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EXHIBIT 2.2 AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER by and among SURGICARE, INC. DCPS/MBS ACQUISITION, INC. DENNIS CAIN PHYSICIAN SOLUTIONS, LTD. MEDICAL BILLING SERVICES, INC. And THE SELLERS PARTY HERETO  Conformed copy dated as of
July 16, 2004
as amended by
First Amendment to Agreement and Plan of Merger
dated as of September 9, 2004




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TABLE OF CONTENTS PageARTICLE I THE ACQUISITIONS
    
    
    3SECTION 1.01 The Acquisitions
    
    
    3SECTION 1.02 Closing; MBS Effective Time
    
    
    3SECTION 1.03 Effect of the Merger
    
    
    4SECTION 1.04 Subsequent Actions
    
    
    4SECTION 1.05 Certificate of Incorporation and By-Laws
    
    
    4SECTION 1.06 Directors and Officers
    
    
    4ARTICLE II CONVERSION AND SALE OF SECURITIES; EXCHANGE OF CERTIFICATES
    
    
    5SECTION 2.01 Conversion and Sale of Securities
    
    
    5SECTION 2.02 Deliveries at the Closing
    
    
    6SECTION 2.03 No Further Rights in MBS Common Shares or DCPS Interests
    
    
    7SECTION 2.04 No Fractional Shares
    
    
    7SECTION 2.05 Withholding Rights
    
    
    7SECTION 2.06 Transfer Books
    
    
    7SECTION 2.07 Adjustments to Acquisition Consideration
    
    
    7SECTION 2.08 Additional DCPS Consideration
    
    
    12SECTION 2.09 MBS Representative
    
    
    13SECTION 2.10 MBS Tax
    
    
    13ARTICLE III REPRESENTATIONS AND WARRANTIES OF SURGICARE AND NEWCO
    
    
    13SECTION 3.01 Organization and Qualification; Subsidiaries
    
    
    13SECTION 3.02 Certificate of Incorporation and By-Laws
    
    
    14SECTION 3.03 Capitalization
    
    
    14SECTION 3.04 Authority Relative to this Agreement
    
    
    16SECTION 3.05 No Conflict; Required Filings and Consents
    
    
    17SECTION 3.06 Permits; Accreditation
    
    
    17SECTION 3.07 Compliance with Laws
    
    
    18SECTION 3.08 SEC Filings; Financial Statements
    
    
    20SECTION 3.09 Undisclosed Liabilities
    
    
    21SECTION 3.10 Absence of Certain Changes or Events
    
    
    21SECTION 3.11 Absence of Litigation
    
    
    23SECTION 3.12 Employee Benefit Matters
    
    
    23SECTION 3.13 Material Contracts
    
    
    25SECTION 3.14 Environmental Matters
    
    
    26SECTION 3.15 Title to Properties; Absence of Liens and Encumbrances
    
    
    27SECTION 3.16 Intellectual Property
    
    
    28SECTION 3.17 Taxes
    
    
    29SECTION 3.18 Insurance
    
    
    30SECTION 3.19 Opinion of Financial Advisor
    
    
    31SECTION 3.20 Brokers
    
    
    31SECTION 3.21 Employees
    
    
    31SECTION 3.22 Transactions with Affiliates
    
    
    32
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PageSECTION 3.23 Stockholder Rights Agreement
    
    
    32SECTION 3.24 IPS Acquisition Agreement, Stock Subscription Agreement and Debt Exchange Agreement
    
    
    32SECTION 3.25 Offering Valid
    
    
    32SECTION 3.26 Certain Payments
    
    
    32ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DCPS, MBS AND THE SELLERS
    
    
    33SECTION 4.01 Organization and Qualification; Subsidiaries
    
    
    33SECTION 4.02 Certificate of Incorporation and By-Laws
    
    
    34SECTION 4.03 Capitalization
    
    
    34SECTION 4.04 Authority Relative to this Agreement
    
    
    35SECTION 4.05 No Conflict; Required Filings and Consents
    
    
    35SECTION 4.06 Permits; Accreditation
    
    
    36SECTION 4.07 Compliance with Laws
    
    
    37SECTION 4.08 Financial Statements
    
    
    38SECTION 4.09 Undisclosed Liabilities
    
    
    38SECTION 4.10 Absence of Certain Changes or Events
    
    
    39SECTION 4.11 Absence of Litigation
    
    
    40SECTION 4.12 Employee Benefit Matters
    
    
    40SECTION 4.13 Material Contracts
    
    
    42SECTION 4.14 Environmental Matters
    
    
    43SECTION 4.15 Title to Properties; Absence of Liens and Encumbrances
    
    
    44SECTION 4.16 Intellectual Property
    
    
    44SECTION 4.17 Taxes
    
    
    45SECTION 4.18 Insurance
    
    
    47SECTION 4.19 Brokers
    
    
    48SECTION 4.20 Employees
    
    
    48SECTION 4.21 Transactions with Affiliates
    
    
    48SECTION 4.22 Stockholder Rights Agreement
    
    
    48SECTION 4.23 Certain Payments
    
    
    48SECTION 4.24 Investment Representations
    
    
    49ARTICLE V CONDUCT OF BUSINESS PENDING THE ACQUISITIONS
    
    
    49SECTION 5.01 Conduct of Business by SurgiCare Pending the Acquisitions
    
    
    49SECTION 5.02 Conduct of Business by DCPS, DCM and MBS Pending the
Acquisitions
    
    
    52SECTION 5.03 Notification of Certain Matters
    
    
    55ARTICLE VI ADDITIONAL AGREEMENTS
    
    
    55SECTION 6.01 Proxy Statement; Stockholders Meetings
    
    
    55SECTION 6.02 Access to Information; Confidentiality
    
    
    57SECTION 6.03 [Intentionally Omitted]
    
    
    57SECTION 6.04 No Solicitation of Transactions by DCPS or MBS
    
    
    58SECTION 6.05 Further Action; Consents
    
    
    58SECTION 6.06 Public Announcements
    
    
    58SECTION 6.07 AMEX Listing
    
    
    59SECTION 6.08 Listing of SurgiCare Class A Common Shares
    
    
    59SECTION 6.09 Form S-3 Eligibility
    
    
    59
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PageSECTION 6.10 Outsourcing of Services to the Surviving Corporation; Surgery Center Division
    
    
    59SECTION 6.11 Right of First Refusal
    
    
    59SECTION 6.12 Advisory Board
    
    
    60SECTION 6.13 Observer Rights
    
    
    60SECTION 6.14 S Corporation Status
    
    
    61SECTION 6.15 Reservation of Shares
    
    
    61SECTION 6.16 Contribution of DCPS Interests
    
    
    61SECTION 6.17 Tax Indemnification
    
    
    61ARTICLE VII CONDITIONS TO THE ACQUISITIONS
    
    
    61SECTION 7.01 Conditions to the Obligations of Each Party
    
    
    61SECTION 7.02 Conditions to the Obligations of SurgiCare and Newco
    
    
    62SECTION 7.03 Conditions to the Obligations of DCPS, MBS and the Sellers
    
    
    64ARTICLE VIII TERMINATION, AMENDMENT, WAIVER AND EXPENSES
    
    
    66SECTION 8.01 Termination
    
    
    66SECTION 8.02 Effect of Termination
    
    
    67SECTION 8.03 Expenses
    
    
    67ARTICLE IX GENERAL PROVISIONS
    
    
    68SECTION 9.01 Non-Survival of Representations, Warranties and Agreements
    
    
    68SECTION 9.02 Notices
    
    
    68SECTION 9.03 Certain Definitions
    
    
    69SECTION 9.04 Amendment
    
    
    74SECTION 9.05 Waiver
    
    
    74SECTION 9.06 Severability
    
    
    74SECTION 9.07 Assignment; Binding Effect; Benefit
    
    
    74SECTION 9.08 Specific Performance
    
    
    75SECTION 9.09 Governing Law; Forum
    
    
    75SECTION 9.10 Headings
    
    
    75SECTION 9.11 Counterparts
    
    
    75SECTION 9.12 Entire Agreement
    
    
    75SECTION 9.13 Set-Off
    
    
    75SECTION 9.14 Waiver of Jury Trial
    
    
    75
 EXHIBIT A Form of SurgiCare Restated Charter
EXHIBIT B Form of Seller Note
EXHIBIT C Form of New Equity Plan
EXHIBIT D Form of Employment Agreement
EXHIBIT E Form of Opinions of Fant & Burman, L.L.P. and Peter Workin P.C.
EXHIBIT F Form of Opinion of Strasburger & Price, LLP
EXHIBIT G Form of SurgiCare Amended and Restated By-Laws  -iii-




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GLOSSARY OF DEFINED TERMS Location ofDefined Term
    
    DefinitionAccountants
    
    Section 2.07(b)Acquisition Consideration
    
    Section 9.03Acquisitions
    
    RecitalsAction
    
    Section 3.11Affiliate or affiliate
    
    Section 9.03Affiliated Group
    
    Section 3.17(e)Agreement
    
    PreambleALTA
    
    Section 3.15(b)AMEX
    
    Section 3.05(b)Appraisal Shares
    
    Section 2.01(a)Articles of Merger
    
    Section 1.02(b)Assumed Incremental Gain
    
    Section 2.10Board Election
    
    Section 3.04(b)Brantley III
    
    RecitalsBrantley III Notes
    
    RecitalsBrantley IV
    
    RecitalsBrantley Capital
    
    RecitalsBrantley Capital Notes
    
    RecitalsBridge Notes
    
    Recitalsbusiness day
    
    Section 9.03Cain
    
    PreambleClass A Common Closing Price
    
    Section 9.03Closing
    
    Section 1.02(a)Closing Date
    
    Section 1.02(a)Code
    
    RecitalsConfidentiality Agreements
    
    Section 6.02Consent
    
    Section 3.05(b)Constructive Sale
    
    Section 9.03Contract
    
    Section 3.03(b)control
    
    Section 9.03DCM
    
    RecitalsDCPS
    
    PreambleDCPS Cash Consideration
    
    Section 2.01(b)DCPS EBITDA Shortfall Amount
    
    Section 2.07(d)DCPS Interests
    
    RecitalsDCPS Notes
    
    Section 2.01(b)DCPS Note Balance
    
    Section 2.07(d)DCPS Partnership Agreement
    
    Section 4.02DCPS Sellers
    
    PreambleDCPS Share Consideration
    
    Section 2.01(b)DCPS/MBS Accreditations
    
    Section 4.06(c)
  -iv-




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Location ofDefined Term
    
    DefinitionDCPS/MBS Acquisition Transaction
    
    Section 6.04DCPS/MBS Balance Sheets
    
    Section 4.08(b)DCPS/MBS Disclosure Schedule
    
    Section 9.12DCPS/MBS Employee Benefit Plan
    
    Section 9.03DCPS/MBS Intellectual Property
    
    Section 4.16(b)DCPS/MBS Material Adverse Effect
    
    Section 9.03DCPS/MBS Material Contracts
    
    Section 4.13(a)DCPS/MBS Permits
    
    Section 4.06(a)DCPS/MBS Real Property
    
    Section 4.15(b)DGCL
    
    RecitalsEarn-out Period
    
    Section 6.10Employee Pension Benefit Plan
    
    Section 9.03Employee Welfare Benefit Plan
    
    Section 9.03Environmental Laws
    
    Section 9.03Environmental Permits
    
    Section 3.14Equity Financing
    
    RecitalsERISA
    
    Section 3.12(a)Exchange Act
    
    Section 3.08Expenses
    
    Section 8.03(a)Federal Employee Health Benefit Program
    
    Section 1.07(b)Fiduciary
    
    Section 9.03Filed SurgiCare SEC Documents
    
    Section 3.10Financial Statements
    
    Section 4.08(a)Five Day Average Price
    
    Section 9.03Fully-Diluted SurgiCare Shares
    
    Section 9.03Governmental Entity
    
    Section 3.06(a)Hazardous Substances
    
    Section 9.03HIPAA
    
    Section 3.07(d)HSR Act
    
    Section 3.05(b)Intellectual Property
    
    Section 9.03Interest Purchase
    
    RecitalsIPS
    
    RecitalsIPS Acquisition
    
    RecitalsIPS Acquisition Agreement
    
    RecitalsIPS Bridge Notes
    
    RecitalsIPS Merger Sub
    
    RecitalsJudgment
    
    Section 3.05(a)knowledge
    
    Section 9.03Lakepoint
    
    RecitalsLaw
    
    Section 1.02(b)Liability
    
    Section 9.03Liens
    
    Section 3.01(b)MBS
    
    PreambleMBS Board
    
    RecitalsMBS By-Laws
    
    Section 4.02MBS Cash Consideration
    
    Section 2.01(a)
  -v-




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Location ofDefined Term
    
    DefinitionMBS Charter
    
    Section 4.02MBS Common Shares
    
    Section 2.01(a)MBS Common Stock
    
    RecitalsMBS EBITDA Shortfall Amount
    
    Section 2.07(d)MBS Effective Time
    
    Section 1.02(b)MBS Sellers
    
    PreambleMBS Share Consideration
    
    Section 2.01(a)Medicaid
    
    Section 3.07(b)Medicare
    
    Section 3.07(b)Merger
    
    RecitalsMultiemployer Plan
    
    Section 9.03New Equity Plan
    
    Section 3.04(a)Newco
    
    PreambleNewco Board
    
    RecitalsNewco EBITDA
    
    Section 9.03Newco EBITDA Excess
    
    Section 2.07(c)Newco EBITDA Shortfall
    
    Section 2.07(d)Newco EBITDA Statement
    
    Section 2.07(a)Newco Net Income
    
    Section 9.03Newco Sale Event
    
    Section 2.07(e)Order
    
    Section 7.01(b)PBGC
    
    Section 9.03Person or person
    
    Section 9.03Prohibited Transaction
    
    Section 9.03Proxy Statement
    
    Section 6.01Qualifying Termination
    
    Section 2.07(e)Recapitalization
    
    RecitalsRequired Consents
    
    Section 3.05(b)Reverse Split Fraction
    
    Section 9.03ROFR
    
    Section 6.11ROFR Notice
    
    Section 6.11(a)SEC
    
    Section 3.05(b)Securities Act
    
    Section 3.08(a)Sellers
    
    PreambleSmith
    
    PreambleStock Subscription Agreement
    
    RecitalsStockholder Percentages
    
    Section 2.01(c)Subordination Agreement
    
    Section 7.02(l)subsidiary or subsidiaries
    
    Section 9.03SurgiCare
    
    PreambleSurgiCare Accreditations
    
    Section 3.06(c)SurgiCare Balance Sheet
    
    Section 3.08(b)SurgiCare Board
    
    RecitalsSurgiCare Board Approval
    
    Section 3.04(b)SurgiCare Bridge Notes
    
    RecitalsSurgiCare By-Laws
    
    Section 3.02
  -vi-




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Location ofDefined Term
    
    DefinitionSurgiCare Capital Stock
    
    RecitalsSurgiCare Charter
    
    Section 3.02SurgiCare Class A Common Shares
    
    RecitalsSurgiCare Class A Common Stock
    
    RecitalsSurgiCare Class B Common Stock
    
    RecitalsSurgiCare Class C Common Shares
    
    RecitalsSurgiCare Class C Common Stock
    
    RecitalsSurgiCare Disclosure Schedule
    
    Section 9.12SurgiCare Employee Benefit Plan
    
    Section 9.03SurgiCare Intellectual Property
    
    Section 3.16(b)SurgiCare Material Adverse Effect
    
    Section 9.03SurgiCare Material Contracts
    
    Section 3.13(a)SurgiCare Old Common Stock
    
    RecitalsSurgiCare Option Plan
    
    Section 3.03(a)SurgiCare Permits
    
    Section 3.06(a)SurgiCare Real Property
    
    Section 3.15(b)SurgiCare Restated Charter
    
    RecitalsSurgiCare SEC Reports
    
    Section 3.08(a)SurgiCare Series A
    
    Section 3.03(a)SurgiCare Series AA
    
    RecitalsSurgiCare Stock Options
    
    Section 3.03(a)SurgiCare Stockholder Approval
    
    Section 3.04(a)SurgiCare Stockholders Meeting
    
    Section 6.01(a)SurgiCare Subsidiary
    
    Section 9.03SurgiCare Warrants
    
    Section 3.03(a)Surviving Corporation
    
    Section 1.01Tax or Taxes
    
    Section 9.03Tax Return
    
    Section 9.03TBCA
    
    RecitalsThird-Party Offer
    
    Section 6.12(a)Trademarks
    
    Section 9.03Transactions
    
    Section 9.03TRICARE
    
    Section 3.07(b)U.S. GAAP
    
    Section 3.08(b)Voting DCPS/MBS Debt
    
    Section 4.03(c)Voting SurgiCare Debt
    
    Section 3.03(c)
  -vii-




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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGERdated as of July
16, 2004 (this Agreement) is by and among SURGICARE, INC., a Delaware
corporation (SurgiCare), DCPS/MBS ACQUISITION, INC., a Texas corporation and
a wholly-owned subsidiary of SurgiCare (Newco), DENNIS CAIN PHYSICIAN
SOLUTIONS, LTD., a Texas limited partnership (DCPS), MEDICAL BILLING
SERVICES, INC., a Texas corporation (MBS), Dennis Cain (Cain), the other
persons designated on the signature pages hereto as DCPS Sellers (collectively
with Cain, the DCPS Sellers), Tom M. Smith (Smith) and the other persons
designated on the signature pages hereto as MBS Sellers (collectively with
Smith, the MBS Sellers and, collectively with the DCPS Sellers, the
Sellers). This Agreement amends and restates in its entirety the Agreement
and Plan of Merger dated as of February 9, 2004 entered into among SurgiCare,
Newco, DCPS, MBS, the Sellers and DCM (as defined herein). All terms not
otherwise defined herein have the meanings ascribed to them in Section 9.03
hereof. WHEREAS, the boards of directors of SurgiCare (the SurgiCare Board),
Newco (the Newco Board) and MBS (the MBS Board), and the DCPS Sellers, have
each determined that it is advisable and in the best interests of their
respective stockholders or partners, as applicable, for SurgiCare to enter into
a business combination with DCPS and MBS upon the terms and subject to the
conditions set forth herein; WHEREAS, in furtherance of such combination, (i) the SurgiCare Board, the
Newco Board and the MBS Board have each approved the merger (the Merger) of
Newco with and into MBS in accordance with the applicable provisions of the
Delaware General Corporation Law (the DGCL) and the Texas Business
Corporation Act (the TBCA), and (ii) the SurgiCare Board and the DCPS Sellers
have each approved the purchase by SurgiCare, and the sale by the DCPS Sellers
(the Interest Purchase and, together with the Merger, the Acquisitions), of
all outstanding Units of Limited Partnership Interest in DCPS and all
outstanding membership interests in Dennis Cain Management, L.L.C., a Texas
limited liability company (DCM) (collectively, the DCPS Interests), in each
case upon the terms and subject to the conditions set forth herein; WHEREAS, (i) pursuant to the Merger, each outstanding share of common
stock, par value $1.00 per share, of MBS (MBS Common Stock), shall be
converted into the right to receive the applicable Acquisition Consideration
(as defined herein), and (ii) pursuant to the Interest Purchase, the DCPS
Sellers shall receive the applicable Acquisition Consideration in exchange for
the DCPS Interests, in each case upon the terms and subject to the conditions
set forth herein; WHEREAS, simultaneously with, and as a condition to, the Acquisitions, IPS
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of
SurgiCare (IPS Merger Sub), will merge with and into Integrated Physician
Solutions, Inc., a Delaware corporation (IPS), on the terms and subject to
the conditions set forth in the Amended and Restated Agreement and Plan of
Merger dated as of February 9, 2004 among SurgiCare, IPS




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Merger Sub and IPS (as amended from time to time, the IPS Acquisition
Agreement; the transactions contemplated thereby are referred to herein as the
IPS Acquisition); WHEREAS, prior to the Acquisitions, (A) SurgiCare will file an Amended and
Restated Certificate of Incorporation (the SurgiCare Restated Charter) in the
form of Exhibit A hereto with the Secretary of State of the State of Delaware
pursuant to which (i) SurgiCares corporate name will be changed to Orion
HealthCorp, Inc., (ii) the Class B Common Stock, par value $0.001 per share
(the SurgiCare Class B Common Stock), of SurgiCare will be authorized, (iii)
the Class C Common Stock, par value $0.001 per share (the SurgiCare Class C
Common Stock; shares of SurgiCare Class C Common Stock being referred to
herein collectively as the SurgiCare Class C Common Shares), of SurgiCare
will be authorized and (iv) SurgiCare will effect a reverse stock split whereby
each outstanding share of common stock, par value $0.005 per share (the
SurgiCare Old Common Stock), of SurgiCare shall be reclassified and reduced
to a fraction of a share of Class A Common Stock, par value $0.001 per share
(the SurgiCare Class A Common Stock; shares of SurgiCare Class A Common Stock
being referred to herein collectively as the SurgiCare Class A Common
Shares), of SurgiCare equal to the Reverse Split Fraction (as hereinafter
defined), and (B) unless otherwise agreed by IPS, all outstanding shares of
Series AA Preferred Stock, $0.001 par value per share (the SurgiCare Series
AA and, collectively with the SurgiCare Old Common Stock and the SurgiCare
Series A, the SurgiCare Capital Stock), of SurgiCare shall be converted into
shares of SurgiCare Class A Common Stock (the filing of the SurgiCare Restated
Charter and the conversion, if applicable, of the SurgiCare Series AA being
referred to herein as the Recapitalization); WHEREAS, prior to February 9, 2004, Brantley Partners IV, L.P. (Brantley
IV) advanced a total of $2,055,000 in loans to Lakepoint Acquisition, Inc., a
Delaware corporation (Lakepoint), which in turn advanced $665,000 to
SurgiCare pursuant to one or more promissory notes (collectively with any notes
evidencing additional loans made by Lakepoint to SurgiCare after February 9,
2004, the SurgiCare Bridge Notes) and $1,390,000 to IPS pursuant to one or
more promissory notes (collectively with any notes evidencing additional loans
made by Lakepoint to IPS after February 9, 2004, the IPS Bridge Notes and,
together with the SurgiCare Bridge Notes, the Bridge Notes) to fund certain
approved working capital expenses; WHEREAS, prior to the date hereof, Brantley Venture Partners III, L.P.
(Brantley III) has made loans to IPS in the outstanding aggregate principal
amount of $1,271,171 evidenced by one or more promissory notes (the Brantley
III Notes), and, immediately after giving effect to the IPS Acquisition,
Brantley III, SurgiCare and IPS wish to have the Brantley III Notes exchanged
for shares of SurgiCare Class A Common Stock on the terms and conditions set
forth in an Amended and Restated Debt Exchange Agreement dated as of February
9, 2004 among SurgiCare, Brantley Capital Corporation (Brantley Capital) and
Brantley III (as amended from time to time, the Debt Exchange Agreement; the
transactions contemplated thereby are referred to herein as the Debt
Exchange); WHEREAS, prior to the date hereof, Brantley Capital has made loans to IPS
in the outstanding aggregate principal amount of $1,985,448 evidenced by one or
more promissory notes (the Brantley Capital Notes) , and, immediately after
giving effect to the IPS Acquisition, Brantley Capital, SurgiCare and IPS wish
to have the Brantley Capital Notes, together with the right to receive certain
other amounts owed by IPS to Brantley Capital,  -2-




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exchanged for shares of SurgiCare Class A Common Stock on the terms and
conditions set forth in the Debt Exchange Agreement; WHEREAS, simultaneously with, and as a condition to, the Acquisitions,
Brantley IV will purchase, and SurgiCare will issue and sell to Brantley IV,
shares of SurgiCare Class B Common Stock on the terms and subject to the
conditions set forth in an Amended and Restated Stock Subscription Agreement
dated as of February 9, 2004 between SurgiCare and Brantley IV (as amended from
time to time, the Stock Subscription Agreement; the transactions contemplated
thereby are referred to herein as the Equity Financing); WHEREAS, for United States federal income tax purposes, (i) assuming the
Five Day Average Price is equal to or greater than $0.70, the MBS Merger is
intended to qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the Code),
and (ii) the Acquisitions, together with the IPS Acquisition, the Debt Exchange
and the Equity Financing, are intended to qualify as transfers to a corporation
controlled by the transferors under the provisions of Section 351 of the Code;
and WHEREAS, SurgiCare, Newco, DCPS, MBS and the Sellers desire to make
certain representations, warranties, covenants and agreements in connection
with the Acquisitions and also to prescribe various conditions to the
Acquisitions; NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows: ARTICLE I
THE ACQUISITIONS SECTION 1.01 The Acquisitions. Upon the terms of this Agreement and
subject to the conditions set forth in Article VII, and in accordance with the
TBCA, (a) at the MBS Effective Time (as defined below), Newco will be merged
with and into MBS, and (b) immediately following the MBS Effective Time, the
DCPS Sellers will sell to SurgiCare, and SurgiCare will purchase from the DCPS
Sellers, all of the DCPS Interests, free and clear of any Liens other than
Liens imposed by applicable securities laws, for the applicable Acquisition
Consideration. As a result of the Merger, (i) the separate existence of Newco
will cease and (ii) MBS will continue as the surviving corporation of the
Merger (the Surviving Corporation) and will continue to be governed by the
TBCA. SECTION 1.02 Closing; MBS Effective Time. (a) The closing of the Acquisitions (the Closing), the Equity Financing,
the Debt Exchange and the IPS Acquisition will take place substantially
simultaneously (i) at 10:00 a.m. (local time) at the offices of Ropes & Gray
LLP, 45 Rockefeller Plaza, New York, New York as soon as practicable, but in
any event within three (3) business days after the day on which the last to be
fulfilled or waived of the conditions set forth in Article VII (other than
those conditions that by their nature are to be fulfilled at the Closing, but
subject to the fulfillment or waiver of such conditions) are fulfilled or
waived in accordance with this Agreement or (ii) at such other place and time
or on such other date as SurgiCare and the Sellers may agree in writing  -3-




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(the Closing Date). Subject to the provisions of Article VII, failure
to consummate the Acquisitions provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 1.02 will not result
in the termination of this Agreement and will not relieve any party of any
obligation under this Agreement. (b) At the Closing, MBS, SurgiCare and Newco will cause articles of merger
(the Articles of Merger) to be duly prepared, executed and filed with the
Secretary of State of the State of Texas as provided in Article 5.04 of the
TBCA and make all other filings or recordings required by applicable statute,
law (including common law), legislation, interpretation, ordinance, rule or
regulation, domestic or foreign (Law) in connection with the Merger. The
Merger will become effective at such time as the Articles of Merger are duly
filed with the Secretary of State of the State of Texas or at such later times
as are specified in the Articles of Merger (the MBS Effective Time). SECTION 1.03 Effect of the Merger. At the MBS Effective Time, the effect
of the Merger will be as provided in this Agreement, the Articles of Merger and
the TBCA. Without limiting the generality of the foregoing, and subject
thereto, at the MBS Effective Time all the property, rights, privileges,
powers, authority and franchises, both public and private, all assets and
property, real, personal and mixed, and every interest therein, wherever
located, of MBS and Newco will vest in the Surviving Corporation, and all
debts, liabilities, obligations and duties of MBS and Newco will become the
debts, liabilities and duties of the Surviving Corporation. SECTION 1.04 Subsequent Actions. If, at any time after the MBS Effective
Time, the Surviving Corporation considers or is advised that any deeds, bills
of sale, assignments, assurances or other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of any of MBS or Newco or which are to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger, or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation are authorized to execute and deliver, in the name and on
behalf of each of MBS and Newco, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of MBS and
Newco or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement. SECTION 1.05 Certificate of Incorporation and By-Laws. The certificate of
incorporation and by-laws of the Surviving Corporation shall be the certificate
of incorporation and by-laws of MBS as in effect as of the MBS Effective Time,
until duly amended or repealed. SECTION 1.06 Directors and Officers. The directors of Newco immediately
prior to the MBS Effective Time will be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation, and the officers of
Newco immediately prior to the MBS Effective Time will be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.  -4-




