EXHIBIT 4.11
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement dated as of December 29, 2005 (this
"Agreement") by and between American HealthChoice, Inc., a New York
corporation, with principal executive offices located at 0000 Xxxxxx Xxxx,
Xxxxx 000-000, Xxxxxx Xxxxx, Xxxxx 00000 (the "Company"), and Golden Gate
Investors, Inc. ("Holder").
WHEREAS, Holder desires to purchase from the Company, and the Company
desires to issue and sell to Holder, upon the terms and subject to the
conditions of this Agreement, the Convertible Debenture of the Company in
the aggregate principal amount of $30,000 (the "Debenture"); and
WHEREAS, in conjunction with the Debenture, the Company has issued a
Warrant to Purchase Common Stock to the Holder (the "Warrant"); and
WHEREAS, upon the terms and subject to the conditions set forth in the
Debenture and the Warrant, the Debenture and Warrant are convertible and
exercisable, respectively, into shares of the Company's Common Stock (the
"Common Stock");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
PURCHASE AND SALE OF DEBENTURE
Transaction. Holder hereby agrees to purchase from the Company, and
the Company has offered and hereby agrees to issue and sell to Holder in a
transaction exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), the Debenture.
Purchase Price; Form of Payment. The purchase price for the Debenture
to be purchased by Holder hereunder shall be $30,000 (the "Purchase Price").
Simultaneously with the execution of this Agreement, Holder shall pay
$30,000 of the Purchase Price (the "Initial Purchase Price") by wire
transfer of immediately available funds to the Company. Simultaneously with
the execution of this Agreement, the Company shall deliver the Convertible
Debenture and the Warrants (which shall have been duly authorized, issued
and executed I/N/O Holder or, if the Company otherwise has been notified,
I/N/O Holder's nominee). Upon notification and verification that the
Registration Statement for the Conversion Shares (as defined below) and the
shares of Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares") has been declared effective by the Securities and Exchange
Commission, and such shares can legally be issued to Holder, Holder shall
immediately send via wire the remainder of the Purchase Price.
HOLDER'S REPRESENTATIONS AND WARRANTIES
Holder represents and warrants to and covenants and agrees with the
Company as follows:
Holder is purchasing the Debenture and the Common Stock issuable upon
conversion or redemption of the Debenture (the "Conversion Shares" and,
collectively with the Debenture and the Warrant Shares, the "Securities")
for its own account, for investment purposes only and not with a view
towards or in connection with the public sale or distribution thereof in
violation of the Securities Act.
Holder is (i) an "accredited investor" within the meaning of Rule 501
of Regulation D under the Securities Act, (ii) experienced in making
investments of the kind contemplated by this Agreement, (iii) capable, by
reason of its business and financial experience, of evaluating the relative
merits and risks of an investment in the Securities, and (iv) able to afford
the loss of its investment in the Securities.
Holder understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the registration requirements
of the Securities Act and equivalent state securities and "blue sky" laws,
and that the Company is relying upon the accuracy of, and Holder's
compliance with, Holder's representations, warranties and covenants set
forth in this Agreement to determine the availability of such exemption and
the eligibility of Holder to purchase the Securities;
Holder understands that the Securities have not been approved or
disapproved by the Securities and Exchange Commission (the "Commission") or
any state or provincial securities commission.
This Agreement has been duly and validly authorized, executed and
delivered by Holder and is a valid and binding agreement of Holder
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws.
THE COMPANY'S REPRESENTATIONS
The Company represents and warrants to Holder that:
Capitalization.
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The authorized capital stock of the Company consists of 2,000,000
shares of Common Stock and 20,000 shares of Series B Preferred Stock of
which 110,970,759 shares and 13,875 shares, respectively, are issued and
outstanding as of the date hereof and are fully paid and nonassessable. The
amount, exercise, conversion or subscription price and expiration date for
each outstanding option and other security or agreement to purchase shares
of Common Stock is accurately set forth on Schedule III.A.1.
The Conversion Shares and the Warrant Shares have been duly and
validly authorized and reserved for issuance by the Company, and, when
issued by the Company upon conversion of the Debenture, will be duly and
validly issued, fully paid and nonassessable and will not subject the holder
thereof to personal liability by reason of being such holder.
