Exhibit 10.2

SETTLEMENT AGREEMENT

This Settlement Agreement (“Settlement Agreement”) is entered into effective
February 1, 2008 (the “Effective Date”), by and among PainCare Holdings, Inc.
(“PainCare”), PainCare, Inc. (“PainCare Sub”) (PainCare and PainCare Sub are
hereinafter sometimes referred to as the “Sellers”) on the one hand, and Robert
Carpenter, D.C., as his sole and separate property, (hereinafter the
“Purchaser”), Randall W. Rodgers, D.O. (“Dr. Rodgers”) and Carefirst Medical
Associates & Pain Rehabilitation, P.C., a Texas professional corporation (the
“New Practice”), on the other hand. Each of the Sellers, the Purchaser,
Dr. Rodgers and New Practice may be referred to herein as a “Party” or
collectively, as the “Parties.”

RECITALS

A. On January 6, 2006, the Sellers, PainCare Acquisition Company XXII, Inc., a
Florida corporation authorized to do business in Texas (the “Management
Company”), Carefirst Medical Associates, P.A., a Texas professional corporation
(the “Original Practice”) and Dr. Rodgers effected a series of related
transactions (the “Carefirst Purchase Transactions”) by which: (i) Dr. Rodgers
formed the New Practice and (a) pursuant to that certain General Assignment and
Bill of Sale dated January 6, 2006, the Original Practice transferred all right
title and interest to its medical assets to the New Practice, and (b) pursuant
to that certain Assignment and Assumption Agreement dated January 6, 2006, the
New Practice assumed certain contracts and liabilities of the Original Practice
in order for the New Practice to continue the business of the Original Practice;
(ii) Management Company acquired all of the non-medical assets of the Original
Practice pursuant to that certain Merger Agreement and Plan of Reorganization
dated January 6, 2006, (the “Carefirst Merger Agreement”); and (iii) the New
Practice and Management Company entered into that certain Management Services
Agreement, dated January 6, 2006 (the “Management Agreement”) pursuant to which
Management Company would manage the business operations of the New Practice.

B. Also on January 6, 2006, the Sellers, Management Company, REC, Inc., a Texas
corporation (“REC”) and Purchaser effected a series of related transactions (the
“REC Purchase Transactions”) by which Management Company acquired all of the
assets of REC (which included a management and billing agreement with the
Original Practice) pursuant to that certain Merger Agreement and Plan of
Reorganization dated January 6, 2006, (the “REC Merger Agreement”).

C. One or more of the Parties and others have become dissatisfied with the
arrangement contemplated by the Purchase Transactions and the conduct of the
business in the form created by the Purchase Transactions. In addition, certain
disagreements and disputes have arisen among the Parties. Each side of this
dispute denies that it has engaged in any misconduct or legally actionable
conduct of any kind.

D. The Parties have accordingly concluded that it is in their mutual best
interest to settle all claims they may have against each other. By this
Settlement Agreement and the ancillary documents hereto, it is the Parties’
intent to completely sever the relationship between (i) the Sellers and the
Purchaser created by the REC Purchase Transactions, which will include the
termination of all agreements linking the Parties together, and (ii) the
Sellers, on one hand, and Dr. Rodgers and the New Practice, on the other hand,
created by the Carefirst Purchase Transactions, which will include the
termination and/or release of the Sellers with respect to all agreements linking
the Parties together.

E. Therefore, to effectuate the foregoing, the Sellers desire to sell, and the
Purchaser desires to purchase all of the issued and outstanding stock of the
Management Company for a purchase price described below (the “Stock Purchase
Price”), all pursuant to the terms and conditions of, and as more fully
described in, this Settlement Agreement.

NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and representations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties to this Settlement Agreement agree as follows:

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TERMS AND CONDITIONS

1. Purpose of Settlement Agreement and Absence of Liability.

a. This Settlement Agreement and any and all schedules, exhibits and ancillary
documents hereto (collectively, the “Settlement Documents”) are being executed
for the purposes of (a) providing for an orderly and amicable separation of the
Parties, and (b) compromising and settling all disputes between them, which
shall be accomplished generally by (i) the Purchaser purchasing all of the
issued and outstanding common stock of Management Company (the “Management
Company Stock”) from PainCare Sub as his sole and separate property, for the sum
of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)(the “Stock
Purchase Price”) payable as follows: seventeen (17) equal consecutive monthly
payments of Eleven Thousand Seven Hundred Sixty Eight and 37/00 ($11,768.37)
beginning on March 1, 2008 and continuing on the first day of each month
thereafter until August 1, 2009 whereupon a final payment in an amount equal to
Seventy Nine Thousand One Hundred Seventy Nine and 87/00 Dollars ($79,179.87)
shall be due and payable.

b. Adjustment of Stock Purchase Price and Promissory Note Balance.

