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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
American HealthChoice, Inc.
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
026929100
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(CUSIP Number)
J.W. Stucki
1300 West Walnut Hill Lane, Suite 275
Irving, Texas 75038 (972) 751-1900
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 19, 1997
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement of Schedule 13G to report
the acquisition which is the subject of the Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filed out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
<PAGE>
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CUSIP No. 026929100 SCHEDULE 13D
- -----------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wingate Financial Associates, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES 1,000,000 shares of common stock, par value of $.001 per
BENEFICIALLY share, of American HealthChoice, Inc. (the "Common Stock"),
OWNED BY issuable upon exercise of outstanding warrants
EACH
REPORTING --------------------------------------------------------------
PERSON 8 SHARED VOTING POWER
WITH --
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,000,000 shares of Common Stock issuable upon exercise of
outstanding warrants
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000 shares of Common Stock issuable upon exercise of outstanding
warrants.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.7%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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<PAGE>
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CUSIP No. 026929100 SCHEDULE 13D
- -----------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mandel Sherman
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,000,000 shares of common stock, issuable upon exercise
BENEFICIALLY of outstanding warrants
OWNED BY
EACH
REPORTING --------------------------------------------------------------
PERSON 8 SHARED VOTING POWER
WITH --
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,000,000 shares of Common Stock issuable upon exercise of
outstanding warrants
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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<PAGE>
Item 1. Security and Issuer.
This statement relates to shares of Common Stock, par value $.001 per
share ("Common Stock"), of American HealthChoice, Inc. (the "Company"),
which are issuable upon exercise of outstanding warrants granted to the
reporting person. The principal executive offices of the Company are
located at Suite 275, 1300 West Walnut Hill Lane, Irving, Texas 75038.
Item 2. Identity and Background.
This Schedule 13D is being filed by Wingate Financial Associates, LLC
("Wingate") and Mandel Sherman ("Sherman"). Wingate is a limited
liability company organized under the laws of the State of Delaware and
Sherman is the Manager of Wingate.
(a) Wingate Financial Associates, LLC
(b) 210 Dartmouth, Pawtucket, RI 02860
(c) A private acquisition company, which principal business activity
is to act as an investor in strategic equity positions in
operating businesses and, pending such investments, to act as an
investor in securities and investments. Wingate does not limit
its investment activities to a particular industry.
(d) During the last five (5) years, Wingate has not been convicted
in any criminal proceeding.
(e) During the last five (5) years, Wingate has not been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation
with respect to such laws.
(a) Mandel Sherman
(b) c/o 210 Dartmouth, Pawtucket, RI 02860
(c) Manager, Wingate Financial Associates, LLC, having its principal
place of business at 210 Dartmouth, Pawtucket, RI 02860
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<PAGE>
(d) During the last five (5) years, Sherman has not been convicted
in any criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) During the last five (5) years, Sherman has not been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation
with respect to such laws.
(f) United States
Item 3. Source and Amount of Funds or Other Consideration.
In partial consideration of assisting the Company in its capital raising
efforts as well as a $550,000 loan to the Company (collectively, the
"Transaction"), which loan was made using working capital of Wingate in
the ordinary course of Wingate's business, as more particularly
described in Item 2(c) above, the Company granted Wingate warrants (the
"Warrants") to purchase up to 1,000,000 shares of Common Stock (the
"Warrant Shares"). Such Warrant Shares may be acquired by exercise of
the Warrants by Wingate any time after March 20, 1997 and before April
1, 1998, at an exercise price of $2.375 per share. For purposes of this
Schedule 13D, such Warrant Shares are deemed to be beneficially owned by
Wingate.