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ARTICLE II
CONVERSION AND SALE OF SECURITIES; EXCHANGE OF CERTIFICATES SECTION 2.01 Conversion and Sale of Securities. (a) MBS. At the MBS Effective Time, by virtue of the Merger and without
any action on the part of SurgiCare, Newco, MBS or the holders of any of the
following securities: (i) except as otherwise set forth in Section 2.01(a)(iv), all shares
of MBS Common Stock (collectively, the MBS Common Shares) issued and
outstanding immediately prior to the MBS Effective Time (other than any
MBS Common Shares to be canceled pursuant to Section 2.01(a)(ii)) shall
be canceled and automatically converted into the right to receive, in the
aggregate: A. (1) $1,400,000 in cash, if the Five Day Average Price is
equal to or greater than $0.70, or (2) $2,000,000 in cash, if the
Five Day Average Price is less than $0.70 (the MBS Cash
Consideration); and B. (1) a number of SurgiCare Class C Common Shares equal to
the product of 10,400,000 multiplied bythe Reverse Split Fraction,
if the Five Day Average Price is equal to or greater than $0.70, or
(2) a number of SurgiCare Class C Common Shares equal to the
product of 7,878,800 multiplied bythe Reverse Split Fraction, if
the Five Day Average Price is less than $0.70 (the MBS Share
Consideration); (ii) each share of MBS Common Stock owned by SurgiCare or any direct
or indirect wholly owned subsidiary of SurgiCare or held in treasury by
MBS or any subsidiary of MBS immediately prior to the MBS Effective Time
shall be canceled and extinguished without any conversion thereof and no
payment or distribution shall be made with respect thereto; and (iii) each share of common stock, $0.001 par value per share, of
Newco issued and outstanding immediately prior to the MBS Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, $1.00 per share, of the
Surviving Corporation. (iv) Notwithstanding any provisions of this Agreement to the
contrary, MBS Common Shares which are issued and outstanding immediately
prior to the MBS Effective Time and which are held by any Person who has
not voted such MBS Common Shares in favor of the Merger, who has
delivered a written demand for appraisal of such MBS Common Shares in the
manner provided by the TBCA and who, as of the MBS Effective Time, has
perfected and not effectively withdrawn or lost such right to appraisal
(the Appraisal Shares) will not be converted into or represent a right
to receive the applicable Acquisition Consideration pursuant to this
Article II. The holders thereof will be entitled only to such rights as
are granted by Section 5.11 of the TBCA. Each holder of Appraisal Shares
who becomes entitled to payment for such MBS Common Shares pursuant to
Section 5.12 of the TBCA will receive payment therefor from the Surviving  -5-




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Corporation in accordance with the TBCA; provided, however, that (i)
if any such holder of Appraisal Shares fails to establish its entitlement
to appraisal rights as provided in Section 5.12 of the TBCA, (ii) if any
such holder of Appraisal Shares effectively withdraws its demand for
appraisal of such MBS Common Shares or loses its right to appraisal and
payment for its MBS Common Shares under Section 5.13 of the TBCA, or
(iii) if neither any holder of Appraisal Shares nor the Surviving
Corporation files a petition demanding a determination of the value of
all Appraisal Shares within the time provided in Section 5.12 of the
TBCA, such holder will forfeit the right to appraisal of such MBS Common
Shares and each such MBS Common Share will be treated as if such MBS
Common Share had been converted, as of the MBS Effective Time, into a
right to receive the applicable Acquisition Consideration, without
interest thereon, from the Surviving Corporation as provided in Section
2.01(a)(i). MBS will give SurgiCare prompt notice of any demands
received by MBS for appraisal of MBS Common Shares, and, until the MBS
Effective Time, SurgiCare will have the opportunity to participate in all
negotiations and proceedings with respect to such demands. MBS will not,
except with the prior written consent of SurgiCare, make any payment with
respect to, or settle or offer to settle, any such demands. (b) DCPS. The consideration to be paid by SurgiCare to the DCPS Sellers
for the DCPS Interests shall be, in the aggregate: (i) $1,500,000 in cash (the DCPS Cash Consideration); (ii) a number of SurgiCare Class C Common Shares equal to the
product of 7,878,800 multiplied bythe Reverse Split Fraction (the DCPS
Share Consideration); and (iii) subordinated promissory notes of SurgiCare, substantially in
the form attached hereto as Exhibit B, in the aggregate principal amount
of $500,000 (the DCPS Notes). (c) Allocation of Consideration. The MBS Cash Consideration and MBS Share
Consideration, and any additions thereto or subtractions therefrom in
accordance with Section 2.07, shall be allocated among the MBS Sellers
according to the percentages (the Stockholder Percentages) set forth on
Schedule 2.01(c)(i) hereto. The DCPS Cash Consideration, DCPS Share
Consideration and DCPS Notes, and any additions thereto or subtractions
therefrom in accordance with Section 2.07, shall be allocated among the DCPS
Sellers according to the percentages set forth on Schedule 2.01(c)(ii) hereto. SECTION 2.02 Deliveries at the Closing. At the Closing, (i) SurgiCare
will deliver to DCPS and MBS the various certificates, instruments and
documents referred to in Section 7.03 below, (ii) DCPS and MBS will deliver to
SurgiCare the various certificates, instruments and documents referred to in
Section 7.02 below, (iii) each of the Sellers will deliver to SurgiCare
certificates (to the extent applicable) representing all of his MBS Common
Shares or DCPS Interests, as applicable, endorsed in blank or accompanied by
duly executed assignment documents, (iv) SurgiCare will deliver to Smith (a)
certificates representing the MBS Share Consideration and (b) by wire transfer
of immediately available funds, to such account as Smith  -6-




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has specified in writing to SurgiCare at least two business days prior to
the Closing Date, the MBS Cash Consideration, and (v) SurgiCare will deliver to
Cain (a) certificates representing the DCPS Share Consideration, (b) the DCPS
Notes and (c) by wire transfer of immediately available funds, to such account
as Cain has specified in writing to SurgiCare at least two business days prior
to the Closing Date, the DCPS Cash Consideration. SECTION 2.03 No Further Rights in MBS Common Shares or DCPS Interests.
The Acquisition Consideration delivered upon conversion of the MBS Common
Shares and the purchase and sale of the DCPS Interests in accordance with the
terms hereof (including any additional Acquisition Consideration delivered
under Section 2.07(c)) shall be deemed to have been issued in full satisfaction
of all rights pertaining to such MBS Common Shares and DCPS Interests. SECTION 2.04 No Fractional Shares. No certificates or scrip representing
less than one SurgiCare Class C Common Share shall be issued to the Sellers in
connection with the Acquisitions, and the portion of the MBS Share
Consideration or the DCPS Share Consideration going to each Seller shall be
rounded down to the nearest whole share. SECTION 2.05 Withholding Rights. Newco and SurgiCare shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of MBS Common Shares or DCPS Interests such amounts as
it is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax Law.
To the extent that amounts are so withheld by Newco or SurgiCare, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the MBS Common Shares or DCPS
Interests in respect of which such deduction and withholding was made by Newco
or SurgiCare, as the case may be. SECTION 2.06 Transfer Books. At the MBS Effective Time, the stock
transfer books of MBS shall be closed and there shall be no further
registration of transfers of MBS Common Shares that were outstanding
immediately prior to the MBS Effective Time thereafter on the records of MBS.
From and after the MBS Effective Time, the holders of certificates representing
MBS Common Shares outstanding immediately prior to the MBS Effective Time shall
cease to have any rights with respect to such MBS Common Shares, except as
otherwise provided in this Agreement or by Law. On or after the MBS Effective
Time, any certificates presented to SurgiCare for any reason shall be converted
into the applicable Acquisition Consideration. SECTION 2.07 Adjustments to Acquisition Consideration. (a) Newco EBITDA Statement. With respect to each of the year ended
December 31, 2004 and the year ended December 31, 2005, as promptly as
practicable, but in no event later than five business days, following the
completion of the final audit report in respect of the audited financial
statements for such year, SurgiCare will prepare and submit to the Sellers a
statement (a Newco EBITDA Statement) setting forth the Newco EBITDA for such
year, showing in reasonable detail the calculation of such Newco EBITDA. The
Sellers may employ (at their own expense) certified public accountants to audit
or review the calculation of Newco EBITDA set forth in such Newco EBITDA
Statement. SurgiCare will give the Sellers  -7-




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and their representatives reasonable access to the books, records and
personnel of SurgiCare to the extent requested for purposes of reviewing each
Newco EBITDA Statement. (b) Disputes. If the Sellers dispute SurgiCares calculation of the Newco
EBITDA, as set forth in a Newco EBITDA Statement, the Sellers will notify
SurgiCare in writing setting forth their objections in reasonable detail within
30 days after delivery of such Newco EBITDA Statement. If the Sellers do not
so notify SurgiCare within such 30-day period, the Sellers will be deemed to
have conclusively accepted such Newco EBITDA Statement and the Newco EBITDA set
forth thereon. If the Sellers do so notify SurgiCare, SurgiCare and the
Sellers will endeavor in good faith to resolve any dispute over the calculation
of the Newco EBITDA. If SurgiCare and the Sellers are unable to resolve any
such dispute within 30 days of the delivery of the applicable Newco EBITDA
Statement, such dispute will be submitted to Pannell Kerr Forster or to another
nationally recognized independent accounting firm chosen jointly by SurgiCare
and the Sellers (the Accountants). Such submission shall be accompanied by a
statement from each of SurgiCare, on the one hand, and the Sellers, on the
other hand, setting forth its or their calculation of the amount of Newco
EBITDA. The Accountants shall make a selection as to which of the Newco EBITDA
calculations presented to them is, in the aggregate, more accurate, which
determination will be (A) in writing, (B) furnished to SurgiCare and the
Sellers as promptly as practicable after the dispute has been referred to the
Accountants (but in no event later than 30 days thereafter), and (C) made in
accordance with this Agreement. Nothing herein will be construed to authorize
or permit the Accountants to determine any question or matter whatsoever under
or in connection with this Agreement, except as set forth in the immediately
preceding sentence. The amount of Newco EBITDA resulting from the calculation
so determined by the Accountants to be, in the aggregate, more accurate shall
for all purposes of this Agreement be the amount of Newco EBITDA for the
applicable year and such determination shall be conclusive and binding upon
each of the parties. The fees and expenses of the Accountants with respect to
the dispute referred to in this Section 2.07(b) shall be paid by the party
whose proposed Newco EBITDA calculation is not selected by the Accountants
hereunder. (c) Additional Acquisition Consideration. The Sellers may be eligible to
receive additional Acquisition Consideration consisting of an aggregate of up
to a maximum of $1,012,500 in cash and up to a maximum number of SurgiCare
Class A Common Shares equal to 4,650,000 multipliedby the Reverse Split
Fraction, as set forth in this Section 2.07(c) and subject to Section 2.07(e). (i) With respect to each of the year ended December 31, 2004 and the
year ended December 31, 2005, if Newco EBITDA for such year is greater
than $1,600,000 (any such amounts in excess of $1,600,000 being referred
to herein as the Newco EBITDA Excess): A. the MBS Cash Consideration shall be increased by an amount
equal to the product of 20% multiplied bythe Newco EBITDA Excess;
provided, however, in no event shall the MBS Cash Consideration be
increased by more than an aggregate of $450,000 pursuant to this
Section 2.07(c)(i)(A);  -8-




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B. the DCPS Cash Consideration shall be increased by an amount
equal to the product of 25% multiplied bythe Newco EBITDA Excess;
provided, however, in no event shall the DCPS Cash Consideration be
increased by more than an aggregate of $562,500 pursuant to this
Section 2.07(c)(i)(B); C. the MBS Share Consideration shall be increased by an amount
of SurgiCare Class A Common Shares equal to the product of 80%
multiplied bya fraction, the numerator of which is the Newco
EBITDA Excess, and the denominator of which is the quotient of (1)
$0.75 divided by(2) the Reverse Split Fraction; provided, however,
in no event shall the MBS Share Consideration be increased pursuant
to this Section 2.07(c)(i)(C) by more than an aggregate number of
SurgiCare Class A Common Shares equal to the product of (x)
2,400,000 multipliedby (y) the Reverse Split Fraction; and D. the DCPS Share Consideration shall be increased by an
amount of SurgiCare Class A Common Shares equal to the product of
75% multiplied bya fraction, the numerator of which is the Newco
EBITDA Excess, and the denominator of which is the quotient of (1)
$0.75 divided by(2) the Reverse Split Fraction; provided, however,
in no event shall the DCPS Share Consideration be increased
pursuant to this Section 2.07(c)(i)(D) by more than an aggregate
number of SurgiCare Class A Common Shares equal to the product of
(x) 2,250,000 multipliedby (y) the Reverse Split Fraction. (ii) Any increase to the MBS Cash Consideration or the DCPS Cash
Consideration to be made under this Section 2.07(c) will be paid (or
cause to be paid) by SurgiCare, without interest, by wire transfer of
immediately available funds to an account or accounts designated by Smith
(in the case of the MBS Cash Consideration) or Cain (in the case of the
DCPS Cash Consideration), promptly but in no event later than ten days
after final determination of the amount of Newco EBITDA for the
applicable year (whether by lack of disagreement with the initial
determination, resolution of any disagreement with the initial
determination by the parties, or resolution through submission of any
dispute to the Accountants). Notwithstanding anything to the contrary in
this Section 2.07(c), the right of the Sellers to receive any cash
payment pursuant to the terms of this Section 2.07(c) shall be subject to
the terms of the Subordination Agreement. If payment of all or any
portion of any amount due under this Section 2.07(c) is not permitted by
the Subordination Agreement, then interest, compounded on an annual
basis, will accrue on the unpaid balance at the rate of 8% per annum from
the date such payment is due until the date such payment is made, and
payment of such amount (together with such interest) shall be made (or
caused to be made) by SurgiCare on the earliest date as of which such
payment may be made in compliance with the Subordination Agreement. Any
increase to the MBS Share Consideration or the DCPS Share Consideration
to be made under this Section 2.07(c) will be satisfied by SurgiCare by
delivery to Smith (in the case of the MBS Share Consideration) or Cain
(in the case of the DCPS Share Consideration), of certificates
representing such increase to the MBS Share Consideration or DCPS Share
Consideration, in either case promptly but in no event later than ten
days after final determination of the amount of Newco EBITDA for the
applicable year (whether by lack  -9-




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of disagreement with the initial determination, resolution of any
disagreement with the initial determination by the parties, or resolution
through submission of any dispute to the Accountants); provided, however,
that any issuance of SurgiCare Class A Common Shares to a Seller
hereunder will be conditioned upon SurgiCare receiving from such Seller
satisfactory assurances that the representations and warranties set forth
in Section 4.24 of this Agreement remain true and correct in all respects
with regards to such Seller as of the date of such issuance. (d) Reduction of Acquisition Consideration. The Sellers may be required
to forfeit a portion of the Acquisition Consideration, as set forth in this
Section 2.07(d) and subject to Section 2.07(e). (i) With respect to each of the year ended December 31, 2004 and the
year ended December 31, 2005, if Newco EBITDA for such year is less than
$1,600,000 (the amount of shortfall below $1,600,000 being referred to
herein as the Newco EBITDA Shortfall): A. the MBS Share Consideration (as increased pursuant to
Section 2.07(c), if applicable) shall be reduced by an amount of
SurgiCare Class C Common Shares which, if converted, would
represent a number of Class A Common Shares equal to the quotient
of (1) the product (the MBS EBITDA Shortfall Amount) of 1.25
multiplied bythe Newco EBITDA Shortfall divided by(2) the
quotient of (a) $0.33 divided by(b) the Reverse Split Fraction;
provided, however, Smith (on behalf of the MBS Sellers) may elect
to pay some or all of the MBS EBITDA Shortfall Amount in cash, in
which event the reduction in the MBS Share Consideration hereunder
shall be proportionately decreased; B. the outstanding principal amount of the DCPS Notes (the
DCPS Note Balance) shall be reduced by an amount equal to the
lesser of (1) the product (the DCPS EBITDA Shortfall Amount) of
1.25 multiplied bythe Newco EBITDA Shortfall and (2) the DCPS Note
Balance, and any interest accrued but unpaid on such reduced
principal amount shall be forfeited; and C. to the extent that the DCPS EBITDA Shortfall Amount is
greater than the DCPS Note Balance, upon the written election of
SurgiCare, the DCPS Share Consideration (as increased pursuant to
Section 2.07(c), if applicable) shall be reduced by an amount of
SurgiCare Class C Common Shares which, if converted, would
represent a number of Class A Common Shares equal to the quotient
of (1) the difference between the DCPS EBITDA Shortfall Amount and
the DCPS Note Balance divided by(2) the quotient of (a) $0.33
divided by(b) the Reverse Split Fraction. (ii) Any decrease to be made under this Section 2.07(d) to (A) the
MBS Share Consideration will be satisfied by Smith by delivery to
SurgiCare of certificates representing such decrease to the MBS Share
Consideration, endorsed in blank or accompanied by duly executed
assignment documents with a medallion signature guarantee, or (B) the
DCPS Share Consideration will be satisfied by Cain by  -10-




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delivery to SurgiCare of certificates representing such decrease to
the DCPS Share Consideration, endorsed in blank or accompanied by duly
executed assignment documents with a medallion signature guarantee, in
either case promptly but in no event later than ten days after final
determination of the amount of Newco EBITDA for the applicable year
(whether by lack of disagreement with the initial determination,
resolution of any disagreement with the initial determination by the
parties, or resolution through submission of any dispute to the
Accountants). In the event that Smith elects to pay any amounts in cash
in accordance with Section 2.07(d)(i)(A), such payment shall be made by
Smith by wire transfer of immediately available funds to an account or
accounts designated by SurgiCare promptly but in no event later than ten
days after final determination of the amount of Newco EBITDA for the
applicable year (whether by lack of disagreement with the initial
determination, resolution of any disagreement with the initial
determination by the parties, or resolution through submission of any
dispute to the Accountants). (iii) Until such time as no decrease to the Acquisition
Consideration received by a Seller can be made pursuant to this Section
2.07(d), (A) such Seller will not, without the prior written consent of
SurgiCare, directly or indirectly, sell, transfer, assign, pledge,
hypothecate, tender, encumber, engage in a Constructive Sale or otherwise
dispose of in any manner any of the SurgiCare Class C Common Shares
received by such Seller as part of the Acquisition Consideration (or
SurgiCare Class A Common Shares into which such SurgiCare Class C Common
Shares have been converted), or offer, consent or agree to do any of the
foregoing, (B) such SurgiCare Class C Common Shares (or SurgiCare Class A
Common Shares, if applicable) shall bear a legend disclosing the
existence of the restrictions contained herein and (C) SurgiCare may,
without the consent of such Seller, deliver stop transfer instructions to
SurgiCares transfer agent with respect to such SurgiCare Class C Common
Shares (or SurgiCare Class A Common Shares, if applicable); provided,
however, if Newco EBITDA for the year ended December 31, 2004 is equal to
or greater than $1,600,000, the restrictions contained in this sentence
will cease to apply (effective upon the final determination of the amount
of Newco EBITDA for such year (whether by lack of disagreement with the
initial determination, resolution of any disagreement with the initial
determination by the parties, or resolution through submission of any
dispute to the Accountants)) with respect to a number of the SurgiCare
Class C Common Shares received by the Sellers as part of the Acquisition
Consideration (the Released Shares) equal to the product of (x)
3,030,303 multiplied by(y) the Reverse Split Fraction. The number of
            shares that shall be deemed Released Shares for each Seller shall be
equal to the product of (1) one-half of the total number of Released
Shares multiplied bythe percentage set forth opposite the name of such
Seller on Schedule 2.01(c)(i) or Schedule 2.01(ii), as applicable. (e) Effect of Termination Without Cause or Sale of the Surviving
Corporation. Sections 2.07(c) and 2.07(d) are subject to the following
provisions in the event that (1) SurgiCare sells (a Newco Sale Event) all of
the capital stock, or all or substantially all of the assets, of the Surviving
Corporation to an unaffiliated third party (other than in connection with an
acquisition of all or substantially all of SurgiCare and other than any sale
pursuant to the ROFR granted by Section 6.11 hereof) or (2) the employment of
Cain or Smith is terminated by SurgiCare without Cause (as defined in the
employment agreements referenced in Section  -11-




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7.02) (a Qualifying Termination), in either case prior to the second
anniversary of the Closing Date. (i) If a Newco Sale Event or a Qualifying Termination of Smith
occurs on or prior to the first anniversary of the Closing Date, (x) the
Newco EBITDA for the year ended December 31, 2004 shall be deemed to be
$3,850,000 solely for purposes of Sections 2.07(c)(i)(A), 2.07(c)(i)(C),
2.07(d)(i)(A) and 2.07(d)(i)(C), and (y) Section 2.07(d) shall terminate
and be of no further force or effect with respect to Smith or the MBS
Share Consideration following the date of such Newco Sale Event or
Qualifying Termination. (ii) If a Newco Sale Event or a Qualifying Termination of Cain
occurs on or prior to the first anniversary of the Closing Date, (x) the
Newco EBITDA for the year ended December 31, 2004 shall be deemed to be
$3,850,000 solely for purposes of Sections 2.07(c)(i)(B), 2.07(c)(i)(D),
2.07(d)(i)(B) and 2.07(d)(i)(D), and (y) Section 2.07(d) shall terminate
and be of no further force or effect with respect to Cain, the DCPS Notes
or the DCPS Share Consideration following the date of such Newco Sale
Event or Qualifying Termination. (iii) If a Newco Sale Event or a Qualifying Termination of Smith
occurs after the first anniversary of the Closing Date but on or prior to
the second anniversary of the Closing Date, (x) the Newco EBITDA for the
year ended December 31, 2005 shall, solely for purposes of Sections
2.07(c)(i)(A), 2.07(c)(i)(C), 2.07(d)(i)(A) and 2.07(d)(i)(C), be
determined by annualizing the Newco EBITDA as of the last day of the
month in which such Newco Sale Event or Qualifying Termination occurs,
and (y) Section 2.07(d) shall terminate and be of no further force or
effect with respect to Smith or the MBS Share Consideration following the
date of such Newco Sale Event or Qualifying Termination. (iv) If a Newco Sale Event or a Qualifying Termination of Cain
occurs after the first anniversary of the Closing Date but on or prior to
the second anniversary of the Closing Date, (x) the Newco EBITDA for the
year ended December 31, 2005 shall, solely for purposes of Sections
2.07(c)(i)(B), 2.07(c)(i)(D), 2.07(d)(i)(B) and 2.07(d)(i)(D), be
determined by annualizing the Newco EBITDA as of the last day of the
month in which such Newco Sale Event or Qualifying Termination occurs,
and (y) Section 2.07(d) shall terminate and be of no further force or
effect with respect to Cain, the DCPS Notes or the DCPS Share
Consideration following the date of such Newco Sale Event or Qualifying
Termination. SECTION 2.08 Additional DCPS Consideration. Subject to any restrictions
imposed by applicable law, if DCPS or Cain is notified by the Internal Revenue
Service on or before the 60th day prior to the maturity date of the DCPS Notes
that tax-free treatment is not available for the DCPS Share Consideration
because the Acquisitions, together with the IPS Acquisition, the Debt Exchange
and the Equity Financing, do not qualify as transfers to a corporation
controlled by the transferors under the provisions of Section 351 of the Code,
and an additional tax is therefore payable in respect of the DCPS Share
Consideration, SurgiCare will, at the request of Cain, provide a loan to Cain
in the amount of the additional tax due up to a maximum amount of  -12-




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$375,000; provided, however, that SurgiCare shall have no obligation under
this Section 2.08 if such tax-free reorganization treatment is unavailable as a
result in whole or in part of any action, omission or circumstance that
constitutes a breach of any representation, warranty or covenant of DCPS, MBS
or any of the Sellers under this Agreement. Any loan provided under this
Section 2.08 will be evidenced by a promissory note, in form and substance
satisfactory to SurgiCare, with the same maturity date as the DCPS Notes, and
will bear interest at the annual rate of 8% with monthly interest payments. SECTION 2.09 MBS Representative. Each MBS Seller hereby appoints Smith as
the agent, proxy and attorney-in-fact for the MBS Sellers for all purposes
under this Agreement (including without limitation full power and authority to
act on the MBS Sellers behalf) to take any action, should he elect to do so in
his sole discretion, (i) to consummate the transactions contemplated under this
Agreement, (ii) in the event of such consummation, to receive on behalf of each
MBS Seller such MBS Sellers Stockholder Percentage of the MBS Cash
Consideration and the MBS Share Consideration, (iii) to pay to each MBS Seller
his, her or its Stockholder Percentage of the MBS Cash Consideration and the
MBS Share Consideration, (iv) to execute and deliver, should he elect to do so
in his sole discretion, on behalf of the MBS Sellers any amendment to this
Agreement so long as such amendment shall apply to all parties to this
Agreement, and (v) to take all other actions to be taken by or on behalf of the
MBS Sellers and exercise any and all rights which the MBS Sellers are permitted
or required to do or exercise under this Agreement. SECTION 2.10 MBS Tax. If (i) the Five Day Average Price is less than
$0.70 and (ii) MBS or Smith is notified by the Internal Revenue
Service that tax-free treatment is not available for the MBS Share
Consideration because the Acquisitions, together with the IPS Acquisition, the Debt
Exchange and the Equity Financing, do not qualify as transfers to a corporation
controlled by the transferors under the provisions of
Section 351 of the Code, and an additional tax is therefore payable in respect of the MBS
Share Consideration, SurgiCare will promptly upon request by Smith pay (or cause to be paid), by wire transfer of
immediately available funds to an account or accounts designated by Smith, cash
equal to the quotient of (a) the excess, if any, of (i) the product of the
Assumed Incremental Gain multiplied by15%, over (ii) $435,000, divided by(b)
85%. For purposes of this section, Assumed Incremental Gain shall mean an
amount equal to the excess, if any, of (a) the number of SurgiCare Class C
Common Shares issued to the MBS Sellers on the Closing Date multiplied bythe
Class A Common Closing Price, over (b) $100,000. Any payments to Smith
hereunder will be allocated and distributed by Smith to the MBS Sellers pro
rata based on the respective federal income tax liabilities of the MBS Sellers
in respect of the SurgiCare Class C Common Shares issued to the MBS Sellers on
the Closing Date. ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SURGICARE AND NEWCO SurgiCare and Newco, jointly and severally, hereby represent and warrant
to DCPS and MBS that: SECTION 3.01 Organization and Qualification; Subsidiaries. (a) SurgiCare and each SurgiCare Subsidiary is a corporation or other
legal entity duly organized, validly existing and in good standing (where such
concept is applicable) under the laws of the jurisdiction of its incorporation
or formation and has all requisite power  -13-