The $250,000.00 set forth in 1.a. above shall be adjusted down by the amount
that the accounts payable of the Management Company at closing exceed the sum of
$70,000.00 (the “Accounts Payable Limit”). In the event an adjustment is
necessary, the adjustment will be made at Purchaser’s option by crediting such
sums as credits toward upcoming payments due on the promissory note or as a
prepayment without penalty to Purchaser on the indebtedness due under the
Promissory Note. For purposes of clarification, it is expressly understood and
agreed that the Accounts Payable Limit shall not include obligations of the
Management Company with respect to: (i) accrued payroll expense and related
taxes; (ii) obligations associated with operating leases; and (iii) any other
payables, expenses or obligations which the Purchaser or anyone under his
control or supervision has knowledge thereof.

It is expressly understood and agreed, as a condition hereof, that any payment
or agreement associated with this Settlement Agreement will not constitute or be
construed as an admission of liability on the part of any of the Parties to this
Settlement Agreement.

2. Sale of Management Company Stock.

a. Sale of Management Company Stock to Purchaser. Subject to the terms and
conditions of this Settlement Agreement, effective as of the Closing Date (as
defined in Section 8 below), the Purchaser shall purchase, and PainCare Sub
shall sell, transfer, convey, assign and deliver to the Purchaser in accordance
with the terms and conditions of that certain Stock Purchase Agreement attached
hereto as Exhibit 2a.(i), the Management Company Stock including all rights,
claims and assets (of every kind, nature, character, and description, whether
real, personal or mixed, tangible or intangible, accrued, contingent or
otherwise) and wherever situated, of the Management Company, including without
limitation, the accounts receivable of Management Company that remain
outstanding on the Closing Date, except as otherwise provided below
(collectively, the “Management Company Assets”). It is hereby acknowledged and
agreed that the Management Company and the Assets are being sold subject to all
existing accounts payable and other liabilities as more specifically described
in Exhibit 2.a.(ii) attached hereto and incorporated herein by reference.

b. Excluded Assets. Section 2.a notwithstanding, the PainCare Sub shall not
sell, transfer, assign, convey or deliver to the Purchaser, and the Purchaser is
not acquiring any of the following assets of the Management Company
(collectively, the “Excluded Assets”):

i. Tax Credits and Records. Federal, state and local income and other tax
credits and tax refund claims for periods of time prior to Closing, and
associated returns and records, provided the Purchaser shall have reasonable
access to such records to the extent reasonably necessary for the Purchaser’s
own tax planning or returns.

ii. Business Documents. The following documents and records of the Management
Company: general accounting records, correspondence, policies, procedures,
reports, data, its financial statements and records and any other documents not
deemed necessary to operate the business on an on-going basis. However,

 

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Seller covenants not to destroy such documents and to allow Purchaser access to
the records and to obtain copies of the same as may be reasonably necessary from
time to time. In the event Seller is not required by applicable law to maintain
should in the future decide to no longer maintain such documents,

iii. Cash. All cash, cash equivalents, bank deposits or accounts, securities,
short-term investments or similar items held by or owned by the Sellers. For
avoidance of doubt, all the accounts receivable, cash, cash equivalents, bank
deposits or accounts, securities, short-term investments or similar items now
held by or owned by the Management Company will be included as part of the
Management Company Assets to be purchased by Purchaser. In anticipation of the
Closing, the Sellers covenant and agree not to sweep or take any other action to
remove or claim any interest whatsoever in the bank deposits of the New Practice
or the Management Company after January 29, 2008.

iv. Equipment. The equipment listed in Exhibit 2b.iv. attached hereto and
incorporated herein (the “Excluded Equipment”) is not owned by the Management
Company and therefore shall be part of the Excluded Assets. The parties hereby
agree that PainCare will arrange with Purchaser for the pick-up of the Excluded
Equipment at the New Practice business locations (the “Locations”) within 90
days of the Closing (the “Pick-up Time”). The Purchaser and Dr. Rodgers hereby
represent and warrant that to the best of their knowledge and belief that as of
the Closing Date the Excluded Equipment has not been damaged and will be at the
Pick-up Time in good working order, reasonable wear and tear and normal
operational impediments excepted. In addition, the Purchaser and Dr. Rodgers
agree to provide access to the Locations at the Pick-up Time for purposes of
removing the Excluded Equipment and in connection therewith, will cooperate in
good faith and will provide all reasonable assistance necessary to allow for the
removal of the Excluded Equipment. Purchaser reserves the right but not the
obligation to negotiate for the purchase or lease of the Excluded Equipment
provided that PainCare and its affiliates are released from any further
obligation, debt or liability as it pertains to such Excluded Equipment. In the
event such an agreement is reached prior to the Pick-up Time and PainCare
approves same, then PainCare shall not be entitled to pick up the Excluded
Equipment.

c. Stock Purchase, Pledge and Security Agreements. The Purchaser and the Sellers
shall enter into a Stock Purchase Agreement in substantially the same form as
attached hereto as Exhibit 2(a), which is incorporated herein by reference, for
the purpose of effectuating the sale and transfer of the Management Company
Stock to the Purchaser. The Purchaser and the Sellers shall enter into a Stock
Pledge Agreement and Security Agreement in substantially the same forms as
attached hereto as Exhibits 2(c)(i) and (ii), which are incorporated herein by
reference, for the purpose of securing the payment of the Stock Purchase Price.

d. Liabilities. The Parties recognize and agree that the Management Company
shall remain responsible for the payment of all its accounts payable and other
contractual obligations disclosed on Exhibit 2.a.(ii) which it has and will
incur in the ordinary course of its business and that the sale of the Management
Company Stock is sold subject to these obligations.