In connection with the Transaction and in order to induce Wingate to
enter into such Transaction, certain existing stockholders of the
Company granted options to Wingate to purchase up to an aggregate of
2,000,000 additional shares of Common Stock (the "Option Shares"), at an
exercise price of $2.75 per share, as follows: (i) an option to purchase
up to 300,000 Option Shares, commencing April 18, 1997 in the event that
the Company's Common Stock trades at $5.00 for 5 consecutive trading
days; (ii) an option to purchase up to an additional 300,000 Option
Shares, commencing June 17, 1997 in the event that the Company's Common
Stock trades at $5.50 for 5 consecutive trading days; (iii) an option to
purchase up to an additional 300,000 Option Shares, commencing July 17,
1997 in the event that the Company's Common Stock trades at $6.00 for 5
consecutive trading days; (iv) an option to purchase up
-5-
<PAGE>
to an additional 300,000 Option Shares, commencing September 15, 1997 in
the event that the Company's Common Stock trades at $6.50 for 5
consecutive trading days; (v) an option to purchase up to an additional
300,000 Option Shares, commencing November 14, 1997 in the event that
the Company's Common Stock trades at $7.00 for 5 consecutive trading
days; and (vi) an option to purchase up to an additional 500,000 Option
Shares, commencing January 13, 1998 in the event that the Company's
Common Stock trades at $7.00 for 5 consecutive trading days.
Item 4. Purpose of Transaction.
Wingate acquired the Warrants in a private transaction for investment
purposes. The options to purchase Option Shares from the Company were
also granted to Wingate in a private transaction, as more particularly
set forth in Item 3(b). These securities are also being held for
investment purposes. The purpose of Wingate obtaining the right to vote
the shares of Common Stock, upon exercise of the Warrants and/or
options, is to enable Wingate to influence the outcome of matters that
are subject to a vote of stockholders of the Company. Depending upon
market conditions and other factors that Wingate may deem material to
its investment decision, Wingate may purchase additional securities of
the Company in the open market or in private transactions, or may
dispose of all or a portion of the securities of the Company that it now
owns or hereafter may acquire.
The Company has also granted to Wingate the right to appoint four (4)
members of the Company's seven (7) member board of directors, subject to
the resignation of one (1) of the existing board members, to which
resignation has already been agreed.
Except as set forth in this Item 4, Wingate does not have any present
plans or proposals that relate to or that would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) The calculations in this Item are based upon 9,281,913 shares of
Common Stock issued and outstanding as of June 30, 1997. For
purposes hereof, Wingate beneficially owns 1,000,000 Warrant
Shares, issuable upon exercise of the
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<PAGE>
Warrants, comprising 9.7% of the issued and outstanding shares
of Common Stock. The foregoing calculation is made pursuant to
Rule 13d-3 promulgated under the Securities Exchange Act of
1934.
(b) Wingate is the sole owner of the Warrants and will have, upon
exercise of such Warrants, the sole power to vote and dispose of
all of the underlying Warrant Shares.
(c) Wingate has not effected any transactions in shares of the
Common Stock or in any options or warrants to purchase Common
Stock in the past 60 days.
(d) Wingate affirms that no other person has the right to receive or
the power to direct the receipt of dividends from, or the
proceeds from the sale of, the shares of Common Stock
beneficially owned by Wingate.
(e) It is inapplicable for the purposes herein to state the date on
which Wingate ceased to be the owner of more than five percent
(5%) of the Shares.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Except as set forth in Items 3 and 4, neither Wingate nor Sherman have
any contract, arrangement, understanding or relationship (legal or
otherwise) with any person with respect to any securities of the
Company. As noted in Item 3, the Company granted Wingate Warrants for
the purchase of 1,000,000 Warrant Shares and certain shareholders of the
Company granted Wingate options, contingent upon the trading price of
the Common Stock for an 18 month period commencing March 19, 1997, to
purchase up to an aggregate of 2,000,000 Option Shares. In addition, as
noted in Item 4, the Company has granted Wingate the right to appoint 4
of the 7 members of the Company's board of directors.
Item 7. Material to be Filed as Exhibits.