Except as disclosed on Schedule III.A.3., there are no preemptive,
subscription, "call," right of first refusal or other similar rights to
acquire any capital stock of the Company or other voting securities of the
Company that have been issued or granted to any person and no other
obligations of the Company to issue, grant, extend or enter into any
security, option, warrant, "call," right, commitment, agreement, arrangement
or undertaking with respect to any of their respective capital stock.
Organization; Reporting Company Status.
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The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state or jurisdiction in which it is
incorporated and is duly qualified as a foreign corporation in all
jurisdictions in which the failure so to qualify would reasonably be
expected to have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise) or results of operations of
the Company or on the consummation of any of the transactions contemplated
by this Agreement (a "Material Adverse Effect").
The Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Common Stock is traded on the OTC Bulletin Board service of the National
Association of Securities Dealers, Inc. ("OTCBB") and the Company has not
received any notice regarding, and to its knowledge there is no threat of,
the termination or discontinuance of the eligibility of the Common Stock for
such trading.
Authorization. The Company (i) has duly and validly authorized and
reserved for issuance shares of Common Stock, which is a number sufficient
for the conversion of the Debenture and the exercise of the Warrant and (ii)
at all times from and after the date hereof shall have a sufficient number
of shares of Common Stock duly and validly authorized and reserved for
issuance to satisfy the conversion of the Debenture in full and the exercise
of the Warrant. The Company understands and acknowledges the potentially
dilutive effect on the Common Stock of the issuance of the Conversion Shares
and the Warrant Shares. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Debenture and
the exercise of the Warrant in accordance with this Agreement is absolute
and unconditional regardless of the dilutive effect that such issuance may
have on the ownership interests of other stockholders of the Company and
notwithstanding the commencement of any case under 11 U.S.C. S 101 et seq.
(the "Bankruptcy Code"). In the event the Company is a debtor under the
Bankruptcy Code, the Company hereby waives to the fullest extent permitted
any rights to relief it may have under 11 U.S.C. S 362 in respect of the
conversion of the Debenture. The Company agrees, without cost or expense to
Holder, to take or consent to any and all action necessary to effectuate
relief under 11 U.S.C. S 362.
Authority; Validity and Enforceability. The Company has the requisite
corporate power and authority to enter into the Documents (as such term is
hereinafter defined) and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Holder of the
Securities). The execution, delivery and performance by the Company of the
Documents and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance
of the Debenture and the issuance and reservation for issuance of the
Conversion Shares and the Warrant Shares) have been duly and validly
authorized by all necessary corporate action on the part of the Company.
Each of the Documents has been duly and validly executed and delivered by
the Company and each Document constitutes a valid and binding obligation of
the Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and except as rights to indemnity and contribution may be limited
by federal or state securities laws or the public policy underlying such
laws. The Securities have been duly and validly authorized for issuance by
the Company and, when executed and delivered by the Company, will be valid
and binding obligations of the Company enforceable against it in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally. For purposes of this Agreement,
the term "Documents" means (i) this Agreement; (ii) the Registration Rights
Agreement dated as of even date herewith between the Company and Holder,
(iii) the Debenture; and (iv) the Warrant.
Validity of Issuance of the Securities. The Debenture, the Conversion
Shares upon their issuance in accordance with the Debenture, and the Warrant
Shares will be validly issued and outstanding, fully paid and nonassessable,
and not subject to any preemptive rights, rights of first refusal, tag-along
rights, drag-along rights or other similar rights.
Non-contravention. The execution and delivery by the Company of the
Documents, the issuance of the Securities, and the consummation by the
Company of the other transactions contemplated hereby and thereby do not,
and compliance with the provisions of this Agreement and other Documents
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any Lien (as such term
is hereinafter defined) upon any of the properties or assets of the Company
or any of its Subsidiaries under, or result in the termination of, or
require that any consent be obtained or any notice be given with respect to
(i) the Articles or Certificate of Incorporation or By-Laws of the Company
or the comparable charter or organizational documents of any of its
Subsidiaries, in each case as amended to the date of this Agreement, (ii)
any loan or credit agreement, Debenture, bond, mortgage, indenture, lease,
contract or other agreement, instrument or permit applicable to the Company
or any of its Subsidiaries or their respective properties or assets or (iii)
any Law (as such term is hereinafter defined) applicable to, or any
judgment, decree or order of any court or government body having
jurisdiction over, the Company or any of its Subsidiaries or any of their
respective properties or assets.
