Document:

EXHIBIT 4.1

                              SECURITY AGREEMENT

      THIS SECURITY AGREEMENT (this "Security Agreement"), dated as of August
 19, 2000, is between and among the parties identified as a "Grantor" on  the
 signature pages  hereto and  such  other parties  as  may become  a  Grantor
 hereunder after the date hereof (individually an "Grantor", and collectively
 the "Grantors") and Southridge  Capital Management LLC,  in its capacity  as
 collateral agent (in  such capacity, the  "Collateral Agent") for  Sovereign
 Partners, L.P.,  Dominion Capital  Fund,  Ltd., Canadian  Advantage  Limited
 Partnership,  and  Atlantis  Capital  Fund  (collectively,  the   "Debenture
 Holders"), holders of  8% Senior Secured  Debentures dated  August 19,  2000
 (the "Debentures") issued pursuant to the Chapter 11 plan of  reorganization
 of American Health Choice, Inc. and  AHC Physicians Corporation dated  March
 31, 2000 as amended by modification dated  June 5, 2000 (the "Plan") and  as
 confirmed by order of the United States Bankruptcy Court, Northern  District
 of Texas, dated August 8, 2000 (the "Confirmation Order").

                                   RECITALS

      WHEREAS, pursuant  to those  certain Debentures  dated as  of the  date
 hereof issued by American Health Choice  Inc. ("AHIC") pursuant to the  Plan
 and the Confirmation Order, Grantors, AHIC  and its subsidiaries, agreed  to
 secure AHIC's obligations under the Debentures, and the Grantors shall  have
 executed and delivered this Security Agreement  to the Collateral Agent  for
 the ratable benefit of the Debenture Holders.

      NOW, THEREFORE, in consideration of these  premises and other good  and
 valuable consideration,  the receipt  and sufficiency  of which  are  hereby
 acknowledged, the parties hereto agree as follows:

      1.   Definitions.

           (a)  Capitalized terms used and not otherwise defined herein shall
      have the meanings  ascribed to such  terms in the  Debentures, and  the
      following terms which  are defined in  the Uniform  Commercial Code  in
      effect in the State of New York the  date hereof are used herein as  so
      defined:    Accounts,  Chattel  Paper,  Deposit  Accounts,   Documents,
      Equipment, Farm Products,  Fixtures, General Intangibles,  Instruments,
      Inventory, Investment Property and Proceeds.

           (b)  In addition,  the following  terms shall  have the  following
      meanings:

           "Contracts":  all contracts and agreements to which a Grantor is a
      party, as each may be amended, supplemented or otherwise modified  from
      time to  time,  including, without  limitation,  (a) all  rights  of  a
      Grantor to receive moneys due and to become due to it thereunder or  in
      connection therewith, (b) all  rights of a  Grantor to damages  arising
      out of or for breach or default  in respect thereof and (c) all  rights
      of a Grantor to exercise all remedies thereunder.

           "Secured Obligations":   the collective  reference to  all of  the
      obligations of  AHIC to  the Debenture  Holders whenever  arising,  for
      payment  or  performance  under  the  Debentures  and  all  liabilities
      incurred in connection with collecting and enforcing the foregoing.
<PAGE>

           "Trademark License":   any agreement, written  or oral,  providing
      for the grant by  or to a Grantor  of any right  to use any  Trademark,
      including, without limitation, any thereof referred to in Schedule 1(b)
      hereto.

           "Trademarks":  (a) all  trademarks, trade names, corporate  names,
      company names, business names, fictitious business names, trade styles,
      service marks, logos and other source or business identifiers, and  the
      goodwill associated  therewith, now  existing or  hereafter adopted  or
      acquired,  all   registrations   and  recordings   thereof,   and   all
      applications in  connection therewith,  whether  in the  United  States
      Patent and Trademark Office or in  any similar office or agency of  the
      United States, any State thereof or any other country or any  political
      subdivision thereof, or otherwise,  including, without limitation,  any
      thereof referred  to in  Schedule 1(b)  hereto,  and (b)  all  renewals
      thereof.

           "Work":   any  work  which  is  subject  to  copyright  protection
      pursuant to Title 17 of the United States Code.

      2.   Grant of  Security Interest  in the  Collateral.   To  secure  the
 prompt payment and performance  under the Debentures in  full when due  (the
 "Secured Obligations"), whether by lapse of time, acceleration or otherwise,
 of the Secured  Obligations, each Grantor  hereby grants  to the  Collateral
 Agent, for the benefit of the Debenture Holders, a continuing first priority
 security interest in, and  a right to  set off against,  any and all  right,
 title and interest  of such  Grantor in and  to the  following, whether  now
 owned or existing  or owned, acquired,  or arising hereafter  (collectively,
 the "Collateral"):

                (a)  all Accounts;

                (b)  all Cash and Cash Equivalents maintained on deposit with
                the Collateral Agent;

                (c)  all Chattel Paper;

                (d)  all Deposit Accounts;

                (e)  all Documents;

                (f)  all Equipment;

                (g)  all Fixtures;

                (h)  all General  Intangibles, including  without  limitation
                Contracts;

                (i)  all Instruments;

                (j)  all Inventory;

                (k)  all Investment Property;

                (l)  all Trademarks;

                (m)  all Trademark Licenses;
<PAGE>

                (n)  all books, records, ledger cards, files, correspondence,
                computer programs, tapes, disks, and related data  processing
                software (owned  by  such  Grantor or  in  which  it  has  an
                interest) that at  any time evidence  or contain  information
                relating to  any Collateral  or  are otherwise  necessary  or
                helpful in the collection  thereof or realization  thereupon;
                and

                (o)  to the extent not  otherwise included, all Proceeds  and
                products of any and all of the foregoing, and Accessions  and
                After Acquired Property;

      provided that this Agreement shall not constitute an assignment of,  or
 a grant of a security  interest in or lien  on, (i) any Contract  (including
 any license or  use agreement)  if the terms  of the  Contract prohibit  the
 assignment thereof or grant of a security interest or lien therein, or  (ii)
 any Property subject to a Contract (including any license or use  agreement)
 if the terms  of the Contract  prohibit the assignment  of such Property  or
 grant of a security interest or lien in such Property.

      The Grantors  and the  Collateral Agent,  on  behalf of  the  Debenture
 Holders, hereby acknowledge  and agree  that the  security interest  created
 hereby in the Collateral (i) constitutes continuing collateral security  for
 all of the Secured  Obligations, whether now  existing or hereafter  arising
 and (ii)  is not  to be  construed as  an assignment  of any  Trademarks  or
 Trademark Licenses.

      Notwithstanding the  foregoing,  with respect  to  any and  all  assets
 purchased  AHIC  from  Dr.   Voracek  and/or  his  entities   (collectively,
 "Voracek")  that own  clinics being purchased by  the Company in  accordance
 with the terms of the Plan together with all replacement collateral  thereof
 (collectively, the "Voracek Assets"),  the Debenture Holders hereby  consent
 and agree to (a) the granting by Grantors of a first priority purchase money
 security interest in  favor of  Voracek, and  (b) the  subordination of  the
 Debenture Holders' first priority security interest in the Voracek Assets to
 a properly perfected purchase money security interest in favor of Voracek.

      3.   Representations and Warranties.   Each  Grantor hereby  represents
 and warrants  to the  Collateral Agent,  for the  benefit of  the  Debenture
 Holders, that so long as any of the Secured Obligations remain  outstanding,
 and until  all of  the  obligations under  the  Debentures shall  have  been
 terminated:

           (a)  Chief Executive  Office; Books  &  Records.   Each  Grantor's
      chief executive office  and chief  place of  business is  (and for  the
      prior four months  have been)  located at  the locations  set forth  on
      Schedule 3(a) hereto, and each Grantor  keeps its books and records  at
      such locations.

           (b)  Location of Collateral.  The location of all Collateral owned
      by each Grantor is as shown on Schedule 3(b) hereto.
<PAGE>

           (c)  Ownership.  Each Grantor is the legal and beneficial owner of
      its Collateral and has  the right to pledge,  sell, assign or  transfer
      the same.   Each  Grantor's legal  name is  as shown  in this  Security
      Agreement and no Grantor has in the past four months changed its  name,
      been party to a merger, consolidation  or other change in structure  or
      used any  tradename  except as  set  forth in  Schedule  3(c)  attached
      hereto.

           (d)  Security Interest/Priority.  This Security Agreement  creates
      a valid first  priority security interest  in favor  of the  Collateral
      Agent, or, with respect to the Collateral listed on Schedule 2  hereof,
      a second priority security interest, for  the benefit of the  Debenture
      Holders, in the Collateral of such Grantor and, when properly perfected
      by filing, shall constitute a valid perfected security interest in such
      Collateral, to  the extent  such security  can be  perfected by  filing
      under the UCC, free and clear of all Liens.

           (e)  Farm Products.  None of the Collateral constitutes, or is the
      Proceeds of, Farm Products.

           (f)  Accounts.  (i) Each  Account of the  Grantors and the  papers
      and documents relating thereto are genuine and in all material respects
      what they purport  to be, (ii) each  Account arises out  of (A) a  bona
      fide sale of goods  sold and delivered  by such Grantor  (or is in  the
      process of  being  delivered)  or  (B)  services  theretofore  actually
      rendered by such Grantor to, the account debtor named therein, (iii) no
      Account of a Grantor  is evidenced by any  Instrument or Chattel  Paper
      unless such Instrument or Chattel  Paper has been theretofore  endorsed
      over and delivered to the Collateral Agent and (iv) no surety bond  was
      required or given in  connection with any Account  of a Grantor or  the
      contracts or purchase orders out of which they arose.

           (g)  Inventory.  No  Inventory is held  by a  Grantor pursuant  to
      consignment, sale or return, sale on approval or similar arrangement.

           (h)  Trademarks.

                (i)  Schedule  1(b)  hereto   includes  all  Trademarks   and
           Trademark Licenses owned by the Grantors in their own names as  of
           the date hereof.

                (ii) Each Trademark  of such  Grantor is  valid,  subsisting,
           unexpired, enforceable and has not been abandoned.

                (iii) Except as set forth  in Schedule 1(b) hereto,  none  of
           such  Trademarks  is  the  subject of  any licensing or  franchise
           agreement.

