.
Section 3.2 Representations and Warranties of AHC. AHC hereby
represents and warrants, to the Company and each Member, with the intentions
that the Members shall rely thereon in performing hereunder, as follows:
9
(a) Organization and Good Standing. AHC is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware with full corporate power and authority to
enter into this Agreement and to perform hereunder.
(b) Validity of Agreement. All corporate action
necessary to be taken on AHC's part to effect the transactions
contemplated by this Agreement has been taken and this Agreement is
binding upon AHC in accordance with its terms. Neither the making of
this Agreement nor performance hereunder will constitute a breach
under or violation of AHC's Certificate of Incorporation or Bylaws or
any contract or agreement to which it is a party or by which it may be
bound.
(c) Issuance of Shares. The Shares to be delivered to
the Members on the Closing Date will be duly authorized, validly
issued, fully paid and nonassessable.
ARTICLE 4
COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE
Section 4.1 Conduct of Operations. Prior to the Closing Date,
the Company shall conduct its business and affairs in the ordinary course and
consistent with prior practice and shall maintain, keep and preserve its assets
and properties (including, without limitation, the Assets) in good condition
and repair and maintain insurance thereon in accordance with present practices,
and the Members shall use their best efforts to cause the Company (i) to
preserve the business and organization of the Company intact, (ii) to keep
available to the Company the services of its present employees, agents and
independent contractors, and (iii) to preserve for the benefit of Company and
AHC the goodwill of the Company's suppliers, customers, patients, and others
having business relations with the Company. Without limiting the generality of
the foregoing, the Company agrees not to (1) make any material change in the
business or operations of the Company or in the utilization of the Assets, or
(2) enter into any contracts or transactions which are not in the ordinary
course of business without AHC's prior written consent.
Section 4.2 Access to Books and Records. Pending the Closing,
the Company shall afford the officers and other representatives of AHC full
access to its properties and company and other records at reasonable times and
after reasonable notice in order that AHC has full opportunity to make such
investigation as it desires of the business and affairs of the Company. The
Company agrees to fully cooperate with AHC in AHC's financial review of the
books and records of the Company and Company Operations.
Section 4.3 Unusual Events. Until the Closing Date, the Company
shall supplement or amend all relevant information previously delivered to AHC
with respect to any matter thereafter arising or discovered which, if existing
or known at the date of this Agreement, would have been required to be set
forth or described therein.
Section 4.4 Departmental Violations. The Company shall make all
reasonable attempts to comply with all notices of violations of law or
municipal ordinances, orders or requirements noted in or issued by government
agencies or departments having authority with respect to buildings, fire,
labor, health, or any other federal, state or municipal department having
jurisdiction against or affecting Company Operations or the Assets prior to the
Closing date unless contesting the same in good faith. All such notices, after
the date hereof and prior to the Closing Date, shall be complied with by the
Company prior to the Closing Date. Upon written request, the Company shall
furnish AHC with an authorization to make the necessary searches for such
notices.
ARTICLE 5
10
CONDITIONS PRECEDENT
Section 5.1 To Performance by AHC. The obligation of AHC to
consummate this Agreement shall be conditioned upon each of the following (any
or all of which may be waived in writing by AHC):
(a) The representations and warranties of the Company and
the Members contained herein shall be true and correct on and as of
the Closing Date, the covenants of the Company hereunder required to
be performed prior to Closing shall have been performed, and the
Company shall have executed and delivered to AHC a certificate to such
effect.
(b) There shall not have occurred any event which has had
a material, adverse effect on the business or financial condition of
the Company, its business prospects or Company Operations.
(c) There shall have been no material damage or
destruction with respect to any of the Assets.
(d) AHC shall have received from the Company an
Incumbency Certificate, dated as of the Closing Date, in form
satisfactory to AHC's legal counsel, containing a specimen of the
signature of representative of the Company who has authority to sign
for and on behalf of the Company.
(e) The Company shall have delivered to AHC a true and
complete and accurate list as of the Closing Date, showing (i) all
liabilities, obligations and contracts and agreements of the Company
incurred or entered into since the date hereof, other than those
contracts, liabilities and obligations incurred or entered into in the
ordinary course of Company Operations (excluding liabilities resulting
from or arising out of any claim for medical malpractice or other tort
liability), and (ii) all assets of the Company acquired since the date
hereof other than those assets acquired in the ordinary course of
Company Operations.
