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EXHIBIT 2.1

AMENDED AND RESTATED

AGREEMENT AND PLAN OF MERGER

by and among

SURGICARE, INC.

IPS ACQUISITION, INC.

and

INTEGRATED PHYSICIAN SOLUTIONS, INC.

Conformed copy dated as of February 9, 2004,
as amended by
First Amendment to Agreement and Plan of Merger dated as of
July 16, 2004
and
Second Amendment to Agreement and Plan of Merger dated as
of September 9, 2004







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TABLE OF CONTENTS

PageARTICLE I
THE MERGER
    
    
    3SECTION 1.01 The Merger
    
    
    3SECTION 1.02 Closing; Effective Time.
    
    
    3SECTION 1.03 Effect of the Merger
    
    
    3SECTION 1.04 Subsequent Actions
    
    
    4SECTION 1.05 Certificate of Incorporation and By-Laws.
    
    
    4SECTION 1.06 Directors and Officers
    
    
    4ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
    
    
    4SECTION 2.01 Conversion of Securities.
    
    
    4SECTION 2.02 Exchange of Certificates.
    
    
    6SECTION 2.03 Stock Transfer Books
    
    
    9SECTION 2.04 Stock Options and Warrants
    
    
    9SECTION 2.05 Closing Certificates
    
    
    9ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SURGICARE AND MERGER SUB
    
    
    9SECTION 3.01 Organization and Qualification; Subsidiaries.
    
    
    9SECTION 3.02 Certificate of Incorporation and By-Laws
    
    
    10SECTION 3.03 Capitalization.
    
    
    10SECTION 3.04 Authority Relative to this Agreement.
    
    
    12SECTION 3.05 No Conflict; Required Filings and Consents.
    
    
    13SECTION 3.06 Permits; Accreditation.
    
    
    13SECTION 3.07 Compliance with Laws.
    
    
    14SECTION 3.08 SEC Filings; Financial Statements.
    
    
    16SECTION 3.09 Undisclosed Liabilities
    
    
    17SECTION 3.10 Absence of Certain Changes or Events
    
    
    17SECTION 3.11 Absence of Litigation
    
    
    19SECTION 3.12 Employee Benefit Matters.
    
    
    19SECTION 3.13 Material Contracts.
    
    
    21SECTION 3.14 Environmental Matters
    
    
    23SECTION 3.15 Title to Properties; Absence of Liens and Encumbrances.
    
    
    23SECTION 3.16 Intellectual Property.
    
    
    24SECTION 3.17 Taxes.
    
    
    25SECTION 3.18 Insurance.
    
    
    26SECTION 3.19 Opinion of Financial Advisor
    
    
    26SECTION 3.20 Brokers
    
    
    26SECTION 3.21 Employees
    
    
    26SECTION 3.22 Transactions with Affiliates
    
    
    27SECTION 3.23 Stockholder Rights Agreement
    
    
    27SECTION 3.24 DCPS/MBS Acquisition Agreement
    
    
    27SECTION 3.25 Offering Valid
    
    
    27SECTION 3.26 Certain Payments
    
    
    27




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PageARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IPS
    
    
    28SECTION 4.01 Organization and Qualification; Subsidiaries.
    
    
    28SECTION 4.02 Certificate of Incorporation and By-Laws
    
    
    28SECTION 4.03 Capitalization.
    
    
    29SECTION 4.04 Authority Relative to this Agreement.
    
    
    30SECTION 4.05 No Conflict; Required Filings and Consents.
    
    
    31SECTION 4.06 Permits; Accreditation.
    
    
    31SECTION 4.07 Compliance with Laws.
    
    
    32SECTION 4.08 Financial Statements.
    
    
    33SECTION 4.09 Undisclosed Liabilities
    
    
    34SECTION 4.10 Absence of Certain Changes or Events
    
    
    34SECTION 4.11 Absence of Litigation
    
    
    35SECTION 4.12 Employee Benefit Matters.
    
    
    36SECTION 4.13 Material Contracts.
    
    
    37SECTION 4.14 Environmental Matters
    
    
    39SECTION 4.15 Title to Properties; Absence of Liens and Encumbrances.
    
    
    39SECTION 4.16 Intellectual Property.
    
    
    40SECTION 4.17 Taxes.
    
    
    41SECTION 4.18 Insurance.
    
    
    43SECTION 4.19 Brokers
    
    
    43SECTION 4.20 Employees
    
    
    43SECTION 4.21 Transactions with Affiliates
    
    
    44SECTION 4.22 Stockholder Rights Agreement
    
    
    44SECTION 4.23 Opinion of Financial Advisor
    
    
    44SECTION 4.24 Certain Payments
    
    
    44ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
    
    
    44SECTION 5.01 Conduct of Business by SurgiCare Pending the Merger
    
    
    44SECTION 5.02 Conduct of Business by IPS Pending the Merger
    
    
    47SECTION 5.03 Notification of Certain Matters
    
    
    50ARTICLE VI
ADDITIONAL AGREEMENTS
    
    
    50SECTION 6.01 Proxy Statement; Stockholders Meetings.
    
    
    50SECTION 6.02 Access to Information; Confidentiality
    
    
    52SECTION 6.03 No Solicitation of Transactions by SurgiCare.
    
    
    53SECTION 6.04 No Solicitation of Transactions by IPS.
    
    
    55SECTION 6.05 Directors and Officers Indemnification and Insurance.
    
    
    57SECTION 6.06 Further Action; Consents
    
    
    57SECTION 6.07 Public Announcements
    
    
    58SECTION 6.08 IPS Stock Options
    
    
    58SECTION 6.09 AMEX Listing
    
    
    58SECTION 6.10 Listing of SurgiCare Class A Common Shares
    
    
    58SECTION 6.11 Amendment or Waiver of Agreements
    
    
    58SECTION 6.12 Form S-3 Eligibility
    
    
    59SECTION 6.13 IPS Audited Financial Statements
    
    
    59




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PageARTICLE VII
CONDITIONS TO THE MERGER
    
    
    59SECTION 7.01 Conditions to the Obligations of Each Party
    
    
    59SECTION 7.02 Conditions to the Obligations of SurgiCare and Merger Sub
    
    
    59SECTION 7.03 Conditions to the Obligations of IPS
    
    
    61ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND EXPENSES
    
    
    64SECTION 8.01 Termination
    
    
    64SECTION 8.02 Effect of Termination
    
    
    66SECTION 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
    
    
    75SECTION 9.07 Assignment; Binding Effect; Benefit
    
    
    75SECTION 9.08 Specific Performance
    
    
    75SECTION 9.09 Governing Law; Forum
    
    
    75SECTION 9.10 Headings
    
    
    75SECTION 9.11 Counterparts
    
    
    75SECTION 9.12 Entire Agreement
    
    
    76SECTION 9.13 Waiver of Jury Trial
    
    
    76EXHIBIT A Form of SurgiCare Restated CharterEXHIBIT B Form of Debt Exchange AgreementEXHIBIT C Form of Stock Subscription AgreementEXHIBIT D Form of New Equity PlanEXHIBIT E Form of Employment AgreementEXHIBIT F Form of Opinion of Morris, Manning & Martin, LLPEXHIBIT G Form of Investment LetterEXHIBIT H Form of Opinion of Strasburger & Price, LLPEXHIBIT I Form of SurgiCare Amended and Restated By-LawsEXHIBIT J Form of Registration Rights AgreementEXHIBIT K Form of DCPS/MBS Acquisition Agreement