                (iv) No holding, decision  or judgment has  been rendered  by
           any Governmental Authority which  would limit, cancel or  question
           the validity of any Trademark.

                (v)  No action  or proceeding  is pending  seeking to  limit,
           cancel or question  the validity of  any Trademark,  or which,  if
           adversely determined, would have a material adverse effect on  the
           value of any Trademark.
<PAGE>

                (vi) All applications pertaining  to the  Trademarks of  each
           Grantor have been duly and  properly filed, and all  registrations
           or letters  pertaining  to  such Trademarks  have  been  duly  and
           properly filed and issued,  and all of  such Trademarks are  valid
           and enforceable.

                (vii)  No  Grantor  has made  any assignment or agreement  in
           conflict with  the security  interest in  the Trademarks  of  each
           Grantor hereunder.

      4.   Covenants.  Each  Grantor covenants that,  so long as  any of  the
 Secured  Obligations  remain  outstanding  or  any  obligations  under   the
 Debentures shall remain outstanding, and until all of the Commitments  shall
 have been terminated, such Grantor shall:

           (a)  Other Liens.   Defend the Collateral  against the claims  and
      demands of all  other parties claiming  an interest  therein, keep  the
      Collateral free  from  all Liens,  and  not sell,  exchange,  transfer,
      assign, lease or otherwise  dispose of the  Collateral or any  interest
      therein.

           (b)  Preservation of  Collateral.   Keep  the Collateral  in  good
      order, condition and repair and not use the Collateral in violation  of
      the provisions  of  this  Security Agreement  or  any  other  agreement
      relating to the Collateral or any policy insuring the Collateral or any
      applicable statute, law, bylaw, rule, regulation or ordinance.

           (c)  Instruments/Chattel Paper.  If any amount payable under or in
      connection with any of the Collateral  shall be or become evidenced  by
      any Instrument or Chattel Paper, immediately deliver such Instrument or
      Chattel Paper  to  the Collateral  Agent,  duly endorsed  in  a  manner
      satisfactory to the Collateral Agent, to be held as Collateral pursuant
      to this Security Agreement.

           (d)  Change in Location.   Not,  without providing  30 days  prior
      written  notice  to  the  Collateral  Agent  and  without  filing  such
      amendments  to  any  previously  filed  financing  statements  as   the
      Collateral Agent  may require,  (a) change  the location  of its  chief
      executive office and chief place of business (as well as its books  and
      records) from  the locations  set forth  on Schedule  3(a) hereto,  (b)
      change the location of its Collateral from the locations set forth  for
      such Grantor on Schedule 3(b) hereto, or (c) change its name, be  party
      to a merger,  consolidation or  other change  in structure  or use  any
      tradename other than as set forth on Schedule 3(c) attached hereto.

           (e)  Inspection.  Upon  reasonable notice,  and during  reasonable
      hours, at all times allow the  Collateral Agent or its  representatives
      to visit and inspect the Collateral.
<PAGE>

           (f)  Perfection of Security Interest.  Execute and deliver to  the
      Collateral Agent such agreements, assignments or instruments (including
      affidavits, notices, reaffirmations and amendments and restatements  of
      existing documents, as the Collateral Agent may reasonably request) and
      do all such other  things as the Collateral  Agent may reasonably  deem
      necessary or  appropriate (i)  to assure  to the  Collateral Agent  its
      security interests hereunder, including  (A) such financing  statements
      (including renewal  statements) or  amendments thereof  or  supplements
      thereto or other instruments as the  Collateral Agent may from time  to
      time reasonably request in order to  perfect and maintain the  security
      interests granted hereunder in  accordance with the  UCC, and (B)  with
      regard to  Trademarks,  a  Notice of  Grant  of  Security  Interest  in
      Trademarks for  filing  with the  United  States Patent  and  Trademark
      Office in  the  form  of Schedule  4(f)(i)  attached  hereto,  (ii)  to
      consummate the transactions contemplated hereby and (iii) to  otherwise
      protect and assure  the Collateral Agent  of its  rights and  interests
      hereunder.  To that end, each Grantor agrees that the Collateral  Agent
      may file one  or more  financing statements  disclosing the  Collateral
      Agent's security  interest in  any or  all of  the Collateral  of  such
      Grantor without,  to  the  extent  permitted  by  law,  such  Grantor's
      signature thereon,  and further  each Grantor  also hereby  irrevocably
      makes, constitutes and  appoints the Collateral  Agent, its nominee  or
      any other  person whom  the Collateral  Agent  may designate,  as  such
      Grantor's attorney in fact with full power and for the limited  purpose
      to sign in the name of  such Grantor any such financing statements,  or
      amendments and supplements to  financing statements, renewal  financing
      statements, notices or  any similar documents  which in the  Collateral
      Agent's  reasonable  discretion  would  be  necessary,  appropriate  or
      convenient in order to perfect and maintain perfection of the  security
      interests  granted  hereunder,  such  power,  being  coupled  with   an
      interest, being and remaining irrevocable so long as the Debentures are
      in effect or any obligations thereunder shall remain outstanding.  Each
      Grantor hereby agrees that a carbon, photographic or other reproduction
      of  this  Security  Agreement  or  any  such  financing  statement   is
      sufficient for filing as a financing statement by the Collateral  Agent
      without notice thereof  to such Grantor  wherever the Collateral  Agent
      may in its sole discretion desire to file  the same.  In the event  for
      any reason the law of any  jurisdiction other than New York becomes  or
      is applicable to the Collateral of any Grantor or any part  thereof, or
      to any of the Secured Obligations,  such Grantor agrees to execute  and
      deliver all such  instruments and to  do all such  other things as  the
      Collateral Agent in its sole  discretion reasonably deems  necessary or
      appropriate to preserve, protect and enforce the security interests  of
      the Collateral Agent under the law of such other jurisdiction  (and, if
      a Grantor  shall  fail  to do  so  promptly  upon the  request  of  the
      Collateral Agent, then  the Collateral Agent  may execute  any and  all
      such requested  documents on  behalf of  such Grantor  pursuant  to the
      power of attorney granted  hereinabove).  If any  Collateral is in  the
      possession or control of a Grantor's agents and the Collateral Agent so
      requests, such Grantor agrees to notify  such agents in writing of  the
      Collateral Agent's security interest  therein and, upon the  Collateral
      Agent's request,  instruct them  to hold  all such  Collateral for  the
      Debenture Holders'  account  and  subject  to  the  Collateral  Agent's
      instructions.  Each  Grantor agrees to  mark its books  and records  to
      reflect  the  security  interest  of   the  Collateral  Agent  in   the
      Collateral.
<PAGE>

           (g)  Treatment of  Accounts.   Not grant  or extend  the time  for
      payment of any Account,  or compromise or settle  any Account for  less
      than the full  amount thereof, or  release any person  or property,  in
      whole or in part, from payment thereof, or allow any credit or discount
      thereon, other than as normal and customary in the ordinary course of a
      Grantor's business or as required by law.

           (h)  Covenants Relating to Trademarks.

                (i)  (A) Continue to  use each  Trademark on  each and  every
           trademark class  of  goods  applicable  to  its  current  line  as
           reflected in its  current catalogs, brochures  and price lists  in
           order to maintain such Trademark in full force free from any claim
           of abandonment  for  non-use, (B)  maintain  as in  the  past  the
           quality of products and services offered under such Trademark, (C)
           employ such Trademark with the appropriate notice of registration,
           (D) not adopt or  use any mark which  is confusingly similar or  a
           colorable imitation of such Trademark unless the Collateral Agent,
           for the ratable benefit of the  Debenture Holders, shall obtain  a
           perfected security interest in such mark pursuant to this Security
           Agreement, and (E) not (and not permit any licensee or sublicensee
           thereof to) do any act or knowingly omit to do any act whereby any
           Trademark may become invalidated or deemed abandoned.

                (ii)  Notify the Collateral Agent and  the Debenture  Holders
           immediately  if  it  knows,  or  has  reason  to  know,  that  any
           application or registration relating  to any Trademark may  become
           abandoned  or  dedicated,  or  of  any  adverse  determination  or
           development (including, without limitation, the institution of, or
           any such determination  or development in,  any proceeding in  the
           United States Patent and Trademark Office or any court or tribunal
           in any country) regarding a  Grantor's ownership of any  Trademark
           or its right  to register  the same or  to keep  and maintain  the
           same.

                (iii)  Whenever  a  Grantor,  either by itself or through  an
           agent, employee, licensee or  designee, shall file an  application
           for the  registration  of any  Trademark  with the  United  States
           Patent and Trademark Office or any similar office or agency in any
           other country  or any  political  subdivision thereof,  a  Grantor
           shall report such filing to the Collateral Agent and the Debenture
           Holders within five Business Days after the last day of the fiscal
           quarter in  which  such  filing  occurs.    Upon  request  of  the
           Collateral Agent, a Grantor shall execute and deliver any and  all
           agreements, instruments, documents  and papers  as the  Collateral
           Agent may reasonably  request to evidence  the Collateral  Agent's
           and the Debenture Holders' security interest in any Trademark  and
           the goodwill and general intangibles of a Grantor relating thereto
           or represented thereby.

                (iv)  Take all reasonable  and  necessary  steps,  including,
           without limitation,  in any  proceeding before  the United  States
           Patent and Trademark Office,  or any similar  office or agency  in
           any  other  country  or  any  political  subdivision  thereof,  to
           maintain and pursue each application  (and to obtain the  relevant
           registration) and to maintain each registration of the Trademarks,
           including, without limitation, filing of applications for renewal,
           affidavits of use and affidavits of incontestability.
<PAGE>

                (v)  Promptly notify the Collateral  Agent and the  Debenture
           Holders after  it  learns  that  any  Trademark  included  in  the
           Collateral is  infringed, misappropriated  or diluted  by a  third
           party and  promptly  sue  for  infringement,  misappropriation  or
           dilution, to  seek  injunctive  relief where  appropriate  and  to
           recover   any   and   all    damages   for   such    infringement,
           misappropriation or dilution,  or take  such other  actions as  it
           shall reasonably  deem  appropriate  under  the  circumstances  to
           protect such Trademark.