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and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to do so would not have a SurgiCare
Material Adverse Effect. Each of SurgiCare and the SurgiCare Subsidiaries is
duly qualified or licensed as a foreign corporation or organization to do
business, and is in good standing (where such concept is applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except where the failure to do so would not have a SurgiCare
Material Adverse Effect. (b) Section 3.01(b) of the SurgiCare Disclosure Schedule lists each
SurgiCare Subsidiary, its jurisdiction of organization and all trade names
currently used or used at any time during the past two years by such SurgiCare
Subsidiary. All of the outstanding shares of capital stock or other equity
interests of each SurgiCare Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable and, except as set forth in Section
3.01(b) of the SurgiCare Disclosure Schedule, are owned by SurgiCare, free and
clear of all pledges, liens, charges, mortgages, encumbrances and security
interests of any kind or nature whatsoever (collectively, Liens). Except for
its interests in the SurgiCare Subsidiaries and except for the ownership of
interests set forth in Section 3.01(b) of the SurgiCare Disclosure Schedule,
SurgiCare does not own, directly or indirectly, or have any outstanding
contractual obligation to acquire, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
corporation, partnership, joint venture or other business association or
entity. SECTION 3.02 Certificate of Incorporation and By-Laws. SurgiCare has
heretofore provided to each of DCPS and MBS a complete and correct copy of
SurgiCares certificate of incorporation, as amended to date (the SurgiCare
Charter) and SurgiCares by-laws, as amended to date (the SurgiCare
By-Laws). The SurgiCare Charter and SurgiCare By-Laws are in full force and
effect. SurgiCare is not in violation of any of the provisions of the
SurgiCare Charter or the SurgiCare By-Laws. SurgiCare has provided to each of
DCPS and MBS complete copies of the certificate of incorporation, by-laws or
other organizational documents (including without limitation partnership
agreements or limited liability company agreements) of each SurgiCare
Subsidiary and no SurgiCare Subsidiary is in violation of such documents. SECTION 3.03 Capitalization. (a) The authorized capital stock of SurgiCare consists of (i) 50,000,000
shares of SurgiCare Old Common Stock, (ii) 1,650,000 shares of Series A
Preferred Stock, $0.001 par value per share (SurgiCare Series A), and (iii)
900,000 shares of SurgiCare Series AA. At the close of business on January 29,
2004 (i) 27,141,359 shares of SurgiCare Old Common Stock were issued and
outstanding, (ii) no shares of SurgiCare Series A were issued and outstanding,
(iii) 900,000 shares of SurgiCare Series AA were issued and outstanding, (iv)
91,400 shares of SurgiCare Old Common Stock were held in SurgiCares treasury,
(iv) no shares of SurgiCare Series A or SurgiCare Series AA were held in
SurgiCares treasury, (v) 59,392 shares of SurgiCare Old Common Stock were
subject to options (the SurgiCare Stock Options) granted pursuant to
SurgiCares 2001 Stock Option Plan (the SurgiCare Option Plan), (vi)
10,000,000 shares of SurgiCare Old Common Stock were reserved for issuance
pursuant to the conversion or  -14-




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exchange of the shares of SurgiCare Series AA that were issued and
outstanding, (vii) 9,591,591 shares of SurgiCare Old Common Stock were reserved
for issuance pursuant to the exercise of all outstanding warrants of SurgiCare
(the SurgiCare Warrants) and (viii) 1,342,857 shares of SurgiCare Old Common
Stock were reserved for issuance pursuant to the conversion of a $470,000 10%
Debenture. Except as set forth above, at the close of business on January 29,
2004 no shares of SurgiCare Capital Stock or other securities of SurgiCare were
issued, reserved for issuance or outstanding. Immediately following the
Closing, and after giving effect to the Acquisitions, the Equity Financing, the
Debt Exchange, the IPS Acquisition and the Recapitalization, the authorized,
issued and outstanding capital stock of SurgiCare shall be as set forth in
Schedule 3.03(a) of the SurgiCare Disclosure Schedule. (b) All outstanding shares of SurgiCare Capital Stock are, and all such
shares that may be issued prior to the Closing will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in material violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of the DGCL, the SurgiCare Charter, the SurgiCare By-Laws or any
contract, lease, license, indenture, note, bond, mortgage, agreement or other
instrument or obligation (Contract) to which SurgiCare is a party or
otherwise bound. Each offer or sale by SurgiCare of shares of its capital
stock or other securities has been in compliance with all applicable federal
and state securities laws or the applicable statute of limitations with respect
to such offers or sales has expired. (c) Except as set forth in Section 3.03(c) of the SurgiCare Disclosure
Schedule, there are not any bonds, debentures, notes or other indebtedness of
SurgiCare having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of
SurgiCare Capital Stock may vote (Voting SurgiCare Debt). (d) Except as set forth in Section 3.03(a) above, as of the date of this
Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, phantom stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which SurgiCare or any SurgiCare Subsidiary is a
party or by which any of them is bound (i) obligating SurgiCare or any
SurgiCare Subsidiary to issue or sell, or cause to be issued or sold,
additional shares of capital stock or other equity interests in, or any
security convertible or exchangeable into, or exercisable for, any capital
stock of or other equity interest in, SurgiCare or of any SurgiCare Subsidiary
or any Voting SurgiCare Debt, (ii) obligating SurgiCare or any SurgiCare
Subsidiary to issue, grant, extend or enter into any such option, warrant,
right, security, stock appreciation right, stock-based performance unit,
commitment, Contract, arrangement or undertaking, or (iii) that give any Person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights accruing to holders of SurgiCare Capital
Stock. Section 3.03(d) of the SurgiCare Disclosure Schedule sets forth the
total number of outstanding SurgiCare Stock Options and Warrants and the
exercise prices thereof. SurgiCare has provided each of DCPS and MBS with a
schedule of all of such SurgiCare Stock Options and SurgiCare Warrants,
including the relevant vesting times, exercise prices and exercise periods, and
copies of all SurgiCare Warrants and all SurgiCare Option Plans and forms of
option certificates granted thereunder.  -15-




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(e) There are not any outstanding contractual obligations of SurgiCare or
of any SurgiCare Subsidiary, contingent or otherwise, to repurchase, redeem or
otherwise acquire any shares of capital stock of SurgiCare or, except as set
forth in Section 3.03(e)(i) of the SurgiCare Disclosure Schedule, any capital
stock or other ownership interest in any SurgiCare Subsidiary. Except as set
forth in Section 3.03(e)(ii) of the SurgiCare Disclosure Schedule, there are no
issued and outstanding shares of SurgiCare Capital Stock that are subject to a
repurchase or redemption right in favor of SurgiCare. (f) The authorized stock of Newco consists of 1,000 shares of common
stock, $0.001 par value, all of which are duly authorized, validly issued,
fully paid and nonassessable and free of any preemptive rights in respect
thereof, and all of which are owned by SurgiCare. The SurgiCare Class C Common
Shares (and, if applicable, SurgiCare Class A Common Shares) to be issued
pursuant to the Acquisitions in accordance with Section 2.01(a)(i) will, when
issued, be duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive or similar rights created by statute, the Certificate
of Incorporation or By-Laws of SurgiCare or any agreement to which the
SurgiCare is a party or is bound. SECTION 3.04 Authority Relative to this Agreement. (a) Each of SurgiCare and Newco has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. The execution and delivery by each of SurgiCare and Newco of
this Agreement and the consummation by each of SurgiCare and Newco of the
Transactions have been duly authorized by all necessary corporate action on the
part of each of SurgiCare and Newco, subject to the approval of the issuance of
SurgiCare Class C Common Shares (and, if applicable, SurgiCare Class A Common
Shares) in the Acquisitions, the IPS Acquisition and the Debt Exchange, as well
as the Recapitalization, the Equity Financing, the election of each of the
individuals listed in Section 7.03(m) to the SurgiCare Board effective as of
the Closing (the Board Election) and the Orion HealthCorp, Inc. 2004
Incentive Plan in the form set forth as Exhibit C hereto (the New Equity
Plan) by the holders of (i) not less than a majority of the outstanding shares
of SurgiCare Capital Stock, voting together as a class, (ii) not less than a
majority of the outstanding shares of SurgiCare Old Common Stock, and (iii) not
less than a majority of the outstanding shares of SurgiCare Series AA (the
SurgiCare Stockholder Approval). Each of SurgiCare and Newco has duly
executed and delivered this Agreement, and this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms. (b) On or prior to the date of this Agreement, the SurgiCare Board duly
adopted resolutions (the SurgiCare Board Approval) at a meeting duly called
and held or by unanimous written consent and such resolutions have not been
subsequently rescinded or modified in any way in accordance with the DGCL, (i)
approving, authorizing and adopting this Agreement, the Acquisitions (including
to the extent required by Section 203 of the DGCL in order that the
consummation of the Transactions is not limited or restricted by such Law), the
New Equity Plan and the other Transactions, (ii) determining that the
Acquisitions are advisable and in the best interests of SurgiCare and the
SurgiCare stockholders, (iii) determining that the Transactions are fair to the
SurgiCare stockholders and (iv) recommending that the SurgiCare stockholders
approve and adopt this Agreement and directing that this Agreement, the  -16-




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Acquisitions, the New Equity Plan and the other Transactions be submitted
for consideration by the SurgiCare stockholders at the SurgiCare Stockholders
Meeting. (c) Except for Section 203 of the DGCL, no fair price, moratorium,
control share acquisition or other similar anti-takeover statute or regulation
is applicable, by reason of SurgiCares being a party to this Agreement, the
Acquisitions or the other Transactions. Neither SurgiCare nor any of the
SurgiCare Subsidiaries is a party to any stockholder rights plan or any
similar anti-takeover plan or device. SECTION 3.05 No Conflict; Required Filings and Consents. (a) Except as set forth in Section 3.05(a) of the SurgiCare Disclosure
Schedule, the execution and delivery by each of SurgiCare and Newco of this
Agreement and the other transaction documents referenced hereby does not, and
the consummation of the Transactions and compliance with the terms hereof will
not, result in any material violation of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or require any offer to purchase or any
prepayment of any debt, or result in the creation of any Lien upon any of the
properties or assets of SurgiCare or any SurgiCare Subsidiary under, any
provision of (i) the SurgiCare Charter, the SurgiCare By-Laws or the comparable
charter, by-law or other organizational documents of any SurgiCare Subsidiary,
(ii) any SurgiCare Material Contract or SurgiCare Employee Benefit Plan, or
(iii) subject to the filings and other matters referred to in Section 3.05(b),
any judgment, order, injunction or decree, domestic or foreign (Judgment), or
Law, applicable to SurgiCare or any SurgiCare Subsidiary or their respective
properties or assets. (b) Except as set forth in Section 3.05(a) of the SurgiCare Disclosure
Schedule, no consent, approval, certificate, license, permit, order or
authorization (Consent) of, or registration, declaration, notification or
filing with, any Governmental Entity or third party is required to be obtained
or made by or with respect to SurgiCare or any SurgiCare Subsidiary in
connection with the execution, delivery and performance of this Agreement or
the consummation of the Transactions, other than (i) if required, compliance
with and filing of a pre-merger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR Act), (ii) compliance
with the applicable requirements of states securities or blue sky laws, the
Securities Act and the Exchange Act and the rules and regulations of the
American Stock Exchange (the AMEX), (iii) the filing of the Articles of
Merger with the Secretary of State of the State of Texas and appropriate
documents with the relevant authorities of the other jurisdictions in which
SurgiCare is qualified to do business (the foregoing clauses (b)(i) through
(iii) being referred to collectively as the Required Consents), and (iv) such
other items that would not have a SurgiCare Material Adverse Effect. SECTION 3.06 Permits; Accreditation.  (a) Except as set forth in Section 3.06(a) of the SurgiCare Disclosure
Schedule, SurgiCare has all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals
and orders of any federal, national, state, -17-




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provincial, municipal or local government, any instrumentality,
subdivision, court, administrative agency or commission or other authority
thereof, or any quasi-governmental or private body exercising any regulatory,
taxing, importing or any other governmental or quasi-governmental authority,
whether of the U.S., or another jurisdiction (a Governmental Entity),
necessary or advisable for SurgiCare or any SurgiCare Subsidiary to own, lease
and operate its properties or to carry on its business as it is now being
conducted, including without limitation all licenses and permits required to
operate a health care facility under applicable legal requirements of each
jurisdiction, all licenses required for the practice of medicine and the
provision of medical or technical services in connection with the business of
SurgiCare and each SurgiCare Subsidiary, certificates of need, provider and
supplier numbers, and reassignments of supplier and provider billing rights as
applicable to each health care facility or operation of SurgiCare and each
SurgiCare Subsidiary (the SurgiCare Permits), other than such SurgiCare
Permits as, individually and in the aggregate, are not material to the business
of either SurgiCare or any SurgiCare Subsidiary and the lack of which would not
result in a SurgiCare Material Adverse Effect. Except as disclosed in Section
3.06(a) of the SurgiCare Disclosure Schedule, each of SurgiCare and the
SurgiCare Subsidiaries is in possession of all SurgiCare Permits in good
standing, neither SurgiCare nor any SurgiCare Subsidiary is in breach of, or in
default or violation under any of the SurgiCare Permits, and no suspension,
violation, revocation, limitation or cancellation of or default under any of
the SurgiCare Permits is pending or, to the knowledge of SurgiCare, threatened,
except as would not have a SurgiCare Material Adverse Effect. Neither
SurgiCare nor any SurgiCare Subsidiary has received any written notices of
violation, default or deficiency with respect to any SurgiCare Permit that
remains uncured. No SurgiCare Permit will be materially affected by, or
terminate or lapse by reason of, the Transactions. (b) Except as disclosed in Section 3.06(b) of the SurgiCare Disclosure
Schedule, each employee and agent of SurgiCare and each SurgiCare Subsidiary,
including without limitation each physician and other health care professional
employed by or performing services on behalf of SurgiCare or any SurgiCare
Subsidiary, has all licenses, permits and approvals required for the
performance of his or her duties for SurgiCare or SurgiCare Subsidiary, except
where the failure to have such approvals would not have a SurgiCare Material
Adverse Effect; and no such employee or agent of SurgiCare or any SurgiCare
Subsidiary is in violation of any such license, permit, or approval or any term
or condition thereof, except for such violations as would not have a SurgiCare
Material Adverse Effect. (c) Section 3.06(c) of the SurgiCare Disclosure Schedule sets forth a list
of all health care facility accreditations held by or awarded to SurgiCare and
each SurgiCare Subsidiary and to each health care facility owned or operated by
SurgiCare or a SurgiCare Subsidiary (the SurgiCare Accreditations). Except
as disclosed in Section 3.06(c) of the SurgiCare Disclosure Schedule, each of
the SurgiCare Accreditations is in good standing, and no suspension,
revocation, limitation, or cancellation of any of the SurgiCare Accreditations
is pending or, to the knowledge of SurgiCare, threatened. Neither SurgiCare
nor any SurgiCare Subsidiary has received any written notices of violation,
default, or deficiency with respect to any SurgiCare Accreditation that remains
uncured. No SurgiCare Accreditation will be materially affected by, or
terminate or lapse by reason of, the Transactions. SECTION 3.07 Compliance with Laws. -18-




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(a) Except as disclosed in the Filed SurgiCare SEC Documents or in Section
3.07(a) of the SurgiCare Disclosure Schedule, SurgiCare and the SurgiCare
Subsidiaries are, and have been, in compliance with each Law applicable to
SurgiCare or any SurgiCare Subsidiary or by which any property or asset of
SurgiCare or any SurgiCare Subsidiary is bound or affected, except where
failure to be in such compliance would not have a SurgiCare Material Adverse
Effect. Except as set forth in the Filed SurgiCare SEC Documents or in Section
3.07(a) of the SurgiCare Disclosure Schedule, neither SurgiCare nor any
SurgiCare Subsidiary has received any communication from a Governmental Entity
that alleges that SurgiCare or a SurgiCare Subsidiary is not or was not in
compliance with any applicable Law. (b) Without limiting the generality of the foregoing, except as set forth
in Section 3.07(b) of the SurgiCare Disclosure Schedule, neither SurgiCare nor
any SurgiCare Subsidiary, nor, to the knowledge of SurgiCare, any of the
officers, directors, employees, and agents of SurgiCare or any SurgiCare
Subsidiary, has engaged in any activity that (i) would constitute a violation
of, or that would serve as cause for criminal or civil penalties under, the
statutes pertaining to the federal Medicare and Medicaid programs (as defined
below), or the federal statutes applicable to health care fraud and abuse,
kickbacks and self-referrals, including without limitation 42 U.S.C. §
1320a-7a, 42 U.S.C. § 1320a-7b, 42 U.S.C. § 1395nn and the federal Civil False
Claims Act, 31 U.S.C. § 3729 et seq., related or similar statutes pertaining to
the Federal Employee Health Benefit Program (5 U.S.C. § 8901 et seq.) (the
Federal Employee Health Benefit Program), the TRICARE program (10 U.S.C. §
1071 et seq.) (TRICARE) or any other federal health care program, or the
regulations promulgated pursuant to any of such federal statutes, or any
analogous or similar state statutes pertaining to Medicaid or any state
statutes or regulations pertaining to commercial health care or health
insurance programs or the regulations promulgated pursuant to such statutes or
regulations, (ii) would serve as cause for mandatory or permissive exclusion
from Medicare (Soc. Sec. Act of 1965, Title VIII, P.L. 89-97, as amended, 42
U.S.C. 1395 et seq.) (Medicare), Medicaid (Soc. Sec. Act of 1965, Title XIX,
P.L. 89-97, as amended, 42 U.S.C. 1396 et seq.) (Medicaid), the Federal
Employee Health Benefit Program, TRICARE, or any other federal or state health
care program or any other governmental or commercial third party payor program,
or (iii) would prohibit billing under Medicare or Medicaid, the Federal
Employee Health Benefit Program, TRICARE, or any state-funded health care or
private health insurance program. (c) Except as set forth in Section 3.07(c) of the SurgiCare Disclosure
Schedule, neither SurgiCare, nor any of the SurgiCare Subsidiaries, nor any of
their respective officers, directors, or managing employees, nor, to the
knowledge of SurgiCare, any Person with a direct or indirect ownership,
partnership, or equity interest in SurgiCare or a SurgiCare Subsidiary has (i)
received notice of any action pending, nor been party to any action, to
terminate the participation of such entity, or to exclude such entity from
participation, in Medicare, Medicaid, TRICARE, the Federal Employee Health
Benefits Program, or any other federal health care program, or any state or
private third party health plan, insurance program, or managed care plan; (ii)
received notice of any action pending or investigation initiated, or been
subject to a civil monetary penalty assessed against it, under Section 1128A of
the Social Security Act, (iii) been excluded from participation under Medicare,
Medicaid or any other federal health care program, (iv) been convicted (as that
term is defined in 42 C.F.R. § 1001.2) of any offenses described in Sections
1128(a) and 1128(b)(1), (2), (3) of the Social Security Act, or (v) received
notice of any action pending or investigation initiated, or been subject to
fines,  -19-




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under any applicable state fraud and abuse statutes or regulations or any
federal health care fraud and abuse, kickbacks and self-referrals statutes or
regulations, including without limitation 42 U.S.C. § 1320a-7a, 42 U.S.C. §
1320a-7b, 42 U.S.C. § 1395nn or the federal Civil False Claims Act, 31 U.S.C. §
3729 et seq. (d) SurgiCare and each SurgiCare Subsidiary operates in compliance with
all federal and state Laws relating to the privacy, security and electronic
interchange of individually identifiable health information, including without
limitation the Administrative Simplification provisions of the Health Insurance
Portability and Accountability Act of 1996, Title II, Subtitle F and the final
regulations promulgated thereunder (collectively, HIPAA). SurgiCare and each
SurgiCare Subsidiary comply with all regulations promulgated under HIPAA with
respect to electronic data interchange and standard transactions and code sets. (e) SurgiCare, on behalf of itself and each SurgiCare Subsidiary, has
implemented and maintains a corporate compliance program that incorporates each
element set forth in the U.S. Sentencing Commission Guidelines Manual and is
consistent with applicable guidance set forth by the Office of Inspector
General of the Department of Health and Human Services; and the business of
SurgiCare and its Subsidiaries has been conducted in all material respects in
accordance with the terms of such corporate compliance program. (f) SurgiCare, on behalf of itself and each SurgiCare Subsidiary, has
implemented and maintains credentialing policies and procedures applicable to
each physician and other health care provider who provides professional or
health care services in a health care facility or site owned or operated by
SurgiCare or a SurgiCare Subsidiary, which policies and procedures represent
commercially reasonable efforts to assure legal compliance by such physicians
and other health care professionals. SECTION 3.08 SEC Filings; Financial Statements. (a) Except as disclosed in Section 3.08(a) of the SurgiCare Disclosure
Schedule, SurgiCare has timely filed all forms, reports and documents required
to be filed by it with the SEC since August 20, 1999, including (i) all Annual
Reports on Form 10-K, (ii) all Quarterly Reports on Form 10-Q, (iii) all proxy
statements relating to meetings of stockholders (whether annual or special),
(iv) all Reports on Form 8-K, (v) all other reports or registration statements,
and (vi) all amendments, exhibits and supplements to all such reports and
registration statements (collectively, the SurgiCare SEC Reports). The
SurgiCare SEC Reports, including all forms, reports and documents to be filed
by SurgiCare with the SEC after the date hereof and prior to the Closing, (i)
were and, in the case of SurgiCare SEC Reports filed after the date hereof,
will be prepared in all material respects in accordance with the applicable
requirements of the Securities Act of 1933, as amended (the Securities Act),
the Securities Exchange Act of 1934, as amended (the Exchange Act), and the
published rules and regulations of the SEC thereunder, and (ii) did not as of
the time they were filed, and in the case of such forms, reports and documents
filed by SurgiCare with the SEC after the date of this Agreement, will not as
of the time they are filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were and will be made, not misleading. No SurgiCare Subsidiary is
subject to the periodic reporting requirements of the Exchange Act. There is no  -20-




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unresolved violation of the Exchange Act or the published rules and
regulations of the SEC asserted by the SEC or any other Governmental Entity
with respect to the SurgiCare SEC Reports. (b) Each of the consolidated financial statements (including any notes
thereto) contained in the SurgiCare SEC Reports was prepared in accordance with
the rules and regulations of the SEC and United States generally accepted
accounting principles (U.S. GAAP) applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes thereto or, in
the case of unaudited statements, as permitted by Form 10-Q under the Exchange
Act) and each presented fairly or, in the case of SurgiCare SEC Reports filed
after the date hereof, will present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of
SurgiCare and the consolidated SurgiCare Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which have not been and are not
expected to be material, individually or in the aggregate). The balance sheet
of SurgiCare contained in the SurgiCare SEC Reports as of December 31, 2002 is
hereinafter referred to as the SurgiCare Balance Sheet. (c) The Chief Executive Officer and Chief Financial Officer of SurgiCare
have each executed, delivered and filed with applicable SurgiCare SEC Reports
the certificates required under Section 302 and 906 of the Sarbanes-Oxley Act
of 2002. SECTION 3.09 Undisclosed Liabilities. Except for those Liabilities that
are fully reflected or reserved against on the SurgiCare Balance Sheet (or in
the notes thereto) or as set forth in Section 3.09 of the SurgiCare Disclosure
Schedule, neither SurgiCare nor any SurgiCare Subsidiary has outstanding any
Liability (including without limitation any Liability under any federal, state,
or private health care, health benefit, or managed care plan or program for any
refund, overpayment, discount and adjustment required by U.S. GAAP to be set
forth on a consolidated balance sheet of SurgiCare and the SurgiCare
Subsidiaries or in the notes thereto), except for Liabilities which have been
incurred since the date of the SurgiCare Balance Sheet in the ordinary course
of business, consistent with past practice, and which would not have a
SurgiCare Material Adverse Effect. SECTION 3.10 Absence of Certain Changes or Events. Except as disclosed in
the SurgiCare SEC Reports filed and publicly available on the SECs EDGAR
database prior to the date of this Agreement (the Filed SurgiCare SEC
Documents) or in Section 3.10 of the SurgiCare Disclosure Schedule, from the
date of the SurgiCare Balance Sheet, SurgiCare and each SurgiCare Subsidiary
has conducted its business only in the ordinary course consistent with past
practice, and during such period there has not been: (a) any event, damage, change, effect, destruction, loss or development
that would have a SurgiCare Material Adverse Effect; (b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any SurgiCare
Capital Stock or any repurchase or redemption for value by SurgiCare of any
SurgiCare Capital Stock;  -21-




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(c) any split, combination or reclassification of any SurgiCare Capital
Stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of SurgiCare
Capital Stock, other than pursuant to the Recapitalization; (d) any issuance by SurgiCare or any SurgiCare Subsidiary of any capital
stock or other equity securities or any securities convertible, exchangeable or
exercisable into any capital stock or other equity securities, except for the
issuance of any shares of SurgiCare Old Common Stock pursuant to the exercise
of any stock options outstanding on the date hereof pursuant to the SurgiCare
Option Plans or any warrants outstanding on the date hereof or the issuance of
shares of SurgiCare Class A Common Stock pursuant to the Recapitalization; (e) any incurrence, assumption or guaranty by SurgiCare or any SurgiCare
Subsidiary of any indebtedness for borrowed money or issuance by SurgiCare or
any SurgiCare Subsidiary of any debt securities or assumption, guarantee or
endorsement of the obligations of any Person by SurgiCare or any SurgiCare
Subsidiary, or any making of loans or advances by SurgiCare or any SurgiCare
Subsidiary, or any creation or other incurrence by SurgiCare or any SurgiCare
Subsidiary of any Lien; (f) (i) any grant by SurgiCare or any SurgiCare Subsidiary to any current
or former director, officer or employee of SurgiCare or any SurgiCare
Subsidiary of any increase in their compensation, except to the extent required
under employment agreements in effect as of the date of the SurgiCare Balance
Sheet, or with respect to employees (other than directors, officers or key
employees) in the ordinary course of business consistent with past practice and
except for SurgiCare Stock Options that are reflected as outstanding in clause
(v) of Section 3.03(a), (ii) any grant by SurgiCare or any SurgiCare Subsidiary
to any current or former director, officer or employee of any increase in
severance or termination pay, except as was required under any employment,
severance or termination policy, practice or agreements in effect as of the
date of the SurgiCare Balance Sheet or (iii) any entry by SurgiCare or any
SurgiCare Subsidiary into, or any amendment of, any employment, severance or
termination agreement with any such director, officer or employee, except for
such agreements or amendments with employees (other than directors, officers or
key employees) that were entered into in the ordinary course of business
consistent with past practice; (g) any termination of employment or departure of any officer or other key
employee of SurgiCare or any SurgiCare Subsidiary; (h) any entry by SurgiCare or any SurgiCare Subsidiary into any commitment
or transaction, or any contract or agreement entered into by SurgiCare or any
SurgiCare Subsidiary, relating to SurgiCares or any SurgiCare Subsidiarys
assets or business, or any relinquishment by SurgiCare or any SurgiCare
Subsidiary of any contract or other right, material to SurgiCare and the
SurgiCare Subsidiaries taken as a whole; (i) any material revaluation by SurgiCare of any material asset (including
any writing off of notes or accounts receivable);  -22-