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GLOSSARY OF DEFINED TERMS

Location ofDefined Term
    
    DefinitionAcquisition Agreement
    
    Section 6.03(c)Action
    
    Section 3.11Affiliate or affiliate
    
    Section 9.03Affiliated Group
    
    Section 3.17(e)Aggregate Merger Consideration
    
    Section 9.03Agreement
    
    PreambleALTA
    
    Section 3.15(b)AMEX
    
    Section 3.05(b)Appraisal Shares
    
    Section 2.01(c)Bank Austria Warrants
    
    Section 4.03(a)Board Election
    
    Section 3.04(b)Brantley III
    
    RecitalsBrantley III Loan Amount
    
    Section 9.03Brantley III Loan Conversion Shares
    
    Section 9.03Brantley III Notes
    
    RecitalsBrantley IV
    
    RecitalsBrantley Capital
    
    RecitalsBrantley Capital Loan Amount
    
    Section 9.03Brantley Capital Loan Conversion Shares
    
    Section 9.03Brantley Capital Notes
    
    RecitalsBrantley Warrants
    
    Section 2.04Bridge Notes
    
    Recitalsbusiness day
    
    Section 9.03Certificate of Merger
    
    Section 1.02(b)Certificates
    
    Section 2.01(b)Class A Common Closing Price
    
    Section 9.03Closing
    
    Section 1.02(a)Closing Date
    
    Section 1.02(a)Code
    
    RecitalsCommon/Series C Exchange Ratio
    
    Section 2.01(a)Confidentiality Agreement
    
    Section 6.02Consent
    
    Section 3.05(b)Contract
    
    Section 3.03(b)control
    
    Section 9.03DCPS
    
    Section 9.03DCPS/MBS Acquisition
    
    Section 9.03DCPS/MBS Acquisition Agreement
    
    Section 9.03Debt Financing
    
    Section 4.08DGCL
    
    RecitalsEffective Time
    
    Section 1.02(b)Employee Pension Benefit Plan
    
    Section 9.03




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Location ofDefined Term
    
    DefinitionEmployee Welfare Benefit Plan
    
    Section 9.03Environmental Laws
    
    Section 9.03Environmental Permits
    
    Section 3.14Equity Financing
    
    RecitalsERISA
    
    Section 3.12(a)Exchange Act
    
    Section 3.08Exchange Agent
    
    Section 2.02Exchange Fund
    
    Section 2.02Expenses
    
    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 9.03Investment Letters
    
    Section 7.02IPS
    
    PreambleIPS Accreditations
    
    Section 4.06(c)IPS Acquisition Proposal
    
    Section 6.04(b)IPS Acquisition Transaction
    
    Section 6.04(a)IPS Balance Sheet
    
    Section 4.08(b)IPS Board
    
    RecitalsIPS Board Approval
    
    Section 4.04(b)IPS Bridge Notes
    
    RecitalsIPS By-Laws
    
    Section 4.02IPS Capital Stock
    
    RecitalsIPS Charter
    
    Section 4.02IPS Charter Amendment
    
    RecitalsIPS Common/Series C Merger Consideration
    
    Section 9.03IPS Common Shares
    
    RecitalsIPS Common Stock
    
    RecitalsIPS Disclosure Schedule
    
    Section 9.12IPS Employee Benefit Plan
    
    Section 9.03IPS Intellectual Property
    
    Section 4.16(b)IPS Material Adverse Effect
    
    Section 9.03IPS Material Contracts
    
    Section 4.13(a)IPS Option Plan
    
    Section 2.04IPS Permits
    
    Section 4.06(a)IPS Real Property
    
    Section 4.15(b)IPS Series A
    
    Recitals




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Location ofDefined Term
    
    DefinitionIPS Series A Merger Consideration
    
    Section 9.03IPS Series A Shares
    
    Section 2.01(a)IPS Series A-1
    
    RecitalsIPS Series A-1 Merger Consideration
    
    Section 9.03IPS Series A-1 Shares
    
    Section 2.01(a)IPS Series A-2
    
    RecitalsIPS Series A-2 Merger Consideration
    
    Section 9.03IPS Series A-2 Shares
    
    Section 2.01(a)IPS Series B
    
    RecitalsIPS Series B Merger Consideration
    
    Section 9.03IPS Series B Shares
    
    Section 2.01(a)IPS Series C
    
    RecitalsIPS Series C Shares
    
    Section 2.01(a)IPS Stock Options
    
    Section 2.04IPS Stockholder Approval
    
    Section 4.04(a)IPS Stockholders Meeting
    
    Section 6.01(a)IPS Subsequent Adverse Determination
    
    Section 6.04(c)IPS Subsidiary
    
    Section 9.03IPS Superior Proposal
    
    Section 6.04(b)Judgment
    
    Section 3.05(a)knowledge
    
    Section 9.03Lakepoint
    
    RecitalsLaw
    
    Section 1.02(b)Liability
    
    Section 9.03Liens
    
    Section 3.01(b)Maximum Premium
    
    Section 6.05(b)MBS
    
    Section 9.03Medicaid
    
    Section 3.07(b)Medicare
    
    Section 3.07(b)Merger
    
    RecitalsMerger Consideration
    
    Section 2.01(c)Merger Sub
    
    PreambleMerger Sub Board
    
    RecitalsMultiemployer Plan
    
    Section 9.03New Equity Plan
    
    Section 3.04(a)Order
    
    Section 7.01(b)PBGC
    
    Section 9.03Person or person
    
    Section 9.03Prohibited Transaction
    
    Section 9.03Proxy Statement
    
    Section 6.01Recapitalization
    
    RecitalsRequired Consents
    
    Section 3.05(b)Reverse Split Fraction
    
    Section 9.03Reverse Stock Split
    
    RecitalsRule 145 Affiliate
    
    Section 6.08(a)SEC
    
    Section 3.05(b)








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Location ofDefined Term
    
    DefinitionSecurities Act
    
    Section 3.08(a)Stock Subscription Agreement
    
    Recitalssubsidiary or subsidiaries
    
    Section 9.03SurgiCare
    
    PreambleSurgiCare Accreditations
    
    Section 3.06(c)SurgiCare Acquisition Proposal
    
    Section 6.03(b)SurgiCare Acquisition Transaction
    
    Section 6.03(a)SurgiCare Balance Sheet
    
    Section 3.08(b)SurgiCare Board
    
    RecitalsSurgiCare Board Approval
    
    Section 3.04(b)SurgiCare Bridge Notes
    
    RecitalsSurgiCare By-Laws
    
    Section 3.02SurgiCare Capital Stock
    
    RecitalsSurgiCare Charter
    
    Section 3.02SurgiCare Class A Common Shares
    
    Section 2.01(a)SurgiCare Class A Common Stock
    
    RecitalsSurgiCare Class B Common Stock
    
    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
    
    RecitalsSurgiCare Series AA
    
    RecitalsSurgiCare Stock Options
    
    Section 3.03(a)SurgiCare Stockholder Approval
    
    Section 3.04(a)SurgiCare Stockholders Meeting
    
    Section 6.01(a)SurgiCare Subsequent Adverse Determination
    
    Section 6.03(c)SurgiCare Subsidiary
    
    Section 9.03SurgiCare Superior Proposal
    
    Section 6.03(b)SurgiCare Warrants
    
    Section 3.03(a)Surviving Corporation
    
    Section 1.01Tax or Taxes
    
    Section 9.03Tax Return
    
    Section 9.03Trademarks
    
    Section 9.03Transactions
    
    Section 9.03TRICARE
    
    Section 3.07(b)U.S. GAAP
    
    Section 3.08(b)Voting IPS Debt
    
    Section 4.03(c)








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Location ofDefined Term
    
    DefinitionVoting SurgiCare Debt
    
    Section 3.03(c)








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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER

THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGERdated as of
February 9, 2004 (this Agreement) is by and among SURGICARE, INC., a Delaware
corporation (SurgiCare), IPS ACQUISITION, INC., a Delaware corporation and a
wholly-owned subsidiary of SurgiCare (Merger Sub), and INTEGRATED PHYSICIAN
SOLUTIONS, INC., a Delaware corporation (IPS). The Agreement amends and
restates in its entirety the Agreement and Plan of Merger dated as of November
18, 2003 entered into among SurgiCare, Merger Sub and IPS (the Prior
Agreement). 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),
Merger Sub (the Merger Sub Board) and IPS (the IPS Board) have each
determined that it is advisable and in the best interests of their respective
stockholders for SurgiCare to enter into a business combination with IPS upon
the terms and subject to the conditions set forth herein;

WHEREAS, in furtherance of such combination, the SurgiCare Board, the
Merger Sub Board and the IPS Board have each approved the merger (the Merger)
of Merger Sub with and into IPS in accordance with the applicable provisions of
the Delaware General Corporation Law (the DGCL), and upon the terms and
subject to the conditions set forth herein;

WHEREAS, prior to the Merger, (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), and the Class C Common Stock, par value
$0.001 per share (the SurgiCare Class C Common Stock), of SurgiCare will be
authorized and (iii) SurgiCare will effect a reverse stock split (the 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), of SurgiCare
equal to the Reverse Split Fraction (as hereinafter defined), and (B) all
outstanding shares of Series A Preferred Stock, $0.001 par value per share
(SurgiCare Series A), of SurgiCare and, unless otherwise agreed by IPS,
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 of the SurgiCare Series A and, if applicable,
SurgiCare Series AA being referred to herein as the Recapitalization);

WHEREAS, prior to the Merger, IPS will file an amendment to its
certificate of incorporation (the IPS Charter Amendment) in form and
substance necessary to make Section 2.01 hereof consistent with the terms of
such certificate of incorporation;







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WHEREAS, prior to the date hereof, 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 such date, 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 such date, 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 Merger, 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 in substantially the form attached
hereto as Exhibit B (the Debt Exchange Agreement; the transactions
contemplated thereby are referred to herein as the Debt Exchange).