(a) Investor Agreement dated March 19, 1997 between the Company and
Wingate Financial Associates, LLC
(b) Warrant Agreement dated March 19, 1997 between the Company and
Wingate Financial Associates, LLC
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<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
WINGATE FINANCIAL ASSOCIATES, LLC
Dated July 16, 1997 By: /s/ Mandel Sherman
---------------------------------------
Mandel Sherman, Manager
Dated July 16, 1997 /s/ Mandel Sherman
---------------------------------------
MANDEL SHERMAN
-8-
INVESTOR AGREEMENT
This agreement is made and entered into this 19th day of March, 1997 by and
between Wingate Financial Associates, L.L.C. ("Investor"), a Delaware
corporation, and American HealthChoice, Inc. ("Company"), a New York
corporation.
WITNESSETH
WHEREAS, Company is engaged in the practice of operating medical clinics in
Texas, Georgia and Louisiana;
WHEREAS, Investor desires to invest in Company and take certain
responsibilities relative to control of the Company's Board of Directors;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual covenants, promises
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Investor and Company
hereby agree as follows:
BEST EFFORTS
Both parties agree to use best efforts to effectuate the intent and terms
of this agreement. Investor recognizes that Company is foregoing other
opportunities to fund the Company's needs. Further, both parties recognized time
is of the essence.
REPRESENTATIONS BY COMPANY
Board Members: The Company agrees to change its Board of Directors (Board)
to allow for seven (7) members. Upon the completion of the five hundred and
fifty thousand ($550,000) Bridge Loan, as defined below, to the Company, the
Company will agree to change the number of board members to seven (7). Further,
the Company will deliver the resignations of one (1) board member. Investor will
then have the right to appoint four members to the Company Board.
If a Raise of Capital (minimum of two million ($2,000,000), separate from
bridge loan), as described herein under Representations By Investor, is not
substantially complete within one hundred (100) days of the bridge loan, also
described herein under Representations By Investor, the Investor will provide
the Company with resignations of the four (4) board members appointed by the
Investors.
Bridge Loan: The current Board will approve a bridge loan in the amount of
five hundred and fifty thousand dollars ($550,000.00) by Investor, at ten (10%)
percent annually, as senior debt subject to existing debt already perfected as
of the date of this agreement. Additional consideration for said loan is in the
form of one million (1,000,000) warrants at two and three-
<PAGE>
eight ($2 3/8) dollars per share of Company common shares to be issued from
"authorized but not issued" Company common stock.
Consultant: David Love, C.P.A., J.D., an affiliate of Investor, will be
retained by the board as a consultant for an initial period of one (1) year,
subject to the same terms as imposed upon the new board members. Compensation
will be at forty-eight thousand ($48,000.00) annually plus reasonable
reimbursement expenses, with the first amount being deducted as a non-refundable
retainer of ten thousand ($10,000.00) to be paid upon the closing of the bridge
loan, with the balance being accrued until the funding of the Raise of Capital
as represented by Investor below.
Founder Options: Doctors J.W. Stucki, J. Jones and J. Nelson, or other
founders will make available two million ($2,000,000) shares of their common
stock to Investor to be optioned at two dollars and seventy-five cents ($2.75)
per share executable for the next eighteen months. Said shares will be held in
escrow by an escrow agent mutually agreed upon by both parties. The "Put" is as
follows:
(a) after thirty (30) days, if the stock trades at five ($5.00) dollars
for five consecutive trading days, a Put call can be exercised for
three hundred thousand (300,000) shares.
(b) after ninety (90) days, if the stock trades at five and a half ($5.50)
dollars for five consecutive trading days, a Put call can be exercised
for three hundred thousand (300,000) shares.
(c) after one hundred twenty (120) days, if the stock trades at six
($6.00) dollars for five consecutive trading days, a Put call can be
exercised for three hundred thousand (300,000) shares.
(d) after one hundred eighty (180) days, if the stock trades at six and a
half ($6.50) dollars for five consecutive trading days, a Put call can
be exercised for three hundred thousand (300,000) shares.
(e) after two hundred and forty (240) days, if the stock trades at seven
($7.00) dollars for five consecutive trading days, a Put call can be
exercised for three hundred thousand (300,000) shares.
