EXHIBIT 4.3
STOCK TRUST AND ESCROW AGREEMENT
AGREEMENT entered into as of the 19th day of August, 2000 by and between
American HelathChoice, Inc., a New York Corporation (the "Company"),
Sovereign Partners, L.P., Dominion Capital Fund, Ltd., Canadian Advantage
Limited Partnership and Atlantis Capital Fund, Ltd. (collectively, the
"Debenture Holders") and Krieger & Prager, LLP, a New York limited liability
partnership (the "Trustee").
W I T N E S S E T H :
1. Pursuant to a certain Amended Joint Plan of Reorganization of American
HealthChoice, Inc. and AHC Physicians Corporation dated March 31, 2000 (the
"Plan") as approved and confirmed by order of the United States Bankruptcy
Court, Northern District of Texas dated August 8, 2000 (the "Confirmation
Order"), the Company has issued four (4) 8% Senior Secured Convertible
Debentures in the aggregate amount of $4,621,684.24 (the "Debentures"),
collectively convertible into shares of common stock in the Company as
reorganized under Chapter 11 of the Bankruptcy Code (the "Reorganized
Company"), which, if fully converted, would aggregate 30% of the aggregate
issued and outstanding shares of the Reorganized Company issued as of the
Effective Date (as defined in the Plan) (the "Debenture Shares").
2. In order to secure the obligations of the Company to issue the Debenture
Shares upon conversion of the Debentures pursuant to the terms of the Plan,
the Confirmation Order and the Debentures, the Company shall, upon the
Effective Date, issue the Debenture Shares in the name of the Trustee.
Pursuant to the Plan and the Confirmation Order, the Debenture Shares
shall be exempt, pursuant to 11 U.S.C. [S] 1145, from registration
requirements pursuant to the Securities Act.
The Trustee hereby agrees to act as Trustee and escrow agent in connection
with the Debentures and the Debenture Shares. In such capacity, the Trustee
shall:
hold Debenture Shares to be issued to the Trustee on the Effective Date, in
the capacity as a trustee, and hold same pursuant to the terms of this Stock
Trust and Escrow Agreement;
receive from the Debenture Holders notices of conversion of all or portions
of the Debentures into the Debenture Shares pursuant to the terms of the
Debentures ("Conversion Notices");
promptly after conversion of all or portions of the Debentures into
Debenture Shares, forward to the Company's stock transfer agent, Corporate
Stock Transfer, at 3200 Cherry Creek Drive South, Suite 430, Denver,
Colorado 80209 (the "Transfer Agent"), the Debenture Shares into which the
Debentures have been converted with instructions for reissuance by the
Transfer Agent of all or part of the Debenture Shares to the Debenture
Holders or subsequent transferees, free from restrictive legend, in the form
annexed hereto as Exhibit "A", which the Company has confirmed will be
satisfactory to the Transfer Agent for such purpose; and
maintain in its office the original Debenture certificates forwarded to the
Trustee together with Conversion Notices pursuant to subparagraph (b) above;
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maintain in its office a register for recording all conversions of portions
of the Debentures into Debenture Shares (the "Register"). The Trustee will
make reasonable efforts to maintain the accuracy of the Register and to
promptly update the Register from time to time, as necessary. The entries
in the Register shall be conclusive in the absence of manifest error by the
Trustee. The Register shall be available for inspection by the Company and
each Debenture Holder, at any reasonable time and from time to time upon
reasonable prior notice. Upon its receipt of a Conversion Notice, the
Trustee shall, if such Conversion Notice has been completed and has been
accompanied at that time or previously with the original Debentures, (i)
accept such Conversion Notice, (ii) record the information contained therein
in the Register and (iii) give prompt notice thereof to the parties thereto;
and
shall, upon full conversion of each of the Debentures, deliver the original
Debentures to the Transfer Agent.
The Trustee acknowledges hereby that it is a fiduciary in a limited
capacity, solely to the extent provided in this Agreement. The Trustee
shall not be deemed to be the legal or beneficial owner of the Debenture
Shares for any purpose. The Company and the Debenture Holders hereby
acknowledge that the Trustee has acted as counsel to one or more of the
Debenture Holders and waive and consent to any conflict of interest that
might otherwise appear or exist in the Trustee's acting as a fiduciary
hereunder.
3. The Trustee and the Debenture Holders acknowledge that, prior to the
conversion of the applicable portion of the Debentures to Debenture Shares,
the Debenture Shares underlying any unconverted portion of the Debentures,
although issued, shall not be deemed to be (a) outstanding, or (b) subject
to voting rights or distributions.
Each of the Debenture Holders agrees to indemnify the Trustee and hold it
harmless from any and all claims, liabilities, losses, actions, suits or
proceedings at law or in equity, which it may incur or with which it may be
threatened by reason of its acting as trustee and escrow agent as herein
described; and in connection therewith, to indemnify the Trustee as herein
described; and in connection therewith, to indemnify the Trustee against any
and all expenses (including reasonable attorney's fees) or costs of
defending any such action, suit or proceeding or resisting any such claims;
provided, however, that the provisions of this paragraph 5 shall not apply
in the event of any claim, liability, loss, action, suit or proceeding
resulting from its gross negligence, willful malfeasance or fraud.