WHEREAS, prior to the date hereof, Brantley Capital Corporation (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 Merger, 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,
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 Merger, 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 in substantially the form
attached hereto as Exhibit C (the Stock Subscription Agreement; the
transactions contemplated thereby are referred to herein as the Equity
Financing);

WHEREAS, simultaneously with, and as a condition to, the Merger, SurgiCare
or one of its wholly-owned subsidiaries will consummate the DCPS/MBS
Acquisition;

WHEREAS, for United States
federal income tax purposes, (i) the 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 Merger, together with the
DCPS/MBS 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;

WHEREAS, pursuant to the Merger, each outstanding share of common stock,
par value $0.001 per share, of IPS (IPS Common Stock), Series A Convertible
Preferred Stock, par value $0.001 per share, of IPS (IPS Series A), Series
A-1 Convertible Preferred Stock, par value $0.001 per share, of IPS (IPS
Series A-1), Series A-2 Convertible Preferred Stock, par value $0.001 per
share, of IPS (IPS Series A-2), Series B Convertible Preferred Stock, par
value $0.001 per share, of IPS (IPS Series B) and Series C Convertible
Preferred Stock, par value $0.001 per share, of IPS (IPS Series C and,
collectively with the IPS Common Stock, the IPS



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Series A, the IPS Series A-1, the IPS Series A-2 and the IPS Series B, the
IPS Capital Stock) shall be converted into the right to receive the
applicable Merger Consideration (as defined herein), upon the terms and subject
to the conditions set forth herein; and

WHEREAS, SurgiCare, Merger Sub and IPS desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;

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 MERGER

SECTION 1.01 The Merger. Upon the terms of this Agreement and subject to
the conditions set forth in Article VII, and in accordance with the DGCL, at
the Effective Time (as defined below), Merger Sub will be merged with and into
IPS. As a result of the Merger, the separate corporate existence of Merger Sub
will cease and IPS will continue as the surviving corporation of the Merger
(the Surviving Corporation) and will continue to be governed by the DGCL.

SECTION 1.02 Closing; Effective Time.

(a) The closing of the Merger (the Closing), the Equity Financing, the
Debt Exchange and the DCPS/MBS 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 IPS may agree in writing (the Closing
Date). Subject to the provisions of Article VII, failure to consummate the
Merger 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, IPS, SurgiCare and Merger Sub will cause a certificate
of merger (the Certificate of Merger) to be duly prepared, executed and filed
with the Secretary of State of the State of Delaware as provided in Section 251
of the DGCL 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 Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or at such
later time as is specified in the Certificate of Merger (the Effective Time).

SECTION 1.03 Effect of the Merger. At the Effective Time, the effect of
the Merger will be as provided in this Agreement, the Certificate of Merger and
the DGCL. Without



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limiting the generality of the foregoing, and subject thereto, at the
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 IPS and Merger Sub
will vest in the Surviving Corporation, and all debts, liabilities, obligations
and duties of IPS and Merger Sub will become the debts, liabilities and duties
of the Surviving Corporation.

SECTION 1.04 Subsequent Actions. If, at any time after the 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 either IPS or Merger Sub 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 IPS, SurgiCare and Merger Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of IPS, SurgiCare and Merger Sub 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.

(a) At the Effective Time, the IPS Charter will, by virtue of the Merger,
be amended and restated to be identical to the certificate of incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, except that
Article I will state that the name of IPS is Integrated Physician Solutions,
Inc., until duly amended or repealed.

(b) At the Effective Time, the IPS By-Laws will, by virtue of the Merger,
be amended and restated to be identical to the by-laws of Merger Sub, as in
effect immediately prior to the Effective Time, except that such by-laws, as so
amended and restated, will state that the name of IPS is Integrated Physician
Solutions, Inc., until duly amended or repealed.

SECTION 1.06 Directors and Officers. The directors of IPS immediately
prior to the 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 IPS immediately prior
to the Effective Time will be the officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.

ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

SECTION 2.01 Conversion of Securities.

(a) At the Effective Time, by virtue of the Merger and without any action
on the part of SurgiCare, Merger Sub, IPS or the holders of any of the
following securities:

(i) except as otherwise set forth in Section 2.01(b):



| | (A) |  | each share of IPS Series A
(collectively, the IPS Series A Shares) issued and
outstanding immediately prior to the Effective Time
(other than any IPS Series A Shares to be canceled
pursuant to Section 2.01(a)(ii)) shall be canceled and
automatically converted, subject to Section 2.02(e),
into the right to receive the number of shares of
SurgiCare Class A Common Stock (shares of SurgiCare
Class A Common Stock being referred to herein
collectively as the SurgiCare Class A Common Shares)
equal to the quotient of the IPS Series A Merger
Consideration divided bythe aggregate number of IPS
Series A Shares outstanding immediately prior to the
Effective Time (assuming for such purpose the exercise
of all then outstanding options, warrants, conversion
rights, commitments or other rights to acquire IPS
Series A Shares, whether vested or unvested):
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (B) |  | each share of IPS Series A-1
(collectively, the IPS Series A-1 Shares) issued and
outstanding immediately prior to the Effective Time
(other than any IPS Series A-1 Shares to be canceled
pursuant to Section 2.01(a)(ii)) shall be canceled and
automatically converted, subject to Section 2.02(e),
into the right to receive the number of SurgiCare Class
A Common Shares equal to the quotient of the IPS Series
A-1 Merger Consideration divided bythe aggregate number
of IPS Series A-1 Shares outstanding immediately prior
to the Effective Time (assuming for such purpose the
exercise of all then outstanding options, warrants,
conversion rights, commitments or other rights to
acquire IPS Series A-1 Shares, whether vested or
unvested);                                                                                                                       
|
| | (C) |  | each share of IPS Series A-2
(collectively, the IPS Series A-2 Shares) issued and
outstanding immediately prior to the Effective Time
(other than any IPS Series A-2 Shares to be canceled
pursuant to Section 2.01(a)(ii)) shall be canceled and
automatically converted, subject to Section 2.02(e),
into the right to receive the number of SurgiCare Class
A Common Shares equal to the quotient of the IPS Series
A-2 Merger Consideration divided bythe aggregate number
of IPS Series A-2 Shares outstanding immediately prior
to the Effective Time (assuming for such purpose the
exercise of all then outstanding options, warrants,
conversion rights, commitments or other rights to
acquire IPS Series A-2 Shares, whether vested or
unvested, other than any convertible debt being
exchanged pursuant to the Debt Exchange Agreement);                              
|
| | (D) |  | each share of IPS Series B
(collectively, the IPS Series B Shares) issued and
outstanding immediately prior to the Effective Time                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



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| |     |  | (other than any IPS Series B Shares to be canceled
pursuant to Section 2.01(a)(ii)) shall be canceled and
automatically converted, subject to Section 2.02(e),
into the right to receive the number of SurgiCare Class
A Common Shares equal to the quotient of the IPS Series
B Merger Consideration divided by the aggregate number
of IPS Series B Shares outstanding immediately prior to
the Effective Time (assuming for such purpose the
exercise of all then outstanding options, warrants,
conversion rights, commitments or other rights to
acquire IPS Series B Shares, whether vested or
unvested); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (E) |  | each share of IPS Common Stock
(collectively, the IPS Common Shares) and each share
of IPS Series C (collectively, the IPS Series C
Shares) issued and outstanding immediately prior to the
Effective Time (other than any IPS Common Shares and IPS
Series C Shares to be canceled pursuant to Section
2.01(a)(ii)) shall be canceled and automatically
converted, subject to Section 2.02(e), into the right to
receive the number of SurgiCare Class A Common Shares
equal to the quotient of the IPS Common/Series C Merger
Consideration divided by the aggregate number of IPS
Common Shares and IPS Series C Shares outstanding
immediately prior to the Effective Time (assuming for
such purpose the exercise of all then outstanding
options, warrants, conversion rights, commitments or
other rights to acquire IPS Common Shares or IPS Series
C Shares, whether vested or unvested, other than the
options canceled pursuant to Section 6.08 hereof and
other than the Brantley Warrants, the IPS Series A
Shares, the IPS Series A-1 Shares, the IPS Series A-2
Shares, the IPS Series B Shares and, with respect to the
IPS Common Shares, the IPS Series C Shares) (such
fraction, the Common/Class C Exchange Ratio);

(ii) each share of IPS Capital Stock owned by SurgiCare or any
direct or indirect wholly owned subsidiary of SurgiCare or held in
treasury by IPS or any Subsidiary of IPS immediately prior to the
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
Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, $0.001 par value per share, of
the Surviving Corporation.