Additionally, Purchaser agrees to assume all obligations, liabilities, duties
and responsibilities arising out of any investigations, audits, demands, claims,
damages, fines, or penalties incurred by the Management Company or Purchaser
arising from any actions relative to the New Practice and its business taken
against the Sellers and/or their successors in interest by any government funded
health care benefit program or any commercial or private third party payor for
acts or occurrences that occur on and after the Closing Date. Sellers agree to
assume all obligations, liabilities, duties and responsibilities arising out of
any investigations, audits, demands, claims, damages, fines, or penalties
incurred by the Purchaser or the Management Company arising from any actions
relative to the New Practice and its business taken against the Sellers, the
Management Company or Purchasers and/or their successors in interest by any
government funded health care benefit program or any commercial or private third
party payor relating to the Assumed Liabilities and Assumed Contracts and for
acts or occurrences that occurred before the Closing Date provided that (i) such
acts or occurrences were not the acts or omissions of, either Purchaser or any
employee, contractor or agent under their supervision or control; or (ii) such
acts or omissions to act are not known by either Purchaser with the
understanding that the limit of any such assumption of liabilities pursuant to
this provision shall be $250,000.,

 

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3. Sale of Equipment.

a. Sale of Equipment to Purchaser. Subject to the terms and conditions of this
Settlement Agreement, effective as of the Closing Date (as defined in Section 8
below), Sellers shall sell, transfer, convey, assign and deliver to the
Purchaser to the extent owned by Sellers and not already owned by the Management
Company, all of the equipment and personal property assets now located in, or
about the premises operated by the Management Company at 403 Highway 110 North,
Whitehouse Texas and 1007 W Gentry Pkwy Tyler, Texas, save and except the
equipment listed on Exhibit 2b.iv. (the “Purchased Equipment”) The Purchaser and
PainCare shall enter into a Bill of Sale in substantially the same form as
attached hereto as Exhibit 3(a), which is incorporated herein by reference, for
the purpose of effectuating the sale and transfer of the Purchased Equipment to
the Purchaser.

4. Termination of Other Agreements.

a. The Sellers, on one hand, and Purchaser, New Practice and Dr. Rodgers, on the
other hand, shall terminate all agreements, other than this Agreement, written
or oral, between them as of the Closing Date pursuant to the Termination
Agreement attached hereto as Exhibit 3(a), and no Party thereto shall have
obligation or responsibility to any other Party thereto under the terms of any
such agreements on or after the Closing Date.

c. In connection with the termination of the foregoing agreements, the Parties
are hereby deemed to have waived any applicable termination provisions contained
in such agreements or any and all other conditions (including, but not limited
to, any conditions precedent or conditions subsequent) to the termination
thereof.

4. Mutual Releases.

a. In consideration of (i) the releases given hereby by the Sellers, (ii) the
agreement of the Sellers to terminate all agreements between the Parties other
than this Agreement, (iii) the agreement of the Sellers to sell to the Purchaser
the Management Company Stock, and (iv) other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Purchaser, New
Practice and Dr. Rodgers shall execute that certain General Release in favor of
the Sellers in substantially the same form as attached hereto as Exhibit 4(a).

b. In consideration of (i) the releases given hereby by the Purchaser, New
Practice and Dr. Rodgers (ii) the agreement of the Purchaser, New Practice and
Dr. Rodgers to terminate all agreements between them and the Sellers other than
this Agreement, (iii) the agreement of the Purchaser to buy the Management
Company Stock, and (iv) other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Sellers shall execute that
certain General Release in favor of the Purchaser, New Practice and Dr. Rodgers
in substantially the same form as attached hereto as Exhibit 4(b).

c. Notwithstanding the releases referenced above, Purchaser and Dr. Rogers do
not release Sellers, and Sellers hereby agree to:

1. Provide adequate written certification that all PainCare shares previously
issued to Purchaser and Dr. Rogers are registered and may immediately be sold in
accordance with PainCare’s currently effective S-1 prospectus, and

2. The additional shares of PainCare earned by Purchaser (57,040 shares) and
Dr. Rogers (7,778 shares) will be delivered at or within ten (10) business days
of Closing along with adequate written certification that the shares are
registered and may immediately be sold in accordance with PainCare’s currently
effective S-1 prospectus.

5. Representations and Warranties by the Purchaser, Dr. Rogers and New Practice.
Purchaser, Dr. Rogers and New Practice represent, warrant and covenant to the
Sellers as follows:

a. The statements made by Purchaser, Dr. Rogers and New Practice in this
Agreement are and will be correct and complete as of the date of the Effective
Date of this Settlement Agreement and as of the Closing Date.

b. Purchaser, Dr. Rogers and New Practice have the full power and authority to
execute, deliver and perform this Settlement Agreement and the documents to be
delivered by them under this Settlement Agreement.