(f) after three hundred (300) days, if the stock trades at seven ($7.00)
dollars for five consecutive trading days, a Put call can be exercised
for five hundred thousand (500,000) shares.
Founder Lock-up: Doctors J.W. Stucki, J. Jones, J. Nelson and the majority
of shares belonging to Doctors Webb, Bryant, and Hanks, will lock-up with
Investor the remaining portion of any shares that become freely tradable within
eighteen (18) months of this agreement. All shares shall become freely tradable
eighteen (18) months from the date of this agreement.
-2-
<PAGE>
All shares subject to the Investor, and/or his assignee, lock-up can be rolled
out after six (6) months from the date of this agreement at a rate of
one-eighteenth (1/18) per month subject to Security Exchange Commission Rules.
Warrants and Options previously granted are not subject to this lock-up
agreement. Company will use its best efforts to get other shareholders to lock
up under similar terms.
Employment Agreement: Dr. Stucki will remain as CEO for three (3) years.
Compensation to be at a base rate of two hundred and fifty thousand ($250,000)
annually with milestone bonuses based on Company profitability. The employment
agreement will be substantially similar to Dr. Stucki's existing agreement.
Dr. Stucki's Bridge Loan: Dr. Stucki agrees to sell shares of his stock in
an amount equal to five hundred thousand ($500,000) dollars and loan the
proceeds to Company. As repayment, Dr. Stucki will receive a debenture of equal
value, convertible to common stock at a fifteen (15%) discount fixed on date of
execution, at ten percent (10%) interest, convertible in ninety (90) days. This
is in addition to the salary as enumerated above. To effectuate the proceeds,
Dr. Stucki will agree to lock up in a trust with Investor the amount of shares
necessary and Investor will fund the proceeds within seven (7) days of trust
agreement.
Repayment of Bridge Loan: Company agrees to repay any loans made under this
agreement or these loans made by Galaxy Investment and/or its assignees from the
sale of the Raise of Capital contemplated herein.
Consulting Agreements: Other than the consulting agreement for Dr. Dave
Voracek and James Carter, the Company agrees all other consulting agreements are
void.
REPRESENTATIONS BY INVESTORS
Raise of Capital: Investor represents that it will use its best efforts to
raise a minimum of two million ($2,000,000.00) net to the Company. Company
agrees to repay Galaxy and Investor the five hundred and fifty thousand
($550,000) dollar bridge loan from said Raise of Capital. The Raise of Capital
must be substantially complete within one hundred (100) days of this agreement.
Shares for raising the minimum net capital shall be from no more than one
million four hundred thousand (1,430,000) of "authorized but unissued" Company
stock.
Board Control: The new board members appointed by Investor will not agree
to any stock split, reverse merger, equity conversions, or take any action that
is dilutive to shareholders, except for the transactions that are expressly
agreed to in this agreement or without written approval from Stucki, which
approval will not be unreasonably withheld.
Bridge Loans: Investor agrees to loan Company a minimum of five hundred and
fifty thousand ($550,000.00) secured by a note and security agreement perfected
against tangible and intangible assets of the Company. Investor acknowledges
that the intention of the parties is that the bridge loan be repaid by a
convertible debenture at a ten (10%) percent discount.
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<PAGE>
Hold Harmless: Investor agrees to hold harmless any prior acts by the
Company's officers and directors, except those actions directly related to
criminal conduct.
Approvals: Investor agrees that DVI and Grovest Management ("Other
Affiliates") have agreed to the terms of this agreement and that by entering
into this agreement the Other Affiliates will not claim any default under their
respective agreements due to this agreement.
Disclosure: Investor acknowledges that is has performed due diligence,
reviewed the Company's Form 10-KSB 1996, and Form 10-QSB for the first quarter
of 1997, and has received a copy of the Risk Factors prepared by the Company.
Investor represents that it has had an opportunity to request additional
information and receive such information to the satisfaction of Investor.