(b) Notwithstanding any provisions of this Agreement to the contrary,
shares of IPS Capital Stock which are issued and outstanding immediately prior
to the Effective Time and which are held by any Person who has not voted such
shares of IPS Capital Stock in favor of the Merger, who has delivered a written
demand for appraisal of such shares of IPS Capital Stock in the manner provided
by the DGCL and who, as of the Effective Time, has perfected and



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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 Merger Consideration pursuant to this Article II. The holders
thereof will be entitled only to such rights as are granted by Section 262 of
the DGCL. Each holder of Appraisal Shares who becomes entitled to payment for
such shares of IPS Capital Stock pursuant to Section 262 of the DGCL will
receive payment therefor from the Surviving Corporation in accordance with the
DGCL; provided, however, that (i) if any such holder of Appraisal Shares fails
to establish its entitlement to appraisal rights as provided in Section 262 of
the DGCL, (ii) if any such holder of Appraisal Shares effectively withdraws its
demand for appraisal of such shares of IPS Capital Stock or loses its right to
appraisal and payment for its shares of IPS Common Stock under Section 262 of
the DGCL, 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 262 of the DGCL, such
holder will forfeit the right to appraisal of such shares of IPS Capital Stock
and each such share of IPS Capital Stock will be treated as if such share of
IPS Capital Stock had been converted, as of the Effective Time, into a right to
receive the applicable Merger Consideration, without interest thereon, from the
Surviving Corporation as provided in Section 2.01(a). IPS will give SurgiCare
prompt notice of any demands received by IPS for appraisal of IPS Capital
Stock, and, until the Effective Time, SurgiCare will have the opportunity to
participate in all negotiations and proceedings with respect to such demands.
IPS 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.

SECTION 2.02 Exchange of Certificates.

(a) Exchange Agent. SurgiCare shall deposit, or shall cause to be
deposited, with Registrar and Transfer Company or such other bank or trust
company that may be designated by SurgiCare and is reasonably satisfactory to
IPS (the Exchange Agent), for the benefit of the holders of shares of IPS
Capital Stock, for exchange in accordance with this Article II through the
Exchange Agent, certificates representing SurgiCare Class A Common Shares
issuable pursuant to Section 2.01 as of the Effective Time, and cash, from time
to time as required to make payments in lieu of any fractional shares pursuant
to Section 2.02(e) (the aggregate of such cash and certificates for SurgiCare
Class A Common Shares, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the Exchange Fund). If
requested by the Exchange Agent, SurgiCare and IPS will enter into a mutually
acceptable exchange agent agreement which will set forth the duties,
responsibilities and obligations of the Exchange Agent. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the SurgiCare Class A
Common Shares contemplated to be issued pursuant to Section 2.01, out of the
Exchange Fund. Except as contemplated by Section 2.02(f) hereof, the Exchange
Fund shall not be used for any other purpose.

(b) Exchange Procedures. As promptly as practicable after the Effective
Time (but in any event within five business days after the Effective Time),
SurgiCare shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of IPS Capital Stock (the Certificates) (i) a
letter of transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and (ii) instructions for use in



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effecting the surrender of the Certificates in exchange for certificates
representing SurgiCare Class A Common Shares and cash in lieu of any fractional
shares. Upon surrender to the Exchange Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may be reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole SurgiCare Class A Common Shares which such
holder has the right to receive in respect of the shares of IPS Capital Stock
formerly represented by such Certificate (after taking into account all shares
of IPS Capital Stock then held by such holder), cash in lieu of any fractional
SurgiCare Class A Common Shares to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder
is entitled pursuant to Section 2.02(c) (the SurgiCare Class A Common Shares,
cash, dividends and distributions being, collectively, the Merger
Consideration), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of shares of IPS Capital
Stock which is not registered in the transfer records of IPS, the applicable
Merger Consideration may be issued to a transferee if the Certificate
representing such shares of IPS Capital Stock is properly endorsed and
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to the Surviving
Corporation that any applicable share transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the applicable Merger Consideration. No interest
shall be paid or shall accrue on the cash payable upon surrender of any
Certificate.

(c) Distributions with Respect to Unexchanged SurgiCare Class A Common
Shares. No dividends or other distributions declared or made after the
Effective Time with respect to the SurgiCare Class A Common Shares with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the SurgiCare Class A Common Shares
represented thereby, and no cash payment in lieu of any fractional shares shall
be paid to any such holder pursuant to Section 2.02(e), until the holder of
such Certificate shall surrender such Certificate as provided in Section
2.02(b). Subject to the effect of escheat, tax or other applicable Laws (as
defined below), following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole SurgiCare Class A
Common Shares issued in exchange therefor, without interest, (i) promptly (but
in any event within five business days after such surrender), the amount of any
cash payable with respect to a fractional SurgiCare Class A Common Share to
which such holder is entitled pursuant to Section 2.02(e) and the amount of
dividends or other distributions with a record date after the Effective Time
and theretofore payable with respect to such whole SurgiCare Class A Common
Shares, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole SurgiCare Class A Common Shares.

(d) No Further Rights in IPS Capital Stock. All SurgiCare Class A Common
Shares issued (and represented by certificates delivered) upon conversion of
the shares of IPS Capital Stock in accordance with the terms hereof (including
any cash paid pursuant to Section 2.02(c) or (e)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of IPS
Capital Stock.



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(e) No Fractional Shares. No certificates or scrip representing
fractional SurgiCare Class A Common Shares shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution with respect to
SurgiCare Class A Common Shares shall be payable on or with respect to any
fractional share and such fractional share interests will not entitle the owner
thereof to any rights of a stockholder of SurgiCare. In lieu of any such
fractional share, each holder of IPS Capital Stock who would otherwise have
been entitled to a fraction of a SurgiCare Class A Common Share upon surrender
of Certificates for exchange shall be paid upon such surrender cash (without
interest) determined by multiplying (i) the fractional share interest to which
such holder would otherwise be entitled (after taking into account all shares
of IPS Capital Stock held at the Effective Time by such holder) times (ii) the
Class A Common Closing Price. As soon as practical after determining the
amount of cash, if any, to be paid to holders of IPS Capital Stock with respect
to any fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of IPS Capital Stock. SurgiCare will make available to
the Exchange Agent the cash necessary for this purpose.

(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of shares of IPS Capital Stock for twelve
months after the Effective Time shall be delivered to SurgiCare, upon demand,
and any holders of shares of IPS Capital Stock who have not theretofore
complied with this Article II shall thereafter look only to SurgiCare for the
applicable Merger Consideration. Any portion of the Exchange Fund remaining
unclaimed by holders of shares of IPS Capital Stock as of a date which is
immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity shall, to the extent permitted by
applicable Law, become the property of SurgiCare free and clear of any claims
or interest of any person previously entitled thereto.

(g) No Liability. None of SurgiCare, Merger Sub, IPS or the Surviving
Corporation shall be liable to any holder of shares of IPS Capital Stock for
any such shares of IPS Capital Stock (or dividends or distributions with
respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar Law.

(h) Withholding Rights. Each of the Surviving Corporation, SurgiCare and
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of IPS Capital Stock 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 the Surviving Corporation, SurgiCare or the Exchange Agent, 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 shares of IPS Capital
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation, SurgiCare or the Exchange Agent, as the case may be.

(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in such reasonable
amount as the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the



-8-



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Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate, the applicable Merger Consideration.

SECTION 2.03 Stock Transfer Books. At the Effective Time, the stock
transfer books of IPS shall be closed and there shall be no further
registration of transfers of shares of IPS Capital Stock thereafter on the
records of IPS. From and after the Effective Time, the holders of Certificates
representing shares of IPS Capital Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
IPS Capital Stock, except as otherwise provided in this Agreement or by Law.
On or after the Effective Time, any Certificates presented to the Exchange
Agent or SurgiCare for any reason shall be converted into the applicable Merger
Consideration.

SECTION 2.04 Stock Options and Warrants. Effective immediately after the
Effective Time, (a) all outstanding options (the IPS Stock Options) under
IPS 1996 Long-Term Incentive Plan (the IPS Option Plan) shall be cancelled
without the payment of any consideration in accordance with Section 6.08 hereof
and (b) the Bank Austria Warrants, to the extent not exercised prior to the
Effective Time, shall thereafter represent the right to purchase the number of
SurgiCare Class A Common Shares that would have been received by the holder of
the Bank Austria Warrants if the unexercised portion of those warrants had been
exercised immediately prior to the Effective Time.