                (vi)  Not make any assignment or agreement  in conflict  with
           the security interest in the Trademarks of each Grantor hereunder.

           (i)  New Trademarks.  Promptly  provide the Collateral Agent  with
      (i) a listing of all applications, if any, for new Trademarks (together
      with a listing of the issuance  of registrations or letters on  present
      applications), which  new  applications  and  issued  registrations  or
      letters shall be  subject to the  terms and  conditions hereunder,  and
      (ii) (A) with respect to Trademarks, a duly executed Notice of Security
      Interest in Trademarks or (B) such other duly executed documents as the
      Collateral Agent may request  in a form acceptable  to counsel for  the
      Collateral Agent and  suitable for recording  to evidence the  security
      interest in the Trademark which is the subject of such new application.

           (j)  Insurance.  Insure, repair and replace the Collateral of such
      Grantor.   All insurance  proceeds shall  be  subject to  the  security
      interest of the Collateral Agent hereunder.

      5.   Advances by  Debenture Holders.   On  failure  of any  Grantor  to
 perform any of the covenants and agreements contained herein, the Collateral
 Agent may, at its sole option and  in its sole discretion, perform the  same
 and in so doing may expend such sums as the Collateral Agent may  reasonably
 deem advisable in  the performance thereof,  including, without  limitation,
 the payment of any insurance premiums,  the payment of any taxes, a  payment
 to obtain  a release  of a  Lien  or potential  Lien, expenditures  made  in
 defending against any  adverse claim and  all other  expenditures which  the
 Collateral Agent or the Debenture Holders may make for the protection of the
 security hereof or which may be compelled to make by operation of law.   All
 such sums and amounts so  expended shall be repayable  by the Grantors on  a
 joint and  several basis  promptly upon  timely  notice thereof  and  demand
 therefor, shall  constitute additional  Secured Obligations  and shall  bear
 interest from  the  date said  amounts  are  expended at  the  default  rate
 specified in  the  Debentures.   No  such  performance of  any  covenant  or
 agreement by the  Debenture Holders on  behalf of any  Grantor, and no  such
 advance or expenditure therefor, shall relieve  the Grantors of any  default
 under the terms of this Security Agreement or the Debentures.  The Debenture
 Holders may make any payment hereby authorized in accordance with any  bill,
 statement or estimate procured from the appropriate public office or  holder
 of the claim  to be  discharged without inquiry  into the  accuracy of  such
 bill, statement or  estimate or  into the  validity of  any tax  assessment,
 sale, forfeiture, tax lien, title or claim except to the extent such payment
 is being contested in good faith by a Grantor in appropriate proceedings and
 against which  adequate reserves  are being  maintained in  accordance  with
 GAAP.

      6.   Events of Default.

      The occurrence of an event which under the Debentures or under the Plan
 would constitute an Event of Default shall be an Event of Default  hereunder
 (an "Event of Default").
<PAGE>

      7.   Remedies.

           (a)  General Remedies.  Upon the occurrence of an Event of Default
      and during continuation thereof, the  Debenture Holders shall have,  in
      addition to the rights and remedies provided herein, under the Plan  in
      the Debentures,  or any  Affiliate of  a Debenture  Holder, or  by  law
      (including, but not limited  to, the rights and  remedies set forth  in
      the Uniform  Commercial  Code of  the  jurisdiction applicable  to  the
      affected Collateral, the rights and remedies  of a secured party  under
      the UCC (regardless of whether the  UCC is the law of the  jurisdiction
      where the rights and  remedies are asserted  and regardless of  whether
      the  UCC  applies  to  the  affected  Collateral),  and,  further,  the
      Collateral Agent may, with or without  judicial process or the aid  and
      assistance of others,  (i) enter on  any premises on  which any of  the
      Collateral may be  located and, without  resistance or interference  by
      the Grantors, take possession  of the Collateral,  (ii) dispose of  any
      Collateral on any such premises, (iii) require the Grantors to assemble
      and make  available to  the  Collateral Agent  at  the expense  of  the
      Grantors any  Collateral  at  any place  and  time  designated  by  the
      Collateral Agent which is reasonably  convenient to both parties,  (iv)
      remove any  Collateral  from  any such  premises  for  the  purpose  of
      effecting sale or other disposition thereof, and/or (v) without  demand
      and without advertisement, notice,  hearing or process  of law, all  of
      which each  of  the  Grantors  hereby  waives  to  the  fullest  extent
      permitted by law, at any place and time or times, sell and deliver  any
      or all Collateral held by or for it  at public or private sale, by  one
      or more contracts,  in one or  more parcels, for  cash, upon credit  or
      otherwise, at such prices and upon  such terms as the Collateral  Agent
      deems advisable,  in  its  sole discretion  (subject  to  any  and  all
      mandatory legal requirements).  In addition  to all other sums due  the
      Collateral Agent and the Debenture Holders with respect to the  Secured
      Obligations, the Grantors shall  pay the Collateral  Agent and each  of
      the Debenture  Holders all  reasonable  documented costs  and  expenses
      incurred  by  the  Collateral  Agent  or  any  such  Debenture  Holder,
      including, but not  limited to,  reasonable attorneys'  fees and  court
      costs, in obtaining or liquidating the Collateral, in enforcing payment
      of the Secured  Obligations, or in  the prosecution or  defense of  any
      action or  proceeding  by  or  against  the  Collateral  Agent  or  the
      Debenture Holders or the Grantors concerning any matter arising out  of
      or connected  with  this  Security Agreement,  any  Collateral  or  the
      Secured  Obligations,  including,  without   limitation,  any  of   the
      foregoing arising in,  arising under  or related  to a  case under  the
      Bankruptcy Code.  To the extent the rights of notice cannot be  legally
      waived  hereunder,  each  Grantor   agrees  that  any  requirement   of
      reasonable notice shall be met if  such notice is personally served  on
      or mailed, postage prepaid, to AHIC at least 10 days before the time of
      sale or other event giving rise to the requirement of such notice.  The
      Collateral Agent and the  Debenture Holders shall  not be obligated  to
      make any  sale or  other disposition  of the  Collateral regardless  of
      notice having  been  given.    To the  extent  permitted  by  law,  any
      Debenture Holder may be a  purchaser at any such  sale.  To the  extent
      permitted by applicable law, each of the Grantors hereby waives all  of
      its rights of redemption with respect to any such sale.  Subject to the
      provisions of applicable  law, the Collateral  Agent and the  Debenture
      Holders may postpone or  cause the postponement of  the sale of all  or
      any portion of the Collateral by announcement at the time and place  of
      such sale, and  such sale may,  without further notice,  to the  extent
      permitted by law, be made at the time  and place to which the sale  was
      postponed, or  the  Collateral  Agent and  the  Debenture  Holders  may
      further postpone such sale by announcement made at such time and place.
<PAGE>

           (b)  Remedies relating to  Accounts.   Upon the  occurrence of  an
      Event of Default and  during the continuation  thereof, whether or  not
      the Collateral  Agent  has exercised  any  or  all of  its  rights  and
      remedies hereunder,  each Grantor  will promptly  upon request  of  the
      Collateral Agent instruct all account debtors to remit all payments  in
      respect of Accounts to  a mailing location  selected by the  Collateral
      Agent.  In addition,  the Collateral Agent or  its designee may  notify
      any Grantor's customers and account debtors  that the Accounts of  such
      Grantor have been assigned to the Collateral Agent or of the Collateral
      Agent's security interest therein, and may  (either in its own name  or
      in the name of  a Grantor or both)  demand, collect (including  without
      limitation by way of a lockbox arrangement), receive, take receipt for,
      sell, sue for,  compound, settle, compromise  and give acquittance  for
      any and all amounts due or  to become due on  any Account, and, in  the
      Collateral Agent's discretion, file any claim or take any other  action
      or proceeding to protect and realize upon the security interest of  the
      Debenture Holders  in  the Accounts.    Each Grantor  acknowledges  and
      agrees that the Proceeds  of its Accounts remitted  to or on behalf  of
      the Collateral Agent in accordance with the provisions hereof shall  be
      solely for the Collateral Agent's own convenience and that such Grantor
      shall not have any right, title or interest in such Accounts or in  any
      such other amounts except as expressly provided herein.  The Collateral
      Agent  and  the   Debenture  Holders   shall  have   no  liability   or
      responsibility to any Grantor for acceptance of a check, draft or other
      order for payment  of money  bearing the  legend "payment  in full"  or
      words of similar import or any other restrictive legend or  endorsement
      or be responsible  for determining the  correctness of any  remittance.
      Each Grantor hereby agrees  to indemnify the  Collateral Agent and  the
      Debenture Holders from  and against all  liabilities, damages,  losses,
      actions, claims,  judgments, costs,  expenses, charges  and  reasonable
      attorneys' fees suffered  or incurred by  the Collateral  Agent or  the
      Debenture  Holders  (each,  an  "Indemnified  Party")  because  of  the
      maintenance of  the foregoing  arrangements except  as relating  to  or
      arising out  of  the  gross negligence  or  willful  misconduct  of  an
      Indemnified Party or its officers, employees or agents.  In the case of
      any  investigation,  litigation  or  other  proceeding,  the  foregoing
      indemnity  shall  be  effective  whether  or  not  such  investigation,
      litigation or  proceeding  is  brought by  a  Grantor,  its  directors,
      shareholders or creditors or an Indemnified  Party or any other  Person
      or any other Indemnified Party is otherwise a party thereto.