 

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c. This Settlement Agreement and the Settlement Documents to be executed and
delivered by Purchaser, Dr. Rogers and New Practice constitutes the legal, valid
and binding obligations of such Parties, and will be enforceable in accordance
with their respective terms against them, subject to bankruptcy, insolvency,
moratorium, reorganization and similar laws of general applicability affecting
the rights and remedies of creditors and to general principles of equity,
regardless of whether enforcement is sought in proceedings in equity or at law.

d. The execution and deliver by Purchaser, Dr. Rogers and New Practice of this
Settlement Agreement and the Settlement Documents, and any and all other
agreements, documents or instruments contemplated hereby, and the fulfillment of
and compliance with the respective terms hereof and thereof by the Purchaser,
Dr. Rogers and New Practice do not and will not (i) conflict with or result in a
breach of the terms, conditions, or provisions of, (ii) constitute a default or
event of default under, (iii) give any third party the right to accelerate any
obligation under, (iv) result in a violation of, or (v) require any
authorization, consent, approval exemption or other action by or notice to any
court or governmental authority pursuant to any regulation, order or contract to
which any of the Purchaser, Dr. Rogers and New Practice is subject.

e. Neither the Purchaser, Dr. Rogers nor New Practice has employed any broker,
finder, advisor, consultant or other intermediary in connection with this
Settlement Agreement or the transaction contemplated hereby who is or might be
entitled to any fee, commission or other compensation from any one of the
Sellers, upon or as a result of the execution of this Settlement Agreement or
the consummation of the transactions contemplated hereby.

f. All PainCare shares previously issued to Purchaser and Dr. Rogers are
registered and may immediately be sold in accordance with PainCare’s currently
effective S-1 prospectus.

g. The additional shares of PainCare earned by Purchaser (57,040 shares) and
Dr. Rogers (7,778 shares) will be delivered at or within ten (10) business days
of Closing along with adequate written certification that the shares are
registered and may immediately be sold in accordance with PainCare’s currently
effective S-1 prospectus.

6. Representations and Warranties by the Sellers. Each of the Sellers, jointly
and severally, represents and warrants to the Purchaser as follows:

a. The statements made by the Sellers in this Section 6 are and will be correct
and complete as of the date of this Settlement Agreement and as of the Closing
Date.

b. Each of the Sellers is a corporation, validly existing and in good standing
under the laws of the State of their domicile.

c. This Settlement Agreement and the Settlement Documents to be executed and
delivered by each Seller have been duly approved by all requisite action of such
Seller, and such Seller has full power and authority to execute, deliver and
perform this Settlement Agreement, together with all of the Settlement Documents
to be executed and delivered by it.

d. PainCare Sub owns, has not assigned, sold or otherwise transferred and has
the full right to sell the Management Company Stock Practice, free and clear of
any claim, lien, encumbrance, option to purchase by, or other rights of any
third person arising by, through or under any Seller, other than the liens
granted to HBK Investments, LP, a Delaware limited partnership (“HBK”) in
connection with that certain Loan and Security Agreement, dated as of May 10,
2005, and entered into by and between PainCare and HBK, among others
(hereinafter referred to sometimes as the “HBK Debt” or “HBK Loan Agreement”),
which liens HBK will release at Closing.

e. This Settlement Agreement and the Settlement Documents to be executed and
delivered by each of the Sellers constitutes the legal, valid and binding
obligations of such Seller, and will be enforceable in accordance with their
respective terms against such Seller, subject to bankruptcy, insolvency,
moratorium, reorganization and similar laws of general applicability affecting
the rights and remedies of creditors and to general principles of equity,
regardless of whether enforcement is sought in proceedings in equity or at law.

 

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f. The execution and deliver by each Seller of this Settlement Agreement and the
Settlement Documents, and any and all other agreements, documents or instruments
contemplated hereby, and the fulfillment of and compliance with the respective
terms hereof and thereof by the Sellers do not and will not (i) conflict with or
result in a breach of the terms, conditions, or provisions of, (ii) constitute a
default or event of default under, (iii) give any third party the right to
accelerate any obligation under, (iv) result in a violation of, or (v) require
any authorization, consent, approval exemption or other action by or notice to
any court or governmental authority pursuant to, the articles of incorporation
or bylaws of the Sellers or any regulation, order or contract to which any of
the Sellers are subject, except for the required consent by HBK.

g. The Sellers have not employed any broker, finder, advisor, consultant or
other intermediary in connection with this Settlement Agreement or the
transaction contemplated hereby who is or might be entitled to any fee,
commission or other compensation from any of the Purchaser, upon or as a result
of the execution of this Settlement Agreement or the consummation of the
transactions contemplated hereby.

h. Tax Matters.

Tax Returns. The Management Company has filed all tax returns when due except in
the case where extensions were filed. To the best of Seller’s knowledge, all
such tax returns were correct and complete in all material respects and were
filed (or, an extension was filed) on a timely basis. To the best of Seller’s
knowledge, all taxes owed by the Management Company (whether or not shown on any
tax return) have been paid. The Management Company currently is not the
beneficiary of any extension of time within which to file any tax return. To the
best of Seller’s knowledge, no claim is currently pending by an authority in a
jurisdiction where the Management Company is or may be subject to taxation by
that jurisdiction. To the best of Seller’s knowledge, there are no security
interests on any of the assets of the Management Company that arose in
connection with any failure (or alleged failure) to pay any tax.