SECTION 2.05 Closing Certificates. At the Closing, (a) SurgiCare shall
deliver to IPS a certificate, in form and substance satisfactory to IPS and
signed by its Chief Executive Officer and Chief Financial Officer, certifying
in reasonable detail the calculation of the amount of Fully-Diluted SurgiCare
Shares on the Closing Date, together with all supporting materials used in such
calculation, and (b) IPS shall deliver to SurgiCare a certificate, signed by
its Chief Executive Officer and Chief Financial Officer, certifying in
reasonable detail the calculation of (i) the aggregate number of IPS Series A
Shares, IPS Series A-1 Shares, IPS Series A-2 Shares, IPS Series B Shares, IPS
Series C Shares and IPS Common Shares outstanding immediately prior to the
Effective Time (assuming for such purpose the exercise of all then outstanding
options, warrants, conversion rights, commitments or other rights to acquire
shares of IPS Capital Stock, whether vested or unvested, other than the options
canceled pursuant to Section 6.08 hereof and other than the Brantley Warrants,
the IPS Series A Shares, the IPS Series A-1 Shares, the IPS Series A-2 Shares,
the IPS Series B Shares and the IPS Series C Shares) and (ii) the IPS Series A
Merger Consideration, the IPS Series A-1 Merger Consideration, the IPS Series
A-2 Merger Consideration and the IPS Series B Merger Consideration, together
with all supporting materials used in such calculation.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SURGICARE AND MERGER SUB

SurgiCare and Merger Sub, jointly and severally, hereby represent and
warrant to IPS that:

SECTION 3.01 Organization and Qualification; Subsidiaries.



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(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 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 IPS 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 IPS 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 SurgiCare Series
A and (iii) 1,200,000 shares of SurgiCare Series AA. At the close of business
on November 14, 2003 (i) 25,793,520 shares of SurgiCare Old Common Stock were
issued and outstanding, (ii) 1,225,100 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) 62,706 shares of SurgiCare Old Common
Stock were subject to options (the SurgiCare Stock Options) granted pursuant
to SurgiCares 2001 Stock Option Plan (the



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SurgiCare Option Plan), (vi) 1,225,100 shares of SurgiCare Old Common
Stock were reserved for issuance pursuant to the conversion of the shares of
SurgiCare Series A that were issued and outstanding, (vii) 10,975,610 shares of
SurgiCare Old Common Stock were reserved for issuance pursuant to the
conversion of the shares of SurgiCare Series AA that were issued and
outstanding and (viii) 10,789,082 shares of SurgiCare Old Common Stock were
reserved for issuance pursuant to the exercise of all outstanding warrants of
SurgiCare (the SurgiCare Warrants). Except as set forth above, at the close
of business on November 14, 2003 no shares of SurgiCare Capital Stock or other
securities of SurgiCare were issued, reserved for issuance or outstanding.

(b) All outstanding shares of SurgiCare Capital Stock are, and all such
shares that may be issued prior to the Effective Time 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 IPS 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.

(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



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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 Merger Sub 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 A Common
Shares to be issued pursuant to the Merger 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. Immediately following
the Effective Time, and after giving effect to the Merger, the Equity
Financing, the Debt Exchange, the DCPS/MBS Acquisition and the
Recapitalization, the authorized, issued and outstanding capital stock of
SurgiCare shall be as set forth in Schedule 3.03(f) of the SurgiCare Disclosure
Schedule.

SECTION 3.04 Authority Relative to this Agreement.

(a) Each of SurgiCare and Merger Sub 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 Merger Sub
of this Agreement and the consummation by each of SurgiCare and Merger Sub of
the Transactions have been duly authorized by all necessary corporate action on
the part of each of SurgiCare and Merger Sub, subject to the approval of the
issuance of SurgiCare Class A Common Shares in the Merger and the Debt
Exchange, as well as the DCPS/MBS Acquisition, the Recapitalization, the Equity
Financing, the election of each of the individuals listed in Section 7.03(o) to
the SurgiCare Board effective as of the Effective Time (the Board Election)
and the Orion HealthCorp, Inc. 2003 Incentive Plan in the form set forth as
Exhibit D 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, (iii) not less than a majority of the outstanding
shares of SurgiCare Series A and (iv) not less than a majority of the
outstanding shares of SurgiCare Series AA (the SurgiCare Stockholder
Approval). Each of SurgiCare and Merger Sub 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 Merger (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 Merger is 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 Merger,



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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
Merger 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 Merger Sub 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 Certificate of
Merger with the Secretary of State of the State of Delaware 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,



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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.



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(a) Except as disclosed in the Filed 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 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,



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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). On or before
October 16, 2003, SurgiCare and each SurgiCare Subsidiary will be prepared to
comply and will comply with 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 Effective
Time, (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



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misleading. No SurgiCare Subsidiary is subject to the periodic reporting
requirements of the Exchange Act. There is no 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.

(d) SurgiCare is eligible to file with the SEC registration statements on
Form S-3 for offerings to be made on a continuous basis pursuant to Rule 415
under the Securities Act.

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;



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(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;

(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 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;



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(i) any material revaluation by SurgiCare of any material asset (including
any writing off of notes or accounts receivable);

(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
IPS 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 IPS has been made.

(1) 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.



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(2) 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 Employee Benefit Plan, except where the
failure to do so would not have a SurgiCare Material Adverse Effect.

(3) 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.

(4) Each SurgiCare Employee Benefit Plan which is an Employee
Pension Benefit Plan intended to be qualified under Code Section 401(a)
is so qualified.

(5) 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.



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(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.

(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:

(1) 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;

(2) 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;

(3) 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;

(4) 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;

(5) all contracts, credit agreements, indentures and other
agreements evidencing indebtedness for borrowed money (including
capitalized leases);



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(6) all agreements under which SurgiCare or any SurgiCare Subsidiary
has advanced or loaned, or may be required to advance or loan, any funds;

(7) all guarantees of any obligations in excess of $50,000;

(8) all joint venture or other similar agreements;

(9) all lease agreements with annual lease payments in excess of
$50,000;

(10) 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;

(11) 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;

(12) 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;

(13) all contracts and agreements relating to the management or
development of ambulatory surgery centers by SurgiCare or any SurgiCare
Subsidiary;

(14) all affiliation agreements with hospitals or other health care
providers;

(15) all litigation settlement agreements, consent decrees,
corporate integrity agreements, and settlements with governmental
entities;

(16) all contracts and other agreements with Affiliates; and

(17) 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 IPS with copies
of all SurgiCare Material Contracts.



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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 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 IPS 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 IPS 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



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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 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



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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,
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.



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(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.

(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 or (ii) as to which SurgiCare has
knowledge based upon contact with any such authority. 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 IPS 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.

(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 the date of this
Agreement to the effect that, as of the date of this Agreement, the
Transactions are fair to the SurgiCare stockholders from a financial
standpoint, and a copy of the signed opinion has been provided to IPS.

SECTION 3.20 Brokers. No broker, investment banker, financial advisor or
other Person, other than G.A. Herrerra & Co., LLC and Daniel Krzyzanowski, 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 IPS a complete and accurate copy of all
agreements pursuant to which G.A. Herrerra & Co., LLC or Daniel Krzyzanowski 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,



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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 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 Merger in accordance
with the terms of this Agreement, and (c) otherwise does not have an adverse
effect on IPS or on the rights of IPS under this Agreement.

SECTION 3.24 DCPS/MBS Acquisition Agreement. To the knowledge of
SurgiCare, the DCPS/MBS Acquisition Agreement has been duly 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 IPS Stockholders contained in the Investment Letters to
be delivered pursuant to Section 7.02 hereto, the offer, sale and issuance of
the SurgiCare Class A Common Shares in the Merger 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 A Common Shares to any Person or Persons
so as to bring the sale of such SurgiCare Class A Common Shares 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 any other person acting on behalf of
SurgiCare or any SurgiCare Subsidiary, has (i) given or



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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 IPS

IPS hereby represents and warrants to SurgiCare and Merger Sub that:

SECTION 4.01 Organization and Qualification; Subsidiaries.

(a) IPS and each IPS 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 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 an IPS Material Adverse Effect. Each of IPS and the IPS
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 an IPS
Material Adverse Effect.