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The Company agrees to indemnify the Trustee and hold it harmless from any
and all claims, liabilities, losses, actions, suits or proceedings at law or
in equity, which it may incur or with which it may be threatened by reason
of its acting as trustee and escrow agent as herein described except as to
any actions brought by the Debenture Holders; and in connection therewith,
to indemnify the Trustee as herein described; and in connection therewith,
to indemnify the Trustee against any and all expenses (including reasonable
attorney's fees) or costs of defending any such action, suit or proceeding
or resisting any such claims; provided, however, that the provisions of this
paragraph 6 shall not apply in the event of any claim, liability, loss,
action, suit or proceeding resulting from its gross negligence, willful
malfeasance or fraud. The provisions of this paragraph 6 shall not apply if
the Trustee shall fail to act in accordance with any written, lawful
instruction from the President of the Company consistent with the Trustee's
responsibilities hereunder. The provisions of this paragraph 6 shall apply
if the Trustee shall request instructions from the Company and the Company
shall fail to provide said instructions within five (5) business days of
receipt of such request.
To induce the Trustee to act as trustee and escrow agent hereunder, it is
further agreed by the Debenture Holders and the Company that:
The Trustee shall have no duties or responsibilities other than those
expressly set forth herein.
The Trustee shall not be liable to the Debenture Holders or to anyone else
for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in reliance upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Trustee),
statement, instrument, report or other paper or document (not only as to its
due execution and the validity and effectiveness of its provisions, but also
as to the truth and acceptability of any information therein contained)
which is reasonably believed by the Trustee to be genuine and to be signed
or presented by the proper person or persons. The Trustee shall not be bound
by any notice or demand, or any waiver, modification, termination or
rescission of this agreement or any of the terms hereof, unless evidenced by
a writing delivered to the Trustee signed by the proper party or parties
and, if the duties or rights of the Trustee are affected, unless it shall
give its prior written consent thereto.
The Trustee shall not be responsible for the sufficiency or accuracy of the
form of, or the execution, validity, value or genuineness of, any document
or property received, held or delivered by it hereunder, or of any signature
or endorsement thereon, or for any lack of endorsement thereof, or for any
description therein, nor shall the Trustee be responsible or liable in any
respect on account of the identity, authority or rights of the persons
executing or delivering or purporting to execute or deliver any document or
property or this agreement.
The Trustee shall have the right to assume, in the absence of written notice
to the contrary, that facts or events represented by the parties hereto to
have occurred have actually occurred by reason of which an action would or
might be taken by the Trustee pursuant to the terms hereof, without
incurring liability to the other parties hereto or to anyone else for any
action taken or omitted, or any action suffered by it to be taken or
omitted, in reliance upon such assumption.
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The Trustee shall be reimbursed and indemnified and held harmless by the
Debenture Holders from and against any and all expenses, including
reasonable counsel fees and disbursements, or loss suffered by the Trustee
in connection with any action, suit or other proceeding involving any claim,
or in connection with any claim or demand, which in any way, directly or
indirectly, arises out of or relates to this agreement, the services of the
Trustee hereunder, the monies or other property held by it hereunder or any
income earned from investment of such monies. Promptly after the receipt by
the Trustee of notice of any demand or claim or the commencement of any
action, suit or proceeding, the Trustee shall, if a claim in respect thereof
is to be made against any of the other parties hereto, notify the Company
and the Debenture Holders thereof in writing; but the failure by the Trustee
to give such notice shall not relieve any party from any liability which
such party may have to the Trustee hereunder. For the purposes hereof, the
term "expense or loss" shall include all amounts paid or payable to satisfy
any claim, demand or liability, or in settlement of any claim, demand,
action, suit or proceeding settled with the express written consent of the
Trustee and all costs and expenses, including, but not limited to,
reasonable counsel fees and disbursements, paid or incurred in investigating
or defending against any such claim, demand, action, suit or proceeding.
In lieu of delivering physical certificates representing the Debenture
Shares which shall become Common Stock of the Company reissuable upon
conversion, provided the Transfer Agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, upon
request of the Debenture Holders or the Trustee, the Company shall use its
best efforts to cause the Transfer Agent to electronically transmit the
shares of The Company's Common Stock by crediting the account of the
Debenture Holders' Prime Broker with DTC through its Depositary Withdrawal
Agent Commission system.
From time to time on and after the date hereof, the Company and the
Debenture Holders shall deliver or cause to be delivered to the Trustee such
further documents and instruments and shall do and cause to be done such
further acts as the Trustee shall reasonably request (it being understood
that the Trustee shall have no obligation to make any such request) to carry
out more effectively the provisions and purposes of this agreement, to
evidence compliance herewith or to assure itself that it is protected in
acting hereunder.