Withholding. To the best of Seller’s knowledge, the Management Company has
withheld, and remitted when due, all taxes required to have been withheld or
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.

No Disputes of Claims. The Management Company does not expect any authority to
assess any additional taxes for any period for which tax returns have been
filed. There is no dispute or claim concerning any tax liability of the
Management Company either: (a) claimed or raised by any authority in writing; or
(b) as to which any directors and officers (and employees responsible for tax
matters) of the Management Company has knowledge based upon personal contact
with any agent of such authority.

No Waivers. The Management Company has not waived any statute of limitations in
respect of taxes or agreed to any extension of time with respect to a tax
assessment or deficiency.

No Special Circumstances. The Management Company has not made any payments, is
not obligated to make any payments, and is not a party to any agreement that
could obligate it to make any payment that would be an excess parachute payment
that would not be deductible because of Code Section 280G. The Management
Company has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii). The Management Company has disclosed on its
federal income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Code
Section 6662.

Audits of Tax Returns. To the best of Seller’s knowledge, no tax return of the
Management Company is currently under audit or examination by any taxing
authority, and the Management Company has not received a written notice stating
the intention of any taxing authority to conduct such an audit or examination.
Each deficiency of which the Seller’s are aware, if any, resulting from any
audit or examination relating to taxes by any taxing authority has been paid,
except for deficiencies being contested in good faith. The revenue agents’
reports related to any prior audits and examinations, if any, have been
delivered to Purchaser.

 

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Period of Assessment. To the best of Seller’s knowledge, there is no agreement
or other document extending, or having the effect of extending, the period of
assessment or collection of any taxes.

Tax Agreements. The Management Company is not a party to or bound by any tax
sharing agreement, tax indemnity obligation or similar agreement with respect to
taxes, including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority.

Inclusions in Taxable Periods. The Management Company will not be required to
include in a taxable period ending after the Closing Date taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Code Section 481 with
respect to a change in method of accounting occurring before the Closing Date or
comparable provisions of state, local or foreign tax law. Sellers agree to pay
all such tax, if any, as they become due.

Consents. The Management Company has not filed a consent pursuant to or agreed
to the application of Code Section 341(f).

Personal Holding Company. The Management Company has not, during the five
(5) year period ending on the Closing Date, been a personal holding company
within the meaning of Code Section 541.

2007 Federal and State Tax Returns and Tax Liability. Seller shall prepare and
file, (with the consent and approval of Purchaser) and be responsible for
payment of any state local or federal tax liability for the year ending
December 31, 2007 and a proportionate part of any 2008 liability for periods of
time on or before Closing. To the extend any such tax liability is imposed on
and paid by the Management Company or Purchaser, the Stock Purchase Price will
be reduced by a like amount.

7. Closing.

a. The closing of the transactions contemplated by this Settlement Agreement
(the “Closing”) shall be held on or before the Effective Date (the “Closing
Date”), or such other time, as agreed upon in writing by the Parties hereto and
shall be handled via facsimile execution with originals to follow via overnight
delivery. The respective counsel for each of the Sellers, on the one hand, and
the Purchaser, on the other hand, will hold the other parties’ execution pages
of the documents set forth at Section 9(b) below in trust until counsel for the
parties are satisfied that all conditions to Closing have been satisfied at
which time each counsel shall release executed documents to their respective
client upon written confirmation from the Sellers or its legal counsel that the
aforementioned wire has been received; all without any additional required
action by the parties.

b. At the Closing:

 

  (i) The Sellers shall deliver to the Purchaser the following:

 

  (1) A duly executed Stock Purchase Agreement;

 

  (2) A duly executed Termination Agreement;

 

  (3) A duly executed General Release in favor of Purchaser, Dr. Rodgers and New
Practice;

 

  (4) A duly executed Security Agreement;

 

  (5) A duly executed Pledge Agreement;

 

  (6) A duly executed Bill of Sale for the Purchased Equipment

 

  (7) A duly executed Secretary’s Certificate of the Sellers certifying as to
the resolutions approved by the Board of Directors of each of the Sellers to
enter into this Settlement Agreement and consummate the transactions
contemplated hereby;

 

  (8) A Consent and Partial Release Agreement signed by HBK;

 

  (9) Such documents as are necessary to remove all authorized signatures of the
Sellers from the Management Company’s bank accounts and replacing same with
Purchaser; and

 

  (10) Such other documents and certificates as are required or otherwise
reasonably requested by the Purchaser pursuant to the provisions of this
Settlement Agreement or any ancillary document hereto.

 

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  (ii) The Purchaser, Dr. Rodgers and New Practice, as required herein, shall
deliver to the Sellers the following:

 

  (1) A duly executed Stock Purchase Agreement;

 

  (2) A duly executed Termination Agreement;

 

  (3) A duly executed General Release in favor of Sellers;

 

  (5) A duly executed Security Agreement;

 

  (6) A duly executed Pledge Agreement; and

 

  (7) Such other documents and certificates as are required or otherwise
reasonably requested by the Sellers pursuant to the provisions of this
Settlement Agreement.