(b) Section 4.01(b) of the IPS Disclosure Schedule lists each IPS
Subsidiary, its jurisdiction of organization and all trade names currently
used, or used at any time during the past two years, by such IPS Subsidiary.
All of the outstanding shares of capital stock or other equity interests of
each IPS Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable and, except as set forth in Section 4.01(b) of the IPS
Disclosure Schedule, are owned by IPS, free and clear of all Liens. Except for
its interests in the IPS Subsidiaries and except for the ownership of interests
set forth in Section 4.01(b) of the IPS Disclosure Schedule, IPS 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 4.02 Certificate of Incorporation and By-Laws. IPS has heretofore
provided to SurgiCare a complete and correct copy of IPS certificate of
incorporation, as amended to date (the IPS Charter) and IPS by-laws, as
amended to date (the IPS By-Laws). The IPS Charter and IPS By-Laws are in
full force and effect. IPS is not in violation of any of the provisions of the
IPS Charter or the IPS By-Laws. IPS has provided to SurgiCare 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 IPS Subsidiary and no IPS Subsidiary is in
violation of such documents.



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SECTION 4.03 Capitalization.

(a) The authorized capital stock of IPS consists of (i) 8,121,875 shares
of IPS Common Stock, (ii) 772,900 shares of IPS Series A, (iii) 71,028 shares
of IPS Series A-1, (iv) 2,200,000 shares of IPS Series A-2, (v) 474,375 shares
of IPS Series B and (vi) 150,000 shares of IPS Series C. As of November 15,
2003, (i) 2,821,499 shares of IPS Common Stock were issued and outstanding,
(ii) 175,000 shares of IPS Series A were issued and outstanding, (iii) 71,028
shares of IPS Series A-1 were issued and outstanding, (iv) 1,653,000 shares of
IPS Series A-2 were issued and outstanding, (v) 334,375 shares of IPS Series B
were issued and outstanding, (vi) no shares of IPS Series C were issued and
outstanding, (vii) 1,122,323 shares of IPS Common Stock were held in IPS
treasury, (viii) no shares of IPS Series A, IPS Series A-1, IPS Series A-2, IPS
Series B or IPS Series C were held in IPS treasury, (ix) 759,111 shares of IPS
Common Stock were subject to IPS Stock Options granted pursuant to the IPS
Option Plan, (x) 249,375 shares of IPS Common Stock were reserved for issuance
pursuant to the conversion of the shares of IPS Series A that were issued and
outstanding, (xi) 90,382 shares of IPS Common Stock were reserved for issuance
pursuant to the conversion of the shares of IPS Series A-1 that were issued and
outstanding, (xii) 2,614,000 shares of IPS Common Stock were reserved for
issuance pursuant to the conversion of the shares of IPS Series A-2 that were
issued and outstanding, (xiii) 476,484 shares of IPS Common Stock were reserved
for issuance pursuant to the conversion of the shares of IPS Series B that were
issued and outstanding, (xiv) 100,000 shares of IPS Common Stock were reserved
for issuance pursuant to the exercise of warrants held by Brantley Venture
Partners III, L.P. and Brantley Capital Corporation (the Brantley Warrants),
(xv) 150,000 IPS Series C Shares were reserved for issuance pursuant to the
exercise of warrants held by Bank Austria Creditanstalt Corporate Finance, Inc.
(the Bank Austria Warrants) and (xvi) 150,000 shares of IPS Common Stock were
reserved for issuance pursuant to the conversion of the IPS Series C Shares
issuable upon exercise of the Bank Austria Warrants. Except as set forth
above, as of November 15, 2003 no shares of IPS Capital Stock or other
securities of IPS were issued, reserved for issuance or outstanding.

(b) All outstanding shares of IPS Capital Stock are, and all such shares
that may be issued prior to the Effective Time 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 IPS Charter, the IPS By-Laws or any Contract to
which IPS is a party or otherwise bound. Each offer or sale by IPS 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 4.03(c) of the IPS Disclosure Schedule,
there are not any bonds, debentures, notes or other indebtedness of IPS having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which holders of IPS Capital Stock may
vote (Voting IPS 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 IPS or any IPS Subsidiary is a



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party or by which any of them is bound (i) obligating IPS or any IPS
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, IPS or of any IPS Subsidiary or any Voting IPS Debt, (ii)
obligating IPS or any IPS 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 IPS
Capital Stock. Section 4.03(d) of the IPS Disclosure Schedule sets forth the
total number of outstanding IPS Stock Options and Warrants and the exercise
prices thereof. IPS has provided SurgiCare with a schedule of all of such IPS
Stock Options and IPS Warrants, including the relevant vesting times, exercise
prices and exercise periods, and copies of all IPS Warrants and the IPS Option
Plan and forms of option certificates granted thereunder.

(e) There are not any outstanding contractual obligations of IPS or of any
IPS Subsidiary, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of capital stock of IPS or, except as set forth in Section
4.03(e)(i) of the IPS Disclosure Schedule, any capital stock or other ownership
interest in any IPS Subsidiary. Except as set forth in Section 4.03(e)(ii) of
the IPS Disclosure Schedule, there are no issued and outstanding shares of IPS
Capital Stock that are subject to a repurchase or redemption right in favor of
IPS.

SECTION 4.04 Authority Relative to this Agreement.

(a) IPS has all requisite corporate power and authority to execute and
deliver this Agreement, consummate the Merger and file the IPS Charter
Amendment. The execution and delivery by IPS of this Agreement, the
consummation by IPS of the Merger and the filing of the IPS Charter Amendment
have been duly authorized by all necessary corporate action on the part of IPS,
subject to the approval of this Agreement and the IPS Charter Amendment by the
holders of (i) not less than a majority of the outstanding shares of IPS
Capital Stock, voting together as a class, (ii) not less than a majority of the
outstanding shares of IPS Common Stock, (iii) not less than a majority of the
outstanding shares of IPS Series A, (iv) not less than a majority of the
outstanding shares of IPS Series A-1, (v) not less than a majority of the
outstanding shares of IPS Series A-2 and (vi) not less than a majority of the
outstanding shares of IPS Series B (the IPS Stockholder Approval). IPS 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 IPS Board duly adopted
resolutions (the IPS 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
this Agreement, the Merger and the IPS Charter Amendment, (ii) determining that
the Merger is advisable and in the best interests of IPS and the IPS
stockholders, (iii) determining that this Agreement and the IPS Charter
Amendment are fair to the IPS stockholders, and (iv) recommending that the IPS
stockholders approve and adopt this Agreement and directing that this
Agreement, the Merger and the IPS Charter Amendment be submitted for
consideration by the IPS stockholders at the IPS Stockholders Meeting or by
written consent.



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(c) No fair price, moratorium, control share acquisition or other
similar anti-takeover statute or regulation is applicable to IPS, by reason of
IPS being a party to the Merger or this Agreement. Neither IPS nor any of the
IPS Subsidiaries 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 IPS Disclosure Schedule,
the execution and delivery by IPS of this Agreement does not, and the
consummation by IPS of the Merger 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 IPS or any IPS Subsidiary under, any provision of (i) the IPS
Charter, the IPS By-Laws or the comparable charter, by-law or other
organizational documents of any IPS Subsidiary, (ii) any IPS Material Contract
or IPS 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 IPS or any
IPS Subsidiary or their respective properties or assets.

(b) Except as set forth in Section 4.05(a) of the IPS 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 IPS or any IPS Subsidiary in connection with the execution,
delivery and performance of this Agreement or the consummation by IPS of the
Merger, other than (i) the Required Consents and (ii) such other items that
would not have an IPS Material Adverse Effect.

SECTION 4.06 Permits; Accreditation.

(a) Except as set forth in Section 4.06(a) of the IPS Disclosure Schedule,
IPS has all franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary or advisable for IPS or any IPS 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
IPS and each IPS 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 IPS and each IPS
Subsidiary (the IPS Permits), other than such IPS Permits as, individually
and in the aggregate, are not material to the business of either IPS or any IPS
Subsidiary and the lack of which would not result in an IPS Material Adverse
Effect. Except as disclosed in Section 4.06(a) of the IPS Disclosure Schedule,
each of IPS and the IPS Subsidiaries is in possession of all IPS Permits in
good standing, neither IPS nor any IPS Subsidiary is in breach of, or in
default or violation under any of the IPS Permits, and no suspension,
violation, revocation, limitation or cancellation of or default under any of
the IPS Permits is pending or, to the knowledge of IPS, threatened, except as
would not have an IPS Material Adverse Effect. Neither IPS nor any IPS
Subsidiary has received any written notices



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of violation, default or deficiency with respect to any IPS Permit that
remains uncured. No IPS Permit will be materially affected by, or terminate or
lapse by reason of, the Merger.

(b) Except as disclosed in Section 4.06(b) of the IPS Disclosure Schedule,
each employee and agent of IPS and each IPS Subsidiary, including without
limitation each physician and other health care professional employed by or
performing services on behalf of IPS or any IPS Subsidiary, has all licenses,
permits and approvals required for the performance of his or her duties for IPS
or the IPS Subsidiary, except where the failure to have such approvals would
not have an IPS Material Adverse Effect; and no such employee or agent of IPS
or any IPS 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
an IPS Material Adverse Effect.