Approvals. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the Company
for the issuance and sale of the Securities to Holder as contemplated by
this Agreement, except such authorizations, approvals and consents as have
been obtained by the Company prior to the date hereof.
Commission Filings. The Company has properly and timely filed with the
Commission all reports, proxy statements, forms and other documents required
to be filed with the Commission under the Securities Act and the Exchange
Act since becoming subject to such Acts (the "Commission Filings"). As of
their respective dates, (i) the Commission Filings complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the Commission promulgated
thereunder applicable to such Commission Filings and (ii) none of the
Commission Filings contained at the time of its filing any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Filings, as of the
dates of such documents, were true and complete in all material respects and
complied with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") (except in the case of unaudited statements permitted by
Form 10-Q under the Exchange Act) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments that in the
aggregate are not material and to any other adjustment described therein).
Full Disclosure. There is no fact known to the Company (other than
general economic or industry conditions known to the public generally) that
has not been fully disclosed in the Commission Filings that (i) reasonably
could be expected to have a Material Adverse Effect or (ii) reasonably could
be expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to the Documents.
Absence of Events of Default. No "Event of Default" (as defined in any
agreement or instrument to which the Company is a party) and no event which,
with notice, lapse of time or both, would constitute an Event of Default (as
so defined), has occurred and is continuing.
Securities Law Matters. Assuming the accuracy of the representations
and warranties of Holder set forth in Article II, the offer and sale by the
Company of the Securities is exempt from (i) the registration and prospectus
delivery requirements of the Securities Act and the rules and regulations of
the Commission thereunder and (ii) the registration and/or qualification
provisions of all applicable state and provincial securities and "blue sky"
laws. The Company shall not directly or indirectly take, and shall not
permit any of its directors, officers or Affiliates directly or indirectly
to take, any action (including, without limitation, any offering or sale to
any person or entity of any security similar to the Debenture) which will
make unavailable the exemption from Securities Act registration being relied
upon by the Company for the offer and sale to Holder of the Debenture, the
Conversion Shares and the Warrant Shares as contemplated by this Agreement.
No form of general solicitation or advertising has been used or authorized
by the Company or any of its officers, directors or Affiliates in connection
with the offer or sale of the Debenture (and the Conversion Shares) as
contemplated by this Agreement or any other agreement to which the Company
is a party.
Registration Rights. Except as set forth on Schedule III.L., no Person
has, and as of the Closing (as such term is hereinafter defined), no Person
shall have, any demand, "piggy-back" or other rights to cause the Company to
file any registration statement under the Securities Act relating to any of
its securities or to participate in any such registration statement.
Interest. The timely payment of interest on the Debenture is not
prohibited by the Articles or Certificate of Incorporation or By-Laws of the
Company, in each case as amended to the date of this Agreement, or any
agreement, contract, document or other undertaking to which the Company is a
party.
No Misrepresentation. No representation or warranty of the Company
contained in this Agreement or any of the other Documents, any schedule,
annex or exhibit hereto or thereto or any agreement, instrument or
certificate furnished by the Company to Holder pursuant to this Agreement
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Finder's Fee. There is no finder's fee, brokerage commission or like
payment in connection with the transactions contemplated by this Agreement
for which Holder is liable or responsible.
CERTAIN COVENANTS AND ACKNOWLEDGMENTS
Filings. The Company shall make all necessary Commission Filings and
"blue sky" filings required to be made by the Company in connection with the
sale of the Securities to Holder as required by all applicable Laws, and
shall provide a copy thereof to Holder promptly after such filing.
Reporting Status. So long as Holder beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed
by it with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act.
Listing. Except to the extent the Company lists its Common Stock on
The New York Stock Exchange, The American Stock Exchange or The Nasdaq Stock
Market, the Company shall use its best efforts to maintain its listing of
the Common Stock on OTCBB. If the Common Stock is delisted from OTCBB, the
Company will use its best efforts to list the Common Stock on the most
liquid national securities exchange or quotation system that the Common
Stock is qualified to be listed on.