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(j) any change in accounting methods, principles or practices by SurgiCare
or any SurgiCare Subsidiary materially affecting the consolidated assets,
liabilities or results of operations of SurgiCare, except insofar as may have
been required by a change in U.S. GAAP; (k) any elections with respect to Taxes by SurgiCare or any SurgiCare
Subsidiary or settlement or compromise by SurgiCare or any SurgiCare Subsidiary
of any material Tax Liability or refund; or (l) any agreement by SurgiCare or any SurgiCare Subsidiary to take any
action described in this Section 3.10 except as expressly contemplated by this
Agreement. SECTION 3.11 Absence of Litigation. Except as specifically disclosed in
the Filed SurgiCare SEC Documents or in Section 3.11 of the SurgiCare
Disclosure Schedule, (i) there is no litigation, arbitration, suit, claim,
action, adjudication, appeal, proceeding or investigation (an Action) pending
or, to the knowledge of SurgiCare, threatened against SurgiCare or any
SurgiCare Subsidiary, or any property or asset of SurgiCare or any SurgiCare
Subsidiary, before any court, arbitrator or Governmental Entity, domestic or
foreign, or in connection with any appeal or dispute resolution process with a
third party payor for health care services, that would have a SurgiCare
Material Adverse Effect and (ii) there is no Judgment, consent decree or other
Order outstanding against SurgiCare or any SurgiCare Subsidiary. SECTION 3.12 Employee Benefit Matters. (a) Section 3.12(a) of the SurgiCare Disclosure Schedule lists each
SurgiCare Employee Benefit Plan, other than those set forth in Section
3.13(a)(ii) of the SurgiCare Disclosure Schedule. SurgiCare has delivered to
each of DCPS and MBS correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination letter received from
the Internal Revenue Service for each Employee Pension Benefit Plan or Employee
Welfare Benefit Plan trust, the Form 5500 Annual Reports and Form 990 Annual
Reports that were filed for the last three years, all related trust agreements,
insurance contracts (including stop loss policies and fiduciary policies), and
other funding agreements which implement each such SurgiCare Employee Benefit
Plan, and all other forms and information relating to the administration of the
SurgiCare Employee Benefits Plans and no promise or commitment to amend or
improve any SurgiCare Employee Benefit Plan for the benefit of any current or
former director, officer, or employee of SurgiCare or any SurgiCare Subsidiary
which is not reflected in the documentation provided to DCPS and MBS has been
made. (i) Each SurgiCare Employee Benefit Plan (and each related trust,
insurance contract, or fund) (A) complies in form and in operation with
the applicable requirements of the Employee Retirement Income Security
Act of 1974, as amended (ERISA)), the Code, and other applicable Laws,
and (B) has been operated in accordance with its terms, except in either
case where failure to do so would not have a SurgiCare Material Adverse
Effect. (ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-ls, and Summary Plan
Descriptions) have been timely and appropriately filed or distributed
with respect to each SurgiCare  -23-




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Employee Benefit Plan, except where the failure to do so would not
have a SurgiCare Material Adverse Effect. (iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid by
the due date thereof (taking into account any extensions) to each such
SurgiCare Employee Benefit Plan which is an Employee Pension Benefit Plan
and all contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice
of SurgiCare and disclosed on SurgiCares consolidated financial
statements contained in the SurgiCare SEC Reports. All premiums or other
payments for all periods ending on or before the Closing Date have been
paid with respect to each such SurgiCare Employee Benefit Plan which is
an Employee Welfare Benefit Plan. (iv) Each SurgiCare Employee Benefit Plan which is an Employee
Pension Benefit Plan intended to be qualified under Code Section 401(a)
is so qualified. (v) All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each SurgiCare
Employee Benefit Plan which is an Employee Welfare Benefit Plan. Each
trust holding assets used to fund an Employee Welfare Benefit Plan that
is intended to be qualified under Code Section 501(c)(9) is so qualified.
The requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
Section 4980B have been met with respect to each such SurgiCare Employee
Benefit Plan which is an Employee Welfare Benefit Plan subject to such
Part. (b) No SurgiCare Employee Benefit Plan which is an Employee Pension
Benefit Plan is or ever has been subject to Title IV of ERISA and none of
SurgiCare or any SurgiCare Subsidiary has incurred or has any reason to expect
that any of SurgiCare or the SurgiCare Subsidiaries will incur, any Liability
to the PBGC (other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal Liability) or under the Code with respect to
any such SurgiCare Employee Benefit Plan which is an Employee Pension Benefit
Plan. (c) There have been no Prohibited Transactions with respect to any
SurgiCare Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such SurgiCare Employee
Benefit Plan. No action, suit, proceeding, hearing, examination, or
investigation with respect to the administration or the investment of the
assets of any such SurgiCare Employee Benefit Plan (other than routine claims
for benefits) is pending or, to the knowledge of SurgiCare, threatened. No
SurgiCare Employee Benefit Plan is, or in the last three years has been, the
subject of a government sponsored voluntary correction, amnesty, or similar
program. (d) None of SurgiCare or any SurgiCare Subsidiary contributes to, has ever
contributed to, or has ever been required to contribute to any Multiemployer
Plan or has any Liability (including withdrawal Liability) under any
Multiemployer Plan.  -24-




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(e) None of SurgiCare or any SurgiCare Subsidiary maintains or ever has
maintained or contributes, or ever has contributed or has been required to
contribute to, any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B). (f) The Transactions will not result in any payment or acceleration of, or
vesting or increase in benefits under, any SurgiCare Employee Benefit Plan. SECTION 3.13 Material Contracts. (a) Section 3.13(a) of the SurgiCare Disclosure Schedule contains a list
(organized by subsections corresponding to the subsections identified below) of
the following contracts, agreements and arrangements (including all amendments
thereto) to which SurgiCare or a SurgiCare Subsidiary is currently a party,
other than those contracts, agreements and arrangements listed as exhibits in
SurgiCares Form 10-K for the year ended December 31, 2002 (such contracts,
agreements and arrangements required to be set forth in Section 3.13(a) of the
SurgiCare Disclosure Schedule or listed as exhibits in SurgiCares Form 10-K
for the year ended December 31, 2002, the SurgiCare Material Contracts),
except for this Agreement and the other agreements referenced hereby related to
the Transactions: (i) each contract and agreement or group of related agreements which
(A) is likely to involve consideration of more than $100,000 in the
aggregate, during the years ending December 31, 2003 or December 31,
2004, (B) is likely to involve consideration of more than $250,000 in the
aggregate over the remaining term of such contract, or (C) cannot be
canceled by SurgiCare or any SurgiCare Subsidiary without penalty or
further payment and on less than 60 days notice; (ii) all employment, consulting, severance, termination or
indemnification agreements between SurgiCare or any SurgiCare Subsidiary
and any director, officer or employee of SurgiCare or any SurgiCare
Subsidiary; (iii) all (A) management contracts (excluding contracts for
employment) and (B) contracts with consultants which involve
consideration of more than $25,000 or which involve the services of
physicians; (iv) all provider participation agreements, reimbursement
agreements, and third party payor agreements, whether with a governmental
or private health care program, health insurer, managed care
organization, self-funded group health plan, or other payor for health
care services; (v) all contracts, credit agreements, indentures and other
agreements evidencing indebtedness for borrowed money (including
capitalized leases); (vi) all agreements under which SurgiCare or any SurgiCare
Subsidiary has advanced or loaned, or may be required to advance or loan,
any funds; (vii) all guarantees of any obligations in excess of $50,000;  -25-




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(viii) all joint venture or other similar agreements; (ix) all lease agreements with annual lease payments in excess of
$50,000; (x) agreements under which SurgiCare has granted any Person
registration rights (including demand and piggy-back registration rights)
or any other agreements with respect to the capital stock of SurgiCare or
any SurgiCare Subsidiary; (xi) all contracts and agreements that limit the ability of
SurgiCare or any SurgiCare Subsidiary to compete in any line of business
or with any Person or entity or in any geographic area or during any
period of time with respect to any business currently conducted by
SurgiCare or any SurgiCare Subsidiary; (xii) all contracts and agreements pursuant to which SurgiCare or
any SurgiCare Subsidiary may be required to repurchase or redeem any
capital stock or other equity interests; (xiii) all contracts and agreements relating to the management or
development of ambulatory surgery centers by SurgiCare or any SurgiCare
Subsidiary; (xiv) all affiliation agreements with hospitals or other health care
providers; (xv) all litigation settlement agreements, consent decrees,
corporate integrity agreements, and settlements with governmental
entities; (xvi) all contracts and other agreements with Affiliates; and (xvii) any other contracts or agreements that are material to the
business, assets, condition (financial or otherwise) or results of
operations of SurgiCare and the SurgiCare Subsidiaries taken as a whole. (b) To the knowledge of SurgiCare, each SurgiCare Material Contract is a
legal, valid and binding agreement in full force and effect in accordance with
its terms (except that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to the enforcement of creditors rights and remedies generally, and
(ii) is subject to general principals of equity (regardless of whether
considered in a proceeding in equity or at law)). Neither SurgiCare nor any
SurgiCare Subsidiary is in material violation or default, or has received
notice that it is in violation or default, under any SurgiCare Material
Contract and, to SurgiCares knowledge, no other party is in material default
under any SurgiCare Material Contract. SurgiCare has provided each of DCPS and
MBS with copies of all SurgiCare Material Contracts. SECTION 3.14 Environmental Matters. Except as described in Section 3.14
of the SurgiCare Disclosure Schedule or as would not have a SurgiCare Material
Adverse Effect: (a) SurgiCare and the SurgiCare Subsidiaries have not been and
are not in violation of any Environmental Law applicable to any of them; (b)
none of the properties currently or formerly  -26-




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owned, leased or operated by SurgiCare or the SurgiCare Subsidiaries are
contaminated with any Hazardous Substance; (c) neither SurgiCare nor any of the
SurgiCare Subsidiaries are liable for any off-site contamination by Hazardous
Substances; (d) SurgiCare and the SurgiCare Subsidiaries have all permits,
licenses and other authorizations required under any Environmental Law
(Environmental Permits); (e) SurgiCare and the SurgiCare Subsidiaries are in
compliance in all material respects with their Environmental Permits; and (f)
neither the execution of this Agreement nor the consummation of the
Transactions will require any investigation, remediation or other action with
respect to Hazardous Substances, or any notice to or consent of Governmental
Entities or third parties, pursuant to any applicable Environmental Law or
Environmental Permit. Except as described in Section 3.14 of the SurgiCare
Disclosure Schedule, none of SurgiCare or the SurgiCare Subsidiaries has
received notice of a violation of, or any Liability under, any Environmental
Law (whether with respect to properties presently or previously owned or used).
SurgiCare and the SurgiCare Subsidiaries have made available to each of DCPS
and MBS all environmental audits, reports and other material environmental
documents relating to their properties, facilities or operations which are in
their possession or control. Neither SurgiCare nor any SurgiCare Subsidiary
has arranged for the disposal or treatment of any substance at any off-site
location that has been included in any published U.S. federal, state or local
superfund site list or any similar list of hazardous or toxic waste sites
published by any Governmental Entity. SECTION 3.15 Title to Properties; Absence of Liens and Encumbrances. (a) Except as described in Section 3.15(a) of the SurgiCare Disclosure
Schedule, each of SurgiCare and the SurgiCare Subsidiaries has good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of its tangible personal properties and assets owned, used or
held for use in its business, free and clear of any Liens except (i) for Liens
imposed by Law for Taxes not yet due and payable or which otherwise are owed to
materialmen, workmen, carriers, warehousepersons or laborers not in excess of
$25,000 in the aggregate, and (ii) as reflected in the financial statements
contained in the Filed SurgiCare SEC Documents. (b) Section 3.15(b) of the SurgiCare Disclosure Schedule sets forth a
true, correct and complete list of all real property and improvements
(collectively, the SurgiCare Real Property) owned by SurgiCare or any
SurgiCare Subsidiary. There are no leases, subleases or other occupancy
agreements, either written or oral, granting any Person the right of use or
occupancy of any SurgiCare Real Property (or portion thereof). Except as
described in Section 3.15(b) of the SurgiCare Disclosure Schedule, SurgiCare
(or such SurgiCare Subsidiary as the case may be) has good, clear and
marketable title to the SurgiCare Real Property and has furnished to each of
DCPS and MBS true and complete copies of title insurance reports and title
insurance policies with respect to the SurgiCare Real Property. No SurgiCare
Real Property is subject to any Lien except (i) for Liens imposed by Law for
Taxes not yet due and payable or that otherwise are owed to materialmen,
workmen, carriers, warehousepersons or laborers not in excess of $25,000 in the
aggregate, (ii) as reflected in the financial statements contained in the Filed
SurgiCare SEC Documents, or (iii) as set forth in Section 3.15(b) of the
SurgiCare Disclosure Schedule. All title to the SurgiCare Real Property is
insurable by a nationally recognized title insurance company, on a standard
American Land Title Association (ALTA) title insurance policy with all
standard exceptions deleted and otherwise free of all exceptions  -27-




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except for the Liens set forth in Section 3.15(b) of the SurgiCare
Disclosure Schedule. Except as set forth on Section 3.15(b) of the SurgiCare
Disclosure Schedule, neither SurgiCare nor any SurgiCare Subsidiary leases (as
tenant or subtenant) any real property. The real property listed in Section
3.15(b) of the SurgiCare Disclosure Schedule constitutes all of the real
property used, leased or occupied by SurgiCare or any SurgiCare Subsidiary as
of the date hereof. (c) The SurgiCare Real Property and all present uses and operations of the
SurgiCare Real Property comply with all Laws, covenants, conditions,
restrictions, easements, disposition agreements and similar matters affecting
the SurgiCare Real Property, except for such failures to comply as would not
have a SurgiCare Material Adverse Effect. SurgiCare and the SurgiCare
Subsidiaries have obtained all approvals of Governmental Entities (including
certificates of use and occupancy, licenses and permits) required in connection
with the construction, ownership, use, occupation and operation of the
SurgiCare Real Property, except for such approvals the absence of which would
not have a SurgiCare Material Adverse Effect. Neither SurgiCare nor any
SurgiCare Subsidiary has received any notice of, nor does SurgiCare or any
SurgiCare Subsidiary have any knowledge of, any pending or proposed
condemnation proceeding, taking, lawsuit or administrative matter with respect
to any of the SurgiCare Real Property. (d) All structures, facilities and improvements owned by SurgiCare or any
SurgiCare Subsidiary and all structural, mechanical and other physical systems
that constitute a part thereof are free of material defects and are in good
operating condition and repair, except as would not have a SurgiCare Material
Adverse Effect. No maintenance or repair to the SurgiCare Real Property or
such structures, facilities and improvements (including any structural,
mechanical or other physical system thereof) has been unreasonably deferred. SECTION 3.16 Intellectual Property. (a) Except with respect to the items set forth in Section 3.16(a) of the
SurgiCare Disclosure Schedule, SurgiCare and the SurgiCare Subsidiaries own or
possess adequate licenses or other valid enforceable rights to use all
Intellectual Property used in the conduct of the business of SurgiCare and the
SurgiCare Subsidiaries (as currently conducted and contemplated to be
conducted), and the consummation of the Transactions will not conflict with,
alter or impair SurgiCare or any SurgiCare Subsidiarys rights to any such
Intellectual Property. (b) Section 3.16(b) of the SurgiCare Disclosure Schedule sets forth all of
the following Intellectual Property owned or licensed by SurgiCare or any
SurgiCare Subsidiary: patents and patent applications, inventions that have
been identified as active patent matters but for which applications have not
yet been filed, Trademark registrations and applications for Trademark
registrations, trade names, registered copyrights and all material license
agreements relating to the operations of SurgiCare and the SurgiCare
Subsidiaries. All patents, Trademarks, registrations, copyright registrations
and license agreements set forth in Section 3.16(b) of the SurgiCare Disclosure
Schedule are valid and in full force and effect. To the knowledge of
SurgiCare, neither SurgiCare nor any SurgiCare Subsidiary has interfered with
or infringed upon any Intellectual Property rights of third parties in
connection with the business of SurgiCare or any SurgiCare Subsidiary. Except
as set forth in Section 3.16(b) of the SurgiCare Disclosure Schedule, neither
SurgiCare nor any SurgiCare Subsidiary has received any charge, complaint,  -28-




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claim, demand, office action or notice (i) alleging any such interference
or infringement, or (ii) challenging the legality, validity, enforceability,
use or ownership of any Intellectual Property owned or licensed by SurgiCare or
any SurgiCare Subsidiary (SurgiCare Intellectual Property). To the knowledge
of SurgiCare, except as set forth in Section 3.16(b) of the SurgiCare
Disclosure Schedule, no Person is infringing or otherwise violating the rights
of SurgiCare or any of the SurgiCare Subsidiaries with respect to any SurgiCare
Intellectual Property. (c) Except as set forth in Section 3.16(c) of the SurgiCare Disclosure
Schedule, SurgiCare has timely paid, or caused to be timely paid, all required
maintenance, renewal and other similar fees, and has timely met any applicable
legal requirements, with respect to all Intellectual Property that is listed in
Section 3.16(b) of the SurgiCare Disclosure Schedule as owned by SurgiCare or
any SurgiCare Subsidiary. With respect to Intellectual Property licensed by
SurgiCare or any SurgiCare Subsidiary that is listed in Section 3.16(b) of the
SurgiCare Disclosure Schedule or is material to SurgiCare or any SurgiCare
Subsidiary, SurgiCare and each applicable SurgiCare Subsidiary is in compliance
with any applicable license or similar agreement and each such license or
agreement is legal, valid, binding and in full force and effect in accordance
with its terms, except as would not have a SurgiCare Material Adverse Effect. (d) Neither SurgiCare nor any SurgiCare Subsidiary has agreed to indemnify
any Person for or against any interference, infringement, misappropriation, or
any other conflict with respect to the Intellectual Property, except in the
ordinary course of business. (e) All of SurgiCares information technology systems are in good working
order in all material respects and are adequate for the conduct of SurgiCares
and the SurgiCare Subsidiaries business as presently conducted. To the
knowledge of SurgiCare, SurgiCare owns or possesses adequate licenses for all
material computer software used in the conduct of SurgiCares and the SurgiCare
Subsidiaries business as presently conducted. SECTION 3.17 Taxes. (a) Each of SurgiCare and the SurgiCare Subsidiaries has duly filed or
caused to be filed on a timely basis all Tax Returns required to be filed by it
with the applicable Governmental Entity. All such Tax Returns were correct and
complete in all material respects. All material Taxes owed by SurgiCare or any
SurgiCare Subsidiary (whether or not shown on any Tax Return) have been timely
paid in full, including pursuant to any extensions that were timely received.
SurgiCare and the SurgiCare Subsidiaries currently are not the beneficiary of
any extension of time within which to file any Tax Return. SurgiCare has not
received notice that any claim has been made by an authority in a jurisdiction
where any of SurgiCare and the SurgiCare Subsidiaries does not file Tax Returns
that they may be subject to taxation by that jurisdiction. (b) Each of SurgiCare and the SurgiCare Subsidiaries has complied in all
material respects with all reporting requirements and has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder, or
other third party.  -29-




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(c) There is no dispute, audit, investigation, proceeding or claim
concerning any Liability with respect to Taxes of SurgiCare or the SurgiCare
Subsidiaries either (i) claimed or raised by any authority in writing received
by SurgiCare or any SurgiCare Subsidiary, (ii) as to which SurgiCare has
knowledge based upon contact with any such authority, or (iii) as a result of
any internal investigation by any officer, outside professional or consultant
to SurgiCare or any SurgiCare Subsidiary. Except as set forth in Section 3.17
of the SurgiCare Disclosure Schedule, (i) no federal, state, local, and foreign
income Tax Returns filed with respect to SurgiCare and the SurgiCare
Subsidiaries have been audited, and (ii) none are currently open or the subject
of audit. SurgiCare delivered or made available to each of DCPS and MBS
correct and complete copies of all federal, state, local and foreign income Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by any of SurgiCare and the SurgiCare Subsidiaries for the last three
taxable years. (d) None of SurgiCare or any of the SurgiCare Subsidiaries has waived any
statue of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency. (e) None of SurgiCare or any of the SurgiCare Subsidiaries is or ever has
been a party to any Tax allocation or sharing agreement or a member of an
affiliated group within the meaning of Code Section 1504(a) or any similar
group defined under a similar provision of state, local, or foreign Law (an
Affiliated Group) filing a consolidated federal income Tax Return (other than
the Affiliated Group the common parent of which is SurgiCare). SurgiCare does
not have any Liability for the Taxes of any Person other than SurgiCare and the
SurgiCare Subsidiaries under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign Law), as a transferee or successor, by
contract, or otherwise. (f) None of SurgiCare or any of the SurgiCare Subsidiaries has filed a
consent under Code Section 341(f) concerning collapsible corporations. None of
SurgiCare and the SurgiCare Subsidiaries has made any payments, is obligated to
make any payments, or is a party to any Contract (including this Agreement)
that under certain circumstances could obligate it to make any payments that
will not be deductible under Code Sections 162, 280G or 404 or that will be
subject to an excise tax under Code Section 4999. (g) The unpaid Taxes of SurgiCare and the SurgiCare Subsidiaries (1) did
not, as of December 31, 2002, exceed the reserve for Tax Liability (excluding
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the SurgiCare Balance
Sheet (rather than in any notes thereto) and (2) will not exceed that reserve
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of SurgiCare and the SurgiCare
Subsidiaries in filing their Tax Returns. (h) Since July 1, 1993, SurgiCare has not had an ownership change within
the meaning of Section 382(g) of the Code. SECTION 3.18 Insurance.  -30-




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(a) Section 3.18 of the SurgiCare Disclosure Schedule sets forth a
complete and accurate list of all insurance policies in force naming SurgiCare,
any SurgiCare Subsidiary or directors or employees thereof as a loss payee or
for which SurgiCare or any SurgiCare Subsidiary has paid or is obligated to pay
all or part of the premiums. Neither SurgiCare nor any SurgiCare Subsidiary
has received notice of any pending or threatened cancellation or premium
increase (retroactive or otherwise) with respect thereto, and each of SurgiCare
and the SurgiCare Subsidiaries is in compliance with all material conditions
contained therein. (b) Each of SurgiCare and the SurgiCare Subsidiaries maintains and has
maintained, in full force and effect with financially sound and reputable
insurers, general and professional liability insurance coverage with respect to
their respective assets and businesses, in such amounts and against such losses
and risks as is customarily carried by Persons engaged in the same or similar
business and as is required under the terms of any SurgiCare Material
Contracts. Neither SurgiCare nor a SurgiCare Subsidiary has been refused such
insurance. (c) SurgiCare and each SurgiCare Subsidiary require physicians and other
health care providers who provide professional or health care services in a
health care facility or site owned or operated by SurgiCare or a SurgiCare
Subsidiary, or who are independent contractors of SurgiCare or a SurgiCare
Subsidiary, to maintain professional liability and comprehensive general
liability insurance from financially sound and reputable insurers in amounts
of, at a minimum, $3,000,000 per occurrence and $5,000,000 in the aggregate. SECTION 3.19 Opinion of Financial Advisor. The SurgiCare Board has
received the written opinion of G.A. Herrerra & Co., LLC dated November 17,
2003 to the effect that, as of such date, the Transactions are fair to the
SurgiCare stockholders from a financial standpoint, and a copy of the signed
opinion has been provided to each of DCPS and MBS. SECTION 3.20 Brokers. No broker, investment banker, financial advisor or
other Person, other than G.A. Herrerra & Co., LLC, Daniel Krzyzanowski and
Odyssey Capital, LLC, the fees and expenses of which will be paid by SurgiCare
and are set forth in Section 3.20 of the SurgiCare Disclosure Schedule, is
entitled to any brokers, finders, financial advisors or other similar fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of SurgiCare. SurgiCare has delivered to each of DCPS and MBS a
complete and accurate copy of all agreements pursuant to which G.A. Herrerra &
Co., LLC, Daniel Krzyzanowski or Odyssey Capital, LLC is entitled to any fees
and expenses payable directly or indirectly by SurgiCare or any SurgiCare
Subsidiary in connection with any of the Transactions. SECTION 3.21 Employees. To the knowledge of SurgiCare, except as set
forth in Section 3.21 of the SurgiCare Disclosure Schedule, no executive, key
employee, or group of employees has any plans to terminate employment with
SurgiCare or the SurgiCare Subsidiaries or any affiliates (including, but not
limited to, any physician groups). SurgiCare and the SurgiCare Subsidiaries
have not experienced any labor disputes or work stoppages due to labor
disagreements. SurgiCare and the SurgiCare Subsidiaries are in material
compliance with all applicable Laws respecting employment and employment
practices and terms and conditions of employment. SurgiCare and the SurgiCare
Subsidiaries are not, nor have any of them ever been, a party to any collective
bargaining agreements and, to the knowledge of SurgiCare, none of SurgiCare or
any of the SurgiCare Subsidiaries has been the subject of any organizational  -31-




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activity. None of SurgiCare nor any of the SurgiCare Subsidiaries engages
in the corporate practice of medicine or employs physicians in violation of the
corporate practice of medicine doctrine, as defined or applied under the Laws
of Texas or any other applicable jurisdiction. SECTION 3.22 Transactions with Affiliates. Except as set forth in the
Filed SurgiCare SEC Documents, since the date of SurgiCares last proxy
statement filed with the SEC, no event has occurred that would be required to
be reported by SurgiCare pursuant to Item 404 of Regulation S-K promulgated by
the SEC. Section 3.22 of the SurgiCare Disclosure Schedule identifies each
Person who is (or who may be deemed to be) an Affiliate of SurgiCare or any
SurgiCare Subsidiary. Without limiting the generality of the foregoing, there
are no amounts due or payable by SurgiCare or any SurgiCare Subsidiary to any
of the SurgiCare Principal Stockholders or any of their Affiliates or
associates in connection with the Transactions or otherwise. SECTION 3.23 Stockholder Rights Agreement. Neither SurgiCare nor any
SurgiCare Subsidiary has an effective stockholder rights agreement or any
similar plan or agreement which limits or impairs the ability to purchase, or
become the direct or indirect beneficial owner of, shares of SurgiCare Old
Common Stock or any other equity or debt securities of SurgiCare or any
SurgiCare Subsidiary, other than any stockholder rights plan or stockholder
rights agreement that (a) is adopted after the date of this Agreement, (b) does
not impair the ability of the parties to consummate the Acquisitions in
accordance with the terms of this Agreement, and (c) otherwise does not have an
adverse effect on any of DCPS, MBS or the Sellers or on the rights of any of
DCPS, MBS or the Sellers under this Agreement. SECTION 3.24 IPS Acquisition Agreement, Stock Subscription Agreement and
Debt Exchange Agreement. Each of the IPS Acquisition Agreement, the Stock
Subscription Agreement and the Debt Exchange Agreement has been executed by all
parties thereto and is in full force and effect as of the date hereof. SECTION 3.25 Offering Valid. Assuming the accuracy of the representations
and warranties of the Sellers contained in Section 4.24, the offer, sale and
issuance of the SurgiCare Class C Common Shares (and, if applicable, SurgiCare
Class A Common Shares) and the DCPS Notes in the Acquisitions will be exempt
from the registration requirements of the Securities Act, and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. Neither SurgiCare nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the SurgiCare Class C Common Shares, SurgiCare
Class A Common Shares or DCPS Notes to any Person or Persons so as to bring the
sale of such SurgiCare Class C Common Shares, SurgiCare Class A Common Shares
or DCPS Notes by SurgiCare within the registration provisions of the Securities
Act or any state securities laws. SurgiCare has made or will, in accordance
with all time periods under applicable laws, make all requisite filings and has
taken or will take all action necessary to be taken to comply with such state
securities or blue sky laws. All prior issuances of SurgiCares securities
have been conducted in conformity with all applicable securities laws. SECTION 3.26 Certain Payments. Neither SurgiCare nor any SurgiCare
Subsidiary, nor to SurgiCares knowledge, their respective directors, officers,
agents, affiliates or employees, nor  -32-