(c) Section 4.06(c) of the IPS Disclosure Schedule sets forth a list of
all health care facility accreditations held by or awarded to IPS and each IPS
Subsidiary and to each health care facility owned or operated by IPS or a IPS
Facility (the IPS Accreditations). Except as disclosed in Section 4.06(c) of
the IPS Disclosure Schedule, each of the IPS Accreditations is in good
standing, and no suspension, revocation, limitation, or cancellation of any of
the IPS Accreditations is pending or, to the knowledge of IPS, threatened.
Neither IPS nor any IPS Subsidiary has received any written notices of
violation, default, or deficiency with respect to any IPS Accreditation that
remains uncured. No IPS Accreditation will be materially affected by, or
terminate or lapse by reason of, the Merger.

SECTION 4.07 Compliance with Laws.

(a) Except as disclosed in Section 4.07(a) of the IPS Disclosure Schedule,
IPS and the IPS Subsidiaries are, and have been, in compliance with each Law
applicable to IPS or any IPS Subsidiary or by which any property or asset of
IPS or any IPS Subsidiary is bound or affected, except where such failure to
comply would not have an IPS Material Adverse Effect. Except as set forth in
Section 4.07(a) of the IPS Disclosure Schedule, neither IPS nor any IPS
Subsidiary has received any communication from a Governmental Entity that
alleges that IPS or a IPS 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 4.07(b) of the IPS Disclosure Schedule, neither IPS nor any IPS
Subsidiary, nor, to the Knowledge of IPS, any of the officers, directors,
employees, and agents of IPS or any IPS 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, 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



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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 IPS Disclosure Schedule,
neither IPS, nor any of the IPS Subsidiaries, nor any of their respective
officers, directors, or managing employees, nor, to the knowledge of IPS, any
Person with a direct or indirect ownership, partnership, or equity interest in
IPS or an IPS 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, 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) IPS and each IPS 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
HIPAA. On or before October 16, 2003, IPS and each IPS Subsidiary will be
prepared to comply and will comply with regulations promulgated under HIPAA
with respect to electronic data interchange and standard transactions and code
sets.

(e) IPS, on behalf of itself and each IPS 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 IPS and its
Subsidiaries has been conducted in all material respects in accordance with the
terms of such corporate compliance program.

(f) IPS, on behalf of itself and each IPS 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 IPS or an IPS
Subsidiary, which policies and procedures represent commercially reasonable
efforts to assure legal compliance by such physicians and other health care
professionals.

SECTION 4.08 Financial Statements.

(a) Attached as Section 4.08(a) of the IPS Disclosure Schedule are (i) the
unaudited consolidated balance sheets of IPS and the IPS Subsidiaries as of
December 31, 2002



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and 2001, together with the related consolidated statements of income and
cash flows for the periods then ended , and (ii) the unaudited consolidated
balance sheets of IPS and the IPS Subsidiaries 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) and (ii) 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 consolidated financial position, results of operations and cash
flows of IPS and the consolidated IPS Subsidiaries 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 sheet of IPS
contained in the Financial Statements as of December 31, 2002 is hereinafter
referred to as the IPS Balance Sheet.

SECTION 4.09 Undisclosed Liabilities. Except for those Liabilities that
are fully reflected or reserved against on the IPS Balance Sheet (or in the
notes thereto) or as set forth in Section 4.09 of the IPS Disclosure Schedule,
neither IPS nor any IPS 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 IPS and the IPS Subsidiaries or in the notes
thereto), except for Liabilities which have been incurred since the date of the
IPS Balance Sheet in the ordinary course of business, consistent with past
practice, and which would not have an IPS Material Adverse Effect.

SECTION 4.10 Absence of Certain Changes or Events. Except as disclosed in
Section 4.10 of the IPS Disclosure Schedule, from the date of the IPS Balance
Sheet, IPS and IPS 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 an IPS 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 IPS
Capital Stock or any repurchase or redemption for value by IPS of any IPS
Capital Stock;

(c) any split, combination or reclassification of any IPS 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 IPS Capital Stock;

(d) any issuance by IPS or any IPS 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 IPS Common Stock pursuant to the exercise of any
stock options outstanding on the date hereof pursuant to the IPS Option Plan;



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(e) any incurrence, assumption or guaranty by IPS or any IPS Subsidiary of
any indebtedness for borrowed money or issuance by IPS or any IPS Subsidiary of
any debt securities or assumption, guarantee or endorsement of the obligations
of any Person by IPS or any IPS Subsidiary, or any making of loans or advances
by IPS or any IPS Subsidiary, or any creation or other incurrence by IPS or any
IPS Subsidiary of any Lien;

(f) (i) any grant by IPS or any IPS Subsidiary to any current or former
director, officer or employee of IPS or any IPS Subsidiary of any increase in
their compensation, except to the extent required under employment agreements
in effect as of the date of the IPS 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 IPS Stock Options that
are reflected as outstanding in clause (v) of Section 4.03(a), (ii) any grant
by IPS or any IPS 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 IPS Balance Sheet or (iii) any entry
by IPS or any IPS 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 IPS or any IPS Subsidiary;

(h) any entry by IPS or any IPS Subsidiary into any commitment or
transaction, or any contract or agreement entered into by IPS or any IPS
Subsidiary relating to IPS or any IPS Subsidiarys assets or business, or any
relinquishment by IPS or any IPS Subsidiary of any contract or other right,
material to IPS and the IPS Subsidiaries taken as a whole;

(i) any material revaluation by IPS of any material asset (including any
writing off of notes or accounts receivable);

(j) any change in accounting methods, principles or practices by IPS or
any IPS Subsidiary materially affecting the consolidated assets, liabilities or
results of operations of IPS, except insofar as may have been required by a
change in U.S. GAAP;

(k) any elections with respect to Taxes by IPS or any IPS Subsidiary or
settlement or compromise by IPS or any IPS Subsidiary of any material Tax
Liability or refund; or

(l) any agreement by IPS or any IPS Subsidiary 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 IPS Disclosure Schedule, (i) there is no Action pending or, to the
knowledge of IPS, threatened against IPS or any IPS Subsidiary, or any property
or asset of IPS or any IPS 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



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have an IPS Material Adverse Effect, and (ii) there is no Judgment,
consent decree or other Order outstanding against IPS or any IPS Subsidiary
that would have an IPS Material Adverse Effect.

SECTION 4.12 Employee Benefit Matters.

(a) Section 4.12(a) of the IPS Disclosure Schedule lists each IPS Employee
Benefit Plan, other than those set forth in Section 4.13(a)(ii) of the IPS
Disclosure Schedule. IPS has 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 IPS Employee Benefit Plan, and all other forms and
information relating to the administration of the IPS Employee Benefits Plans
and no promise or commitment to amend or improve any IPS Employee Benefit Plan
for the benefit of any current or former director, officer, or employee of IPS
or any IPS Subsidiary which is not reflected in the documentation provided to
SurgiCare has been made.

(1) Each IPS 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 an IPS Material Adverse
Effect.

(2) 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 IPS Employee Benefit Plan, except where the failure
to do would not have an IPS Material Adverse Effect.

(3) 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
IPS 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 IPS 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 IPS Employee Benefit Plan which is an
Employee Welfare Benefit Plan.

(4) Each IPS Employee Benefit Plan which is an Employee Pension
Benefit Plan intended to be qualified under Code Section 401(a) is so
qualified.

(5) All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each IPS Employee
Benefit Plan which



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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 IPS Employee Benefit Plan which is an Employee
Welfare Benefit Plan subject to such Part.

(b) No IPS Employee Benefit Plan which is an Employee Pension Benefit Plan
is or ever has been subject to Title IV of ERISA and none of IPS or any IPS
Subsidiary has incurred or has any reason to expect that any of IPS or the IPS
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 IPS Employee Benefit Plan
which is an Employee Pension Benefit Plan.

(c) There have been no Prohibited Transactions with respect to any IPS
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 IPS 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 IPS
Employee Benefit Plan (other than routine claims for benefits) is pending or,
to the knowledge of IPS, threatened. No IPS 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 IPS or any IPS 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.

(e) None of IPS or any IPS 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 Merger will not result in any payment or acceleration of, or
vesting or increase in benefits under, any IPS Employee Benefit Plan.

SECTION 4.13 Material Contracts.