Section 5.2 To Performance by the Members. The obligations of
each Member to consummate this Agreement shall be conditioned upon each of the
following (any or all of which may be waived in writing by such Member):
(a) The representations and warranties of AHC contained
herein shall be true and correct on and as of the Closing Date, and
the covenants of AHC to be performed prior to Closing shall have been
performed.
(b) AHC shall have executed all documents required
pursuant to the terms of this Agreement, and AHC shall have provided
each Member with all such Incumbency Certificates and Corporate
Resolutions as reasonably requested by the Member to evidence the
effectiveness of the closing documents executed by AHC.
ARTICLE 6
INDEMNIFICATION
Section 6.1 Indemnification of AHC. Each Member hereby agrees to
indemnify, defend and hold harmless AHC from and against all damages, loss,
cost and expense (including reasonable attorneys' fees and expenses) of or to
AHC in respect of:
(a) any and all misrepresentations or breaches of
warranty by the Member; and
11
(b) any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to the foregoing.
Section 6.2 Indemnification of Members. AHC hereby agrees to
indemnify, defend and hold each Member harmless from and against all damages,
loss, cost and expense (including reasonable attorneys' fees and expenses) of
the Member in respect of:
(a) any and all misrepresentations or breaches of
warranty by AHC, regardless of any investigation made by the Members;
and
(b) any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to the foregoing.
Section 6.3 Right of Participation. Each Member shall be given
reasonable written notice and the reasonable opportunity to participate, at the
Member's expense, in the defense of any cause of action initiated by a third
party against AHC as to which indemnity may be sought by AHC hereunder. AHC
shall be given reasonable written notice and the reasonable opportunity to
participate, at AHC's expense in the defense of any cause of action initiated
by a third party against any Member as to which indemnity may be sought by the
Member hereunder. The obligations described in Sections 7.1 and 7.2 of this
Article 7 shall survive the Closing hereunder.
ARTICLE 7
FEDERAL SECURITIES LAWS
Section 7.1 Shares not Registered. Each of the Members
acknowledges that the Shares to be delivered hereunder thereto have not been
registered under the '33 Act and may not be resold except pursuant to an
effective registration statement under the '33 Act or pursuant to an exemption
from registration. Furthermore, the Shares to be acquired pursuant to this
Agreement are being acquired by each Member solely for the Member's own
account, for investment purposes only and with no present intention of
distributing, selling or otherwise disposing of any or all of such Shares in
connection with a distribution within the meaning of the '33 Act.
Section 7.2 Compliance with Law. Each Member covenants, warrants
and represents that none of the Shares to be issued to him pursuant to this
Agreement will be offered, sold, assigned, pledged, hypothecated, transferred
or otherwise disposed of except after full compliance with all of the
applicable provisions of the '33 Act and the rules and regulations of the
Commission and applicable state securities laws and regulations. All
certificates evidencing the Shares shall bear the following legend (together
with any other legends required by applicable state securities laws) as
required by law:
"The shares represented hereby have not been registered under
the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state and may not be sold or otherwise
transferred unless in compliance with the Act and all other
applicable securities laws."
Section 7.3 Economic Risk Sophistication. Each Member represents
and warrants to and covenants with AHC as follows:
(a) That AHC has made available to the Member or his
representatives, the opportunity to ask questions of AHC's officers
and directors and to acquire such additional information about the
Shares and the business and financial condition of AHC as the Member
has requested, which additional information, if any requested, has
been satisfactorily received by the Member;
12
(b) That in deciding to consummate the exchange
contemplated herein, the Member has relied upon consultations with his
legal, financial and tax advisers with respect to this transaction and
the nature of the investment in the Shares to be received hereunder,
together with any additional information provided under subsection (a)
above;
(c) That the financial condition of the Member is such
that he can bear the risk of this investment indefinitely;
(d) That, either alone or with his representative(s), the
Member has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of an
investment in AHC and therefore has the capacity to protect his own
interests in connection with the acquisition of the Shares;
(e) That the Member will not transfer or otherwise
dispose of the Shares delivered thereto hereunder, any interest
therein or in such manner as to violate any registration provision of
the '33 Act, or of any applicable state securities law regulating the
disposition thereof; and
(f) That the representations, warranties and covenants of
the Member contained in this Section shall survive the execution and
delivery of this Agreement and the issuance of the Shares thereto.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Further Assurances. Each of the Members agrees that
he shall, at any time and from time to time after the Closing Date, upon
request of AHC, do all such further acts and things as AHC may deem appropriate
or necessary to consummate the transactions contemplated by this Agreement.