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any other person acting on behalf of SurgiCare or any SurgiCare
Subsidiary, has (i) given or agreed to give any gift or similar benefit having
a value of $1,000 or more to any customer, supplier or governmental employee or
official or any other person, for the purpose of directly or indirectly
furthering the business of SurgiCare or any SurgiCare Subsidiary, (ii) used any
corporate funds for contributions, payments, gifts or entertainment, or made
any expenditures, relating to political activities to government officials or
others in violation of any applicable Law or (iii) received any unlawful
contributions, payments, gifts or expenditures in connection with the business
of SurgiCare or any SurgiCare Subsidiary. ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DCPS, MBS AND THE SELLERS DCPS and the DCPS Sellers hereby jointly and severally represent and
warrant (solely with respect to DCPS and DCM) to SurgiCare and Newco, and MBS
and the MBS Sellers hereby jointly and severally represent and warrant (solely
with respect to MBS) to SurgiCare and Newco, that: SECTION 4.01 Organization and Qualification; Subsidiaries. (a) MBS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has all requisite power and
authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted,
except where the failure to do so would not have a DCPS/MBS Material Adverse
Effect. DCPS is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Texas and has all requisite power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to do so would not have a DCPS/MBS Material
Adverse Effect. Each of DCPS and MBS is duly qualified or licensed as a
foreign corporation or organization to do business, and is in good standing
(where such concept is applicable), in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except where the failure to do
so would not have a DCPS/MBS Material Adverse Effect. Section 4.01(a) of the
DCPS/MBS Disclosure Schedule lists all trade names used or used at any time
during the past five years by either of DCPS or MBS. (b) Neither MBS nor DCPS has any subsidiaries. Except for the ownership
of interests set forth in Section 4.01(b) of the DCPS/MBS Disclosure Schedule,
neither DCPS nor MBS owns, directly or indirectly, or has any outstanding
contractual obligation to acquire, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
corporation, partnership, joint venture or other business association or
entity. (c) DCM is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Texas. DCM is a holding
company that engages and has engaged only in the business of holding Units of
General Partnership Interest in DCPS. Except for the ownership of Units of
General Partnership Interest in DCPS, DCM does not own, directly or indirectly,
or have any outstanding contractual obligation to acquire, any capital stock,  -33-




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membership interest, partnership interest, joint venture interest or other
equity interest in any corporation, partnership, joint venture or other
business association or entity. SECTION 4.02 Certificate of Incorporation and By-Laws. MBS has heretofore
provided to SurgiCare a complete and correct copy of MBS certificate of
incorporation, as amended to date (the MBS Charter) and MBS by-laws, as
amended to date (the MBS By-Laws). The MBS Charter and MBS By-Laws are in
full force and effect. MBS is not in violation of any of the provisions of the
MBS Charter or the MBS By-Laws. DCPS has heretofore provided to SurgiCare a
complete and correct copy of DCPS partnership agreement, as amended to date
(the DCPS Partnership Agreement). The DCPS Partnership Agreement is in full
force and effect. DCPS is not in violation of any of the provisions of the
DCPS Partnership Agreement. SECTION 4.03 Capitalization. (a) The authorized capital stock of MBS consists of 2,000 shares of MBS
Common Stock. As of the date hereof, (i) 1,000 MBS Common Shares are issued
and outstanding and held by the MBS Sellers in the percentages set forth on
Schedule 2.01(a)(i) and (ii) no MBS Common Shares are held in MBS treasury.
Except as set forth above, as of the date hereof no shares of capital stock or
other securities of MBS are issued, reserved for issuance or outstanding. As
of the date hereof, 990 Units of Limited Partnership Interest in DCPS and 10
Units of General Partnership Interest of DCPS are issued and outstanding, all
of which are held by the DCPS Sellers. As of the date hereof, Cain is the sole
holder of membership interests in DCM. Except as set forth above, as of the
date hereof no DCPS Interests or other securities of DCPS or DCM are issued,
reserved for issuance or outstanding. (b) All outstanding MBS Common Shares are, and all such shares that may be
issued prior to the Closing will be when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in material
violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision
of the TBCA, the MBS Charter, the MBS By-Laws or any Contract to which MBS is a
party or otherwise bound. Each offer or sale by MBS of shares of its capital
stock or other securities has been in compliance with all applicable federal
and state securities laws or the applicable statute of limitations with respect
to such offers or sales has expired. All outstanding DCPS Interests are duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in material violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of Texas law, the DCPS Partnership Agreement, any agreement
governing DCM or any Contract to which DCPS or DCM is a party or otherwise
bound. Each offer or sale by DCPS or DCM of DCPS Interests or other
securities has been in compliance with all applicable federal and state
securities laws or the applicable statute of limitations with respect to such
offers or sales has expired. (c) Except as set forth in Section 4.03(c) of the DCPS/MBS Disclosure
Schedule, there are not any bonds, debentures, notes or other indebtedness of
DCPS, DCM or MBS having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which holders of
MBS Common Shares or DCPS Interests may vote (Voting DCPS/MBS Debt).  -34-




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(d) Except as set forth in Section 4.03(a) above, as of the date of this
Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, phantom stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which any of DCPS, DCM or MBS is a party or by
which any of them is bound (i) obligating DCPS, DCM or MBS to issue or sell, or
cause to be issued or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exchangeable into, or exercisable
for, any capital stock of or other equity interest in, DCPS, DCM or MBS or any
Voting DCPS/MBS Debt, (ii) obligating DCPS, DCM or MBS to issue, grant, extend
or enter into any such option, warrant, right, security, stock appreciation
right, stock-based performance unit, commitment, Contract, arrangement or
undertaking, or (iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of MBS Common Shares or DCPS Interests. (e) There are not any outstanding contractual obligations of DCPS, DCM or
MBS, contingent or otherwise, to repurchase, redeem or otherwise acquire any
shares of capital stock or other ownership interests of DCPS, DCM or MBS.
Except as set forth in Section 4.03(e) of the DCPS/MBS Disclosure Schedule,
there are no issued and outstanding MBS Common Shares or DCPS Interests that
are subject to a repurchase or redemption right in favor of MBS, DCM or DCPS. (f) Each Seller is the record and beneficial owner of, and owns good and
marketable title to, the number of MBS Common Shares or DCPS Interests set
forth on Section 4.03(f) of the DCPS/MBS Disclosure Schedule, free and clear of
all Liens, and each Seller has complete and unrestricted power to sell, assign
and deliver to SurgiCare unencumbered marketable title to the MBS Common Shares
or DCPS Interests owned by such Seller. SECTION 4.04 Authority Relative to this Agreement. (a) Each of DCPS, MBS and the Sellers has all requisite power and
authority (corporate or otherwise) to execute and deliver this Agreement and
consummate the applicable Acquisition. The execution and delivery by each of
DCPS and MBS of this Agreement and the consummation by each of DCPS and MBS of
the applicable Acquisition have been duly authorized by all necessary action
(corporate or otherwise) on the part of each of DCPS and MBS. Each of DCPS,
MBS and the Sellers has duly executed and delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of DCPS, MBS and
the Sellers, enforceable against them in accordance with its terms. (b) No fair price, moratorium, control share acquisition or other
similar anti-takeover statute or regulation is applicable to either DCPS or
MBS, by reason of DCPS or MBS being a party to the Acquisitions or this
Agreement. Neither DCPS nor MBS is a party to any stockholder rights plan or
any similar anti-takeover plan or device. SECTION 4.05 No Conflict; Required Filings and Consents. (a) Except as set forth in Section 4.05(a) of the DCPS/MBS Disclosure
Schedule, the execution and delivery by each of DCPS, MBS and the Sellers of
this Agreement  -35-




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does not, and the consummation by each of DCPS, MBS and the Sellers of the
applicable Acquisition and compliance with the terms hereof will not, result in
any material violation of or default (with or without notice or lapse of time,
or both) under, or require any offer to purchase or any prepayment of any debt,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any Person under, or result
in the creation of any Lien upon any of the properties or assets of DCPS, MBS
or any Seller under, any provision of (i) the MBS Charter, the MBS By-Laws, the
DCPS Partnership Agreement or any agreement governing DCM, (ii) any DCPS/MBS
Material Contract or DCPS/MBS Employee Benefit Plan, or (iii) subject to the
filings and other matters referred to in Section 3.05(b), any Judgment or Law
applicable to DCPS, MBS or any Seller or their respective properties or assets. (b) Except as set forth in Section 4.05(a) of the DCPS/MBS Disclosure
Schedule, no Consent of, or registration, declaration, notification or filing
with, any Governmental Entity or third party is required to be obtained or made
by or with respect to DCPS or MBS in connection with the execution, delivery
and performance of this Agreement or the consummation by either of DCPS or MBS
of the applicable Acquisition, other than (i) the Required Consents and (ii)
such other items that would not have a DCPS/MBS Material Adverse Effect. SECTION 4.06 Permits; Accreditation. (a) Except as set forth in Section 4.06(a) of the DCPS/MBS Disclosure
Schedule, DCPS and MBS have all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals
and orders of any Governmental Entity necessary or advisable for DCPS or MBS to
own, lease and operate its properties or to carry on its business as it is now
being conducted (the DCPS/MBS Permits), other than such DCPS/MBS Permits as,
individually and in the aggregate, are not material to the business of either
DCPS or MBS and the lack of which would not result in a DCPS/MBS Material
Adverse Effect. Except as disclosed in Section 4.06(a) of the DCPS/MBS
Disclosure Schedule, each of DCPS and MBS is in possession of all DCPS/MBS
Permits in good standing, neither DCPS nor MBS is in breach of, or in default
or violation under any of the DCPS/MBS Permits, and no suspension, violation,
revocation, limitation or cancellation of or default under any of the DCPS/MBS
Permits is pending or, to the knowledge of the Sellers, threatened, except as
would not have a DCPS/MBS Material Adverse Effect. Neither DCPS nor MBS has
received any written notices of violation, default or deficiency with respect
to any DCPS/MBS Permit that remains uncured. No DCPS/MBS Permit will be
materially affected by, or terminate or lapse by reason of, the Acquisitions. (b) Except as disclosed in Section 4.06(b) of the DCPS/MBS Disclosure
Schedule, each employee and agent of DCPS and MBS has all licenses, permits and
approvals required for the performance of his or her duties for DCPS or MBS,
except where the failure to have such approvals would not have a DCPS/MBS
Material Adverse Effect; and no such employee or agent of DCPS or MBS is in
violation of any such license, permit, or approval or any term or condition
thereof, except for such violations as would not have a DCPS/MBS Material
Adverse Effect.  -36-




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SECTION 4.07 Compliance with Laws. (a) Except as disclosed in Section 4.07(a) of the DCPS/MBS Disclosure
Schedule, DCPS and MBS are, and have been, in compliance with each Law
applicable to DCPS or MBS or by which any property or asset of DCPS or MBS is
bound or affected, except where such failure to comply would not have a
DCPS/MBS Material Adverse Effect. Except as set forth in Section 4.07(a) of
the DCPS/MBS Disclosure Schedule, neither DCPS nor MBS has received any
communication from a Governmental Entity that alleges that DCPS or MBS is not
or was not in compliance with any applicable Law. (b) Without limiting the generality of the foregoing, except as set forth
in Section 4.07(b) of the DCPS/MBS Disclosure Schedule, neither DCPS nor MBS,
nor, to the knowledge of the Sellers, any of the officers, directors,
employees, and agents of DCPS or MBS, has engaged in any activity that (i)
would constitute a violation of, or that would serve as cause for criminal or
civil penalties under, the statutes pertaining to the federal Medicare and
Medicaid programs (as defined below), or the federal statutes applicable to
health care fraud and abuse, kickbacks and self-referrals, including without
limitation 42 U.S.C. § 1320a-7a, 42 U.S.C. § 1320a-7b, 42 U.S.C. § 1395nn and
the federal Civil False Claims Act, 31 U.S.C. § 3729 et seq., related or
similar statutes pertaining to the Federal Employee Health Benefit Program,
TRICARE or any other federal health care program, or the regulations
promulgated pursuant to any of such federal statutes, or any analogous or
similar state statutes pertaining to Medicaid or any state statutes or
regulations pertaining to commercial health care or health insurance programs
or the regulations promulgated pursuant to such statutes or regulations, (ii)
would serve as cause for mandatory or permissive exclusion from Medicare,
Medicaid, the Federal Employee Health Benefit Program, TRICARE, or any other
federal or state health care program or any other governmental or commercial
third party payor program, or (iii) would prohibit billing under Medicare or
Medicaid, the Federal Employee Health Benefit Program, TRICARE, or any
state-funded health care or private health insurance program. (c) Except as set forth in Section 4.07(c) of the DCPS/MBS Disclosure
Schedule, neither DCPS nor MBS, nor any of their respective officers,
directors, or managing employees, nor, to the knowledge of the Sellers, any
Person with a direct or indirect ownership, partnership, or equity interest in
DCPS or MBS has (i) received notice of any action pending, nor been party to
any action, to terminate the participation of such entity, or to exclude such
entity from participation, in Medicare, Medicaid, TRICARE, the Federal Employee
Health Benefits Program, or any other federal health care program, or any state
or private third party health plan, insurance program, or managed care plan;
(ii) received notice of any action pending or investigation initiated, or been
subject to a civil monetary penalty assessed against it, under Section 1128A of
the Social Security Act, (iii) been excluded from participation under Medicare,
Medicaid or any other federal health care program, (iv) been convicted (as that
term is defined in 42 C.F.R. § 1001.2) of any offenses described in Sections
1128(a) and 1128(b)(1), (2), (3) of the Social Security Act, or (v) received
notice of any action pending or investigation initiated, or been subject to
fines, under any applicable state fraud and abuse statutes or regulations or
any federal health care fraud and abuse, kickbacks and self-referrals statutes
or regulations, including without limitation 42 U.S.C. § 1320a-7a, 42 U.S.C. §
1320a-7b, 42 U.S.C. § 1395nn or the federal Civil False Claims Act, 31 U.S.C. §
3729 et seq.  -37-




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(d) Each of DCPS and MBS operates in substantial compliance with all
federal and state Laws relating to the privacy, security and electronic
interchange of individually identifiable health information, including without
limitation HIPAA. DCPS and MBS substantially comply with all regulations
promulgated under HIPAA with respect to electronic data interchange and
standard transactions and code sets. (e) Each of DCPS and MBS has implemented and maintains a corporate
compliance program that incorporates each element set forth in the U.S.
Sentencing Commission Guidelines Manual and is consistent with applicable
guidance set forth by the Office of Inspector General of the Department of
Health and Human Services; and the businesses of DCPS and MBS have been
conducted in all material respects in accordance with the terms of such
corporate compliance program. SECTION 4.08 Financial Statements. (a) Attached as Section 4.08(a) of the DCPS/MBS Disclosure Schedule are
(i) the audited balance sheets of DCPS as of December 31, 2002 and 2001,
together with the related statements of income and cash flows for the periods
then ended, all certified by Mann Frankfort Stein & Lipp, DCPS independent
public accountants (ii) the audited balance sheets of MBS as of September 30,
2003, 2002 and 2001, together with the related statements of income and cash
flows for the periods then ended, all certified by Mann Frankfort Stein & Lipp,
MBS independent public accountants, and (iii) the unaudited balance sheets of
DCPS as of September 30, 2003 and the related statements of income for the
three and ninth month periods then ended (collectively, the financial
statements described in clauses (i), (ii) and (iii) are referred to herein as
the Financial Statements). (b) Each of the Financial Statements was prepared in accordance with U.S.
GAAP applied on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and each presents fairly in all material
respects the financial position, results of operations and cash flows of DCPS
or MBS, as applicable, as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject to the absence of complete footnotes and to normal and recurring
year-end adjustments which have not been and are not expected to be material,
individually or in the aggregate). The balance sheets of DCPS contained in the
Financial Statements as of December 31, 2002 and the balance sheets of MBS
contained in the Financial Statements as of September 30, 2003 are hereinafter
referred to as the DCPS/MBS Balance Sheets. SECTION 4.09 Undisclosed Liabilities. Except for those Liabilities that
are fully reflected or reserved against on the DCPS/MBS Balance Sheets (or in
the notes thereto) or as set forth in Section 4.09 of the DCPS/MBS Disclosure
Schedule, none of DCPS, DCM or MBS has outstanding any Liability (including
without limitation any Liability under any federal, state, or private health
care, health benefit, or managed care plan or program for any refund,
overpayment, discount and adjustment required by U.S. GAAP to be set forth on a
balance sheet of DCPS or MBS, as applicable, or in the notes thereto), except
for Liabilities which have been incurred since the date of the DCPS/MBS Balance
Sheets in the ordinary course of business, consistent with past practice, and
which would not have an DCPS/MBS Material Adverse Effect.  -38-




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SECTION 4.10 Absence of Certain Changes or Events. Except as disclosed in
Section 4.10 of the DCPS/MBS Disclosure Schedule, from the date of the DCPS/MBS
Balance Sheets, each of DCPS and MBS has conducted its business only in the
ordinary course consistent with past practice, and during such period there has
not been: (a) any event, damage, change, effect, destruction, loss or development
that would have a DCPS/MBS Material Adverse Effect; (b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any MBS
Common Shares or DCPS Interests or any repurchase or redemption for value by
MBS of any MBS Common Shares or by DCPS of any DCPS Interests; (c) any split, combination or reclassification of any MBS Common Shares
DCPS Interests or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for MBS Common
Shares or DCPS Interests; (d) any issuance by MBS, DCPS or DCM of any capital stock or other equity
securities or any securities convertible, exchangeable or exercisable into any
capital stock or other equity securities; (e) any incurrence, assumption or guaranty by DCPS or MBS of any
indebtedness for borrowed money or issuance by DCPS or MBS of any debt
securities or assumption, guarantee or endorsement of the obligations of any
Person by DCPS or MBS, or any making of loans or advances by DCPS or MBS, or
any creation or other incurrence by DCPS or MBS of any Lien; (f) (i) any grant by DCPS or MBS to any current or former director,
officer or employee of DCPS or MBS of any increase in their compensation,
except to the extent required under employment agreements in effect as of the
date of the DCPS/MBS Balance Sheets, or with respect to employees (other than
directors, officers or key employees) in the ordinary course of business
consistent with past practice, (ii) any grant by DCPS or MBS to any current or
former director, officer or employee of any increase in severance or
termination pay, except as was required under any employment, severance or
termination policy, practice or agreements in effect as of the date of the
DCPS/MBS Balance Sheets or (iii) any entry by DCPS or MBS into, or any
amendment of, any employment, severance or termination agreement with any such
director, officer or employee, except for such agreements or amendments with
employees (other than directors, officers or key employees) that were entered
into in the ordinary course of business consistent with past practice; (g) any termination of employment or departure of any officer or other key
employee of DCPS or MBS; (h) any entry by DCPS or MBS into any commitment or transaction, or any
contract or agreement entered into by DCPS or MBS relating to DCPS or MBS
assets or business, or any relinquishment by DCPS or MBS of any contract or
other right, material to DCPS and MBS taken as a whole;  -39-




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(i) any material revaluation by DCPS or MBS of any material asset
(including any writing off of notes or accounts receivable); (j) any change in accounting methods, principles or practices by DCPS or
MBS materially affecting the assets, liabilities or results of operations of
DCPS or MBS, except insofar as may have been required by a change in U.S. GAAP; (k) any elections with respect to Taxes by DCPS or MBS or settlement or
compromise by DCPS or MBS of any material Tax Liability or refund; or (l) any agreement by DCPS or MBS to take any action described in this
Section 4.10 except as expressly contemplated by this Agreement. SECTION 4.11 Absence of Litigation. Except as disclosed in Section 4.11
of the DCPS/MBS Disclosure Schedule, (i) there is no Action pending or, to the
knowledge of the Sellers, threatened against DCPS, DCM or MBS, or any property
or asset of DCPS, DCM or MBS, before any court, arbitrator or Governmental
Entity, domestic or foreign, or in connection with any appeal or dispute
resolution process with a third party payor for health care services that would
have a DCPS/MBS Material Adverse Effect, and (ii) there is no Judgment, consent
decree or other Order outstanding against DCPS, DCM or MBS that would have an
DCPS/MBS Material Adverse Effect. SECTION 4.12 Employee Benefit Matters. (a) Section 4.12(a) of the DCPS/MBS Disclosure Schedule lists each
DCPS/MBS Employee Benefit Plan, other than those set forth in Section
4.13(a)(ii) of the DCPS/MBS Disclosure Schedule. DCPS and MBS have delivered
to SurgiCare correct and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from the Internal
Revenue Service for each Employee Pension Benefit Plan or Employee Welfare
Benefit Plan trust, the Form 5500 Annual Reports and Form 990 Annual Reports
that were filed for the last three years, all related trust agreements,
insurance contracts (including stop loss policies and fiduciary policies), and
other funding agreements which implement each such DCPS/MBS Employee Benefit
Plan, and all other forms and information relating to the administration of the
DCPS/MBS Employee Benefits Plans and no promise or commitment to amend or
improve any DCPS/MBS Employee Benefit Plan for the benefit of any current or
former director, officer, or employee of DCPS or MBS which is not reflected in
the documentation provided to SurgiCare has been made. (i) Each DCPS/MBS Employee Benefit Plan (and each related trust,
insurance contract, or fund) (A) complies in form and in operation with
the applicable requirements of ERISA), the Code, and other applicable
Laws and (B) has been operated in accordance with its terms, except in
either case where failure to do so would not have a DCPS/MBS Material
Adverse Effect. (ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-ls, and Summary Plan
Descriptions) have been timely and appropriately filed or distributed
with respect to each DCPS/MBS  -40-




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Employee Benefit Plan, except where the failure to do would not have
a DCPS/MBS Material Adverse Effect. (iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid by
the due date thereof (taking into account any extensions) to each such
DCPS/MBS Employee Benefit Plan which is an Employee Pension Benefit Plan
and all contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice
of DCPS or MBS, as applicable, and disclosed on the Financial Statements.
All premiums or other payments for all periods ending on or before the
Closing Date have been paid with respect to each such DCPS/MBS Employee
Benefit Plan which is an Employee Welfare Benefit Plan. (iv) Each DCPS/MBS Employee Benefit Plan which is an Employee
Pension Benefit Plan intended to be qualified under Code Section 401(a)
is so qualified. (v) All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each DCPS/MBS
Employee Benefit Plan which is an Employee Welfare Benefit Plan. Each
trust holding assets used to fund an Employee Welfare Benefit Plan that
is intended to be qualified under Code Section 501(c)(9) is so qualified.
The requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
Section 4980B have been met with respect to each such DCPS/MBS Employee
Benefit Plan which is an Employee Welfare Benefit Plan subject to such
Part. (b) No DCPS/MBS Employee Benefit Plan which is an Employee Pension Benefit
Plan is or ever has been subject to Title IV of ERISA and neither DCPS nor MBS
has incurred or has any reason to expect that either of DCPS or MBS will incur,
any Liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or under the Code with
respect to any such DCPS/MBS Employee Benefit Plan which is an Employee Pension
Benefit Plan. (c) There have been no Prohibited Transactions with respect to any
DCPS/MBS Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such DCPS/MBS Employee
Benefit Plan. No action, suit, proceeding, hearing, examination, or
investigation with respect to the administration or the investment of the
assets of any such DCPS/MBS Employee Benefit Plan (other than routine claims
for benefits) is pending or, to the knowledge of the Sellers, threatened. No
DCPS/MBS Employee Benefit Plan is, or in the last three years has been, the
subject of a government sponsored voluntary correction, amnesty, or similar
program. (d) Neither DCPS nor MBS contributes to, has ever contributed to, or has
ever been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.  -41-




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(e) Neither DCPS nor MBS maintains or ever has maintained or contributes,
or ever has contributed or has been required to contribute to, any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Section
4980B). (f) The Acquisitions will not result in any payment or acceleration of, or
vesting or increase in benefits under, any DCPS/MBS Employee Benefit Plan. SECTION 4.13 Material Contracts. (a) Section 4.13(a) of the DCPS/MBS Disclosure Schedule contains a list
(organized by subsections corresponding to the subsections identified below) of
the following contracts, agreements and arrangements (including all amendments
thereto) to which DCPS or MBS is currently a party (such contracts, agreements
and arrangements required to be set forth in Section 4.13(a) of the DCPS/MBS
Disclosure Schedule, the DCPS/MBS Material Contracts) , except for this
Agreement and the other agreements referenced hereby related to the
Transactions: (i) each contract and agreement or group of related agreements which
(A) is likely to involve consideration of more than $50,000 in the
aggregate, during the years ending December 31, 2003 or December 31,
2004, (B) is likely to involve consideration of more than $125,000 in the
aggregate over the remaining term of such contract, or (C) cannot be
canceled by DCPS or MBS without penalty or further payment and on less
than 60 days notice; (ii) all employment, consulting, severance, termination or
indemnification agreements between DCPS or MBS and any director, officer
or employee of DCPS or MBS; (iii) all (A) management contracts (excluding contracts for
employment) and (B) contracts with consultants which involve
consideration of more than $10,000; (iv) all contracts, credit agreements, indentures and other
agreements evidencing indebtedness for borrowed money (including
capitalized leases); (v) all agreements under which DCPS or MBS has advanced or loaned,
or may be required to advance or loan, any funds; (vi) all guarantees of any obligations in excess of $25,000; (vii) all joint venture or other similar agreements; (viii) all lease agreements with annual lease payments in excess of
$25,000;  -42-




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(ix) agreements under which DCPS or MBS has granted any Person
registration rights (including demand and piggy-back registration rights)
or any other agreements with respect to the capital stock or other
ownership interests of DCPS or MBS; (x) all contracts and agreements that limit the ability of DCPS or
MBS to compete in any line of business or with any Person or entity or in
any geographic area or during any period of time with respect to any
business currently conducted by DCPS or MBS; (xi) all contracts and agreements pursuant to which DCPS or MBS may
be required to repurchase or redeem any capital stock or other equity
interests; (xii) all affiliation agreements with hospitals or other health care
providers; (xiii) all litigation settlement agreements, consent decrees,
corporate integrity agreements, and settlements with governmental
entities; (xiv) all contracts and other agreements with Affiliates; and (xv) any other contracts or agreements that are material to the
business, assets, condition (financial or otherwise) or results of
operations of DCPS and MBS taken as a whole. (b) To the knowledge of the Sellers, each DCPS/MBS Material Contract is a
legal, valid and binding agreement in full force and effect in accordance with
its terms (except that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to the enforcement of creditors rights and remedies generally, and
(ii) is subject to general principals of equity (regardless of whether
considered in a proceeding in equity or at law)). Neither DCPS nor MBS is in
material violation or default, or has received notice that it is in violation
or default, under any DCPS/MBS Material Contract and, to the knowledge of the
Sellers, no other party is in material default under any DCPS/MBS Material
Contract. DCPS and MBS have provided SurgiCare with copies of all DCPS/MBS
Material Contracts. SECTION 4.14 Environmental Matters. Except as described in Section 4.14
of the DCPS/MBS Disclosure Schedule or as would not have a DCPS/MBS Material
Adverse Effect: (a) DCPS and MBS have not been and are not in violation of any
Environmental Law applicable to any of them; (b) none of the properties
currently or formerly owned, leased or operated by DCPS or MBS are contaminated
with any Hazardous Substance; (c) neither DCPS nor MBS are liable for any
off-site contamination by Hazardous Substances; (d) DCPS and MBS have all
Environmental Permits; (e) DCPS and MBS are in compliance in all material
respects with their Environmental Permits; and (f) neither the execution of
this Agreement nor the consummation of the Acquisitions will require any
investigation, remediation or other action with respect to Hazardous
Substances, or any notice to or consent of Governmental Entities or third
parties, pursuant to any applicable Environmental Law or Environmental Permit.
Except as described in Section 4.14 of the DCPS/MBS Disclosure Schedule,
neither DCPS nor MBS has received  -43-