Investment Experience: Investor acknowledges that it is an investor in
securities of developing companies and can bear the economic risk of its
investment. Investor represents that it is an accredited investor as that term
is defined under Regulation D promulgated under the Security Act of 1933.
IN WITNESS WHEREOF, Investor and Company have caused this agreement to be
duly executed and delivered this the 18th day of March 1997.
"INVESTOR" "COMPANY"
Wingate Financial Associates, L.L.C. American HealthChoice, Inc.
- ---------------------------- ----------------------------
Mr. Mandel Sherman Dr. J.W. Stucki
-4-
THIS WARRANT CERTIFICATE, AND THE SHARES TO BE ISSUED UPON ITS
EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED
FOR SALE, SOLD OR TRANSFERRED UNLESS REGISTERED
UNDER THE ACT, OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE
WARRANT CERTIFICATE
Dated: March 19, 1997
Warrant to Purchase up to 1,000,000 share of Common Stock of
AMERICAN HEALTHCHOICE, INC.
VOID AFTER 5:00 P.M., NEW YORK, NEW YORK LOCAL TIME
ON
April 1, 1998
AMERICAN HEALTHCHOICE, INC., a New York corporation (hereinafter referred
to as the "Company"), hereby certifies that Wingate Financial Associates, LLC
its successors and assigns (hereinafter referred to as the "Holder"), is
entitled to purchase from the Company at any time after March 20, 1997 and
before 5:00 P.M. New York local time on April 1, 1998, up to 1,000,000 shares of
the Company's Common Stock, $001 par value per share (the "Stock"), at the
Exercise Price (as hereinafter defined).
1. Exercise of Warrants. In order to exercise the rights to purchase Stock
evidenced by this Warrant Certificate, the Holder must, subject to Section 6
below, present and surrender this Warrant Certificate with the attached Purchase
Form duly executed at the principal office of the Company. This Warrant
Certificate may be exercised with respect to all of the Stock subject hereto, or
in any portion thereof.
2. Exchange and Transfer. This Warrant Certificate at any time prior to the
exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Warrant Certificates if any, of like tenor
registered in the name of the same Holder, for another Warrant Certificate of
like tenor in the name of such Holder exercisable for the same aggregate number
of shares of Stock as the Warrant Certificate(s) surrendered.
3. Rights and Obligations of the Holder of the Warrant Certificate. The
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
in the Company, either at law or in equity, provided, however, in the event that
any certificate representing shares of the Stock is issued to the Holder upon
exercise of some or all of the Stock represented hereby, such
<PAGE>
Holder shall, for all purposes, be deemed to have become the holder of record of
such stock on the date on which this Warrant Certificate, together with a duly
executed Purchase Form, was surrendered and full payment of the Exercise Price
was made (the "Exercise Date"), irrespective of the date of delivery of such
share certificate. The rights of the Holder of this Warrant Certificate are
limited to those expressed herein and the Holder, by his acceptance hereof,
consents to and agrees to be bound by and comply with all the provisions of this
Warrant Certificate. In addition, the Holder agrees that the Company may deem
and treat the person in whose name this Warrant Certificate is registered as the
absolute, true and unlawful owner for all purposes whatsoever, unless and until
such time as the Company has received written notice to the contrary.
4. Common Stock.
(a) The Company covenants and agrees that this Warrant Certificate is duly
and validly authorized and issued, and free from all stamp-taxes, liens, and
charges with respect to the delivery or purchase thereof. In addition, the
Company agrees at all times to reserve and keep available an unauthorized number
of shares of its Stock sufficient to permit the exercise in full of this Warrant
Certificate.
(b) The Company covenants and agrees that all shares of Stock delivered
upon exercise of this Warrant Certificate, will, upon delivery, be duly and
validly authorized and issued, fully paid and non-assessable, and free from all
stamp-taxes, liens and charges with respect to the purchase thereof.