Section 8.2 Expenses. Except as specifically provided herein,
each party hereto shall pay its own expenses and those of their respective
counsel incident to the making of this Agreement and the consummation of the
transactions contemplated hereby.
Section 8.3 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
Section 8.4 Entire Agreement. This Agreement (including the
agreements referred to herein to be executed and delivered at the Closing) is
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior discussions or agreements among the parties
with respect to the subject matter hereof. This Agreement may be modified or
amended only by a writing signed by the party to be bound thereby and shall be
construed and enforced in accordance with the laws of the State of Texas.
Section 8.5 Notices. Any notice or communication given pursuant
hereto by any party hereto shall be in writing and shall be deemed to have been
given when delivered personally or deposited in the United States Mail, postage
prepaid, at the following address, unless such address shall have been changed
by written notice to the other party in which case it shall be addressed to
such changed address:
13
If to the Company: Valley Family Health Center, L.L.C.
0000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to AHC: American HealthChoice, Inc.
0000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to Xxxxxx: Mr. Xxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx 00000
If to Xxxxxx: X.X. Xxxxxx, D.C.
0000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to Voracek: Xx. Xxxxx Xxxxxxx
0000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Section 8.6 Exhibits. All Exhibits referred to herein are to
exhibits attached hereto, the same being incorporated herein by this reference.
Section 8.7 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of the Agreement.
Section 8.8 Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the Members, their
heirs, representatives, successors and assigns, and AHC and its successors and
assigns, and otherwise is not intended to confer any third party beneficiary
rights on any person or entity. This Agreement may not be voluntarily assigned
by any party without the prior written consent of the other parties.
Section 8.9 Termination. This Agreement may be terminated and
the exchange contemplated hereby abandoned at any time prior to the Closing
Date as follows:
(a) by the mutual consent of all parties hereto;
(b) by AHC, if any of the conditions set forth in Section
6.1 of Article 6 hereof shall not have been met by the Closing Date;
or
(c) by any Member, if any of the conditions set forth in
Section 6.2 of Article 6 hereof shall not have been met by the Closing
Date.
In the event this Agreement is terminated as provided above, each of the
parties shall deliver to the other parties all documents previously delivered
(and copies thereof in its possession) concerning one another and the
transactions contemplated hereby and (ii) none of the parties nor any of their
respective shareholders, directors, officers, or agents shall have any
liability to the other party for costs, expenses, loss of anticipated profits,
consequential damages, or otherwise, except for any deliberate breach or
deliberate omission resulting in breach or any of the provisions of this
Agreement.
Section 8.10 Nature and Survival of Representations. All
statements contained in any certificate delivered by or on behalf of any of the
parties to this Agreement pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties made
by
14
the respective parties hereunder. The covenants, representations and
warranties made by the parties each to the other in this Agreement or pursuant
hereto shall survive the exchange contemplated herein and any investigation
made by any party hereto.
Section 8.11 Confidentiality. Except as provided in this Section,
which Section shall survive termination, after termination of this Agreement,
for any reason whatsoever, each party shall keep confidential all information
provided by the other pursuant to this Agreement which is not in the public
domain, and shall exercise the same care in handling such information as it
would exercise with similar information of its own.
Section 8.12 Attorneys' Fees. If legal action is commenced to
enforce this Agreement, the prevailing party in such action shall be entitled
to recover its costs and reasonable attorneys' fees in addition to any other
relief granted.
Section 8.13 Covenant's of Members. In connection with any
registration statement covering the Shares (in whole or any part), each Member
agrees to enter into a written agreement with the managing underwriter in such
form and containing such provisions as are customary in the securities business
for such an arrangement between an underwriter and companies of the size and
investment stature of AHC, including, without limitation, provisions regarding
indemnification. Furthermore, as a condition to the inclusion of any Shares of
a Member in any such registration, the Member shall execute any instrument or
agreement required by the underwriter pursuant to which the Member agrees, in
effect, not to sell, transfer or otherwise dispose of the Shares owned thereby
in the ten days prior to the effectiveness of such registration and for up to
180 days following the effectiveness of such registration.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed as of the day and year first above written.
AHC: American HealthChoice, Inc.
By: /s/ X. X. Xxxxxx
-----------------------------------
President
15
The Company: Valley Family Health Center, L.L.C.
By: /s/ X. X. Xxxxxx
-----------------------------------
Manager
Xxxxxx: /s/ X. X. Xxxxxx
---------------------------------------
X.X. Xxxxxx, X.X.
Xxxxxx: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Xxxxx Xxxxxx
Xxxxxxx: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx Xxxxxxx, D.C.