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notice of a violation of, or any Liability under, any Environmental Law
(whether with respect to properties presently or previously owned or used).
DCPS and MBS have made available to SurgiCare all environmental audits, reports
and other material environmental documents relating to their properties,
facilities or operations which are in their possession or control. Neither
DCPS nor MBS has arranged for the disposal or treatment of any substance at any
off-site location that has been included in any published U.S. federal, state
or local superfund site list or any similar list of hazardous or toxic waste
sites published by any Governmental Entity. SECTION 4.15 Title to Properties; Absence of Liens and Encumbrances. (a) Except as described in Section 4.15(a) of the DCPS/MBS Disclosure
Schedule, each of DCPS and MBS has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
personal properties and assets owned, used or held for use in its business,
free and clear of any Liens except (i) for Liens imposed by Law for Taxes not
yet due and payable or which otherwise are owed to materialmen, workmen,
carriers, warehousepersons or laborers not in excess of $25,000 in the
aggregate, and (ii) as reflected in the Financial Statements. (b) Neither DCPS nor MBS owns any real property. Except as set forth on
Section 4.15(b) of the DCPS/MBS Disclosure Schedule, neither DCPS nor MBS
leases (as tenant or subtenant) any real property. The real property listed in
Section 4.15(b) of the DCPS/MBS Disclosure Schedule (the DCPS/MBS Real
Property) constitutes all of the real property used, leased or occupied by
DCPS or MBS as of the date hereof. (c) The DCPS/MBS Real Property and all present uses and operations of the
DCPS/MBS Real Property comply with all Laws, covenants, conditions,
restrictions, easements, disposition agreements and similar matters affecting
the DCPS/MBS Real Property, except for such failures to comply as would not
have a DCPS/MBS Material Adverse Effect. DCPS and MBS have obtained all
approvals of Governmental Entities (including certificates of use and
occupancy, licenses and permits) required in connection with the use,
occupation and operation of the DCPS/MBS Real Property, except for such
approvals as to which the failure to obtain would not have a DCPS/MBS Material
Adverse Effect. Neither DCPS nor MBS has received any notice of, nor do the
Sellers have any knowledge of, any pending or proposed condemnation proceeding,
taking, lawsuit or administrative matter with respect to any of the DCPS/MBS
Real Property. (d) All structures, facilities and improvements used by DCPS or MBS and
all structural, mechanical and other physical systems that constitute a part
thereof are free of material defects and are in good operating condition and
repair, except as has not had and would not reasonably be expected to have a
DCPS/MBS Material Adverse Effect. No maintenance or repair to the DCPS/MBS
Real Property or such structures, facilities and improvements (including any
structural, mechanical or other physical system thereof) has been unreasonably
deferred. SECTION 4.16 Intellectual Property.  -44-




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(a) Except with respect to the items set forth in Section 4.16(a) of the
DCPS/MBS Disclosure Schedule, DCPS and MBS own or possess adequate licenses or
other valid enforceable rights to use all Intellectual Property used in the
conduct of the businesses of DCPS and MBS (as currently conducted and
contemplated to be conducted), and the consummation of the Acquisitions will
not conflict with, alter or impair DCPS or MBS rights to any such
Intellectual Property. (b) Section 4.16(b) of the DCPS/MBS Disclosure Schedule sets forth all of
the following Intellectual Property owned or licensed by DCPS or MBS: patents
and patent applications, inventions that have been identified as active patent
matters but for which applications have not yet been filed, Trademark
registrations and applications for Trademark registrations, trade names,
registered copyrights and all material license agreements relating to the
operations of DCPS and MBS. All patents, Trademarks, registrations, copyright
registrations and license agreements set forth in Section 4.16(b) of the
DCPS/MBS Disclosure Schedule are valid and in full force and effect. To the
knowledge of the Sellers, neither DCPS nor MBS has interfered with or infringed
upon any Intellectual Property rights of third parties in connection with the
business of DCPS or MBS, and, except as set forth in Section 4.16(b) of the
DCPS/MBS Disclosure Schedule, neither DCPS nor MBS has received any charge,
complaint, claim, demand, office action or notice (i) alleging any such
interference or infringement, or (ii) challenging the legality, validity,
enforceability, use or ownership of any Intellectual Property owned or licensed
by DCPS or MBS (DCPS/MBS Intellectual Property). To the knowledge of the
Sellers, except as set forth in Section 4.16(b) of the DCPS/MBS Disclosure
Schedule, no Person is infringing or otherwise violating the rights of DCPS or
MBS with respect to any DCPS/MBS Intellectual Property. (c) Except as set forth in Section 4.16(c) of the DCPS/MBS Disclosure
Schedule, DCPS and MBS have timely paid, or caused to be timely paid, all
required maintenance, renewal and other similar fees, and has timely met any
applicable legal requirements, with respect to all Intellectual Property that
is listed in Section 4.16(b) of the DCPS/MBS Disclosure Schedule as owned by
DCPS or MBS. With respect to Intellectual Property licensed by DCPS or MBS
that is listed in Section 4.16(b) of the DCPS/MBS Disclosure Schedule or is
material to DCPS or MBS, DCPS or MBS is in compliance with any applicable
license or similar agreement and each such license or agreement is legal,
valid, binding and in full force and effect in accordance with its terms,
except as would not have a DCPS/MBS Material Adverse Effect. (d) Neither DCPS nor MBS has agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or any other conflict with
respect to the DCPS/MBS Intellectual Property, except in the ordinary course of
business. (e) All of DCPS and MBS information technology systems are in good
working order in all material respects and are adequate for the conduct of
DCPS and MBS business as presently conducted. To the knowledge of the
Sellers, DCPS and MBS own or possess adequate licenses for all material
computer software used in the conduct of DCPS and MBS businesses as presently
conducted. SECTION 4.17 Taxes.  -45-




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(a) Each of DCPS, DCM and MBS has duly filed, or caused to be filed, on a
timely basis all Tax Returns required to be filed by it with the applicable
Governmental Entity. All such Tax Returns were correct and complete in all
material respects. All material Taxes owed by DCPS, DCM or MBS (whether or not
shown on any Tax Return) have been timely paid in full, including pursuant to
any extensions that were timely received. DCPS, DCM and MBS currently are not
the beneficiary of any extension of time within which to file any Tax Return.
None of DCPS, DCM or MBS has received notice that any claim has been made by an
authority in a jurisdiction where any of DCPS, DCM or MBS does not file Tax
Returns that they may be subject to taxation by that jurisdiction. (b) Each of DCPS, DCM and MBS has complied in all material respects with
all reporting requirements and has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party. (c) There is no dispute, audit, investigation, proceeding or claim
concerning any Liability with respect to Taxes of DCPS, DCM or MBS either (i)
claimed or raised by any authority in writing received by DCPS, DCM or MBS or
(ii) as to which the Sellers have knowledge based upon contact with any such
authority. Except as set forth in Section 4.17 of the DCPS/MBS Disclosure
Schedule, (i) no federal, state, local, and foreign income Tax Returns filed
with respect to DCPS, DCM or MBS have been audited, and (ii) none are currently
open or the subject of audit. DCPS, DCM and MBS delivered or made available to
SurgiCare correct and complete copies of all federal, state, local and foreign
income Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by any of DCPS, DCM or MBS for the last three taxable
years. (d) None of DCPS, DCM or MBS has waived any statue of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. (e) None of DCPS, DCM or MBS is or ever has been a party to any Tax
allocation or sharing agreement or a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than the Affiliated Group the
common parent of which is DCPS or MBS). None of DCPS, DCM or MBS has any
Liability for the Taxes of any Person other than DCPS, DCM and MBS under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local or foreign
Law), as a transferee or successor, by contract, or otherwise. (f) None of DCPS, DCM or MBS has filed a consent under Code Section 341(f)
concerning collapsible corporations. None of DCPS, DCM or MBS has made any
payments, is obligated to make any payments, or is a party to any Contract
(including this Agreement) that under certain circumstances could obligate it
to make any payments that will not be deductible under Code Sections 162, 280G
or 404 or that will be subject to an excise tax under Code Section 4999. (g) The unpaid Taxes of DCPS, DCM and MBS (1) did not, as of December 31,
2002, exceed the reserves for Tax Liability (excluding any reserves for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of  -46-




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the DCPS/MBS Balance Sheets (rather than in any notes thereto) and (2)
will not exceed those reserves as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and practice of
DCPS, DCM and MBS in filing their Tax Returns. (h) Since July 1, 1993, neither DCPS, DCM nor MBS has had an ownership
change within the meaning of Section 382(g) of the Code. (i) DCPS has been a validly electing S corporation, within the meaning of
Code Sections 1361 and 1362 and for state Tax law purposes, except in those
states which do not recognize S corporation status, since August 31, 2003, and
has filed all forms and taken all actions necessary to maintain such status.
At all times prior to August 31, 2003, DCPS was a partnership for U.S. federal
income tax purposes. DCPS has never been, and will not at any time be, a C
corporation for U.S. federal income tax purposes. None of DCPS, any
predecessor to the DCPS or any stockholder or other equity holder of DCPS has
taken any action, or omitted to take any action, which action or omission could
result in the loss of S corporation status for any period prior to the Closing.
DCPS will be an S corporation up to and including the Closing Date. (j) DCPS shall not be liable for any Tax under Code Section 1374 in
connection with the transactions contemplated by this Agreement. DCPS has not,
since August 31, 2003, (A) acquired assets from another corporation in a
transaction in which DCPS Tax basis for the acquired assets was determined, in
whole or in part, by reference to the Tax basis of the acquired assets (or any
other property) in the hands of the transferor, or (b) acquired the stock of
any corporation which is or was at any time a qualified subchapter S
subsidiary. (k) The business carried on by DCPS is its historic business within the
meaning of Treasury Regulation 1.368-1(d) promulgated under the Code and no
assets of DCPS have been acquired, or sold, transferred or otherwise disposed
of, in an amount which would prevent SurgiCare (or a member of SurgiCares
qualified group) from (i) continuing the historic business of DCPS, or (ii)
using a significant portion of the historic business assets of DCPS in a
business following the Acquisitions. For purposes of this representation,
members of SurgiCares qualified group include corporations in any one or
more chains of corporations connected through stock ownership with SurgiCare,
but only if SurgiCare owns directly stock meeting the requirements of Section
368(c) of the Code in at least one of such corporations and stock meeting the
requirements of Section 368(c) of the Code in each of the other corporations
(other than SurgiCare) is owned directly by one of such other corporations. SECTION 4.18 Insurance. (a) Section 4.18 of the DCPS/MBS Disclosure Schedule sets forth a complete
and accurate list of all insurance policies in force naming DCPS, MBS or
directors or employees thereof as a loss payee or for which DCPS or MBS has
paid or is obligated to pay all or part of the premiums. Neither DCPS nor MBS
has received notice of any pending or threatened cancellation or premium
increase (retroactive or otherwise) with respect thereto, and each of DCPS and
MBS is in compliance with all material conditions contained therein. (b) Each of DCPS and MBS maintains and has maintained, in full force and
effect with financially sound and reputable insurers, general and professional
liability insurance  -47-




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coverage with respect to their respective assets and businesses, in such
amounts and against such losses and risks as is customarily carried by Persons
engaged in the same or similar business and as is required under the terms of
any DCPS/MBS Material Contracts. Neither DCPS nor MBS has been refused such
insurance. SECTION 4.19 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any brokers, finders, financial advisors or
other similar fee or commission in connection with the Acquisitions based upon
arrangements made by or on behalf of DCPS, DCM or MBS. SECTION 4.20 Employees. To the knowledge of the Sellers, no executive,
key employee, or group of employees has any plans to terminate employment with
DCPS or MBS or any affiliates (including, but not limited to, any physician
groups). DCPS and MBS have not experienced any labor disputes or work
stoppages due to labor disagreements. DCPS and MBS are in material compliance
with all applicable Laws respecting employment and employment practices and
terms and conditions of employment. DCPS and MBS are not, nor have either of
them ever been, a party to any collective bargaining agreements and, to the
knowledge of the Sellers, neither DCPS nor MBS has been the subject of any
organizational activity. Neither DCPS nor MBS engages in the corporate
practice of medicine or employs physicians. SECTION 4.21 Transactions with Affiliates. Except as set forth in Section
4.21 of the DCPS/MBS Disclosure Schedule, since December 31, 2002, no event has
occurred that would be required to be reported pursuant to Item 404 of
Regulation S-K promulgated by the SEC. Section 4.21 of the DCPS/MBS Disclosure
Schedule identifies each Person who is (or who may be deemed to be) an
Affiliate of DCPS, DCM or MBS. Without limiting the generality of the
foregoing, there are no amounts due or payable by DCPS, DCM or MBS to any of
the Sellers or any of their Affiliates or associates in connection with the
Acquisitions or otherwise. SECTION 4.22 Stockholder Rights Agreement. None of DCPS, DCM or MBS has
an effective stockholder rights agreement or any similar plan or agreement
which limits or impairs the ability to purchase, or become the direct or
indirect beneficial owner of, shares of MBS Common Stock or DCPS Interests or
any other equity or debt securities of DCPS, DCM or MBS, other than any
stockholder rights plan or stockholder rights agreement that (a) is adopted
after the date of this Agreement, (b) does not impair the ability of the
parties to consummate the Acquisitions in accordance with the terms of this
Agreement, and (c) otherwise does not have an adverse effect on SurgiCare or
Newco or on the rights of SurgiCare or Newco under this Agreement. SECTION 4.23 Certain Payments. Neither DCPS nor MBS, nor to the knowledge
of the Sellers, their respective directors, officers, agents, affiliates or
employees, nor any other person acting on behalf of DCPS or MBS, has (i) given
or agreed to give any gift or similar benefit having a value of $1,000 or more
to any customer, supplier or governmental employee or official or any other
person, for the purpose of directly or indirectly furthering the business of
DCPS or MBS, (ii) used any corporate funds for contributions, payments, gifts
or entertainment, or made any expenditures, relating to political activities to
government officials or others in violation of any applicable Law or (iii)
received any unlawful contributions, payments, gifts or expenditures in
connection with the business of DCPS or MBS.  -48-




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SECTION 4.24 Investment Representations. The Sellers have been advised
that neither the SurgiCare Class C Common Shares (and, if applicable, SurgiCare
Class A Common Shares) constituting the MBS Share Consideration and the DCPS
Share Consideration nor the DCPS Notes have been registered under the
Securities Act or any state securities laws and, therefore, such SurgiCare
Class C Common Shares, SurgiCare Class A Common Shares and DCPS Notes may not
be resold unless they are registered under the Securities Act and applicable
state securities laws or unless an exemption from such registration
requirements is available. The Sellers are aware that SurgiCare is under no
obligation to effect any such registration with respect to such SurgiCare Class
C Common Shares, SurgiCare Class A Common Shares or DCPS Notes or to file for
or comply with any exemption from registration. Each Seller is receiving the
SurgiCare Class C Common Shares, SurgiCare Class A Common Shares and DCPS Notes
to be acquired by such Seller hereunder for his own account and not with a view
to, or for resale in connection with, the distribution thereof in violation of
the Securities Act. Each Seller has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks of
such investment, is able to incur a complete loss of such investment and is
able to bear the economic risk of such investment for an indefinite period of
time. Each Seller is an accredited investor as that term is defined in
Regulation D under the Securities Act. ARTICLE V
CONDUCT OF BUSINESS PENDING THE ACQUISITIONS SECTION 5.01 Conduct of Business by SurgiCare Pending the Acquisitions.
SurgiCare agrees that, between the date of this Agreement and the Closing,
except as set forth in Section 5.01 of the SurgiCare Disclosure Schedule or as
specifically required by any other provision of this Agreement, unless DCPS and
MBS otherwise consent in writing (which consent will not be unreasonably
withheld): (a) the businesses of SurgiCare and the SurgiCare Subsidiaries will be
conducted only in, and SurgiCare and the SurgiCare Subsidiaries will not take
any action except in, the ordinary course of business and in a manner
consistent with past practice; and (b) SurgiCare will use its reasonable best efforts to preserve
substantially intact its business organization and goodwill, to keep available
the services of the current officers, employees and consultants of SurgiCare
and the SurgiCare Subsidiaries (other than termination for cause) and to
preserve the current relationships of SurgiCare and the SurgiCare Subsidiaries
with members or other customers, employees, suppliers, licensors, licensees and
other Persons with which SurgiCare or any SurgiCare Subsidiary has significant
business relations. By way of amplification and not limitation, except (x) as contemplated by this
Agreement, (y) for transfers of cash among SurgiCare and the SurgiCare
Subsidiaries pursuant to SurgiCares existing cash management policies or (z)
as set forth in Section 5.01 of the SurgiCare Disclosure Schedule, neither
SurgiCare nor any SurgiCare Subsidiary will, between the date of this Agreement
and the Closing, directly or indirectly, do, or propose to do, any of the
following  -49-




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without the prior written consent of DCPS and MBS (which consent will not be
unreasonably withheld): (i) amend or change its certificate of incorporation or by-laws or
equivalent organizational documents (including without limitation the
SurgiCare Charter and SurgiCare By-Laws); (ii) issue, sell, pledge or dispose of, or authorize for issuance,
sale, pledge or disposal, any shares of its stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such stock, or any other ownership interest
(including, without limitation, any phantom interest), of SurgiCare or
any SurgiCare Subsidiary (except for the issuance of shares of SurgiCare
Old Common Stock pursuant to the SurgiCare Stock Options and SurgiCare
Warrants outstanding on the date of this Agreement); (iii) authorize, declare or set aside any dividend payment or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its stock; (iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its stock or issue or
authorize the issuance of any other securities in respect of, or in lieu
of or in substitution for shares of its capital stock; (v) acquire or agree to acquire or sell or agree to sell (including,
without limitation, by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership, other business
organization or any division thereof or any assets constituting a
business or a portion of a business, including any shares of any such
entities capital stock or any options, warrants or rights to acquire any
of its capital stock; (vi) sell, lease, license, encumber or subject to any Lien or
otherwise dispose of any SurgiCare Real Property; (vii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse the obligations of any Person,
or make any loans or advances, except for (A) revolving indebtedness
under SurgiCares existing revolving loan agreement, incurred in the
ordinary course of business and consistent with past practice, (B)
indebtedness under additional SurgiCare Bridge Notes and (C) other
indebtedness with a maturity of not more than one year and in a principal
amount not, in the aggregate, in excess of $100,000; (viii) enter into any contracts or agreements requiring the payment,
or receipt of payment, of consideration in excess of $250,000, or modify,
amend, renew, waive any material provision of, breach or terminate any
existing SurgiCare Material Contract; (ix) make or authorize any capital expenditures, other than as set
forth in Section 5.01(ix) of the SurgiCare Disclosure Schedule;  -50-




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(x) except for the acceleration of vesting of unvested SurgiCare
Stock Options and SurgiCare Warrants outstanding on the date hereof,
waive any stock repurchase or acceleration rights, amend or change the
terms of any options, warrants, or restricted stock, or reprice options
granted under any SurgiCare Option Plan or warrants or authorize cash
payments in exchange for any options, or warrants granted under any such
plans; (xi) (a) increase the compensation payable or to become payable to
SurgiCares or any SurgiCare Subsidiarys officers or employees
(including without limitation any rights to severance or termination
pay), except for increases in salaries or wages of employees (other than
directors, officers or key employees) in the ordinary course of business
and in accordance with past practices and consistent with current budgets
and as described in Section 5.01(xi) of the SurgiCare Disclosure
Schedule, (b) grant or amend any rights to severance or termination pay
to, or enter into or amend any employment, consulting, retirement,
special pay arrangement or severance agreement with, any director,
officer or other employee of SurgiCare or any SurgiCare Subsidiary, or
with any other persons, except as required by previously existing
contractual arrangements or applicable law or (c) forgive any
indebtedness of any employee of SurgiCare or any SurgiCare Subsidiary; (xii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $100,000 in the aggregate, other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice, of liabilities reflected or reserved
against in, the SurgiCare Balance Sheet or incurred in the ordinary
course of business and consistent with past practice, or cancel any
indebtedness in excess of $100,000 in the aggregate or waive any claims
or rights of substantial value, or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar
agreement to which SurgiCare or any SurgiCare Subsidiary is a party; (xiii) settle any Action other than any settlement which involves
only the payment of damages in an immaterial amount and does not involve
injunctive or other equitable relief, or commence any litigation or
arbitration; (xiv) make or revoke any Tax elections, unless required by
applicable Law, adopt or change any method of Tax accounting, request any
ruling or similar determination, enter into any closing agreement or
settle any Tax liabilities or take any action (including communications
with a Governmental Entity) with respect to the computation of Taxes or
the preparation of a Tax Return that is inconsistent with past practice; (xv) take any action, other than as required by U.S. GAAP or by the
SEC, with respect to accounting principles or procedures, including,
without limitation, any revaluation of assets; (xvi) except as provided in Section 5.01(b)(x), (i) establish,
adopt, enter into, amend, or terminate any collective bargaining
agreement or SurgiCare Employee  -51-




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Benefit Plan, other than to the extent required by any SurgiCare
Employee Benefit Plan or to comply with applicable Law, (ii) take any
action to accelerate any rights or benefits, or (iii) unless consistent
with past practice, make any material determinations not in the ordinary
course of business, under any collective bargaining agreement or
SurgiCare Employee Benefit Plan; (xvii) enter into or implement any stockholder rights plan or any
similar anti-takeover plan or device in a manner that could prevent or
delay the consummation of the Acquisitions; (xviii) agree in writing or otherwise to take any of the actions
described in clauses (i) through (xvii) above; or (xix) take any action (a) that would reasonably be expected to cause
any of SurgiCares or Newcos representations and warranties set forth in
Article III that are qualified by materiality to be untrue, (b) that
would reasonably be expected to cause any of SurgiCares or Newcos
representations and warranties set forth in Article III that are not
qualified by materiality to be untrue in any material respect or (c) that
would be reasonably expected to result in the inability of SurgiCare or
Newco to satisfy the conditions to closing set forth in Section 7.02. SECTION 5.02 Conduct of Business by DCPS, DCM and MBS Pending the
Acquisitions. DCPS, DCM, MBS and the Sellers agree that, between the date of
this Agreement and the Closing, except as set forth in Section 5.02 of the
DCPS/MBS Disclosure Schedule or as specifically required by any other provision
of this Agreement, unless SurgiCare otherwise consents in writing (which
consent will not be unreasonably withheld): (a) the businesses of DCPS and MBS will be conducted only in, and DCPS and
MBS will not take any action except in, the ordinary course of business and in
a manner consistent with past practice; (b) DCPS and MBS will use their reasonable best efforts to preserve
substantially intact their respective business organizations and goodwill, to
keep available the services of the current officers, employees and consultants
of DCPS and MBS (other than termination for cause) and to preserve the current
relationships of DCPS and MBS with members or other customers, employees,
suppliers, licensors, licensees and other Persons with which DCPS or MBS has
significant business relations; and (c) DCM will not engage in any business or incur any liability or
obligation other than the ownership of Units of General Partnership Interest in
DCPS, and none of the DCPS Sellers will transfer or otherwise dispose of any
DCPS Interests. By way of amplification and not limitation, except (x) as contemplated by this
Agreement or (y) as set forth in Section 5.02 of the DCPS/MBS Disclosure
Schedule, none of DCPS, DCM or MBS will, between the date of this Agreement and
the Closing, directly or indirectly, do, or propose to do, any of the following
without the prior written consent of SurgiCare (which consent will not be
unreasonably withheld):  -52-




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(i) amend or change its certificate of incorporation or by-laws or
equivalent organizational documents (including without limitation the MBS
Charter, the MBS By-Laws and the DCPS Partnership Agreement); (ii) issue, sell, pledge or dispose of, or authorize for issuance,
sale, pledge or disposal, any shares of its stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such stock, or any other ownership interest
(including, without limitation, any phantom interest), of DCPS, DCM or
MBS; (iii) authorize, declare or set aside any dividend payment or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its stock or other ownership interests; provided, however, that
each of DCPS, DCM and MBS may dividend out excess cash prior to the
Closing Date to the extent that (A) DCPS or MBS, as applicable, is able
to maintain its operations in the ordinary course of business, (B) as of
the Closing DCPS or MBS, as applicable, has sufficient cash to fulfill
its cash flow needs for at least one month following the Closing and (C)
solely with respect to DCPS, the aggregate amount of such distributions
is less than 10% of the net assets of DCPS and less than 30% of the gross
assets of DCPS; (iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its stock or other
ownership interests or issue or authorize the issuance of any other
securities in respect of, or in lieu of or in substitution for shares of
its capital stock or other ownership interests; (v) acquire or agree to acquire or sell or agree to sell (including,
without limitation, by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership, other business
organization or any division thereof or any assets constituting a
business or a portion of a business, including any shares of such
entities capital stock or any options, warrants or rights to acquire any
of its capital stock; (vi) sell, lease, license, encumber or subject to any Lien or
otherwise dispose of any DCPS/MBS Real Property; (vii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse the obligations of any Person,
or make any loans or advances, except for revolving indebtedness under
existing revolving loan agreements of DCPS and MBS, incurred in the
ordinary course of business and consistent with past practice, and for
other indebtedness with a maturity of not more than one year and in a
principal amount not, in the aggregate, in excess of $25,000; (viii) enter into any contracts or agreements requiring the payment,
or receipt of payment, of consideration in excess of $100,000, or modify,
amend, renew, waive any material provision of, breach or terminate any
existing DCPS/MBS Material Contract; (ix) make or authorize any capital expenditures, other than as set
forth in Section 5.02(ix) of the DCPS/MBS Disclosure Schedule;  -53-