5. Disposition of the Warrant and Stock. The Holder agrees and represents
that (a) this Warrant Certificate and the Stock issuable upon exercise are being
acquired for the Holder's account, and not with a view to or in connection with
any offering or distribution, and (b) no public distribution of this Warrant
Certificate or the Stock will be made in violation of the provisions of the Act,
or in violation of the provisions of applicable state laws. The Holder further
agrees that if any distribution of this Warrant Certificate or any of such Stock
issued hereunder is proposed to be made, such action shall be taken only after
submission to the Company of an opinion of counsel, reasonably satisfactorily in
form and substance to the Company's counsel, to the effect that the proposed
distribution will not be in violation of the Act or any applicable state law.
The Holder further consents and agrees with the Company that:
(a) This Warrant Certificate is transferable only on the registry books of
the Company by the Holder thereof in person or by his attorney duly authorized
in writing and only if this Warrant Certificate is surrendered to the Company,
duly endorsed or accompanied by a proper instrument of transfer satisfactory to
the Company is its sole discretion, together with payment of any
-2-
<PAGE>
applicable transfer taxed and otherwise strictly in accordance with this Section
5, and
(b) The Company may deem and treat the person in whose name this Warrant
Certificate is registered as the holder and as the absolute, true and lawful
owner of this Warrant Certificate for all purposes, and the Company shall not be
affected by any notice or knowledge to the contrary.
Furthermore, it shall be a condition of the transfer of any rights set
forth in this Warrant Certificate that any transfer thereof deliver to the
Company his or its written agreement to accept and be bound by all of the terms
and conditions of this Warrant Certificate. The Holder is responsible for any
transfer taxes due as a result of any transfer of this Warrant Certificate.
6. Exercise of this Warrant Certificate. At any time after March 20, 1997
and before 5:00 p.m., New York local time, on April 1, 1998, the Holder shall
have the right to acquire up to 1,000,000 shares of Stock on the following terms
and conditions:
(a) Exercise Price, Fractional Shares. The exercise price (the "Exercise
Price") shall be the sum of $2.375 per share of Stock.
(b) Exercise Procedure.
(i) Payment for Shares. On a date determined by the Company, but which
shall in no event be later than five (5) days after the Company's receipt
of the surrendered Warrant Certificate and Purchase Form, the Holder shall
deliver to the Company, at the Company's principal executive office, a
certified or bank cashier's check payable to the Company or a wire transfer
of immediately available funds in the amount of the Exercise Price then in
effect times the number of shares of Stock being purchased.
(ii) Effective Date of Exercise. Each exercise will be deemed to have
been effected as to the close of business on the Exercise Date. The
Purchase Form and this original Warrant Certificate shall be delivered to
the Company at 1300 West Walnut Hill Lane, Irving, Texas 75038, Attention:
Dr. J.W. Stucki.
(c) Delivery of Certificates. As soon as practicable after an exercise has
been effected (but in no event within five (5) business days) the Company will
direct its transfer agent to deliver to the Holder:
(i) a certificate or certificates representing the number of shares of
Stock issuable by reason of such exercise
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in such name(s) and such documentation(s) as the Holder has specified; and
(ii) a new Warrant Certificate entitling the Holder to purchase the
number of shares of Stock as to which the original Warrant Certificate was
not exercised and reflecting any changes to the Exercise Price which have
therefore been effectuated and which Warrant Certificate shall otherwise be
in form and substance identical to that delivered to the Holder to the
Company for said exercise.
(d) Closure of Issuer Books. The Company will not close its books against
the transfer of this Warrant Certificate or of Stock issued or issuable upon
exercise of this Warrant Certificate in any manner which interferes with the
timely exercise of this Warrant Certificate.
(e) Payment of Taxes. The Company will pay all taxes and other governmental
charges (other than taxed measured by the revenue or income of the Holder) that
may be imposed in respect of the issue or delivery of shares of Stock upon
exercise of this Warrant Certificate, provided, however, that the Holder shall
pay any such tax which is due because shares of Stock are issued in a name other
than such Holder's.