4. This agreement shall terminate on the later of the final conversion of
the Debenture and delivery of the Debenture Shares held in escrow hereunder,
or the Maturity Date under the Debentures, provided that the rights and
obligations of the Company, the Debenture Holders and the Trustee under
paragraphs 2, 4, 5, 6 and 7 shall survive the termination hereof.
The Trustee may resign at any time and be discharged from its duties
hereunder by giving the Company and the Debenture Holders at least 30 days'
prior notice thereof. As soon as practicable after its resignation, the
Trustee shall turn over to a successor trustee and escrow agent appointed by
the Company and the holders of the Debenture Holders all monies and property
held hereunder upon presentation of the document appointing the new escrow
agent and its acceptance thereof. If no new agent is so appointed within the
60 day period following such notice of resignation, the Trustee may deposit
the aforesaid monies and property with a court of competent jurisdiction.
<PAGE>
It is understood and agreed that should any dispute arise with respect to
the duties of Trustee hereunder or any Debenture Shares held by the Trustee
hereunder, the Trustee is authorized and directed in the Trustee's sole
discretion (1) to retain in the Trustee's possession without liability to
anyone all or any part of said Debenture Shares until such disputes shall
have been settled either by mutual written agreement of the parties
concerned or by a final order, decree or judgment of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but the Trustee shall be under no duty whatsoever to institute or
defend any such proceedings or (2) to deliver the Debenture Shares and any
other property held by the Trustee hereunder to a state or federal court
having competent subject matter jurisdiction in accordance with paragraph 11
hereof.
Except at to the application of this Agreement as it relates to the Plan,
each of the Company, the Debenture Holders and the Escrow Agent hereby
irrevocably consents to the jurisdiction of the courts of the State of New
York in New York City and of any federal court located in the Southern
District of New York in connection with any action, suit or other proceeding
arising out of or relating to this agreement or any action taken or omitted
hereunder, and agree that service of any summons, complaint or other process
may be made by certified or registered mail directed to such person at such
person's address for purposes of notices hereunder. Any dispute as to the
application of this agreement as it relates to the Plan would be governed by
the laws of Texas and properly venued in the United States Bankruptcy Court
for the Northern District of Texas, Dallas Division.
All notices, requests, demands and other communications provided for herein
shall be in writing, shall be delivered by hand, overnight courier or by
first-class mail addressed to the parties hereto at their respective
addresses listed below or to such other persons or addresses as the relevant
party shall designate as to itself from time to time in writing delivered in
like manner, and shall be deemed given when received:
If to the Trustee, to:
Krieger & Prager, LLP
39 Broadway, Suite 1440
New York, New York 10006
Attn: Samuel M. Krieger
with a copy to:
Blank Rome Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attention: Andrew B. Eckstein, Esq.
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If to the Company, to:
American HealthChoice Inc.
1300 Walnut Hill Lane, Suite 275
Irving, Texas 75038
Attention: Dr. J. W. Stucki
with copy to:
Jay Stucki, Esq.
Hulse & Stucki
1300 Walnut Hill Lane, Suite 275
Irving, Texas 75038
If to the holders of the Debenture Holders, to:
Dominion Capital Fund, Ltd.
c/o Beacon Fund Advisors Ltd.
Harbour House
2nd Floor
Waterfront Drive
P.O. Box 972
Roadtown, Tortola
British Virgin Islands
Sovereign Partners, L.P.
90 Grove Street, Suite 01
Ridgefield, CT 06877
Canadian Advantage Limited Partnership
c/o Thomson Kernaghan
365 Bay Street, 10th Floor
Toronto, Ontario M5H2V2
Canada
Atlantis Capital Fund, Ltd.
c/o Citco Fund Services (Bahamas) Limited
Bahamas Financial Centre
3rd Floor
Shirley & Charlotte Streets
P.O. Box 13136
Nassau, Bahamas
With a copy to:
Blank Rome Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attention: Andrew B. Eckstein, Esq.
<PAGE>
5. Except as set forth in paragraph 7(e) above, each party shall bear its
own costs and expenses in connection herewith.
This agreement shall be governed and construed in accordance with the
internal laws of the State of New York. The representations and warranties
contained in this agreement shall survive the execution and delivery hereof
and any investigation made by any party. The headings in this agreement are
for purposes of reference only and shall not limit or otherwise affect any
of the terms hereof.
The terms "hereby," "hereof," "hereto," "hereunder" and any similar terms,
as used in this agreement, refer to this agreement where the term is used.
The word "person" shall mean any natural person, partnership, corporation,
government and any other form of business or legal entity. References in
this agreement to singular or plural or to gender shall be deemed to include
the other as the context may require.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the date and year first written above.
AMERICAN HEALTHCHOICE, INC.
By: ______________________________ , President
KRIEGER & PRAGER, LLP
By: __________________________________________
SOVEREIGN PARTNERS, L.P.
By: __________________________________________
DOMINION CAPITAL FUND LIMITED
By: __________________________________________
CANADIAN ADVANTAGE LIMITED
PARTNERSHIP
By: __________________________________________
ATLANTIS CAPITAL FUND, LTD.
By: __________________________________________