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(x) waive any stock repurchase or acceleration rights, amend or
change the terms of any options, warrants, or restricted stock, or
reprice options or warrants or authorize cash payments in exchange for
any options or warrants; (xi) (a) increase the compensation payable or to become payable to
DCPS or MBS officers or employees (including without limitation any
rights to severance or termination pay), except for increases in salaries
or wages of employees (other than directors, officers or key employees)
in accordance with past practices and consistent with current budgets,
(b) grant or amend any rights to severance or termination pay to, or
enter into or amend any employment or severance agreement with, any
director, officer or other employee of DCPS or MBS or (c) forgive any
indebtedness of any employee of DCPS or MBS; (xii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $50,000 in the aggregate, other than the payment,
discharge or satisfaction, in the ordinary course of business consistent
with past practice, of liabilities reflected or reserved against in, the
DCPS/MBS Balance Sheets or incurred in the ordinary course of business
and consistent with past practice, or cancel any indebtedness in excess
of $50,000 in the aggregate or waive any claims or rights of substantial
value, or waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which DCPS or MBS is
a party; (xiii) settle any Action other than any settlement which involves
only the payment of damages in an immaterial amount and does not involve
injunctive or other equitable relief, or commence any litigation or
arbitration; (xiv) make or revoke any Tax elections, unless required by
applicable Law, adopt or change any method of Tax accounting, request any
ruling or similar determination, enter into any closing agreement or
settle any Tax liabilities or take any action (including communications
with a Governmental Entity) with respect to the computation of Taxes or
the preparation of a Tax Return that is inconsistent with past practice; (xv) take any action, other than as required by U.S. GAAP or by the
SEC, with respect to accounting principles or procedures, including,
without limitation, any revaluation of assets; (xvi) (i) establish, adopt, enter into, amend, or terminate any
collective bargaining agreement or DCPS/MBS Employee Benefit Plan, other
than to the extent required by any DCPS/MBS Employee Benefit Plan or to
comply with applicable Law, (ii) take any action to accelerate any rights
or benefits, or (iii) unless consistent with past practice, make any
material determinations not in the ordinary course of business, under any
collective bargaining agreement or DCPS/MBS Employee Benefit Plan;  -54-




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(xvii) enter into or implement any stockholder rights plan or any
similar anti-takeover plan or device in a manner that could prevent or
delay the consummation of the Acquisitions; (xviii) agree in writing or otherwise to take any of the actions
described in clauses (i) through (xvii) above; or (xix) take any action (a) that would reasonably be expected to cause
any of DCPS and MBS representations and warranties set forth in Article
IV that are qualified by materiality to be untrue, (b) that would
reasonably be expected to cause any of DCPS and MBS representations and
warranties set forth in Article IV that are not qualified by materiality
to be untrue in any material respect or (c) that would be reasonably
expected to result in the inability of DCPS or MBS to satisfy the
conditions to closing set forth in Section 7.03. SECTION 5.03 Notification of Certain Matters. SurgiCare will give prompt
notice to DCPS and MBS, and DCPS and MBS will give prompt notice to SurgiCare,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause (A) any representation or
warranty contained in this Agreement made by such Person that is qualified by
materiality to be untrue or inaccurate, (B) any representation or warranty
contained in this Agreement made by such Person that is not qualified by
materiality to be untrue or inaccurate in any material respect or (C) any
covenant, condition or agreement contained in this Agreement applicable to such
Person not to be complied with or satisfied, (ii) any failure of SurgiCare, on
the one hand, or DCPS or MBS, on the other hand, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder and (iii) any notices received or provided by SurgiCare under the
Stock Subscription Agreement, the Debt Exchange Agreement or the IPS
Acquisition Agreement; provided, however, that the delivery of any notice
pursuant to this Section 5.03 will not limit or otherwise affect the remedies
available hereunder to the party receiving such notice. ARTICLE VI
ADDITIONAL AGREEMENTS SECTION 6.01 Proxy Statement; Stockholders Meetings. (a) As promptly as practicable after the execution of this Agreement,
SurgiCare shall prepare and file with the SEC a proxy statement (together with
any amendments thereof or supplements thereto, the Proxy Statement) in
preliminary form (provided that DCPS, MBS and their counsel will be given
reasonable opportunity to review and comment on the Proxy Statement and any
amendments thereto prior to each filing with the SEC) relating to the meeting
of SurgiCares stockholders (the SurgiCare Stockholders Meeting) to be held
to consider approval of the issuance of SurgiCare Class C Common Shares (and,
if applicable, SurgiCare Class A Common Shares) in the Acquisitions, the IPS
Acquisition and the Debt Exchange, as well as the Recapitalization, the Equity
Financing, the Board Election and the New Equity Plan. Each of SurgiCare, DCPS
and MBS shall use its reasonable best efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto, and prior to the
Closing, SurgiCare shall take all or any action required under any applicable
federal or state  -55-




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securities laws in connection with the issuance of SurgiCare Class C
Common Shares (and, if applicable, SurgiCare Class A Common Shares) pursuant to
the Acquisitions. DCPS and MBS shall furnish all information concerning DCPS
and MBS as SurgiCare may reasonably request in connection with such actions and
the preparation of the Proxy Statement, including without limitation any
audited or unaudited financial statements. As promptly as practicable after
the definitive Proxy Statement has been filed with the SEC, SurgiCare shall
mail the Proxy Statement to its stockholders. (b) The Proxy Statement shall include a copy of the fairness opinion
identified in Section 3.19 and, subject to paragraph (c) of this Section 6.01,
the SurgiCare Board Approval. (c) Nothing in this Agreement shall prevent the SurgiCare Board from
withholding, withdrawing, amending or modifying the SurgiCare Board Approval if
the SurgiCare Board determines in good faith (after consultation with legal
counsel) that the failure to take such action would constitute a breach by the
SurgiCare Board of its fiduciary duties to SurgiCares stockholders under
applicable law. Unless this Agreement shall have been terminated in accordance
with its terms, nothing contained in this Section 6.01(c) shall limit
SurgiCares obligation to convene and hold the SurgiCare Stockholders Meeting
(regardless of whether the SurgiCare Board Approval shall have been withheld,
withdrawn, amended or modified). (d) No amendment or supplement to the Proxy Statement will be made by
SurgiCare without the approval of DCPS and MBS (such approval not to be
unreasonably withheld or delayed). Each of SurgiCare, DCPS and MBS will advise
the other, promptly after it receives notice thereof, of any request by the SEC
for amendment of the Proxy Statement or comments thereon and responses thereto
or requests by the SEC for additional information. (e) The information supplied by SurgiCare for inclusion in the Proxy
Statement shall not, at (i) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the stockholders of
SurgiCare, (ii) the time of the SurgiCare Stockholders Meeting and (iii) the
Closing, contain any untrue statement of a material fact or fail to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If, at any time prior to the Closing, any event or
circumstance relating to SurgiCare or any SurgiCare Subsidiary, or their
respective officers or directors, that should be set forth in an amendment or a
supplement to the Proxy Statement should be discovered by SurgiCare, SurgiCare
shall promptly inform DCPS and MBS thereof. All documents that SurgiCare is
responsible for filing with the SEC in connection with the Acquisitions or the
other transactions contemplated by this Agreement will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder. (f) The written information supplied by DCPS and MBS for inclusion in the
Proxy Statement shall not, at (i) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the stockholders of
SurgiCare, (ii) the time of the SurgiCare Stockholders Meeting and (iii) the
Closing, contain any untrue statement of a material fact or fail to state any
material fact required to be stated therein or necessary in order to make the  -56-




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statements therein, in light of the circumstances under which they were
made, not misleading. If, at any time prior to the Closing, any event or
circumstance relating to DCPS or MBS, or their respective officers or
directors, that should be set forth in an amendment or a supplement to the
Proxy Statement should be discovered by DCPS or MBS, DCPS or MBS, as
applicable, shall promptly inform SurgiCare. (g) SurgiCare shall call and hold the SurgiCare Stockholders Meeting as
promptly as practicable and in accordance with applicable laws for the purpose
of voting upon the approval of the issuance of SurgiCare Class C Common Shares
(and, if applicable, SurgiCare Class A Common Shares) in the Acquisitions, the
IPS Acquisition and the Debt Exchange, as well as the Recapitalization, the
Equity Financing, the Board Election and the New Equity Plan, and SurgiCare
shall use its reasonable best efforts to hold the SurgiCare Stockholders
Meeting as soon as practicable after the date on which the Proxy Statement is
filed with the SEC. SurgiCare shall (a) use its reasonable best efforts to
solicit from its stockholders proxies in favor of the approval of the issuance
of SurgiCare Class A Common Shares (and, if applicable, SurgiCare Class A
Common Shares) in the Acquisitions, the IPS Acquisition and the Debt Exchange,
as well as the Recapitalization, the Equity Financing, the Board Election and
the New Equity Plan and (b) shall take all other action necessary or advisable
to secure the vote or consent of stockholders required by the rules of the AMEX
to obtain such approvals. SECTION 6.02 Access to Information; Confidentiality. Subject to
applicable law, SurgiCare, DCPS and MBS each will, and will cause each of their
respective subsidiaries to, afford to the other party, and to the other partys
officers, employees, accountants, counsel, financial advisors, financing
sources and other representatives, upon reasonable notice, reasonable access
during normal business hours during the period prior to the Closing to all
their respective properties, books, contracts, commitments, personnel and
records and, during such period, SurgiCare, DCPS and MBS each will, and will
cause each of their respective subsidiaries to, furnish promptly to the other
party such information concerning its business, properties, assets, customers,
consultants and personnel as the other party may reasonably request.
SurgiCare, DCPS and MBS each hereby consents, and will cause each of their
respective subsidiaries to consent, to the other party and the other partys
officers, employees, accountants, counsel, financial advisors, financing
sources and other representatives contacting, in a reasonable fashion, members,
employees, lenders and landlords of SurgiCare, DCPS or MBS, as the case may be,
and such subsidiaries and will, upon reasonable notice from the other party,
request such members, employees, lenders and landlords to cooperate during
normal business hours during the period prior to the Closing with any
reasonable requests made by or on behalf of the other party. Any confidential
information provided to SurgiCare, DCPS or MBS hereunder will be subject to the
terms of the Non-Disclosure and Confidentiality Agreement between SurgiCare and
DCPS dated March 7, 2003 and the Non-Disclosure and Confidentiality Agreement
between SurgiCare and MBS dated March 19, 2003, as applicable (the
Confidentiality Agreements); provided that SurgiCare, Newco, DCPS and MBS may
disclose such information as may be necessary in connection with seeking
required statutory approvals. No investigation pursuant to this Section 6.02
shall affect or be deemed to modify any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the
parties hereto. SECTION 6.03 [Intentionally Omitted].  -57-




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SECTION 6.04 No Solicitation of Transactions by DCPS or MBS. After the
date hereof and prior to the Closing or earlier termination of this Agreement
pursuant to Article VIII hereof, DCPS and MBS will not, directly or indirectly,
initiate, solicit, negotiate, engage in discussions regarding, encourage or
provide nonpublic confidential information to facilitate, and DCPS and MBS will
not, and will use their reasonable best efforts to cause any officer, director
or employee of DCPS or MBS, or any attorney, accountant, investment banker,
financial advisor or other agent retained by DCPS or MBS not to, directly or
indirectly initiate, solicit, negotiate, engage in discussions regarding,
encourage or provide nonpublic or confidential information to facilitate, any
proposal, offer or inquiry to acquire a material part of the business or
properties of DCPS or MBS (which shall include, but not be limited to, a part
of the business or properties of DCPS or MBS constituting 10% or more of the
net revenues, net income or the assets of DCPS or MBS or any capital stock or
other ownership interests of DCPS or MBS) whether by merger, consolidation,
recapitalization, purchase of assets, tender offer or otherwise and whether for
cash, securities or any other consideration or combination thereof (any such
being referred to herein as an DCPS/MBS Acquisition Transaction). DCPS and
MBS immediately will cease and cause to be terminated all activities,
discussions or negotiations with any parties with respect to any DCPS/MBS
Acquisition Transaction, other than the Acquisitions. SECTION 6.05 Further Action; Consents. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties will use all
reasonable efforts to take, or cause to be taken, all reasonable actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things reasonably necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the
Transactions, including without limitation (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
Transactions, including, when reasonable, seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed, (iv) the complete satisfaction of all respective conditions to
closing set forth in Article VII hereof, and (v) the execution and delivery of
any additional instruments necessary to consummate the Transactions and to
fully carry out the purposes of this Agreement. SECTION 6.06 Public Announcements. SurgiCare and Newco, on the one hand,
and DCPS and MBS, on the other hand, will consult with each other a reasonable
time before issuing, and provide each other the reasonable opportunity to
review and comment upon, any press release or other public statements
(including any filings with any federal or state governmental or regulatory
agency or with the AMEX) with respect to the Transactions and will not issue
any such press release or make any such public statement prior to such
consultation. Notwithstanding anything to the contrary herein or in the
Confidentiality Agreements, each of the parties hereto (and each employee,
representative, or other agent of such parties) may disclose to any Person,
without limitation of any kind, the tax treatment and tax structure of the
Transactions and all materials (including opinions or other tax analyses) that
are provided to such party relating to such tax treatment and tax structure.  -58-




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SECTION 6.07 AMEX Listing. SurgiCare shall use its best efforts to
continue the listing of the SurgiCare Old Common Stock on the AMEX during the
term of this Agreement. SECTION 6.08 Listing of SurgiCare Class A Common Shares. SurgiCare shall
use its best efforts to cause the SurgiCare Class A Common Shares issuable upon
conversion of the SurgiCare Class C Common Shares to be issued in the
Acquisitions, as well as any SurgiCare Class A Common Shares issuable under
Section 2.07, to be approved for listing, upon official notice of issuance, on
the AMEX or on The NASDAQ SmallCap Market. SECTION 6.09 Form S-3 Eligibility. SurgiCare shall use its best efforts
to obtain eligibility to file with the SEC registration statements on Form S-3
for offerings made on a continuous basis pursuant to Rule 415 under the
Securities Act. SECTION 6.10 Outsourcing of Services to the Surviving Corporation; Surgery
Center Division. From the period beginning at the Closing and ending on such
date that no further additional Acquisition Consideration may be payable under
Section 2.07(c) (the Earn-out Period), if billing and collection, contracting
or other management services are performed by the Surviving Corporation for
SurgiCare, SurgiCare will pay the Surviving Corporation for such services at a
rate that is 10% greater than the minimum amount needed to cover all costs
(including overhead) associated with the provision of such services by the
Surviving Corporation. In addition, during the Earn-out Period, SurgiCare
agrees that it will not purchase any medical billings services that are
substantially similar to services provided by the Surviving Corporation from a
Person other than the Surviving Corporation at a rate equal to or higher than
the rate payable to the Surviving Corporation hereunder. If, during the
Earn-out Period, SurgiCare proposes to purchase such services from a Person
other than the Surviving Corporation at a rate lower than the rate payable to
the Surviving Corporation hereunder, SurgiCare shall notify the Sellers in
writing and provide the Sellers with the opportunity to allow SurgiCare to pay
such lower rate to the Surviving Corporation. If the Sellers agree to such
lower rate in writing within five business days of such notice from SurgiCare,
SurgiCare agrees to purchase from the Surviving Corporation, and the Surviving
Corporation agrees to provide to SurgiCare, such services at such lower rate.
SurgiCare agrees to use reasonable commercial efforts following the Closing to
assist the Surviving Corporation in the development and marketing of a surgery
center division of the Surviving Corporation to provide billing, collection and
managed care contracting services for both owned and unaffiliated surgery
centers. SECTION 6.11 Right of First Refusal. SurgiCare hereby grants to the
Sellers a right of first refusal (the ROFR) for the purchase of the Surviving
Corporation, which right shall be exercised as set forth in this Section 6.11. (a) Upon SurgiCares acceptance (subject to the provisions of this Section
6.11) of a bona fide offer from an unaffiliated third-party to purchase all of
the capital stock, or all or substantially all of the assets, of the Surviving
Corporation (other than in connection with an acquisition of all or
substantially all of SurgiCare) prior to the later of (i) the third anniversary
of the Closing Date or (ii) the date on which all of the Sellers Notes have
been satisfied in full (a Third-Party Offer), SurgiCare will give the Sellers
written notice of the terms and conditions under which SurgiCare is willing to
sell such capital stock or assets to such third-party (the ROFR Notice). The
Sellers may elect to purchase such capital stock or assets under the terms  -59-




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set forth in the ROFR Notice by providing SurgiCare with written notice of
exercise of the ROFR within fifteen days after the Sellers receipt of the ROFR
Notice. If the Sellers provide such notice to SurgiCare within the fifteen day
period, then the parties will enter into a definitive written agreement for the
sale of the applicable capital stock or assets of the Surviving Corporation to
the Sellers (or the Sellers designee) upon the price and other terms stated in
the ROFR Notice, subject to Section 6.11(c) below. (b) If the Sellers decline the refusal right in response to the ROFR
Notice within the fifteen day period, or if the Sellers do not respond within
the fifteen day period, then SurgiCare may sell the capital stock or assets of
the Surviving Corporation to the third-party who made the offer to SurgiCare at
a price equal to at least 95% of the purchase price offered in the Third
Party-Offer. SurgiCare may (i) extend the due diligence period or closing date
and (ii) make such other modifications that do not materially affect the value
of the consideration to be paid for the Surviving Corporation capital stock or
assets. Upon the consummation of a sale to such third-party upon such price
and terms, the ROFR will terminate. (c) The capital stock or assets of the Surviving Corporation will be sold
to the Sellers upon an exercise of the ROFR on an as-is basis, without
representation, warranty or indemnity, with such other terms and conditions as
are customarily included in a purchase and sale agreement including provisions
(i) as to closing documents and deliveries and (ii) with a closing of the sale
to occur no later than the later of (A) forty-five days after the Sellers
notice of exercise pursuant to Section 6.11(a) or (B) the date contained in
Third-Party Offer, if any. If permitted by applicable law, the Sellers may
elect to transfer SurgiCare Class C Common Shares or SurgiCare Class A Common
Shares to SurgiCare in satisfaction of all or any portion of the applicable
purchase price; provided, however, that the value of any such share transferred
to SurgiCare shall be equal to the product of 85% multiplied bythe average of
the daily average of the high and low price per share of the SurgiCare Class A
Common Stock on the AMEX, or such other stock exchange or other similar system
on which the SurgiCare Class A Common shall be listed or quoted at the time,
for the five trading days immediately preceding the closing of the sale (or, if
the SurgiCare Class A Common Stock is not listed or quoted on any stock
exchange or other similar system at such time, the fair market value of a share
of SurgiCare Class A Common Stock as determined in good faith by the SurgiCare
Board). SECTION 6.12 Advisory Board. If, following the Closing, SurgiCare in its
sole discretion establishes an advisory board, each of Smith and Cain shall
have a right to appoint one member to such board so long as he continues to own
at least 50% of the SurgiCare Class C Common Shares issued to him as part of
the Acquisition Consideration (or Class A Common Shares into which such Class C
Common Shares have converted). SECTION 6.13 Observer Rights. SurgiCare covenants and agrees that (i) for
so long as Smith owns at least 50% of the SurgiCare Class C Common Shares
issued to him as part of the Acquisition Consideration (or Class A Common
Shares into which such Class C Common Shares have converted), Smith may be
present as an observer at all meetings of the SurgiCare Board or any committee
thereof (an Observer), (ii) for so long as Cain owns at least 50% of the
SurgiCare Class C Common Shares issued to him as part of the Acquisition
Consideration (or Class A Common Shares into which such Class C Common Shares
have converted), Cain may be present as an Observer at all meetings of the
SurgiCare Board or any committee thereof, and  -60-




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(iii) SurgiCare shall give each such Observer notice of such meeting not
later than the earlier of (a) the same time notice is provided or delivered to
the directors for such meeting of the SurgiCare Board or committee and (b) 24
hours prior to the time of such proposed meeting; provided, however, that in
the event that the SurgiCare Board or the committee intends to discuss or vote
upon any matter in which an Observer has a material business or financial
interest (other than by reason of such Observers interests as a stockholder of
SurgiCare), or if all members of management are to be excluded therefrom, such
Observer may be excluded therefrom by a vote of the majority of the directors
present. Board materials that are sent to the directors prior to a meeting of
the SurgiCare Board or a committee thereof shall be sent simultaneously by
SurgiCare to the Observer by means reasonably designed to insure timely receipt
by the Observer; provided, however, that SurgiCare may exclude from the
materials sent to the Observer any materials relating directly and
substantially to any matter in which such Observer has a material business or
financial interest (other than by reason of such Observers interests as a
stockholder of SurgiCare). SurgiCare shall pay all reasonable expenses
including, without limitation, airfare and hotel expenses, but shall not pay
any other compensation to an Observer, in connection with such Observers
attendance at meetings of the SurgiCare Board or any committee thereof. SECTION 6.14 S Corporation Status. None of DCPS or the DCPS Sellers will
revoke the election of DCPS to be taxed as an S corporation within the meaning
of Code Sections 1361 and 1362. None of DCPS or the DCPS Sellers will take or
allow any action that would result in the termination of DCPS status as a
validly electing S corporation within the meaning of Code Sections 1361 and
1362. DCPS and the DCPS Sellers will take all actions necessary to ensure that
DCPS is a validly electing S corporation within the meaning of Code Sections
1361 and 1362 at all times during which DCPS is treated as an association
taxable as a corporation for U.S. federal income tax purposes. SECTION 6.15 Reservation of Shares. SurgiCare covenants and agrees to
reserve and keep available an aggregate number of Class A Common Shares equal
to (a) 757,575 multiplied by(b) the Reverse Split Fraction, which shares will
be available for issuance following the Closing to such employees, customers or
other Persons as are designated by Cain or Smith from time to time, subject to
compliance with applicable securities and other laws. SECTION 6.16 Contribution of DCPS Interests. Immediately following the
Closing, SurgiCare will contribute all of the DCPS Interests to the Surviving
Corporation. SECTION 6.17 Tax Indemnification. The DCPS Sellers shall jointly and
severally indemnify SurgiCare from and against any income Taxes that are
determined to be payable by DCPS in respect of the 2003 or 2004 tax years. ARTICLE VII
CONDITIONS TO THE ACQUISITIONS SECTION 7.01 Conditions to the Obligations of Each Party. The obligations
of DCPS, MBS, the Sellers, SurgiCare and Newco to consummate the Acquisitions
pursuant to Section 1.02 hereof are subject to the satisfaction or waiver
(where permissible) of the following conditions:  -61-




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(a) Stockholder Approvals. The SurgiCare Stockholder Approval shall have
been obtained. (b) No Order. No Governmental Entity or court of competent jurisdiction
shall have enacted, threatened, issued, promulgated, enforced or entered any
Law, rule, regulation, judgment, decree, injunction, executive order or award
(an Order) that is then in effect, pending or threatened and has, or would
have, the effect of making the Acquisitions illegal or otherwise prohibiting
consummation of the Acquisitions, the Debt Exchange, the Equity Financing, the
Recapitalization or the IPS Acquisition; provided that the party relying on a
failure of this condition has complied with its obligations under Section 6.05. (c) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the Acquisitions under the HSR Act
shall have expired or been terminated or obtained. (d) IPS Acquisition. The IPS Acquisition shall have been consummated
concurrently with the Acquisitions. (e) Equity Financing. The Equity Financing shall have been consummated
concurrently with the Acquisitions, and Brantley IV shall have purchased at
least $6,000,000 of SurgiCare Class B Common Stock pursuant to such Equity
Financing for cash. (f) Debt Exchange. The Debt Exchange shall have been consummated
concurrently with the Acquisitions. SECTION 7.02 Conditions to the Obligations of SurgiCare and Newco. The
obligations of SurgiCare and Newco to consummate the Acquisitions are subject
to the satisfaction or, where permissible, the waiver by SurgiCare of the
following additional conditions: (a) Representations and Warranties. Each of the representations and
warranties of DCPS, MBS and the Sellers contained in this Agreement shall be
true and correct in all material respects as of the Closing, as though made at
and as of the Closing, except that those representations and warranties that
address matters only as of a particular date shall remain true and correct in
all material respects as of such date (provided, that any representation or
warranty that is qualified by materiality (including, without limitation, by
reference to a Material Adverse Effect) shall be true in all respects as of the
Closing, or as of such particular date, as the case may be), and SurgiCare and
Newco shall have received a certificate of the Sellers and of the Chief
Executive Officer or Chief Financial Officer of each of DCPS and MBS to that
effect. (b) Agreements and Covenants. DCPS, DCM and MBS shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing and SurgiCare and Newco shall have received a certificate of the
Sellers and of the Chief Executive Officer or Chief Financial Officer of each
of DCPS and MBS to that effect. (c) Consents. All material consents, approvals and authorizations
(including, without limitation, the Required Consents) legally required to be
obtained to consummate the Acquisitions shall have been obtained from and made
with all Governmental Entities and all  -62-




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consents from third parties under any DCPS/MBS Material Contract or other
material agreement, contract, license, lease or other instrument to which DCPS
or MBS is a party or by which it is bound required as a result of the
transactions contemplated by this Agreement or the Acquisitions shall have been
obtained. (d) Material Adverse Effect. Since the date of this Agreement, there
shall have been no circumstances, events, occurrences, changes or effects that
have had or would have a DCPS/MBS Material Adverse Effect. (e) Actions. No Action shall have been brought, be pending or have been
threatened by any Governmental Entity or other Person that (i) seeks to prevent
or delay the consummation of the Transactions, (ii) seeks to restrain or
prohibit SurgiCares or Newcos full rights of ownership or operation of any
portion of the business or assets of DCPS, DCM or MBS, or to compel SurgiCare
or Newco to dispose of or hold separate all or any portion of the business or
assets of DCPS, DCM or MBS, (iii) seeks to impose limitations on the ability of
SurgiCare or Newco to exercise full rights of ownership of the MBS Common
Shares and DCPS Interests acquired pursuant to the Acquisitions, (iv) seeks to
require divestiture by SurgiCare or Newco of any MBS Common Shares or DCPS
Interests, or (v) that otherwise would have a DCPS/MBS Material Adverse Effect. (f) Certified Copies. At the Closing, MBS shall have delivered certified
copies of the resolutions duly adopted by the MBS Board and the stockholders of
MBS authorizing the execution, delivery and performance of this Agreement and
the other agreements contemplated hereby applicable to MBS and certified copies
of the MBS Charter and MBS By-Laws, and DCPS shall have delivered certified
copies of the resolutions duly adopted by the DCPS Sellers authorizing the
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby applicable to DCPS and certified copies of the DCPS
Partnership Agreement. (g) Documents and Proceedings. All documents that DCPS, MBS and the
Sellers deliver and all proceedings of DCPS, MBS and the Sellers shall be in
form and substance reasonably satisfactory to SurgiCare and its counsel. (h) Employment Agreements. Each of Dennis Cain and Tom M. Smith shall
have entered into an employment agreement with SurgiCare in substantially the
form attached hereto as Exhibit D and all other employment agreements with such
individuals shall have been terminated. Such new employment agreements shall
be in full force and effect as of the Closing and such individuals shall be in
the employ of DCPS or MBS immediately prior to the Closing and no such
individual shall have indicated his intention to terminate his employment with
the Surviving Corporation or SurgiCare following the Closing. (i) Opinion. SurgiCare shall have received an opinion of Fant & Burman,
L.L.P., counsel to MBS, and an opinion of Peter Workin, P.C., counsel to DCPS,
each in form and substance as set forth on Exhibit E hereto and containing
customary qualifications. (j) Registration Rights. All existing registration rights of holders of
MBS Common Shares or DCPS Interests shall have been terminated and SurgiCare
and Newco shall  -63-




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have received a certificate to such effect signed by the Sellers and by
the President or Chief Financial Officer of each of DCPS and MBS.

(k) Termination of Obligations and Agreements. All loans, guarantees or
other obligations of DCPS, DCM or MBS to each other or to any of their
Affiliates shall have been terminated without the payment of any consideration
and, except as otherwise agreed to in writing by SurgiCare, all agreements
among any of the foregoing shall have been terminated without cost to DCPS, DCM
or MBS.