           (c)  Access.  In  addition to the  rights and remedies  hereunder,
      upon the occurrence of an Event  of Default and during the  continuance
      thereof, the Collateral Agent shall have the right to enter and  remain
      upon the various premises of the Grantors without cost or charge to the
      Collateral Agent, and use the same, together with materials,  supplies,
      books and records  of the Grantors  for the purpose  of collecting  and
      liquidating the Collateral,  or for preparing  for sale and  conducting
      the  sale  of  the  Collateral,  whether  by  foreclosure,  auction  or
      otherwise.  In addition, the Collateral Agent may remove Collateral, or
      any part thereof, from  such premises and/or  any records with  respect
      thereto, in order to effectively collect or liquidate such Collateral.
<PAGE>

           (d)  Nonexclusive Nature of Remedies.   Failure by the  Collateral
      Agent or the Debenture Holders to exercise any right, remedy or  option
      under this Security Agreement,  the Debentures, or as provided by  law,
      or any  delay by  the  Collateral Agent  or  the Debenture  Holders  in
      exercising the same, shall not operate  as a waiver of any such  right,
      remedy or option.  No waiver hereunder shall be effective unless it  is
      in writing, signed by the party  against whom such waiver is sought  to
      be enforced and then only to  the extent specifically stated, which  in
      the case of the Collateral Agent or the Debenture Holders shall only be
      granted as provided herein.   To the extent  permitted by law,  neither
      the Collateral Agent, the  Debenture Holders, nor  any party acting  as
      attorney for the Collateral  Agent or the  Debenture Holders, shall  be
      liable hereunder for any acts or omissions or for any error of judgment
      or mistake of fact or law other than their gross negligence or  willful
      misconduct hereunder.  The rights and remedies of the Collateral  Agent
      and the  Debenture  Holders  under this  Security  Agreement  shall  be
      cumulative and not  exclusive of any  other right or  remedy which  the
      Collateral Agent or the Debenture Holders may have.

           (e)  Retention of  Collateral.   The Collateral  Agent may,  after
      providing the  notices  required by  Section  9-505(2) of  the  UCC  or
      otherwise complying  with the  requirements of  applicable law  of  the
      relevant jurisdiction,  to  the  extent  the  Collateral  Agent  is  in
      possession  of  any  of  the  Collateral,  retain  the  Collateral   in
      satisfaction  of  the  Secured  Obligations.    Unless  and  until  the
      Collateral  Agent  shall  have  provided  such  notices,  however,  the
      Collateral Agent shall not be deemed to have retained any Collateral in
      satisfaction of any Secured Obligations for any reason.

           (f)  Deficiency.   In the  event that  the proceeds  of any  sale,
      collection or realization are insufficient to pay all amounts to  which
      the Collateral Agent or the Debenture Holders are legally entitled, the
      Grantors shall  be jointly  and severally  liable for  the  deficiency,
      together with interest  thereon at the  default rate  specified in  the
      Debentures, together with  the costs of  collection and the  reasonable
      fees of any attorneys employed by the Collateral Agent to collect  such
      deficiency.    Any  surplus  remaining  after  the  full  payment   and
      satisfaction of  the  Secured  Obligations shall  be  returned  to  the
      Grantors or  to  whomsoever a  court  of competent  jurisdiction  shall
      determine to be entitled thereto.

      8.   Rights of the Collateral Agent.

           (a)  Power of Attorney.  In addition  to other powers of  attorney
      contained herein,  each  Grantor  hereby designates  and  appoints  the
      Collateral Agent, on behalf of the  Debenture Holders, and each of  its
      designees or agents, as  attorney-in-fact of such Grantor,  irrevocably
      and with power of  substitution, with authority to  take any or all  of
      the following actions upon the occurrence and during the continuance of
      an Event of Default:

                (i)  to demand,  collect,  settle,  compromise,  adjust,
           give discharges and releases, all as the Collateral Agent may
           reasonably determine;

                (ii) to commence and prosecute any actions at any  court
           for the purposes of  collecting any Collateral and  enforcing
           any other right in respect thereof;
<PAGE>

                (iii)  to  defend,   settle  or  compromise  any  action
           brought and, in connection therewith, give such discharge  or
           release  as  the   Collateral  Agent   may  deem   reasonably
           appropriate;

                (iv) receive, open and  dispose of mail  addressed to  a
           Grantor and endorse checks, notes, drafts, acceptances, money
           orders,  bills  of  lading,   warehouse  receipts  or   other
           instruments or  documents  evidencing  payment,  shipment  or
           storage of the goods  giving rise to  the Collateral of  such
           Grantor on behalf  of and  in the  name of  such Grantor,  or
           securing, or relating to such Collateral;

                (v)  sell,  assign,  transfer,  make  any  agreement  in
           respect of,  or otherwise  deal with  or exercise  rights  in
           respect of, any  Collateral or  the goods  or services  which
           have given rise  thereto, as fully  and completely as  though
           the Collateral Agent were the absolute owner thereof for  all
           purposes;

                (vi) adjust and settle claims under any insurance policy
           relating thereto;

                (vii)     execute   and    deliver   all    assignments,
           conveyances,  statements,   financing   statements,   renewal
           financing  statements,   security   agreements,   affidavits,
           notices and other agreements, instruments and documents  that
           the Collateral  Agent may  determine  necessary in  order  to
           perfect and maintain the security interests and liens granted
           in this Security Agreement and  in order to fully  consummate
           all of the transactions contemplated therein;

                (viii)  institute  any  foreclosure proceedings that the
           Collateral Agent may deem appropriate; and

                (ix)  do and perform all such other  acts and things  as
           the Collateral  Agent may  reasonably deem  to be  necessary,
           proper or convenient in connection with the Collateral.

      This power of attorney is a power coupled with an interest and shall be
      irrevocable (i) for so  long as any of  the Secured Obligations  remain
      outstanding, or  any  obligation  under  the  Debentures  shall  remain
      outstanding.  The Collateral Agent shall  be under no duty to  exercise
      or withhold the exercise of any  of the rights, powers, privileges  and
      options expressly or implicitly granted to the Collateral Agent in this
      Security Agreement, and shall not be liable for any failure to do so or
      any delay in doing so.   The Collateral Agent  shall not be liable  for
      any act or omission or for any error of judgment or any mistake of fact
      or law in its individual capacity  or its capacity as  attorney-in-fact
      except acts or omissions resulting from its gross negligence or willful
      misconduct.   This power  of attorney  is conferred  on the  Collateral
      Agent solely  to  protect,  preserve  and  realize  upon  its  security
      interest in the Collateral.
<PAGE>

           (b)  Performance by the Collateral Agent  of Obligations.  If  any
      Grantor fails to perform any agreement or obligation contained  herein,
      the Collateral Agent itself may perform, or cause performance of,  such
      agreement or  obligation,  and the  expenses  of the  Collateral  Agent
      incurred in connection therewith shall be payable by the Grantors on  a
      joint and several basis pursuant to Section 10 hereof.

           (c)  Assignment by the Collateral Agent.  The Collateral Agent may
      from time  to  time assign  the  Secured Obligations  and  any  portion
      thereof and/or the Collateral and any portion thereof, and the assignee
      shall be entitled to all of  the rights and remedies of the  Collateral
      Agent under this Security Agreement in relation thereto.

           (d)  The Collateral Agent's Duty of Care.  Other than the exercise
      of reasonable care to assure the  safe custody of the Collateral  while
      being held  by the  Collateral Agent  hereunder, the  Collateral  Agent
      shall have no duty or liability to preserve rights pertaining  thereto,
      it being understood and agreed that  the Grantors shall be  responsible
      for preservation of all  rights in the  Collateral, and the  Collateral
      Agent shall be relieved of all  responsibility for the Collateral  upon
      surrendering it or tendering the surrender of it to the Grantors.   The
      Collateral Agent shall be deemed to  have exercised reasonable care  in
      the custody and preservation of the Collateral in its possession if the
      Collateral is accorded treatment substantially equal to that which  the
      Collateral Agent accords its own property, which shall be no less  than
      the treatment  employed  by  a reasonable  and  prudent  agent  in  the
      industry, it being understood that the Collateral Agent shall not  have
      responsibility for  taking  any  necessary  steps  to  preserve  rights
      against any parties with respect to any of the Collateral.

      9.   Application of  Proceeds.   Upon  the  occurrence and  during  the
 continuance of an Event of Default,  any payments in respect of the  Secured
 Obligations and  any  proceeds  of the  Collateral,  when  received  by  the
 Collateral Agent or any of the Debenture Holders in cash or its  equivalent,
 will be applied  in reduction of  the Secured Obligations  in the order  set
 forth in the  Debentures and each  Grantor irrevocably waives  the right  to
 direct the application of  such payments and  proceeds and acknowledges  and
 agrees that the  Collateral Agent shall  have the  continuing and  exclusive
 right to apply and  reapply any and  all such payments  and proceeds in  the
 Collateral  Agent's  sole  discretion,  notwithstanding  any  entry  to  the
 contrary upon any of its books and records.

      10.  Costs of Counsel.   If  at any  time hereafter,  whether upon  the
 occurrence of  an Event  of Default  or not,  the Collateral  Agent  employs
 counsel to prepare or consider amendments, waivers or consents with  respect
 to this Security Agreement, or to take action or make a response in or  with
 respect to  any  legal or  arbitral  proceeding relating  to  this  Security
 Agreement or relating  to the Collateral,  or to protect  the Collateral  or
 exercise any  rights  or remedies  under  this Security  Agreement  or  with
 respect to the  Collateral, then  the Grantors  agree to  promptly pay  upon
 demand any and  all such  reasonable documented  costs and  expenses of  the
 Collateral Agent or the Debenture Holders,  all of which costs and  expenses
 shall constitute Secured Obligations hereunder.
<PAGE>

      11.  Continuing Agreement.

           (a)  This Security Agreement  shall be a  continuing agreement  in
      every respect and shall remain in full force and effect so long as  any
      of the Secured Obligations remain outstanding or any obligations  under
      the Debentures  shall  remain  outstanding.    Upon  such  payment  and
      termination, this Security Agreement shall be automatically  terminated
      and the  Collateral Agent  and the  Debenture Holders  shall, upon  the
      request and at the  expense of the Grantors,  forthwith release all  of
      its liens  and  security  interests hereunder  and  shall  execute  and
      deliver  all  UCC   termination  statements   and/or  other   documents
      reasonably requested  by  the  Grantors  evidencing  such  termination.
      Notwithstanding the  foregoing all  releases and  indemnities  provided
      hereunder shall survive termination of this Security Agreement.