Reserved Conversion Common Stock. The Company at all times from and
after the date hereof shall have such number of shares of Common Stock duly
and validly authorized and reserved for issuance as shall be sufficient for
the conversion in full of the Debenture and the exercise of the Warrant.
Information. Each of the parties hereto acknowledges and agrees that
Holder shall not be provided with, nor be given access to, any material non-
public information relating to the Company.
Accounting and Reserves. The Company shall maintain a standard and
uniform system of accounting and shall keep proper books and records and
accounts in which full, true, and correct entries shall be made of its
transactions, all in accordance with GAAP applied on consistent basis
through all periods, and shall set aside on such books for each fiscal year
all such reserves for depreciation, obsolescence, amortization, bad debts
and other purposes in connection with its operations as are required by such
principles so applied.
Transactions with Affiliates. So long as the Debenture is outstanding,
neither the Company nor any of its Subsidiaries shall, directly or
indirectly, enter into any material transaction or agreement with any
stockholder, officer, director or Affiliate of the Company or family member
of any officer, director or Affiliate of the Company, unless the transaction
or agreement is (i) reviewed and approved by a majority of Disinterested
Directors (as such term is hereinafter defined) and (ii) on terms no less
favorable to the Company or the applicable Subsidiary than those obtainable
from a nonaffiliated person. A "Disinterested Director" shall mean a
director of the Company who is not and has not been an officer or employee
of the Company and who is not a member of the family of, controlled by or
under common control with, any such officer or employee.
Certain Restrictions. So long as the Debenture is outstanding, no
dividends shall be declared or paid or set apart for payment nor shall any
other distribution be declared or made upon any capital stock of the
Company, nor shall any capital stock of the Company be redeemed, purchased
or otherwise acquired (other than a redemption, purchase or other
acquisition of shares of Common Stock made for purposes of an employee
incentive or benefit plan (including a stock option plan) of the Company or
pursuant to any of the security agreements listed on Schedule IV.H) for any
consideration by the Company, directly or indirectly, nor shall any moneys
be paid to or made available for a sinking fund for the redemption of any
Common Stock.
I. Short Selling. So long as the Debenture is outstanding, Holder
agrees and covenants on its behalf and on behalf of its affiliates that
neither Holder nor its affiliates shall at any time engage in any short
sales with respect to the Company's Common Stock, or sell put options or
similar instruments with respect to the Company's Common Stock. The parties
acknowledge that Holder shall be entitled to sell the Common Stock from each
Debenture conversion and Warrant exercise immediately upon submission of the
applicable Debenture Conversion Notice and Warrant Notice of Exercise, and
payment of the purchase price, to the Company for such Common Stock.
ISSUANCE OF COMMON STOCK
The Company undertakes and agrees that no instruction other than the
instructions referred to in this Article V and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant
to an effective Securities Act registration statement shall be given to its
transfer agent for the Conversion Shares and the Warrant Shares and that the
Conversion Shares and the Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing contained in this Section V.A. shall affect in any way
Holder's obligations and agreement to comply with all applicable securities
laws upon resale of such Common Stock.
Holder shall have the right to convert the Debenture and exercise the
Warrant by telecopying an executed and completed Conversion Notice (as such
term is defined in the Debenture) or Warrant Notice of Exercise (as such
term is defined in the Warrant) to the Company. Each date on which a
Conversion Notice or Warrant Notice of Exercise is telecopied to and
received by the Company in accordance with the provisions hereof shall be
deemed a Conversion Date (as such term is defined in the Debenture). The
Company shall cause the transfer agent to transmit the certificates
evidencing the Common Stock issuable upon conversion of the Debenture
(together with a new debenture, if any, representing the principal amount of
the Debenture not being so converted) or exercise of the Warrant (together
with a new Warrant, if any, representing the amount of the Warrant not being
so exercised) to Holder via express courier, or if a Registration Statement
covering the Common Stock has been declared effective by the SEC by
electronic transfer, within two (2) business days after receipt by the
Company of the Conversion Notice or Warrant Notice of Exercise (the
"Delivery Date").