(l) Subordination Agreement. Each of the Sellers shall have entered into
a subordination agreement with each of SurgiCares senior lenders in form and
substance satisfactory to SurgiCare and such senior lenders (the Subordination
Agreement).

(m) Appraisal Shares. No MBS Common Shares shall be Appraisal Shares.

SECTION 7.03 Conditions to the Obligations of DCPS, MBS and the Sellers.
The obligations of DCPS, MBS and the Sellers to consummate the Acquisitions are
subject to the satisfaction or, where permissible, the waiver by DCPS, MBS and
the Sellers of the following additional conditions:

(a) Representations and Warranties. Each of the representations and
warranties of SurgiCare and Newco contained in this Agreement shall be true and
correct in all material respects as of the Closing, as though made on and as of
the Closing, except that those representations and warranties that address
matters only as of a particular date shall remain true and correct in all
material respects as of such date (provided, that any representation or
warranty that is qualified by materiality (including, without limitation, by
reference to a Material Adverse Effect), as well as the statements
set forth in the footnote in Schedule 3.03(a) of the SurgiCare
Disclosure Schedule shall be true in all respects as of the
Closing, or as of such particular date, as the case may be), and DCPS and MBS
shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of SurgiCare and Newco to that effect.

(b) Agreements and Covenants. Each of SurgiCare and Newco shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing and DCPS and MBS shall have received a certificate of
the Chief Executive Officer or Chief Financial Officer of SurgiCare and Newco
to that effect.

(c) Consents. All material consents, approvals and authorizations
(including, without limitation, the Required Consents) legally required to be
obtained to consummate the Acquisitions shall have been obtained from and made
with all Governmental Entities and all consents from third parties under any
SurgiCare Material Contract or other material agreement, contract, license,
lease or other instrument to which SurgiCare or any SurgiCare Subsidiary is a
party or by which it is bound required as a result of the transactions
contemplated by this Agreement or the Acquisitions shall have been obtained.

(d) Material Adverse Effect. Since the date of this Agreement, there
shall have been no circumstances, events, occurrences, changes or effects that
have had or would have a SurgiCare Material Adverse Effect.

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(e) Actions. No Action shall have been brought, be pending or have been
threatened by any Governmental Entity or other Person that (i) (i) seeks to
prevent or delay the consummation of the Transactions, (ii) seeks to restrain
or prohibit SurgiCares or Newcos full rights of ownership or operation of any
portion of the business or assets of DCPS, DCM or MBS, or to compel SurgiCare
or Newco to dispose of or hold separate all or any portion of the business or
assets of DCPS, DCM or MBS, (iii) seeks to impose limitations on the ability of
SurgiCare or Newco to exercise full rights of ownership of the MBS Common
Shares and DCPS Interests acquired pursuant to the Acquisitions, (iv) seeks to
require divestiture by SurgiCare or Newco of any MBS Common Shares or DCPS
Interests, or (v) that otherwise would have a SurgiCare Material Adverse
Effect. (f) Employment Agreement. Keith LeBlanc shall have entered into an
employment agreement with SurgiCare in substantially the form attached hereto
as Exhibit D and all other employment agreements with such individual shall
have been terminated. Such new employment agreement shall be in full force and
effect as of the Closing and such individual shall be in the employ of
SurgiCare immediately prior to the Closing and such individual shall not have
indicated his intention to terminate his employment with SurgiCare following
the Closing. (g) Certified Copies. At the Closing, (A) each of SurgiCare and Newco
shall have delivered certified copies of (i) the resolutions duly adopted by
each of the SurgiCare Board and the Newco Board authorizing the execution,
delivery and performance of this Agreement and the other agreements
contemplated hereby applicable to it and the Transactions, (ii) the resolutions
duly adopted by such Persons stockholders or other equityholders approving
this Agreement and the Transactions and the tabulation of the stockholder or
other equityholder vote thereof, and (iii) the certificate of incorporation and
the by-laws (or equivalent organizational documents) of each of SurgiCare and
Newco. (h) Opinion. DCPS and MBS shall have received an opinion of Strasburger &
Price, LLP, counsel to SurgiCare and Newco, in form and substance as set forth
on Exhibit F hereto. (i) No Alternative Transactions. No tender offer, exchange offer, merger
or other transaction in respect of shares of SurgiCare Capital Stock or
material assets of SurgiCare or any SurgiCare Subsidiary shall have been
commenced by any Person. (j) Documents and Proceedings. All documents that SurgiCare or Newco
delivers and all proceedings of SurgiCare and Newco shall be in form and
substance reasonably satisfactory to DCPS and MBS and their counsel. (k) Filing of SurgiCare Restated Charter. The SurgiCare Restated Charter
shall have been filed with the Secretary of State of the State of Delaware and
shall continue to be in full force and effect as of the Closing. (l) Amendment of SurgiCare By-Laws. The SurgiCare By-Laws shall have been
amended and restated in the form of Exhibit G hereto and shall continue to be
in full force and effect as of the Closing.  -65-




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(m) Director Resignations and Elections; Officers. At the Closing,
SurgiCare shall have delivered signed letters of resignation from each director
of SurgiCare, pursuant to which each such director resigns from his position as
a director of SurgiCare and makes such resignation effective at or prior to the
Closing. At the Closing, the SurgiCare Board shall consist of Terrence Bauer,
Keith LeBlanc, two individuals designated by Brantley IV, and three outside
directors reasonably satisfactory to DCPS and MBS, and the officers of
SurgiCare shall be as follows: Terrence Bauer
    
    Chief Executive OfficerKeith LeBlanc
    
    PresidentSteve Murdock
    
    Chief Financial Officer
 (n) AMEX or NASDAQ Listing. The SurgiCare Class A Common Shares issuable
upon conversion of the SurgiCare Class C Common Shares to be issued in the
Acquisitions, as well as any SurgiCare Class A Common Shares issuable under
Section 2.07, shall have been authorized for listing on the AMEX or on The
NASDAQ SmallCap Market, subject to official notice of issuance. (o) Code Section 351. The Sellers have not reasonably determined,
based upon underlying information certified by SurgiCare to be
accurate and complete and furnished by SurgiCare to the Sellers prior
to Closing and upon the advice of the Seller's independent certified
accountant, that the Acquisitions, together with the IPS Acquisition,
the Debt Exchange and the Equity Financing, fail to qualify as
transfers to a corporation controlled by the transferors under the
provisions of Section 351 of the Code. In connection therewith, said
information shall include without limitation an update capitalization
table, disclosure regarding the number of shares to be issued to
SurgiCare employees, options designated by exercise price and the
notification of the exercise of any appraisal rights by any IPS
equity holder. ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND EXPENSES SECTION 8.01 Termination. This Agreement may be terminated and the
Acquisitions and the other transactions contemplated hereby may be abandoned at
any time prior to the Closing, notwithstanding any requisite approval and
adoption of this Agreement and such transactions, as follows: (a) by mutual written consent duly authorized by the SurgiCare Board, the
MBS Board and the DCPS Sellers; (b) by either SurgiCare, on the one hand, or DCPS and MBS, on the other
hand, by giving written notice to the other party, if there is any Law or Order
of a Governmental Authority which is final and nonappealable preventing the
consummation of the Acquisitions; provided, however, that the provisions of
this Section 8.01(b) will not be available to any party whose failure to
fulfill its obligations hereunder is the cause of, or has resulted in, such Law
or Order; (c) by either SurgiCare, on the one hand, or DCPS and MBS, on the other
hand, by giving written notice to the other party, if the Closing has not
occurred on or before October 31, 2004; (d) by either SurgiCare, on the one hand, or DCPS and MBS, on the other
hand, by giving written notice to the other party, if the SurgiCare Stockholder
Approval is not obtained at the SurgiCare Stockholders Meeting or any
adjournment thereof duly called and held in accordance with Section 6.01(g)
hereof; (e) by SurgiCare, by giving written notice to DCPS and MBS, upon a breach
of any representation, warranty, covenant or agreement on the part of DCPS or
MBS set forth in this Agreement, or if any representation or warranty of DCPS
and MBS has become untrue, in  -66-




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either case such that the conditions set forth either in Section 7.02(a)
or (b) would not be satisfied, and such breach shall not have been cured within
twenty (20) business days following receipt by DCPS and MBS of written notice
of such breach; provided that the right to terminate this Agreement pursuant to
this clause shall not be available to SurgiCare if SurgiCare is, at the time,
in breach of this Agreement; and (f) by DCPS and MBS by giving written notice to SurgiCare, upon a breach
of any representation, warranty, covenant or agreement on the part of SurgiCare
or Newco set forth in this Agreement, or if any representation or warranty of
SurgiCare or Newco has become untrue, in either case such that the conditions
set forth either in Section 7.03(a) or (b) would not be satisfied, and such
breach shall not have been cured within twenty (20) business days following
receipt by SurgiCare of written notice of such breach; provided that the right
to terminate this Agreement pursuant to this clause shall not be available to
DCPS and MBS if DCPS or MBS is, at the time, in breach of this Agreement. SECTION 8.02 Effect of Termination. Except as provided in Section 8.03 or
Section 9.01 (which provisions will survive termination of this Agreement), in
the event of termination of this Agreement pursuant to Section 8.01, this
Agreement will immediately become void, there will be no liability under this
Agreement on the part of SurgiCare, Newco, DCPS, MBS, the Sellers or any of
their respective officers or directors, and all rights and obligations of each
party hereto will cease; provided, however, that nothing herein will relieve
any party from liability for any pre-termination breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement. SECTION 8.03 Expenses. (a) Except as set forth below, all Expenses (as defined below) incurred in
connection with this Agreement and the Transactions will be paid by the party
incurring such expenses. Expenses as used in this Agreement include all
reasonable out of pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, financing sources, appraisers, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with or related to the due diligence
review and analysis, the Acquisitions and the other Transactions, the
authorization, preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of the SurgiCare Stockholder Approval, the filing
of any required notices under the HSR Act or other similar regulations and all
other matters related to the closing of the Acquisitions and the other
Transactions. (b) SurgiCare will reimburse DCPS and MBS for all Expenses incurred by or
on behalf of DCPS or MBS prior to termination of this Agreement in connection
with this Agreement and the Transactions, upon the termination of this
Agreement by SurgiCare, on the one hand, or DCPS and MBS, on the other hand,
pursuant to Section 8.01(d). (c) SurgiCare acknowledges that the agreements contained in this Section
8.03 are an integral part of the Transactions, and that, without these
agreements, DCPS and MBS would not enter into this Agreement; accordingly, if
SurgiCare fails to pay the amounts due pursuant to this Section 8.03, and, in
order to obtain any such payment, DCPS or MBS  -67-




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commences a legal proceeding which results in a judgment against SurgiCare
for the amounts set forth in this Section 8.03, SurgiCare will pay to DCPS and
MBS their costs and expenses (including attorneys fees) in connection with
such proceeding, together with interest on the amounts set forth in this
Section 8.03 at the prime rate of Citibank N.A. in effect on the date any such
payment was required to be made. ARTICLE IX
GENERAL PROVISIONS SECTION 9.01 Non-Survival of Representations, Warranties and Agreements.
The representations and warranties in this Agreement and in any certificate
delivered pursuant hereto will terminate at the Closing. The covenants and
agreements in this Agreement will survive the Closing in accordance with their
terms. SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be deemed given (i) five
days after mailing by certified mail (postage prepaid, return receipt
requested), (ii) when delivered by hand, (iii) upon confirmation of receipt by
facsimile or (iv) one business day after sending by overnight delivery service
to the respective parties at the following addresses (or at such other address
for a party as is specified in a notice given in accordance with this Section
9.02): if to SurgiCare or Newco: SurgiCare, Inc.
12727 Kimberly Lane, Suite 200
Houston, TX 77024
Facsimile No.: (713) 722-0921
Attention: Keith LeBlanc with a copy to: Strasburger & Price, LLP
1401 McKinney, Suite 2200
Houston, Texas 77010.4035
Facsimile No.: (713) 951-5660
Attention: Ivan Wood Jr., Esq. if to MBS or the MBS Sellers: Medical Billing Services, Inc.
10700 Richmond Avenue
Suite 320
Houston, TX 77042
Facsimile No.: (713) 432-0221
Attention: Tom M. Smith with a copy to:  -68-




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Fant & Burman, L.L.P.
3D/International Tower
1900 West Loop South, Suite 1100
Houston, Texas 77027
Facsimile No.: (713) 961-3260
Attention: Darryl M. Burman, Esq. if to DCPS or the DCPS Sellers: Dennis Cain Physician Solutions, Ltd.
714 FM 1960 West
Suite 206
Houston, TX 77090
Facsimile No.: (281) 880-6994
Attention: Dennis Cain with a copy to: Peter Workin, P.C.
7500 San Felipe
Suite 777
Houston, TX 77063
Facsimile No.: (713) 963-8338 SECTION 9.03 Certain Definitions. For purposes of this Agreement, the
term: (a) Acquisition Consideration means the MBS Cash Consideration, the DCPS
Cash Consideration, the MBS Share Consideration, the DCPS Share Consideration
and the DCPS Notes. (b) Affiliate or affiliate of a specified Person means a Person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such specified Person. (c) Assumed Market Price means (x) the greater of $0.55 or the Five Day
Average Price, in each case divided by(y) the Reverse Split Fraction. (d) business day means any day on which both the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day (other than a Saturday or a
Sunday) on which banks are not required or authorized to close in The City of
New York. (e) Class A Common Closing Price means an amount equal to the Five Day
Average Price divided bythe Reverse Split Fraction.  -69-




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(f) Constructive Sale means, with respect to any security, a short sale
with respect to such security, entering into or acquiring an offsetting
derivative contract with respect to such security, entering into or acquiring a
futures or forward contract to deliver such security or entering into any
transaction that has substantially the same effect as any of the foregoing. (g) control (including the terms controlled by and under common
control with) means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise. (h) Dilutive Options and Warrants means options and warrants to purchase
SurgiCare Class A Common Shares that have an exercise price immediately after
giving effect to the filing of the SurgiCare Restated Charter that is equal to
or less than the Assumed Market Price. (i) Employee Pension Benefit Plan has the meaning set forth in ERISA
Section 3(2). (j) Employee Welfare Benefit Plan has the meaning set forth in ERISA
Section 3(l). (k) Environmental Laws means any federal, state, local or foreign Laws
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution or protection of the environment. (l) Fiduciary has the meaning set forth in ERISA Section 3(21). (m) Five Day Average Price means the average of the daily average of the
high and low price per share of the SurgiCare Old Common Stock on the American
Stock Exchange, or such other stock exchange or other similar system on which
the SurgiCare Old Common Stock shall be listed or quoted at the time, for the
five trading days immediately preceding the Closing Date. (n) Hazardous Substances means (i) those substances defined in or
regulated under the following federal statutes and their state counterparts and
all regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide,
and Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum
products, including crude oil and any fractions thereof; (iii) natural gas,
synthetic gas, and any mixtures thereof; (iv) polychlorinated biphenyls,
asbestos and radon; (v) any other contaminant; and (vi) any substance, material
or waste regulated by any federal, state, local or foreign Governmental Entity
pursuant to any Environmental Law.  -70-




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(o) Intellectual Property means the entire right, title and interest in
and to all proprietary rights of every kind and nature, including without
limitation all rights and interests pertaining to or deriving from: (i) patents, copyrights, technology, know-how, processes, trade
secrets, inventions, domain names, works (whether published or
unpublished and whether registered or not), proprietary data, customer
data, databases, pricing and cost information, business, sales and
marketing methods and plans, formulae, research and development data and
computer software programs; (ii) all Trademarks; (iii) all registrations, applications, recordings, licenses,
common-law rights and Contracts relating thereto; and (iv) all Actions and rights to sue at law or in equity for any past,
present or future infringement or other impairment of any of the
foregoing. (p) DCPS/MBS Employee Benefit Plan means any current (a) nonqualified
deferred compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan (including any Multiemployer Plan), (d) Employee Welfare Benefit Plan,
material fringe benefit plan or program, or (e) profit sharing, stock option,
stock purchase, equity, stock appreciation, bonus, incentive deferred
compensation, severance plan or other benefit plan, which covers any current or
former employees, officers, directors, independent contractors (or their
dependents or beneficiaries) of DCPS or MBS or for which DCPS or MBS may have
any Liability. (q) DCPS/MBS Material Adverse Effect means any one or more
circumstances, events, occurrences, changes or effects that, individually or in
the aggregate with respect to all events, occurrence, changes or effects with
respect to which such phrase is used herein, (i) materially and adversely
affects, or poses a material risk of materially and adversely affecting, the
business, operations, condition (financial or otherwise), assets (tangible or
intangible), results of operations or prospects of DCPS and MBS taken as a
whole, or (ii) is reasonably likely to prevent or delay the consummation of the
Acquisitions. (r) Fully-Diluted SurgiCare Shares means the number of SurgiCare Class A
Common Shares which would be outstanding on a fully-diluted basis (calculated
as set forth in the immediately following sentence) immediately after the
effectiveness of the filing of the SurgiCare Restated Charter and the
Recapitalization but prior to the Equity Financing, the Acquisitions, the Debt
Exchange or the IPS Acquisition, rounded up to the nearest whole share. For
purposes of this definition, fully-diluted basis shall mean the number of
SurgiCare Class A Common Shares that would be outstanding assuming the exercise
of all outstanding options, warrants and rights to acquire SurgiCare Class A
Common Shares and the conversion or exchange of all securities convertible
into, or exchangeable for, SurgiCare Class A Common Shares, whether or not
vested or then exercisable, calculated at the maximum number of shares  -71-




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issuable pursuant thereto; provided, however, that all options and
warrants that are not Dilutive Options and Warrants will be disregarded for
purposes of such calculation, and each Dilutive Option and Warrant shall be
deemed to have been exercised for a number of shares equal to (i) the maximum
number of shares issuable pursuant to such Dilutive Option and Warrant
multiplied by (ii) a fraction, the numerator of which is the excess of the
Assumed Market Price over the exercise price of such Dilutive Option and
Warrant, and the denominator of which is the Assumed Market Price. (s) knowledge means, with respect to the Sellers, the actual knowledge,
after reasonable inquiry, of Smith and Cain, and, with respect to SurgiCare,
the actual knowledge, after reasonable inquiry, of the executive officers of
SurgiCare. (t) Liability means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, whether
incurred or consequential and whether due or to become due). (u) Multiemployer Plan has the meaning set forth in ERISA Section 3(37). (v) Newco EBITDA means, with respect to any fiscal year of the Surviving
Corporation, the total of Newco Net Income for such fiscal year, plus all
amounts (without duplication), to the extent actually deducted in computing
Newco Net Income for such fiscal year, in respect of: (A) income tax expense;
(B) interest expense; (C) depreciation and amortization expense; and (D)
management fees required to be paid by the Surviving Corporation to SurgiCare. (w) Newco Net Income means, with respect to any fiscal year of the
Surviving Corporation, the net income (or loss) of the Surviving Corporation
for such fiscal year, determined in accordance with the audited financial
statements of SurgiCare for such year, prepared in accordance with GAAP;
provided, however, that with respect to the year ended December 31, 2004, the
Surviving Corporation shall be deemed to have been formed by the combination of
DCPS and MBS on December 31, 2003, and the pro forma combined net income (or
loss) of DCPS and MBS for the period from January 1, 2004 through the Closing
Date shall be included in the calculation of Newco Net Income for such year;
provided, further, that there shall be (1) excluded from any calculation of
Newco Net Income any (i) extraordinary or nonrecurring gains and (ii) with
respect to the year ended December 31, 2004, the amount of any compensation or
other amounts paid to either of the Sellers or their Affiliates prior to the
Closing Date in excess of the pro-rated portion of the base salary to be paid
to the Sellers in respect of the year ended December 31, 2004 pursuant to the
employment agreements contemplated by Section 7.02(h), and (2) included in any
calculation of Newco Net Income any amounts paid by SurgiCare to a Person other
than the Surviving Corporation during the applicable fiscal year in breach of
Section 6.10 of this Agreement. (x) PBGC means the Pension Benefit Guaranty Corporation. (y) person or Person means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
person as defined in  -72-




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section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a government. (z) Prohibited Transaction has the meaning set forth in ERISA Section
406 and Code Section 4975. (aa) Reverse Split Fraction means a number equal to 0.10. (bb) subsidiary or subsidiaries of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person (either
alone or through or together with any other subsidiary) owns, directly or
indirectly, 10% or more of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity. (cc) SurgiCare Employee Benefit Plan means any current (a) nonqualified
deferred compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan (including any Multiemployer Plan), (d) Employee Welfare Benefit Plan,
material fringe benefit plan or program, or (e) profit sharing, stock option,
stock purchase, equity, stock appreciation, bonus, incentive deferred
compensation, severance plan or other benefit plan, which covers any current or
former employees, officers, directors, independent contractors (or their
dependents or beneficiaries) of SurgiCare or any SurgiCare Subsidiary or for
which SurgiCare or any SurgiCare Subsidiary may have any Liability. (dd) SurgiCare Material Adverse Effect means any one or more
circumstances, events, occurrences, changes or effects that, individually or in
the aggregate with respect to all events, occurrence, changes or effects with
respect to which such phrase is used herein, (i) materially and adversely
affects, or poses a material risk of materially and adversely affecting, the
business, operations, condition (financial or otherwise), assets (tangible or
intangible), results of operations or prospects of SurgiCare and the SurgiCare
Subsidiaries taken as a whole, or (ii) is reasonably likely to prevent or delay
the consummation of the Acquisitions. (ee) SurgiCare Subsidiary means any subsidiary of SurgiCare. (ff) Tax or Taxes means all taxes, fees, levies, duties, tariffs,
imposts, and governmental impositions or charges of any kind in the nature of
(or similar to) taxes, payable to any federal, state, local, or foreign
authority, whether disputed or not, including without limitation (i) income,
franchise, profits, gross receipts, ad valorem, net worth value added, sales,
use, service, real or personal property, special assessments, capital stock,
license, payroll, withholding, employment, social security (or similar),
workers compensation, unemployment compensation, disability, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
environmental (including taxes under Code section 59A), customs duties,
registration, alternative and add-on minimum, estimated, transfer and gains
taxes, or other tax of any kind whatsoever, and (ii) in all cases, including
interest, penalties, additional taxes and additions to tax imposed with respect
thereto.  -73-




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(gg) Tax Return means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule,
attachment or amendment thereto. (hh) Trademarks means all trademarks, service marks, trade names, trade
dress, and logos, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith. (ii) Transactions means the Acquisitions and the other transactions
contemplated by this Agreement, including without limitation the
Recapitalization, the Debt Exchange the Equity Financing, the Board Election,
the adoption of the New Equity Plan and the IPS Acquisition. SECTION 9.04 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
(or, in the case of DCPS, the DCPS Sellers) at any time prior to the Closing;
provided, however, that the prior written consent of Brantley Partners IV and
IPS shall be required for any amendment hereto. This Agreement may not be
amended, except by an instrument in writing signed by the parties hereto. SECTION 9.05 Waiver. At any time prior to the Closing, any party hereto
may (a) extend the time for the performance of any obligation or other act of
any other party hereto, (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto, or
(c) waive compliance with any agreement or condition contained herein;
provided, however, that the prior written consent of Brantley Partners IV shall
be required in any such event. Any such extension or waiver will be valid if
set forth in an instrument in writing signed by the party or parties to be
bound thereby. The failure of any party to this Agreement to assert any of its
rights under this Agreement will not constitute a waiver of such rights. SECTION 9.06 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect as long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible. SECTION 9.07 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder will be assigned by
any of the parties hereto (whether by operation of Law or otherwise) without
the prior written consent of the other parties, provided, however, that each of
SurgiCare and Newco will be entitled to assign this Agreement and any rights,
interests or obligations hereunder to any of its Affiliates or, following the
Closing, any senior lender of SurgiCare without the consent of DCPS, MBS or the
Sellers. Subject to the preceding sentence, this Agreement will be binding
upon and will inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding  -74-




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anything contained in this Agreement to the contrary, nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. SECTION 9.08 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or in equity. SECTION 9.09 Governing Law; Forum. This Agreement will be governed by,
and construed in accordance with, the laws of the State of Texas applicable to
contracts executed in and to be performed in that state and without regard to
any applicable conflicts of law principles. SECTION 9.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and will not affect in
any way the meaning or interpretation of this Agreement. SECTION 9.11 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered will be deemed to be an original but all of which taken together
will constitute one and the same agreement. SECTION 9.12 Entire Agreement. This Agreement (including the exhibits
hereto, the disclosure schedule called for hereunder and furnished by SurgiCare
and Newco to DCPS and MBS prior to the execution of this Agreement (the
SurgiCare Disclosure Schedule) and the disclosure schedule called for
hereunder and furnished by DCPS and MBS to SurgiCare and Newco prior to the
execution of this Agreement (the DCPS/MBS Disclosure Schedule)) and the
Confidentiality Agreements constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties hereto with respect thereto.
No addition to or modification of any provision of this Agreement will be
binding upon any party hereto unless made in writing and signed by all parties
hereto. SECTION 9.13 Set-Off. Amounts owing by any Seller to SurgiCare or Newco
under Section 2.07 of this Agreement may, but shall not be required to, be
set-off against any amounts owing by SurgiCare or Newco to the Sellers under
any provision of this Agreement (including without limitation Section 2.07) or
the DCPS Notes. SECTION 9.14 Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. [Remainder of Page Intentionally Left Blank]  -75-




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IN WITNESS WHEREOF, SurgiCare, Newco, DCPS, MBS and the Sellers have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized. SURGICARE:
    
    SURGICARE, INC.By:
    
    \s\ Keith LeBlancName:
Title:
    
    Keith LeBlanc
CEONEWCO:
    
    DCPS/MBS ACQUISITION, INC.By:
    
    \s\ Keith LeBlancName:
Title:
    
    Keith LeBlanc
PresidentDCPS:
    
    DENNIS CAIN PHYSICIAN SOLUTIONS, LTD.By:
    
    \s\ Dennis CainName:
Title:
    
    Dennis Cain
PresidentMBS:
    
    MEDICAL BILLING SERVICES, INC.By:
    
    \s\ Tom M. SmithName:
Title:
    
    Tom M. Smith
PresidentDCPS SELLERS:
    
    By:
    
    \s\ Dennis Cain
Dennis CainBy:
    
    \s\ Valerie Cain
Valerie Cain




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MBS SELLERS:
    
    By:
    
    \s\ Tom M. Smith
Tom M. SmithBy:
    
    \s\ John Pruitt
John PruittBy:
    
    \s\ Jane Barnes
Jane Barnes




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Schedule 2.01(c)(i) MBS Stockholder Percentages Tom M. Smith
    
    
    89
    %*John Pruitt
    
    
    5
    %Jane Barnes
    
    
    5
    %Brown & Associates
    
    
    1
    %*
 *It is contemplated that the MBS Common Shares held by Brown & Associates will
be transferred to Tom M. Smith prior to the Closing, in which case the
Stockholder Percentage of Tom M. Smith will be 90% and the Stockholder
Percentage of Brown & Associates will be 0%.




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Schedule 2.01(c)(ii) DCPS Percentages Dennis Cain
    
    
    50
    %Valerie Cain
    
    
    50
    %