           (b)  This Security Agreement shall continue to be effective or  be
      automatically reinstated, as the case may  be, if at any time  payment,
      in whole or in part, of any of the Secured Obligations is rescinded  or
      must otherwise be restored or returned  by the Collateral Agent or  any
      Debenture Holder as  a preference, fraudulent  conveyance or  otherwise
      under any bankruptcy,  insolvency or similar  law, all  as though  such
      payment had not been made; provided that in the event payment of all or
      any part of the Secured Obligations is rescinded or must be restored or
      returned,  all  reasonable  costs   and  expenses  (including   without
      limitation any reasonable legal fees and disbursements) incurred by the
      Collateral Agent or  any Debenture  Holder in  defending and  enforcing
      such reinstatement shall  be deemed  to be included  as a  part of  the
      Secured Obligations.

      12.  Amendments; Waivers; Modifications.   This Security Agreement  and
 the provisions  hereof  may  not  be  amended,  waived,  modified,  changed,
 discharged or terminated except as set forth in the Debentures.

      13.  Successors in Interest.   This Security  Agreement shall create  a
 continuing security interest  in the Collateral  and shall  be binding  upon
 each Grantor, its successors and assigns and shall inure, together with  the
 rights and  remedies  of the  Collateral  Agent and  the  Debenture  Holders
 hereunder, to the benefit of the Collateral Agent and the Debenture  Holders
 and their successors and permitted assigns.  To the fullest extent permitted
 by law, each Grantor hereby releases the Collateral Agent and each Debenture
 Holder, and its successors  and assigns, from any  liability for any act  or
 omission relating to this Security Agreement  or the Collateral, except  for
 any liability arising from the gross negligence or willful misconduct of the
 Collateral Agent, or such  Debenture Holder, or  its officers, employees  or
 agents.

      14.  Notices.  All notices required or permitted to be given under this
 Security Agreement  shall  be in  conformance  with the  provisions  of  the
 Debenture.

      15.  Counterparts.   This Security  Agreement may  be executed  in  any
 number of counterparts, each of which where so executed and delivered  shall
 be an  original,  but  all  of  which shall  constitute  one  and  the  same
 instrument.  It  shall not  be necessary in  making proof  of this  Security
 Agreement to produce or account for more than one such counterpart.
<PAGE>

      16.  Headings.  The headings of the sections and subsections hereof are
 provided for convenience only and shall not in any way affect the meaning or
 construction of any provision of this Security Agreement.

      17.  Governing Law; Submission to Jurisdiction; Venue.

           (a)  THIS SECURITY AGREEMENT AND  THE RIGHTS AND  OBLIGATIONS
      OF THE PARTIES HEREUNDER  SHALL BE GOVERNED  BY AND CONSTRUED  AND
      INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW  YORK.
      Any legal  action  or proceeding  with  respect to  this  Security
      Agreement may be brought in the courts of the State of  New  York,
      or the United States for the  Southern District of New York,  and,
      by execution and delivery of this Security Agreement, each Grantor
      hereby irrevocably  accepts  for  itself and  in  respect  of  its
      property, generally and unconditionally, the jurisdiction of  such
      courts.  Each Grantor further irrevocably consents to the  service
      of process out  of any of  the aforementioned courts  in any  such
      action  or  proceeding  by  the  mailing  of  copies  thereof   by
      registered or  certified  mail,  postage prepaid,  to  it  at  the
      address for notices pursuant to  the provisions of the  Debenture,
      such service  to  become effective  30  days after  such  mailing.
      Nothing herein shall affect the right  of the Collateral Agent  to
      serve process in any other manner permitted by law or to  commence
      legal proceedings or to otherwise  proceed against any Grantor  in
      any other jurisdiction.

           (b)  Each Grantor  hereby  irrevocably waives  any  objection
      which it may now or hereafter have  to the laying of venue of  any
      of the  aforesaid actions  or proceedings  arising  out of  or  in
      connection with  this Security  Agreement  brought in  the  courts
      referred  to  in   subsection  (a)  hereof   and  hereby   further
      irrevocably waives and agrees  not to plead or  claim in any  such
      court that any such action or proceeding brought in any such court
      has been brought in an inconvenient forum.

      18.  Waiver of Jury Trial.  TO THE EXTENT PERMITTED BY APPLICABLE  LAW,
 EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
 RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
 OF OR RELATING TO THIS SECURITY  AGREEMENT OR THE TRANSACTIONS  CONTEMPLATED
 HEREBY.

      19.  Severability.  If any provision of  any of the Security  Agreement
 is determined to be illegal, invalid or unenforceable, such provision  shall
 be fully severable and the remaining  provisions shall remain in full  force
 and effect and  shall be construed  without giving effect   to the  illegal,
 invalid or unenforceable provisions.

      20.  Entirety.  This Security Agreement,  the Debentures, the Plan  and
 the Confirmation Order represent the entire agreement of the parties  hereto
 and thereto, and supersede all prior agreements and understandings, oral  or
 written, if any.

      21.  Survival.   All representations  and  warranties of  the  Grantors
 hereunder  shall  survive  the  execution  and  delivery  of  this  Security
 Agreement and the Debentures.
<PAGE>

      22.  Other Security.  To the extent that any of the Secured Obligations
 are  now  or  hereafter  secured  by  property  other  than  the  Collateral
 (including, without  limitation, real  property and  securities owned  by  a
 Grantor), or by a  guarantee, endorsement or property  of any other  Person,
 then the Collateral Agent and the Debenture Holders shall have the right  to
 proceed against  such  other property,  guarantee  or endorsement  upon  the
 occurrence of  any  Event of  Default,  and  the Collateral  Agent  and  the
 Debenture Holders have  the right, in  their sole  discretion, to  determine
 which rights, security, liens, security interests or remedies the Collateral
 Agent and  the  Debenture Holders  shall  at any  time  pursue,  relinquish,
 subordinate, modify  or  take  with respect  thereto,  without  in  any  way
 modifying or affecting any of them or any of the Collateral Agent's and  the
 Debenture Holders' rights  or the  Secured Obligations  under this  Security
 Agreement or under the Debentures.

      23.  Joint and Several Obligations of Grantors.

           (a)  Each of the Grantors is accepting joint and several liability
      hereunder  in  consideration  of  the  financial  accommodation  to  be
      provided by the Debenture  Holders under the  Plan and the  Debentures,
      for the  mutual  benefit,  directly and  indirectly,  of  each  of  the
      Grantors and  in  consideration of  the  undertakings of  each  of  the
      Grantors to accept joint and several  liability for the obligations  of
      each of them.

           (b)  Each of the Grantors jointly and severally hereby irrevocably
      and unconditionally accepts, not merely as  a surety but also as a  co-
      debtor, joint  and  several  liability with  the  other  Grantors  with
      respect  to  the  payment  and  performance  of  all  of  the   Secured
      Obligations arising under this  Security Agreement and the  Debentures,
      it being the intention of the  parties hereto that all the  Obligations
      shall be the  joint and  several obligations  of each  of the  Grantors
      without preferences or distinction among them.

           (c)  Notwithstanding  any  provision  to  the  contrary  contained
      herein or in the Debentures, the  obligations of each Grantor shall  be
      limited to an aggregate amount equal  to the largest amount that  would
      not render such obligations subject to  avoidance under Section 548  of
      the Bankruptcy  Code or  any comparable  provisions of  any  applicable
      state law.

      24.  Rights  of  Required  Debenture  Holders.    All  rights  of   the
 Collateral Agent hereunder, if not exercised by the Collateral Agent, may be
 exercised by the Required Debenture Holders.
<PAGE>

      Each of the parties  hereto has caused a  counterpart of this  Security
 Agreement to  be duly  executed and  delivered as  of the  date first  above
 written.

 GRANTORS:                AMERICAN HEALTHCHOICE, INC.,
 --------                 a New York corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          AHC Chiropractic Clinics, Inc.,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          AHC Physicians Corporation, Inc.,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          AHC Physicians Corporation, Inc.,
                          a Georgia corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          TOTAL MEDICAL DIAGNOSTICS, INC.,
                          a Delaware corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          NATIONWIDE SPORTS AND INJURY, INC.,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          UNITED CHIROPRACTIC CLINICS OF UPTOWN, INC.,
                          a Louisiana corporation

                          By:  _____________________________________________
                          Name:
                          Title:
<PAGE>

                          NEW ORLEANS EAST CHIROPRACTIC CLINICS, INC.,
                          a Louisiana corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          AHC CLINIC MANAGEMENT, L.L.C.,
                          a Texas limited liability company

                          By:  _____________________________________________
                          Name:
                          Title:

                          AHI MANAGEMENT, INC.,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          DIAGNOSTIC SERVICES, INC.,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          KATY SPORTS INJURY AND REHAB,
                          INCORPORATED,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          PACIFIC CHIROPRACTIC (SAN PEDRO),
                          INCORPORATED, d/b/a United Chiropractic Clinic,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

                          APPLE CHIROPRACTIC CLINIC OF WURZBACH,
                          INCORPORATED,
                          a Texas corporation

                          By:  _____________________________________________
                          Name:
                          Title:

<PAGE>
                          VALLEY FAMILY HEALTH CENTER, L.L.C.,
                          a Texas limited liability company

                          By:  _____________________________________________
                          Name:
                          Title:

 Accepted and agreed to as of the date first above written.

 SOUTHRIDGE CAPITAL MANAGEMENT, LLC,
 as Collateral Agent

 By:  ______________________________
 Name:
 Title:

<PAGE>

                                SCHEDULE 1(b)
                                -------------
                            INTELLECTUAL PROPERTY

                                    None.