8. Required Consents; Further Assurances. The Parties will use commercially
reasonable efforts to obtain in writing, as promptly as possible, all consents,
authorizations and approvals required to be obtained by any of them in
connection with the transactions contemplated by this Settlement Agreement. In
the event any Party discovers additional instruments, certificates, consents or
other documentation are necessary to effectuate delivery of the Settlement
Documents, or any other properties, rights and interests intended to be
transferred in accordance with the Settlement Documents or this Settlement
Agreement, each other Party agrees to execute and deliver such other
instruments, certificates, consents, and documents as are reasonably requested
by such Party.

9. No Admission of Liability; Covenant Not to Sue.

a. The releases set forth in the General Releases are accepted by the parties
hereto as compromises of disputed claims and comprise part of the transactions
contemplated herein, and shall not be construed as an admission of liability on
the part of any of the Parties hereto.

b. Each of the Parties hereto agrees that none of them, nor any of their
respective agents, employees, personal or legal representatives, successors or
permitted assigns will bring, commence, institute, maintain or prosecute any
action at law or proceeding in equity, or any legal proceeding whatsoever, or
any claim for relief or damages, against any of the other Parties hereto which
is based in whole or in part on any of the matters or claims released under the
General Releases. The parties hereto agree that the releases contained in the
General Releases may be pleaded as a full and complete defense, and may be used
as a basis for an injunction against, any action or suit or other proceeding
that may be commenced, instituted, prosecuted or attempted by any of the other
Parties hereto or any of their personal or legal representatives, employees,
agents, officers, directors, successors or permitted assigns, in breach of any
of the provisions set forth in this Settlement Agreement. The Parties hereto
further agree that none of them will, at any time, take any action of any nature
whatsoever to (i) obtain a determination that this Settlement Agreement, or the
transactions contemplated hereby, are unlawful, illegal or against public
policy, (ii) challenge the validity or enforceability of the Agreement or the
transactions contemplated hereby, (iii) or that any of the arrangements set
forth in the Agreement, or any of the transactions contemplated hereby, are
unlawful in any other manner whatsoever.

10. Access to Records and Premises.

a. For a period of three (3) years from the date hereof (or such longer period
as may be necessary for the Parties to comply with applicable Federal and state
regulations), the Parties hereto shall retain and provide each other and their
designees with reasonable access to each other’s books and records for proper
business purposes, including, but not limited to, defending claims asserted
against the other, or as may be otherwise reasonably necessary in order for the
Parties to carry on their business operations and to comply with applicable
statutory, regulatory or judicial requirements provided such access shall
require seventy-two (72) hours prior written notice and not interfere with the
business operation of the other Party. On the Closing Date, Purchaser shall
deliver to Sellers all intellectual property belonging to Sellers, including,
but not limited to, marketing materials (including signs and logos), quality
improvement processes, compliance programs, policy and procedure handbooks and
manuals, and all other documents and materials in the possession of Purchaser
that contain any confidential information.

 

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11. Indemnity.

a. Each of the Sellers shall jointly and severally indemnify, defend and hold
harmless each of the Purchaser, Management Company, their heirs, successors,
assigns, past, present and future affiliates, parents and subsidiaries, and each
of their past, present and future officers, directors, managers, employees,
agents, shareholders, members, partners, insurers, successors and assigns (the
“Purchaser Indemnitees”), from and against any demand, claim, action, damage or
liability (including without limitation reasonable attorney fees, expert and
outside consulting fees and related court expenses) (“Damages”) asserted against
or imposed upon or incurred by the Purchaser Indemnitees, or any them, to the
extent resulting from:

(i) a breach of any representation, warranty or covenant of any of the Sellers
set forth in this Settlement Agreement or any Settlement Documents; and

(ii) any assertion with respect to the Management Company or the use of the
Management Company Assets arising before the Closing Date; noncompliance with
any sales or use taxes resulting from the consummation of the transactions
contemplated by this Settlement Agreement and the Settlement Documents arising
on or before the Closing Date;

(iii) any assertion with respect to contractual obligations of the Management
Company arising on or before the Closing Date except (1) those contractual
obligations which disclosed in Exhibit 2.a.(ii); (2) any accrued payroll expense
and related taxes; (ii) those obligations associated with operating leases; and
(iii) any other payables, expenses or obligations which the Purchaser or anyone
under his control or supervision has knowledge.; and

(iv) any assertion with respect to accounts payable of the Management Company or
any other unpaid operating liability or expense relating to the operation of the
Management Company that arising on or before the Closing Date except (1) those
contractual obligations which disclosed in Exhibit 2.a.(ii); (2) any accrued
payroll expense and related taxes; (ii) those obligations associated with
operating leases; and (iii) any other payables, expenses or obligations which
the Purchaser or anyone under his control or supervision has knowledge.

b. Purchaser shall indemnify, defend and hold harmless each of the Sellers,
their successors, assigns, past, present and future affiliates, parents and
subsidiaries, and each of their past, present and future officers, directors,
managers, employees, agents, shareholders, members, partners, insurers,
successors and assigns (the “Seller Indemnitees”), from and against any Damages
asserted against or imposed upon or incurred by the Seller Indemnitees, or any
them, to the extent resulting from:

(i) a breach of any representation, warranty or covenant of Purchaser set forth
in this Settlement Agreement or any Settlement Documents,;

(ii) noncompliance with any sales or use taxes resulting from the consummation
of the transactions contemplated by this Settlement Agreement and the Settlement
Documents arising after the Closing Date; and

(iii) any assertion with respect to accounts payable and other contractual
obligations of the Management Company.

c. The indemnified party shall give prompt written notice to the indemnifying
party of any claim which might give rise to a claim by the indemnified party
against the indemnifying party based on the indemnity agreement contained in
this Settlement Agreement, stating the nature and basis of said claims and the
amounts thereof, to the extent known. After such notice, if the indemnifying
party shall acknowledge in writing to the indemnitee that the indemnifying party
shall be obligated under the terms of its indemnity hereunder in connection with
such lawsuit, action or claim and the indemnifying party shall have presented
evidence satisfactory to the indemnitee of the indemnifying party’s financial
ability to satisfy its obligations under this Settlement Agreement or, in the
indemnitee’s sole discretion, the indemnifying party shall have provided to the
indemnitee collateral or security sufficient to satisfy the indemnifying party’s
obligations to the indemnitee hereunder, then the indemnifying party shall be
entitled, if it so elects, to take control of the defense and investigation of
such claim, lawsuit or action and to employ and engage attorneys of its own
choice to handle and contest and defend the same, at the indemnifying party’s
cost, risk and expense. If the claim, lawsuit or action is an insured claim
under the indemnifying party’s applicable insurance coverage, the claim shall be
submitted to the insurance carrier and the indemnification obligation shall only
be for such amount as not covered by such insurance policy. The indemnitee shall
cooperate in all reasonable respects, at the cost and expense of the
indemnifying party, with the indemnifying party, the insurance carrier (if
applicable) and such attorneys in the investigation, trial and defense of such
lawsuit or

 

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action and any appeal arising therefrom, or in the processing and resolution of
any claim filed with the insurance carrier, and both parties shall cooperate
with each other to insure the diligent and timely resolution of the matters in
this Settlement Agreement and in providing access to relevant books and records
in their possession; provided, however, that the indemnitee may, at its own
cost, select counsel and participate in the investigation, settlement, trial and
defense of such claim, lawsuit or action and any appeal arising therefrom. No
indemnifying party may effect any settlement that could result in any cost,
expense or liability to the indemnitee unless such indemnitee consents in
writing to such settlement and the indemnifying party agrees to indemnify the
indemnitee therefore. No indemnitee may pay any claim or effect any settlement
that could result (i) in any cost, expense or liability of the indemnifying
party under this Settlement Agreement or otherwise, or (ii) in preventing the
indemnifying party from recovering under the indemnifying party’s insurance
coverage, unless the indemnifying party consents in writing to such payment or
settlement; provided, however, that the indemnitee may pay any such claim or
effect a settlement if the indemnitee relieves the indemnifying party of any
liability therefore. All insurance proceeds collected pursuant to the
indemnitee’s insurance coverage shall be paid to satisfy such claim, lawsuit or
enforcement action and the balance, if any, shall be paid to the indemnitee. Any
damages incurred by an indemnitee not covered by insurance shall be paid to
indemnitee by the indemnifying party.

d. All of the representations, warranties, covenants, and agreements contained
in this Settlement Agreement are material and have been relied upon by each of
the parties hereto and shall survive the Closing for their applicable statute of
limitations. The representations and warranties contained herein shall not be
affected by any investigation, verification or examination by any party hereto
or by anyone on behalf of such party.

e. Each party hereto acknowledges that he or it has had a full and fair
opportunity to review this Settlement Agreement, understands all of its terms
and provisions, and has consulted with an attorney of his or its choice before
executing this Settlement Agreement. Each Party also acknowledges that no
promises or inducements have been offered or given to him or it to persuade him
or it to execute this Settlement Agreement, other than that consideration herein
recited; that such party is not relying on any representations or statements by
any other party in connection with this Settlement Agreement, other than
representations and statements contained herein or instruments executed or
delivered pursuant to this Settlement Agreement; and that this Settlement
Agreement, together with instruments executed or delivered pursuant to this
Settlement Agreement, is intended as a full accord and satisfaction of bona fide
dispute concerning the relationship between the Parties.

f. Each party and his or its attorneys have made various statements and
representations to the other party and his or its attorneys during negotiations
leading to this Settlement Agreement. Nevertheless, each party specifically does
not rely upon any statement, representation, legal opinion, or promise of any
other party or his or its counsel in executing this Settlement Agreement or in
making the settlement provided for herein, except as expressly stated in this
Settlement Agreement. The representations and releases contained in this
Settlement Agreement will survive the consummation of the transactions
contemplated by this Settlement Agreement.

12. Confidentiality. No party will disclose or use the terms of this Settlement
Agreement or the Settlement Documents, other than the fact of settlement, to
anyone other than such party’s attorneys, members, managers, shareholders,
lenders, or accountants, in connection with arbitration/ litigation to enforce
this Settlement Agreement, or as otherwise required by law or as deemed
appropriate by the Sellers’ or Purchaser’s legal counsel.