(f) Notices of Record Date. In the event of (i) any taking by the Company
of a record of the holders of any class or series of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution or (ii) any reclassification or recapitalization of the
capital stock of the Company, any merger or consolidation of the Company, or any
transfer of all or substantially all the assets of the Company to any other
corporation, entity or person, or any voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, the Company shall mail
to the Holder at least twenty (20) days prior to the record date specified
therein (the "Notice Period"), a notice specifying (A) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (B) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and (C) the time, if
any is to be fixed, as to when the holders of record of Stock (or other
securities) shall be entitled to exchange their shares of Stock (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up. During the Notice Period, the Holder shall have
exercise rights provided elsewhere in this Warrant Certificate.
(g) Restrictions on Exercise. Notwithstanding the foregoing, this Warrant
Certificate may not be exercised by, or
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shares of Stock issued to, the Holder in any jurisdiction in which such exercise
would be unlawful.
7. Exercise Price Adjustments. The Exercise Price shall be subject to
adjustment from time to time as set forth below, however, no adjustment in the
Exercise Price need to be made pursuant to any of Section 7(a), (b), (c), (d) or
(e) unless the adjustment would require an increase or decrease of at least 1%
in the Exercise Price. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment.
(a) Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof effect a subdivision of the
outstanding Stock, the Exercise Price then in effect immediately before that
subdivision shall be proportionately decreased, conversely, if the Company shall
at any time or from time to time after the date hereof reduce the outstanding
shares of Stock by combination or otherwise, the Exercise Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this Section 7(a) shall become effective at the close of
business on the date the subdivision or combination becomes effect.
(b) Adjustment of Certain Dividends and Distributions of Stock. In the
event the Company at any time or from time to time after the date hereof shall
make or issue, or fix a record date for the determination of holders of Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Stock, then and in each such event the Exercise Price then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the Exercise Price then in effect by a fraction:
(i) the numerator of which shall be the total number of shares of
Stock issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Stock issued and outstanding immediately prior to the time of such issuance
of the close of business on such record date, plus the number of shares of
Stock issuable in payment of such dividend or distribution, provided,
however, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed
therefor, the Exercise Price shall be recompute accordingly as of the close
of business on such record date and thereafter the Exercise Price shall be
adjusted pursuant to this Section 7(b) as of
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the time of actual payment of such dividends or distributions.
(c) Adjustment for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date hereof shall make or
issue, or fix a record date for the determination of holders of Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than shares of Stock, then and in each such event provision shall
be made so that the Holder shall receive upon exercise of this Warrant
Certificate in addition to the number of shares of Stock receivable thereupon,
the amount of securities of the Company that it would have received had this
Warrant Certificate been exercised on the date of such event and had thereafter,
during the period from the date of such event to and including the exercise
date, retained such securities receivable by it as aforesaid during such period
giving application to all adjustments called for during such period under this
Warrant Certificate with respect to the rights of the Holder.
(d) Adjustment for Reclassification, Exchange or Substitution. If the Stock
issuable upon the exercise of this Warrant Certificate shall be changed into the
same or a different number of shares of any class or classes of stock, whether
by reclassification, exchange, substitution or other change (other than a
reorganization, merger, consolidation or sale of assets provided for in Section
7(e) below), then and in each such event, the Holder shall have the right
thereafter to exercise this Warrant Certificate into the kind and amounts of
shares of stock and other securities and property receivable upon such
reclassification, exchange, substitution or other change, by holders of the
number of shares of Stock into which this Warrant Certificate might have been
exercised immediately prior to such reclassification, exchange, substitution, or
other change, all subject to further adjustment as provided herein.