<PAGE>

                                SCHEDULE 3(a)
                                -------------
                            CHIEF EXECUTIVE OFFICE

                     1300 West Walnut Hill Lane Suite 275
                             Irving, Texas 75038

<PAGE>

                                SCHEDULE 3(b)
                                -------------
                           LOCATIONS OF COLLATERAL

                             United Chiropractic
                           6416 Bandera Rd. Suite B
                            San Antonio, TX 78230

                             United Chiropractic
                                9906 San Pedro
                            San Antonio, TX 78216

                             United Chiropractic
                       10935 Wurzbach Bldg. A Suite 102
                            San Antonio, TX 78230

                             United Chiropractic
                                 720 S. Mason
                                Katy, TX 77450

                         Valley Family Health Center
                             510 W. Expressway 83
                              McAllen, TX 78501

                              Southcross Medical
                              3930 E. Southcross
                            San Antonio, TX 78222

                              San Pedro Medical
                                9904 San Pedro
                            San Antonio, TX 78216

                          United Chiropractic Uptown
                               807 S. Carrolton
                            New Orleans, LA 70118

                        New Orleans East Chiropractic
                        200 South Broad St. Suite 150
                            New Orleans, LA 70119

                         American HealthChoice, Inc.
                        1300 W. Walnut Hill Suite 275
                               Irving, TX 75038

<PAGE>

                                SCHEDULE 3(c)
                                -------------
      MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE OR USE OF TRADENAMES

                                     None

<PAGE>

                               SCHEDULE 4(f)(i)
                               ----------------
                                    NOTICE

                                      OF

                          GRANT OF SECURITY INTEREST

                                      IN

                                  TRADEMARKS

 United States Patent and Trademark Office

 Gentlemen:

      Please be advised that pursuant to  the Security Agreement dated as  of
 July __, 2000  (the "Security Agreement")  by and among  the Grantors  party
 thereto  (each   an  "Grantor"   and  collectively,   the  "Grantors")   and
 _________________, as  Collateral Agent  (the  "Collateral Agent")  for  the
 Debenture  Holders  referenced  therein   (the  "Debenture  Holders"),   the
 undersigned Grantor  has  granted  a continuing  security  interest  in  and
 continuing lien upon, the trademarks and trademark applications shown  below
 to the Collateral Agent for the ratable benefit of the Debenture Holders:

                                  TRADEMARKS
                                  ----------
                          Description of Trademark                Date of
      Trademark No.                 Item                         Trademark
      -------------       ------------------------               ---------

                                     NONE

                            TRADEMARK APPLICATIONS
                            ----------------------
         Trademark        Description of Trademark          Date of Trademark
      Applications No.           Applied For                   Applications
      ----------------    ------------------------          -----------------

                                     NONE

<PAGE>

      The Grantors  and the  Collateral Agent,  on  behalf of  the  Debenture
 Holders, hereby  acknowledge and  agree that  the security  interest in  the
 foregoing trademarks and trademark applications  (i) may only be  terminated
 in accordance with the terms of the Security Agreement and (ii) is not to be
 construed as an assignment of any trademark or trademark application.

                               Very truly yours,

                               __________________________________
                               [Grantor]

                               By:  _____________________________
                               Name:
                               Title:

 Acknowledged and Accepted:

 _______________________, as Collateral Agent

 By: ___________________
 Name:
 Title:EXHIBIT 4.2

 No. 104                                                       US $273,068.49

                         AMERICAN HEALTHCHOICE, INC.

         8% SENIOR SECURED CONVERTIBLE DEBENTURE DUE AUGUST 19, 2003

 THIS DEBENTURE is one of a duly authorized issue of $4,621,684.24  principal
 amount of Debentures  (the "Class 6  Debentures") of AMERICAN  HEALTHCHOICE,

 INC., a corporation duly organized and existing under the laws of the  State
 of New York (the "Company"), as  reorganized pursuant to a certain Order  Of
 The United States Bankruptcy Court For The Northern District Of Texas  Dated
 August 8, 2000  (as it may  be amended or  modified from time  to time,  the
 "Confirmation Order") confirming  the Amended Joint  Plan Of  Reorganization
 dated March 31,  2000 as  amended by modification  dated June  5, 2000  (the
 "Plan")  of  Debtors   American  Healthchoice,  Inc.   and  AHC   Physicians
 Corporation (as  it  may be  amended  or modified  from  time to  time,  the
 "Plan").  This Debenture is issued pursuant to the Plan and is designated as
 one of the  Class 6 Debentures  thereunder and replaces  and supercedes  any
 prior debt obligation by the Company  to the Holder hereof.  Upon  execution
 hereof, the Company  shall issue and  deliver to Krieger  & Prager, LLP,  as
 Trustee (the "Trustee") of the Post-Confirmation Stock Trust of the  Company
 (the "Stock Trust")  20,475,000 shares into  which this  Debenture shall  be
 convertible.

 FOR VALUE RECEIVED, the  Company promises to pay  to Atlantis Capital  Fund,
 Ltd. registered  holder hereof  (the "Holder"),  subject  to the  terms  and
 conditions herein, the principal sum  of Two Hundred Seventy-Three  Thousand
 Sixty-Eight and  49/100 (US  $273,068.49) Dollars  on August  19, 2003  (the
 "Maturity Date") and to pay interest  on the principal sum outstanding  from
 time to time in arrears upon the earlier of the Conversion Date, as  defined
 below or the Maturity  Date at the rate  of 8% per  annum accruing from  the
 date of initial issuance.  Interest shall accrue from the date hereof  until
 payment in full of  the principal sum  has been made  or duly provided  for.
 Interest on this Debenture (a) shall  be paid annually, on each  anniversary
 of the date hereof and on the Maturity Date, (b) shall be paid in shares  of
 fully paid and nonassessable  Common Stock of the  Company, $.001 par  value
 ("Common Stock"), valued  at fair market  value, based on  the average  last
 sale prices for the Common Stock (or if no such prices are available, on the
 average closing bid prices for the Common  Stock) for the five (5)   trading
 days prior to the date of payment  of interest, directly to the Holder  (and
 not to the Trustee) at the address last appearing on the Debenture  Register
 of the Company as designated in writing by the Holder from time to time (the
 "Interest Stock"), and (c) shall be calculated based upon the average of the
 daily outstanding principal amounts of this Debenture during the period from
 the last Interest payment date through  the Interest payment date for  which
 said calculation is being made.  The  Company will pay the principal of  and
 interest upon this Debenture on the Maturity Date, less any amounts required
 by law to be deducted, to the registered holder of this Debenture as of  the
 Maturity Date and addressed to such Holder at the last address appearing  on
 the Debenture Register.
<PAGE>

 This Debenture is subject to the following additional provisions:

 Denominations.  The Debentures are issuable in denominations of Ten Thousand
 Dollars (US$10,000) and integral multiples thereof, or such lesser amount as
 shall represent the  remaining principal amount  after issuing multiples  of
 Ten Thousand Dollars. The Debentures are exchangeable for an equal aggregate
 principal amount  of Debentures  of different  authorized denominations,  as
 requested  by  the  Holders.  No  service  charge  will  be  made  for  such
 registration or transfer or exchange.

 Withholding.  The Company shall be entitled to withhold from all payments of
 principal of, and  interest on, this  Debenture any amounts  required to  be
 withheld under the  applicable provisions of  the United  States income  tax
 laws or other applicable laws at the time of such payments, and Holder shall
 execute and deliver all required documentation in connection therewith.

 Transfer.  This Debenture has been issued pursuant to the Confirmation Order
 and the Plan and  pursuant to Section 1145  of the United States  Bankruptcy

 Code (the "Bankruptcy  Code"). Pursuant to  Section 1145  of the  Bankruptcy
 Code, this Debenture and  the Common Stock  issuable upon conversion  hereof
 and/or in lieu of  interest hereon, are exempt  from registration under  the
 Securities Act Of 1933, as amended (the "Act").  Accordingly, they have  not
 been registered under the  Act or any  otherwise applicable securities  laws
 and certificates representing this Debenture and  any such shares of  Common
 Stock shall be issued free of restrictive legend.  Prior to due  presentment
 for transfer of this  Debenture, the Company, the  Trustee and any agent  of
 the Company  or  the  Trustee, may  treat  the  person in  whose  name  this
 Debenture is  duly registered  on the  Company's Debenture  Register as  the
 owner hereof for the purpose of receiving payment as herein provided and for
 all other purposes, whether  or not this Debenture  be overdue, and  neither
 the Company, the Trustee, nor any such agent shall be affected by notice  to
 the contrary.

 Conversion Privilege.    The Holder  of this Debenture  is entitled, at  its
 option, to  convert at  any time,  the principal  amount of  this  Debenture
 together with the accrued interest thereon and any other amounts due to  the
 Holder hereunder or pursuant to the Confirmation Order and Plan, into a  pro
 rata portion, with the other holders of  the Class 6 Debentures, of a  total
 of 20,475,000 shares of  Common Stock of the  Company at a conversion  price
 for each share of Common Stock equal to twenty-two and five hundred seventy-
 two one-thousandths of one cent  ($.22572) (the "Conversion Price")  subject
 to the  limitation set  forth in  paragraph 7  hereof. Conversion  shall  be
 effectuated by surrendering the  Debentures to be  converted to the  Trustee
 with the  form  of conversion  notice  attached  hereto as  Exhibit  A  (the
 "Conversion Notice"), executed  by the  Holder of  the Debenture  evidencing
 such Holder's intention  to convert a  portion of this  Debenture (as  above
 provided), and accompanied, if required by the Trustee, by proper assignment
 hereof in blank.  Copies of such documents shall be simultaneously delivered
 to the Company.   No fractional  shares or scrip  representing fractions  of
 shares will be issued on conversion, but the number of shares issuable shall
 be rounded  to  the  nearest  whole  share. The  date  on  which  notice  of
 conversion is given (the "Conversion Date")  shall be deemed to be the  date
 on which the Holder has delivered this Debenture, with the Conversion Notice
 duly executed,  to the  Trustee, with  a  copy to  the Company.    Facsimile
 delivery of the Conversion Notice shall be accepted by the Trustee, and  the
 Conversion Date  shall  be  deemed the  date  of  such  facsimile  delivery,
 provided  that  original  documentation  is  provided  promptly  thereafter.
 Certificates representing shares  of Common  Stock upon  conversion will  be
 delivered within  five  (5)  business  days  from  the  Conversion  Date  in
 accordance with section 9 hereof.
<PAGE>

 Limitation on Number of Outstanding Shares; Adjustment to Exercise Price.

                (a) The  Company hereby  agrees that  it  shall not issue any
           additional shares of its Common Stock, other than as set forth  in
           the Plan (including the shares to be issued to Dr. Voracek for the
           purchase of his clinics) and/or upon conversions hereunder,  prior
           to the first anniversary of the date hereof.