Upon the conversion of the Debenture or exercise of the Warrant or part
thereof, the Company shall, at its own cost and expense, take all necessary
action (including the issuance of an opinion of counsel) to assure that the
Company's transfer agent shall issue stock certificates in the name of
Holder (or its nominee) or such other persons as designated by Holder and in
such denominations to be specified at conversion representing the number of
shares of common stock issuable upon such conversion or exercise. The
Company warrants that the Conversion Shares and Warrant Shares will be
unlegended, free-trading, and freely transferable, and will not contain a
legend restricting the resale or transferability of the Company Common Stock
provided the Conversion Shares and Warrant Shares are being sold pursuant to
an effective registration statement covering the Common Stock to be sold or
is otherwise exempt from registration when sold.
The Company understands that a delay in the delivery of the Common
Stock in the form required pursuant to this section, or the Mandatory
Redemption Amount described in Section E hereof, beyond the Delivery Date or
Mandatory Redemption Payment Date (as hereinafter defined) could result in
economic loss to the Holder. As compensation to the Holder for such loss,
the Company agrees to pay late payments to the Holder for late issuance of
Common Stock in the form required pursuant to Section C hereof upon
Conversion of the Debenture or late payment of the Mandatory Redemption
Amount, in the amount of $100 per business day after the Delivery Date or
Mandatory Redemption Payment Date, as the case may be, for each $10,000 of
Debenture principal amount being converted or redeemed. The Company shall
pay any payments incurred under this Section in immediately available funds
upon demand. Furthermore, in addition to any other remedies which may be
available to the Holder, in the event that the Company fails for any reason
to effect delivery of the Common Stock by the Delivery Date or make payment
by the Mandatory Redemption Payment Date, the Holder will be entitled to
revoke all or part of the relevant Notice of Conversion or rescind all or
part of the notice of Mandatory Redemption by delivery of a notice to such
effect to the Company whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to the delivery of
such notice, except that late payment charges described above shall be
payable through the date notice of revocation or rescission is given to the
Company.
Mandatory Redemption. In the event the Company is prohibited from
issuing Common Stock, or fails to timely deliver Common Stock on a Delivery
Date, or upon the occurrence of an Event of Default (as defined in the
Debenture) or for any reason other than pursuant to the limitations set
forth herein, or upon the occurrence of an Event of Default as defined in
the Debenture, then at the Holder's election, the Company must pay to the
Holder ten (10) business days after request by the Holder or on the Delivery
Date (if requested by the Holder) a sum of money determined by multiplying
up to the outstanding principal amount of the Debenture designated by the
Holder by 130%, together with accrued but unpaid interest thereon
("Mandatory Redemption Payment"). The Mandatory Redemption Payment must be
received by the Holder on the same date as the Company Common Stock
otherwise deliverable or within ten (10) business days after request,
whichever is sooner ("Mandatory Redemption Payment Date"). Upon receipt of
the Mandatory Redemption Payment, the corresponding Debenture principal and
interest will be deemed paid and no longer outstanding.
F. Buy-In. In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such Common Stock issuable
upon conversion of a Debenture or exercise of a Warrant by the Delivery Date
and if ten (10) days after the Delivery Date the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Common Stock which the Holder
anticipated receiving upon such conversion (a "Buy-In"), then the Company
shall pay in cash to the Holder (in addition to any remedies available to or
elected by the Holder) the amount by which (A) the Holder's total purchase
price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Debenture or Warrant for which such conversion or exercise was
not timely honored, together with interest thereon at a rate of 15% per
annum, accruing until such amount and any accrued interest thereon is paid
in full (which amount shall be paid as liquidated damages and not as a
penalty). For example, if the Holder purchases shares of Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of $10,000 of Debenture or Warrant principal and/or
interest, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
The Securities shall be delivered by the Company to the Holder pursuant
to Section I.B. hereof on a "delivery-against-payment basis" at the Closing.
CLOSING DATE
The Closing shall occur by the delivery: (i) to the Holder of the
certificate evidencing the Debenture and all other Agreements, and (ii) to
the Company the Purchase Price.
CONDITIONS TO THE COMPANY'S OBLIGATIONS
Holder understands that the Company's obligation to sell the Debenture
on the Closing Date to Holder pursuant to this Agreement is conditioned
upon:
Delivery by Holder to the Company of the Initial Purchase Price;
The accuracy on the Closing Date of the representations and warranties
of Holder contained in this Agreement as if made on the Closing Date (except
for representations and warranties which, by their express terms, speak as
of and relate to a specified date, in which case such accuracy shall be
measured as of such specified date) and the performance by Holder in all
material respects on or before the Closing Date of all covenants and
agreements of Holder required to be performed by it pursuant to this
Agreement on or before the Closing Date; and
There shall not be in effect any Law or order, ruling, judgment or writ
of any court or public or governmental authority restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this
Agreement.