13. Nondisparagement. From and after the date of this Settlement Agreement, each
party will refrain from making any disparaging statements, communications or
comments about another party to this Settlement Agreement, and from in any way
interfering with their existing or prospective business relationships.

14. Notices. All notices, requests, demands, claims, and other communications
under this Settlement Agreement must be in writing. Any notice, request, demand,
claim, or other communication under this Settlement Agreement will be deemed
duly given only if it is sent by registered, certified, or express mail, return
receipt requested, postage prepaid, and must be addressed to the intended
recipient as follows:

 

If to the Sellers, or any of them, at:    PainCare Holdings, Inc.    1030 North
Orange Avenue    Suite 105    Orlando, Florida 32801    Attention: CEO

 

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If to the Purchaser at:    Robert Carpenter, D.C.    403 Highway 110 North   
Whitehouse, Texas 75791 With a copy to:       William D. Farrar    William D.
Farrar & Associates, PLLC    3316 Woods Blvd, Suite 100    Tyler, Texas 75707   
Facsimile: 903-597-6417

Notices will be deemed given and received upon confirmation of receipt if sent
by facsimile, the one day after pick-up if sent by reputable overnight courier,
next day delivery service, or three (3) days after mailing if sent by certified
or registered mail, or when delivered by express mail. Either Party may change
the address to which notices, requests, demands, claims and other communications
under this Settlement Agreement are to be delivered by giving the other Party
notice in the manner set forth above.

15. Final Agreement. This Settlement Agreement, together with the other
Settlement Documents, constitutes a single, integrated, written contract
expressing the entire agreement of the Parties relative to this matter. No
covenants, agreements, representations or warranties of any kind whatsoever have
been made by any party, except as specifically set forth in this Settlement
Agreement. All prior discussions and negotiations have been and are merged and
integrated into and are superseded by, this Settlement Agreement.

16. Governing Law. This Settlement Agreement will be governed and construed in
accordance with the laws of the State of Texas, without giving effect to choice
of law principles. Venue for any proceedings brought under this Agreement shall
be the appropriate federal or state courts situated in and for Smith County,
Texas.

17. Amendments in Writing. Any amendments to this Settlement Agreement must be
in writing and signed by or on behalf of all Parties to the Settlement Agreement
and HBK.

18. Enforceability; Waiver. Should any provision of this Settlement Agreement be
found legally unconscionable, objectionable, or otherwise unenforceable, all
other provisions of this Settlement Agreement will remain in full force and
effect. No delay or omission on the part of any Party hereto in exercising any
right hereunder shall operate as a waiver of such right or any other right under
this Settlement Agreement.

19. No Assignment of Any Rights or Claims. The Parties to this Settlement
Agreement warrant that they have not assigned the claims released herein, that
they will not assign the claims before the Closing, and that they have the full
right to execute this Settlement Agreement.

20. Survival. The warranties, representations, covenants and agreements
contained in this Settlement Agreement will survive the Closing, and will
survive indefinitely.

21. Section Headings. The section headings appearing in this Settlement
Agreement have been inserted for the purpose of convenience and ready reference.
They do not purport to, and should not be deemed to define, limit, or extend the
scope or intent of any section.

22. Cooperation in Drafting. Each party has cooperated in the drafting and
preparation of this Settlement Agreement. Hence, in any litigation or
arbitration concerning this Settlement Agreement, the same will not be construed
against any party.

23. Expenses. All expenses in connection with the preparation of this Settlement
Agreement and Settlement Documents, including, without limitation, counsel fees,
accounting fees and disbursements, shall be borne by the respective party(ies)
incurring such expense, whether or not such transactions are consummated.

24. Execution in Counterparts and by Facsimile. This Settlement Agreement may be
signed in counterparts and facsimile copies, each of which may be delivered by
telecopy or other electronic means as agreed to by the Parties, but will not be
effective until all parties have signed at least one counterpart.

 

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25. Time is of the Essence. Time is of the essence with regard to all terms and
provisions set forth in this Agreement.

[Signatures appear on next page]

 

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This Settlement Agreement is hereby made as of the Effective Date.

 

“SELLERS” PainCare Holdings, Inc.     PainCare, Inc. By:  

/s/ Randy Lubinsky

    By:  

/s/ Mark Szporka

  Randy Lubinsky, Chief Executive Officer       Mark Szporka, Chief Executive
Officer “PURCHASER”     “DR. RODGERS”

/s/ Robert Carpenter, D.C.

   

/s/ Randall W. Rodgers, D.O.

Robert Carpenter, D.C.     Randall W. Rodgers, D.O. “NEW PRACTICE”      
Carefirst Medical Associates & Pain Rehabilitation, P.C.       By:  

/s/ Randall W. Rodgers, D.O.

        Randall W. Rodgers, D.O.      

 

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Exhibit 2b.iv.

Excluded Equipment

 

1. EDX machine;

2. C-Arm and table and related accessories;

3. Leg Extension/Curl (Tyler);

4. Lumbar Extension (Tyler);

5. Overhead Press (Tyler);

6. Seated Dip (Tyler);

7. Torso Arm (Tyler); and

8. Upper Back Extremity (Tyler).

 

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