                (b) Upon each issuance of shares of Common Stock prior to the
           first anniversary of  the date  hereof (the  "Trigger Event")  and
           while any principal amount  hereof is outstanding, the  Conversion
           Price shall be lowered to a price at which, upon full  conversion,
           the Holder of this Debenture would  receive a number of shares  of
           Common Stock  equal  to the  same  percentage of  the  outstanding
           Common Stock as the shares into which the Holder of this Debenture
           could convert the outstanding  principal amount of this  Debenture
           immediately prior to the Trigger Event.  Upon the occurrence of  a
           Trigger Event, the Company shall (a) provide notice thereof to the
           Holder hereof, and (b)  issue and deposit  with the Trustee  stock
           certificates representing such number of additional shares as  may
           be issued upon conversion at the adjusted Conversion Price.

 Mandatory Conversion.  Except as otherwise provided in paragraph 10, in  the
 event all  or any  portion  of this  Debenture  remains outstanding  on  the
 Maturity Date, the unconverted portion  of the Debenture will  automatically
 be converted into  shares of Common  Stock on such  date in  the manner  set
 forth in paragraph 4 as if the Maturity Date were the Conversion Date.   If,
 and to the extent  that the aggregate outstanding  principal amount  of  the
 Class 6  Debentures shall  be convertible  into  (without giving  effect  to
 paragraph 7) a number of shares fewer than 3,300,000 shares, the Company may
 likewise cause the unconverted portion of the Debenture to be  automatically
 converted into shares of Common Stock on  such date in the manner set  forth
 in paragraph 4.

 Limitation on Conversion.  Except in the case of Mandatory Conversion, in no
 event shall the Holder be entitled to convert an amount of the Debenture  in
 excess of that amount upon conversion of which the sum of (1) the number  of
 shares of Common Stock beneficially owned  by the Holder and its  affiliates
 (other than shares of  Common Stock which may  be deemed beneficially  owned
 through the ownership of the unconverted portion of the Debentures), and (2)
 the number of  shares of Common  Stock issuable upon  the conversion of  the
 Debenture with respect to which the determination of this paragraph is being
 made, would result in beneficial ownership by the Holder and its  affiliates
 of more than  4.9% of  the outstanding  Common stock  of the  Company.   For
 purposes of the immediately  preceding sentence, beneficial ownership  shall
 be determined in accordance  with Section 13(d)  of the Securities  Exchange
 Act of  1934,  as  amended,  and  Regulation  13(d)  thereunder,  except  as
 otherwise provided in clause (1) of the immediately preceding sentence.
<PAGE>

 Issuance of Common Stock.

           (c) Upon the execution hereof, certificates representing 1,209,749
           shares of Common Stock are being delivered to the Trustee pursuant
           to the  terms  of the  Stock  Trust  and upon  conversion  of  the
           Debentures as provided herein, the Company shall cause the Trustee
           to release  stock certificates  to the  Holder (or  its  designee)
           representing the number  of shares of  Common Stock issuable  upon
           such conversion.

           (d) Upon the execution hereof, the Company shall issue a  standing
           letter of  instruction  to  Corporate Stock  Transfer,  its  stock
           transfer agent  (the  "Transfer Agent"),  directing  the  Transfer
           Agent to honor requests  by the Trustee,  after conversion of  any
           part hereof to  Common Stock,   to  reissue certificates  received
           from the Trustee,  free of  restrictive legends  or stop  transfer
           orders, and to  deliver such reissued  certificates in  accordance
           with the Trustee's instructions within  five (5) business days  of
           receipt of such instructions (the "Transfer Agent Instructions").

           (c) In lieu of delivering  physical certificates representing  the
           reissued Common Stock upon conversion of this Debenture,  provided
           the Transfer  Agent  is  participating  in  the  Depository  Trust
           Company ("DTC") Fast Automated  Securities Transfer program,  upon
           request of the Holder  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  Holder's  Prime  Broker  with  DTC  through  its
           Depositary Withdrawal Agent Commission system.

 Delivery of Common Stock.  In  the event that (i) certificates  representing
 the shares of Common Stock into which this Debenture is convertible are  not
 delivered to the Trustee under the Stock  Trust within five (5) days of  the
 execution hereof, (ii) a  Trigger Event  under paragraph  5(b) hereof  shall
 occur and certificates representing such  additional shares of Common  Stock
 to be issued upon conversion of this Debenture shall not be delivered to the
 Trustee under the  Stock Trust within  five (5) days  after notification  by
 Holder to the Company of such  Trigger Event, (iii) after conversion of  any
 part hereof into Common Stock, the Company's Transfer Agent shall not  cause
 the Common Stock into which this Debenture has been converted to be reissued
 free  of  restrictive  legends or stop transfer  orders, in accordance  with
 the written instructions of the Trustee within five (5) business days  after
 the giving of such instructions and giving the Company notice of such action
 by the Transfer Agent,  and allowing the Company  five (5) business days  to
 make diligent effort to resolve the problem, (iv) the Company fails to issue
 the Transfer Agent Instructions,  withdraws the Transfer Agent  Instructions
 or issues a stop or hold on any properly issued Transfer Agent Instructions,
 or (v) if, at any time, Holder  submits a Conversion Notice and the  Company
 does not have a  sufficient number of  shares of Common  Stock in the  Stock
 Trust to effect, in full,  a conversion of the  Debenture, then in any  such
 event (a "Conversion Default") the Company shall pay to Holder (and not  the
 Trustee)  one  percent  (1%)  of  the  aggregate  principal  amount  of  the
 Debentures being converted for each day  after the fifth (5th) business  day
 following the date of  the Certificate Default, such  payment to be made  in
 shares of  Common  Stock, based  upon  the  Conversion Price  (as  same  may
 adjusted pursuant to paragraphs 5 and 12).
<PAGE>

                (e) Nothing herein shall  limit a  Holder's right  to  pursue
           actual damages against the Company upon any Conversion Default.

                (f) Upon a Conversion Default of a type special in clause (v)
           above, the Company shall cause the  issuance to the Holder of  all
           of the shares of  Common Stock which  are available for  issuance,
           and the Conversion  Notice as to  any Debentures  requested to  be
           converted but not converted  (the "Unconverted Debentures"),  upon
           Holder's sole option, may be deemed null and void.

                (g) The Company and the Trustee  shall provide notice of  any
           Conversion  Default  ("Notice  of  Conversion  Default")  to   all
           existing Holders of outstanding Class 6 Debentures, by  facsimile,
           within one (1)  business day of  such default  (with the  original
           delivered by overnight or two day  courier), and in the case of  a
           Conversion Default of the type specified in clause (v) above,  the
           Holder shall  give  notice  to the  Company  and  the  Trustee  by
           facsimile within  five  (5)   business  days  of  receipt  of  the
           original Notice of Conversion Default (with the original delivered
           by overnight or two day courier) of its election to either nullify
           or confirm the Notice of Conversion.

 Security.  Payment to  the Holder of  this Debenture is  secured by a  first
 priority lien and  security interest  in and  to all  of the  assets of  the
 Company and its subsidiaries, now or hereafter arising or acquired, pursuant
 to a  certain Security  Agreement of  even date  herewith by  and among  the
 Company, the Holders of the Class 6 Debentures and Krieger & Prager, LLP (in
 such capacity, the "Collateral Agent") as agent for the Holders of the Class
 6 Debentures  (as it  may be  amended or  modified from  time to  time,  the
 "Security Agreement").  By its acceptance of this Debenture and the Security
 Agreement, each Holder agrees to be bound by the provisions of the  Security
 Agreement  as   if  such   Holder  was   an  original   signatory   thereto.

 Notwithstanding the foregoing,  pursuant to the  Confirmation Order and  the
 Plan, the lien and  security interest granted  under the Security  Agreement
 shall be  subordinate to  a certain  purchase money  security interest  with
 respect to any  and all  assets purchased by  the Company  from Dr.  Voracek
 and/or his  entities that  own clinics  being purchased  by the  Company  in
 accordance with  the  terms  of  the  Plan  together  with  all  replacement
 collateral thereof.

 Anti-Dilution Provisions.

                (h) In the event that, at any time and from time to time, the
           Company  shall  issue  additional  shares  of  Common  Stock   (or
           securities convertible into or exchangeable for Common Stock) in a
           stock dividend,  stock  distribution,  or  subdivision  paid  with
           respect  to  Common  Stock,  or  declare  any  dividend  or  other
           distribution payable with  additional shares of  Common Stock  (or
           securities convertible into or exchangeable for Common Stock) with
           respect to Common Stock, or effect  a split or subdivision of  the
           outstanding shares of  Common Stock, the  Conversion Price  shall,
           concurrently with the effectiveness of such stock dividend,  stock
           distribution, or subdivision, or the earlier declaration  thereof,
           be proportionately  decreased to  avoid dilution  of the  Holder's
           position, and the Holder shall  thereafter be entitled to  receive
           on conversion of this Debenture an additional number of shares  of
           Common Stock  which such  Holder would  have received  upon or  by
           reason of any of  the events described  above, had this  Debenture
           been converted immediately prior to the occurrence of such event.
<PAGE>

                (i)  In  the  event  the outstanding shares of  Common  Stock
           shall  be  combined  or   consolidated,  by  reclassification   or
           otherwise, into a  lesser number of  shares of  Common Stock,  the
           Conversion Price  shall, concurrently  with the  effectiveness  of
           such combination or consolidation, be proportionately increased so
           that the Holder shall  be entitled to  receive upon conversion  of
           this Debenture,  the  aggregate number of  shares of Common  Stock
           which such  Holder would  have been  entitled to  receive if  this
           Debenture had been converted  immediately prior to the  occurrence
           of such combination or consolidation.

 Performance.  The  Company shall  not, by  amendment of  its Certificate  of
 Incorporation  or   through   any  reorganization,   transfer   of   assets,
 consolidation, merger, dissolution, issue or sale of securities or any other
 voluntary action, avoid or  seek to avoid the  observance or performance  of
 any of the terms to be observed or performed hereunder or under the Plan and
 Confirmation Order,  by the  Company but  will at  all times  in good  faith
 assist in the carrying out  of all the provisions  of this Debenture and  in
 the taking of all such action as may be necessary or appropriate in order to
 protect the  conversion rights  of the  holders  of the  Debentures  against
 impairment.