CONDITIONS TO HOLDER'S OBLIGATIONS
The Company understands that Holder's obligation to purchase the
Securities on the Closing Date pursuant to this Agreement is conditioned
upon:
Delivery by the Company of the Debenture, the Warrant and the other
Agreements (I/N/O Holder or I/N/O Holder's nominee);
The accuracy on the Closing Date of the representations and warranties
of the Company contained in this Agreement as if made on the Closing Date
(except for representations and warranties which, by their express terms,
speak as of and relate to a specified date, in which case such accuracy
shall be measured as of such specified date) and the performance by the
Company in all respects on or before the Closing Date of all covenants and
agreements of the Company required to be performed by it pursuant to this
Agreement on or before the Closing Date, all of which shall be confirmed to
Holder by delivery of the certificate of the chief executive officer of the
Company to that effect;
There not having occurred (i) any general suspension of trading in, or
limitation on prices listed for, the Common Stock on the OTCBB/Pink Sheet,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States or any of its territories,
protectorates or possessions or (iv) in the case of the foregoing existing
at the date of this Agreement, a material acceleration or worsening thereof;
There not having occurred any event or development, and there being in
existence no condition, having or which reasonably and foreseeably could
have a Material Adverse Effect;
There shall not be in effect any Law, order, ruling, judgment or writ
of any court or public or governmental authority restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this
Agreement;
F. The Company shall have obtained all consents, approvals or waivers
from governmental authorities and third persons necessary for the execution,
delivery and performance of the Documents and the transactions contemplated
thereby, all without material cost to the Company;
Holder shall have received such additional documents, certificates,
payment, assignments, transfers and other deliveries as it or its legal
counsel may reasonably request and as are customary to effect a closing of
the matters herein contemplated;
H. Delivery by the Company of an enforceability opinion from its
outside counsel in form and substance satisfactory to Holder.
SURVIVAL; INDEMNIFICATION
The representations, warranties and covenants made by each of the
Company and Holder in this Agreement, the annexes, schedules and exhibits
hereto and in each instrument, agreement and certificate entered into and
delivered by them pursuant to this Agreement shall survive the Closing and
the consummation of the transactions contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants,
the party to whom such representations, warranties or covenants have been
made shall have all rights and remedies for such breach or violation
available to it under the provisions of this Agreement or otherwise, whether
at law or in equity, irrespective of any investigation made by or on behalf
of such party on or prior to the Closing Date.
The Company hereby agrees to indemnify and hold harmless Holder, its
affiliates and their respective officers, directors, partners and members
(collectively, the "Holder Indemnitees") from and against any and all
losses, claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "Losses") and agrees to reimburse Holder Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel),
in each case promptly as incurred by Holder Indemnitees and to the extent
arising out of or in connection with:
any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement or
the other Documents, or the annexes, schedules or exhibits hereto or
thereto or any instrument, agreement or certificate entered into or
delivered by the Company pursuant to this Agreement or the other
Documents;
any failure by the Company to perform any of its covenants,
agreements, undertakings or obligations set forth in this Agreement or
the other Documents or any instrument, certificate or agreement entered
into or delivered by the Company pursuant to this Agreement or the
other Documents;
the purchase of the Debenture, the conversion of the Debenture,
the payment of interest on the Debenture, the issuance of the Warrant
Shares, the consummation of the transactions contemplated by this
Agreement and the other Documents, the use of any of the proceeds of
the Purchase Price by the Company, the purchase or ownership of any or
all of the Securities, the performance by the parties hereto of their
respective obligations hereunder and under the Documents or any claim,
litigation, investigation, proceedings or governmental action relating
to any of the foregoing, whether or not Holder is a party thereto; or
resales of the Common Stock by Holder in the manner and as
contemplated by this Agreement and the Registration Rights Agreement.