(e) Reorganization, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there shall be a reorganization of the Stock (other
than a reclassification, exchange or substitution of shares provided for in
Section 7(d) above) or a merger or consolidation of the Company with or into
another corporation, or the sale of all or substantially all the Company's
properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this Warrant
Certificate, the number of shares of stock or other securities or property of
the Company or of the successor corporation resulting from such reorganization,
merger, consolidation or sale, to which a holder of that number of shares of
Stock deliverable upon exercise of this Warrant Certificate would have been
entitled on such reorganization, merger, consolidation or sale. In any such
case, appropriate adjustment shall be made in the application of the
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provisions of this Warrant Certificate with respect to the rights of the Holder
after the reorganization, merger, consolidation or sale to the end that the
provisions of this Warrant Certificate (including adjustment of the number of
shares issuable upon exercise of this Warrant Certificate) shall be applicable
after that event as nearly equivalent as may be practicable.
(f) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Exercise Price, the Company, at its expense, shall prepare a
certificate showing such adjustment or readjustment signed by a duly elected
officer of the Company (the "Adjustment Certificate") and shall make the
Adjustment Certificate, by first class mail, postage prepaid, to the Holder at
the Holder's address as shown in the Company's books. The Adjustment Certificate
shall set forth such adjustment or readjustment, showing in detail the facts
upon which such adjustment or readjustment is based including a statement of the
Exercise Price and the number of shares of Stock or other securities issuable
upon exercise of this Warrant Certificate immediately before and after giving
effect to the applicable adjustment or readjustment. Any determination as to
whether an adjustment in the Exercise Price in effect hereunder is required
pursuant to this Section 7, or as to the amount of any such adjustment, if
required, shall be binding upon the Holder and the Company if made in good faith
by the Board of Directors of the Company.
8. Mutilated or Missing Warrant Certificate. In case this Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company will,
upon request, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution of the Warrant Certificate lost, stolen or destroyed, a new Warrant
Certificate of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft,
or destruction of such Warrant Certificate and, in the case of a lost, stolen or
destroyed Warrant Certificate, indemnity, if requested, also satisfactory to the
Company. Applicants for such substitute Warrant Certificate shall also comply
with such other reasonable regulations and pay such reasonable charges as the
Company may prescribe.
9. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class registered or certified mail, postage prepaid,
return receipt requested, as follows: if to the Holder, at Wingate Financial
Associates, LLC, Attention Mr. Mandel Sherman _________________________, and, if
to the Company, at 1300 West Walnut Hill Lane, Irving, Texas, Attention Dr. J.W.
Stucki.
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10. Governing Law. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Texas, without reference
to principles of conflicts of law.
11. Binding Effect. This Warrant Certificate shall be binding upon and
inure to the benefit of the Company and the Holder. Nothing in this Warrant
Certificate is intended or shall be construed to confer upon any other person
any right, remedy or claim, in equity or at law, or to impose upon any other
person any duty, liability or obligation.
12. Termination. This Warrant Certificate shall terminate at the close of
business on April 1, 1998 or such earlier date upon which this Warrant
Certificate has been fully exercised, except on the representations and
warranties of the Holder and the Company set forth in Sections 4 and 5 hereof
shall survive such termination.
13. Counterparts. This Warrant Certificate may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed as of the date first above written.
AMERICAN HEALTHCHOICE, INC.,
a New York Corporation
By:
------------------------------
Its:
------------------------------
The Holder hereby executes this Warrant Certificate in order to make the
representations and warranties and agreement set forth in Section 5 of this
Warrant Certificate and to be bound by the terms of this Warrant Certificate.
By:
------------------------------
Its:
------------------------------
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PURCHASE FORM
American HealthChoice, Inc.
1300 West Walnut Hill Lane
Irving, Texas 75033
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of _____ shares of common stock of American
HealthChoice, Inc., $0.001 par value per share, and hereby makes payment of
$______ in payment of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name
--------------------------------------------
(Please typewrite or print in block letters)
DELIVER SECURITIES TO
Address
--------------------------------------------
--------------------------------------------
--------------------------------------------
Holder
--------------------------------------------
(Signature of Holder of Warrant
Certificate, if an individual)
Holder
--------------------------------------------
By
--------------------------------------------
Its
--------------------------------------------
(Signature of Holder of Warrant
Certificate, if a corporation,
partnership or other entity)
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