 Absolute and Unconditional Obligation.  No provision of this Debenture shall
 alter or  impair  the obligation  of  the  Company, which  is  absolute  and
 unconditional, to pay the principal of,  and interest on, this Debenture  at
 the time,  place, and  rate, and  in the  manner, herein  prescribed.   This
 Debenture and all other Debentures now or hereafter issued of similar  terms
 are direct obligations of the Company.

 Usury.  Nothing contained in this Debenture shall be deemed to establish  or
 require the payment of  interest to the Holder  at a rate  in excess of  the
 maximum rate  permitted by  governing law.  In the  event that  the rate  of

 interest required to be  paid under the Debenture  exceeds the maximum  rate
 permitted by  governing  law, the  rate  of  interest required  to  be  paid
 thereunder shall  be automatically  reduced to  the maximum  rate  permitted
 under the  governing  law  and  any  amounts  collected  in  excess  of  the
 permissible amount shall  be deemed a  payment of principal.  To the  extent
 that such  excess amount  exceeds the  aggregate  principal amount  of  this
 Debenture, such excess shall be returned  with reasonable promptness by  the
 Holder to the Company.
<PAGE>

 Merger or Consolidation.   Notwithstanding  the purchases  of Dr.  Voracek's
 clinics, if the Company merges or  consolidates with another corporation  or
 sells or transfers all or substantially all of its assets to another  person
 and the  holders  of  the  Common  Stock  are  entitled  to  receive  stock,
 securities or property in respect of  or in exchange for Common Stock,  then
 as a condition of such merger, consolidation, sale or transfer, the  Company
 and any such successor, purchaser or transferee agree that the Debenture may
 thereafter be converted on the terms and subject to the conditions set forth
 above into the kind and amount  of stock, securities or property  receivable
 upon such merger, consolidation, sale or transfer by a holder of the  number
 of shares  of  Common  Stock  into which  this  Debenture  might  have  been
 converted immediately before such  merger, consolidation, sale or  transfer,
 subject to  adjustments  which shall  be  as  nearly equivalent  as  may  be
 practicable.  It  shall be a  condition precedent to  the occurrence of  any
 such merger, consolidation, sale or transfer that the successor in  interest
 to the  Company agree  to the  foregoing provision.   In  the event  of  any
 proposed merger, consolidation or sale or  transfer of all or  substantially
 all of the assets of  the Company (a "Sale"),  the Holder hereof shall  have
 the right to convert by delivering a Conversion Notice to the Company within
 fifteen (15) days of receipt of notice of such Sale from the Company. In the
 event the Holder hereof shall elect  not to convert, the Company may  prepay
 all outstanding principal and accrued interest  on this Debenture, less  all
 amounts required  by  law to  be  deducted,  upon which  tender  of  payment
 following such notice, the right of conversion shall terminate.

 Governing Law.  Except as to the application of this Debenture as it relates
 to the Plan, this Debenture shall be governed by and construed in accordance
 with the laws of the State of New York.   The parties agree that any  action
 relating to the failure of the Company  or its Transfer Agent to perform  in
 accordance herewith shall be properly venued  in the courts of the State  of
 New York  located in  New York  City or  in federal  courts in  and for  the
 Southern District of New York.   Any dispute as  to the application of  this
 Debenture as it relates to the Plan shall  be governed by the laws of  Texas
 and properly venued in the United  States Bankruptcy Court for the  Northern
 District of Texas, Dallas Division.
<PAGE>

 Notices. All  notices, requests  and/or  other communications  provided  for
 herein shall  be made  in writing  and  shall be  delivered  by hand  or  by
 overnight  courier,  and  shall  be  deemed  given  when  delivered  to  the
 recipient, and  shall  be  addressed to  the  parties  at  their  respective
 addresses listed below or  to such other persons  or addresses as to  itself
 from time to time in writing delivered in like manner:

                If to the Company:

                American HealthChoice, Inc.
                1300 Walnut Hill Lane, Suite 275
                Irving, Texas  75038

                with copy to:

                Jay Stucki, Esq.

                Hulse & Stucki
                1300 Walnut Hill Lane, Suite 275
                Irving, Texas  75038

                If to the Holder hereof:

                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 copy to:

                Andrew B. Eckstein, Esq.
                Blank Rome Tenzer Greenblatt LLP
                405 Lexington Avenue
                New York, New York 10174

                If to the Trustee:

                Krieger& Prager, LLP
                39 Broadway, Suite 1440
                New York, New York 10006
                Attn:  Samuel M. Krieger
<PAGE>

 Events of Default.  The following shall constitute an "Event of Default":

           (j) The Company shall default  in the  performing its  obligations
           hereunder or under this Debenture, the Plan or the Stock Trust; or

           (k) The Company shall fail  to issue shares  of Common Stock  into
           which this Debenture is convertible to the Trustee under the Stock
           Trust and/or fails to issue such additional shares to the  Trustee
           as may be required  upon the occurrence of  a Trigger Event  under
           paragraph 5(b) hereof or otherwise in accordance with the terms of
           this Debenture; or

           (l) Subject to the provisions of  paragraph 9 hereof, the  Company
           or the  Company's  Transfer  Agent  shall  fail  to  transfer  any
           certificate for shares of Common Stock  issued to the Stock  Trust
           after conversion of this Debenture when requested by Holder or the
           Trustee to do so or upon  any successive transfer thereof free  of
           restrictive legend pursuant  to the Plan,  the Confirmation  Order
           and 11 U.S.C. [S] 1145 and any such failure shall continue uncured
           for five (5) business days;

           (m) The Company shall fail to perform or observe, in any  material
           respect, any other covenant, term, provision, condition, agreement
           or obligation of the Company under  this Debenture, the Plan,  the
           Confirmation Order,  or the  Security Agreement  and such  failure
           shall continue uncured for a period of ten (10) days after written
           notice from the Holder of such failure; or

           (n) The Company shall (1)  admit in writing  its inability to  pay
           its debts generally as they mature; (2) make an assignment for the
           benefit of creditors or commence proceedings for its  dissolution;
           or (3)  apply for  or consent  to the  appointment of  a  trustee,
           liquidator or receiver for  its or for a  substantial part of  its
           property or business; or

           (o) A trustee, liquidator or receiver  shall be appointed for  the
           Company or  for a  substantial part  of its  property or  business
           without its consent and shall not be discharged within sixty  (60)
           days after such appointment; or

           (p) Any governmental agency or any court of competent jurisdiction
           at the instance of any governmental agency shall assume custody or
           control of all  or any substantial  portion of  the properties  or
           assets of the Company and shall not be dismissed within sixty (60)
           days thereafter; or

           (q) Any money judgment, writ or warrant of attachment, or  similar
           process  in   excess  of   One  Million   Five  Hundred   Thousand
           ($1,500,000) Dollars in  the aggregate shall  be entered or  filed
           against the Company or any of  its properties or other assets  and
           shall remain unpaid, unvacated, unbonded or unstayed for a  period
           of sixty (60) days or in any event later than five (5)  days prior
           to the date of any proposed sale thereunder; or
<PAGE>

           (r) Bankruptcy,   reorganization,   insolvency   or    liquidation
           proceedings or other proceedings  for relief under any  bankruptcy
           law or any law for the relief of debtors shall be instituted by or
           against the Company and, if instituted against the Company,  shall
           not be dismissed within sixty (60) days after such institution  or
           the Company shall by any action or answer approve of, consent  to,
           or acquiesce  in  any  such  proceedings  or  admit  the  material
           allegations of, or default  in answering a  petition filed in  any
           such proceeding; or

           (s)  The  Company  shall  have  its  Common  Stock  suspended from
           trading, or delisted from an exchange  to a level below the  over-
           the-counter bulletin board market.

 Then, or at any  time thereafter, and  in each and  every such case,  unless
 such Event of Default shall have been waived in writing by the Holder (which
 waiver shall not be deemed to be a waiver of any subsequent default) at  the
 option of the  Holder and in  the Holder's sole  discretion, the Holder  may
 consider this Debenture  immediately due and  payable, without  presentment,
 demand, protest or  notice of any  kind, all of  which are hereby  expressly
 waived, anything herein or in any note or other instruments contained to the
 contrary notwithstanding, and the Holder may immediately enforce any and all
 of the Holder's rights and remedies  provided herein or any other rights  or
 remedies afforded by law.

 Interest Rate Upon Event of Default.  Upon an Event of Default, the interest
 rate hereunder shall increase from 8% to 15% per annum.

 Application of Payments.   Any and all payments  hereunder shall be  applied
 first to interest and then to principal.  If an Event of Default shall  have
 occurred hereunder or under the Security Agreement, proceeds recovered shall
 be applied  first  to  costs,  fees  and  expenses  reasonably  incurred  in
 connection with  efforts to  remedy such  Event of  Default or  collect  the
 amounts due hereunder, second  to interest accrued  hereunder, and third  to
 principal.

 No Rights as  Shareholder.   Nothing contained  in this  Debenture shall  be
 construed as conferring  upon the  Holder the right  to vote  or to  receive
 dividends or to consent or receive notice as a shareholder in respect of any
 meeting of shareholders  or any rights  whatsoever as a  shareholder of  the
 Company, unless and to the extent converted or attempted to be converted  in
 accordance with the terms hereof.

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly
 executed by an officer thereunto duly authorized.

 Dated:    August 19, 2000

                                    AMERICAN HEALTHCHOICE, INC.

                                    By: _____________________________________
                                    Name:
                                    Title:
<PAGE>

                                  EXHIBIT A

                             NOTICE OF CONVERSION

 (To be Executed by the Registered Holder in order to Convert the Debentures)

 The Holder hereby irrevocably elects, as of ____________, 200_ to convert
 $_____________ of Debentures of American HealthChoice Inc. (the "Company")
 into shares of Common Stock of the Company according to the conditions set
 forth in the Debenture, Plan, Confirmation Order.

 Date of Conversion:  _____________________________________________________

 [Applicable Conversion Price:] ___________________________________________

 Number of Shares of Common Stock: ________________________________________
                                                   Signature

                                   ________________________________________
                                                   Print Name

 Address for delivery of the
 Common Stock: ____________________________________________________________

 Phone ____________________________________________________________________

 Fax ______________________________________________________________________

 Tax I.D. No. _____________________________________________________________

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