Holder hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Company Indemnitees") from and against any and all
Losses, and agrees to reimburse the Company Indemnitees for all out-of-
pocket expenses (including the fees and expenses of legal counsel), in each
case promptly as incurred by the Company Indemnitees and to the extent
arising out of or in connection with:
any misrepresentation, omission of fact or breach of any of
Holder's representations or warranties contained in this Agreement or
the other Documents, or the annexes, schedules or exhibits hereto or
thereto or any instrument, agreement or certificate entered into or
delivered by Holder pursuant to this Agreement or the other Documents;
or
any failure by Holder to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in
this Agreement or the other Documents or any instrument, certificate or
agreement entered into or delivered by Holder pursuant to this
Agreement or the other Documents.
Promptly after receipt by either party hereto seeking indemnification
pursuant to this Article SURVIVAL; INDEMNIFICATION (an "Indemnified Party")
of written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Article SURVIVAL; INDEMNIFICATION is being
sought (the "Indemnifying Party") of the commencement thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights or defenses by reason of such failure. In connection
with any Claim as to which both the Indemnifying Party and the Indemnified
Party are parties, the Indemnifying Party shall be entitled to assume the
defense thereof. Notwithstanding the assumption of the defense of any Claim
by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such
Claim, and the Indemnifying Party shall bear the reasonable fees, out-of-
pocket costs and expenses of such separate legal counsel to the Indemnified
Party if (and only if): (x) the Indemnifying Party shall have agreed to pay
such fees, out-of-pocket costs and expenses, (y) the Indemnified Party and
the Indemnifying Party reasonably shall have concluded that representation
of the Indemnified Party and the Indemnifying Party by the same legal
counsel would not be appropriate due to actual or, as reasonably determined
by legal counsel to the Indemnified Party, potentially differing interests
between such parties in the conduct of the defense of such Claim, or if
there may be legal defenses available to the Indemnified Party that are in
addition to or disparate from those available to the Indemnifying Party or
(z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period
of time after notice of the commencement of such Claim. If the Indemnified
Party employs separate legal counsel in circumstances other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of
such legal counsel shall be borne exclusively by the Indemnified Party.
Except as provided above, the Indemnifying Party shall not, in connection
with any Claim in the same jurisdiction, be liable for the fees and expenses
of more than one firm of legal counsel for the Indemnified Party (together
with appropriate local counsel). The Indemnifying Party shall not, without
the prior written consent of the Indemnified Party (which consent shall not
unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnified Party from all liabilities with respect to such Claim or
judgment.
In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such
claim to the Indemnifying Party. If the Indemnified Party disputes the
claim, such dispute shall be resolved by mutual agreement of the Indemnified
Party and the Indemnifying Party or by binding arbitration conducted in
accordance with the procedures and rules of the American Arbitration
Association. Judgment upon any award rendered by any arbitrators may be
entered in any court having competent jurisdiction thereof.
GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California, without regard to the conflicts of law
principles of such state.
SUBMISSION TO JURISDICTION
Each of the parties hereto consents to the exclusive jurisdiction of
the federal courts whose districts encompass any part of the City of San
Diego or the state courts of the State of California sitting in the City of
San Diego in connection with any dispute arising under this Agreement
and the other Documents. Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may effectively do so, any
defense of an inconvenient forum or improper venue to the maintenance of
such action or proceeding in any such court and any right of jurisdiction on
account of its place of residence or domicile. Each party hereto
irrevocably and unconditionally consents to the service of any and all
process in any such action or proceeding in such courts by the mailing of
copies of such process by registered or certified mail (return receipt
requested), postage prepaid, at its address specified in Article XVII. Each
party hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
WAIVER OF JURY TRIAL
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY
HERETO (i) CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES,
AGENTS OR ATTORNEYS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS
AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
COUNTERPARTS; EXECUTION
This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but both of which counterparts
shall together constitute one and the same instrument. A facsimile
transmission of this signed Agreement shall be legal and binding on both
parties hereto.
HEADINGS
The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
SEVERABILITY
In the event any one or more of the provisions contained in this
Agreement or in the other Documents should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS
This Agreement and the Documents constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of such parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by both parties. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
NOTICES
Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally, or sent by telecopier machine or
by a nationally recognized overnight courier service, and shall be deemed
given when so delivered personally, or by telecopier machine or overnight
courier service as follows:
If to the Company, to:
----------------------
American HealthChoice, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000-000
Xxxxxx Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