(a) Section 4.13(a) of the IPS 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 IPS or an IPS Subsidiary is currently a party (such
contracts, agreements and arrangements required to be set forth in Section
4.13(a) of the IPS Disclosure Schedule, the IPS Material Contracts) , except
for this Agreement and the other agreements referenced hereby related to the
Transactions:

(1) 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



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contract, or (C) cannot be canceled by IPS or any IPS Subsidiary
without penalty or further payment and on less than 60 days notice;

(2) all employment, consulting, severance, termination or
indemnification agreements between IPS or any IPS Subsidiary and any
director, officer or employee of IPS or any IPS Subsidiary;

(3) 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;

(4) 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;

(5) all contracts, credit agreements, indentures and other
agreements evidencing indebtedness for borrowed money (including
capitalized leases);

(6) all agreements under which IPS or any IPS Subsidiary has
advanced or loaned, or may be required to advance or loan, any funds;

(7) all guarantees of any obligations in excess of $50,000;

(8) all joint venture or other similar agreements;

(9) all lease agreements with annual lease payments in excess of
$50,000;

(10) agreements under which IPS has granted any Person registration
rights (including demand and piggy-back registration rights) or any other
agreements with respect to the capital stock of IPS or any IPS
Subsidiary;

(11) all contracts and agreements that limit the ability of IPS or
any IPS 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 IPS or any IPS Subsidiary;

(12) all contracts and agreements pursuant to which IPS or any IPS
Subsidiary may be required to repurchase or redeem any capital stock or
other equity interests;

(13) all affiliation agreements with hospitals or other health care
providers;

(14) all litigation settlement agreements, consent decrees,
corporate integrity agreements, and settlements with governmental
entities;



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(15) all contracts and other agreements with Affiliates; and

(16) any other contracts or agreements that are material to the
business, assets, condition (financial or otherwise) or results of
operations of IPS and the IPS Subsidiaries taken as a whole.

(b) To the knowledge of IPS, each IPS 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 IPS nor any IPS Subsidiary is in material
violation or default, or has received notice that it is in violation or
default, under any IPS Material Contract and, to IPS knowledge, no other party
is in material default under any IPS Material Contract. IPS has provided
SurgiCare with copies of all IPS Material Contracts.

SECTION 4.14 Environmental Matters. Except as described in Section 4.14
of the IPS Disclosure Schedule or as would not have an IPS Material Adverse
Effect: (a) IPS and the IPS 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 owned, leased or operated by IPS or the IPS
Subsidiaries are contaminated with any Hazardous Substance; (c) neither IPS nor
any of the IPS Subsidiaries are liable for any off-site contamination by
Hazardous Substances; (d) IPS and the IPS Subsidiaries have all Environmental
Permits; (e) IPS and the IPS 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 Merger 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 IPS Disclosure Schedule, none of IPS
or the IPS 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). IPS and the IPS Subsidiaries 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 IPS nor any IPS 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 4.15 Title to Properties; Absence of Liens and Encumbrances.

(a) Except as described in Section 4.15(a) of the IPS Disclosure Schedule,
each of IPS and the IPS 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.



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(b) Section 4.15(b) of the IPS Disclosure Schedule sets forth a true,
correct and complete list of all real property and improvements (collectively,
the IPS Real Property) owned by IPS or any IPS 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 IPS Real Property (or
portion thereof). Except as described in Section 4.15(b) of the IPS Disclosure
Schedule, IPS (or such IPS Subsidiary as the case may be) has good, clear and
marketable title to the IPS Real Property and has furnished to SurgiCare true
and complete copies of title insurance reports and title insurance policies
with respect to the IPS Real Property. No IPS 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, or (iii) as set forth in Section 4.15(b) of the IPS
Disclosure Schedule. All title to the IPS Real Property is insurable by a
nationally recognized title insurance company on a standard ALTA title
insurance policy with all standard exceptions deleted and otherwise free of all
exceptions except for the Liens set forth in Section 4.15(b) of the IPS
Disclosure Schedule. Except as set forth on Section 4.15(b) of the IPS
Disclosure Schedule, neither IPS nor any IPS Subsidiary leases (as tenant or
subtenant) any real property. The real property listed in Section 4.15(b) of
the IPS Disclosure Schedule constitutes all of the real property used, leased
or occupied by IPS or any IPS Subsidiary as of the date hereof.

(c) The IPS Real Property and all present uses and operations of the IPS
Real Property comply with all Laws, covenants, conditions, restrictions,
easements, disposition agreements and similar matters affecting the IPS Real
Property, except for such failures to comply as would not have an IPS Material
Adverse Effect. IPS and the IPS 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 IPS Real Property, except for such approvals as
to which the failure to obtain would not have an IPS Material Adverse Effect.
Neither IPS nor any IPS Subsidiary has received any notice of, nor does IPS or
any IPS Subsidiary have any knowledge of, any pending or proposed condemnation
proceeding, taking, lawsuit or administrative matter with respect to any of the
IPS Real Property.

(d) All structures, facilities and improvements owned by IPS or any IPS
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 has not had and would not reasonably
be expected to have an IPS Material Adverse Effect. No maintenance or repair
to the IPS 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.

(a) Except with respect to the items set forth in Section 4.16(a) of the
IPS Disclosure Schedule, IPS and the IPS Subsidiaries own or possess adequate
licenses or other valid enforceable rights to use all Intellectual Property
used in the conduct of the business of IPS and the IPS Subsidiaries (as
currently conducted and contemplated to be conducted), and the consummation of
the Merger will not conflict with, alter or impair IPS or any IPS Subsidiarys
rights to any such Intellectual Property.



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(b) Section 4.16(b) of the IPS Disclosure Schedule sets forth all of the
following Intellectual Property owned or licensed by IPS or any IPS 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 IPS and the IPS Subsidiaries. All patents, Trademarks,
registrations, copyright registrations and license agreements set forth in
Section 4.16(b) of the IPS Disclosure Schedule are valid and in full force and
effect. To the knowledge of IPS, neither IPS nor any IPS Subsidiary has
interfered with or infringed upon any Intellectual Property rights of third
parties in connection with the business of IPS or any IPS Subsidiary, and,
except as set forth in Section 4.16(b) of the IPS Disclosure Schedule, neither
IPS nor any IPS Subsidiary 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 IPS or any IPS Subsidiary (IPS
Intellectual Property). To the knowledge of IPS, except as set forth in
Section 4.16(b) of the IPS Disclosure Schedule, no Person is infringing or
otherwise violating the rights of IPS or any of the IPS Subsidiaries with
respect to any IPS Intellectual Property.

(c) Except as set forth in Section 4.16(c) of the IPS Disclosure Schedule,
IPS 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 4.16(b) of the IPS Disclosure Schedule as owned by IPS or any IPS
Subsidiary. With respect to Intellectual Property licensed by IPS or any IPS
Subsidiary that is listed in Section 4.16(b) of the IPS Disclosure Schedule or
is material to IPS or any IPS Subsidiary, IPS and each applicable IPS
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 an IPS
Material Adverse Effect.

(d) Neither IPS nor any IPS 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 IPS information technology systems are in good working order
in all material respects and are adequate for the conduct of IPS and the IPS
Subsidiaries business as presently conducted. To the Knowledge of IPS, IPS
owns or possesses adequate licenses for all material computer software used in
the conduct of IPS and the IPS Subsidiaries business as presently conducted.

SECTION 4.17 Taxes.

(a) Each of IPS and the IPS 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 IPS or any IPS Subsidiary
(whether or not shown on any Tax Return) have been timely paid in full,
including pursuant to any extensions that were timely received. IPS and the
IPS Subsidiaries currently are not the beneficiary of any extension of time
within which to file



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any Tax Return. IPS has not received notice that any claim has been made
by an authority in a jurisdiction where any of IPS and the IPS Subsidiaries
does not file Tax Returns that they may be subject to taxation by that
jurisdiction.

(b) Each of IPS and the IPS 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.

(c) There is no dispute, audit, investigation, proceeding or claim
concerning any Liability with respect to Taxes of IPS or the IPS Subsidiaries
either (i) claimed or raised by any authority in writing received by IPS or any
IPS Subsidiary or (ii) as to which IPS has knowledge based upon contact with
any such authority. Except as set forth in Section 4.17 of the IPS Disclosure
Schedule, (i) no federal, state, local, and foreign income Tax Returns filed
with respect to IPS and the IPS Subsidiaries have been audited, and (ii) none
are currently open or the subject of audit. IPS 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 IPS and the IPS Subsidiaries for the last three
taxable years.

(d) None of IPS or any of the IPS 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 IPS or any of the IPS Subsidiaries 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 IPS). IPS does not have any Liability for
the Taxes of any Person other than IPS and the IPS 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 IPS or any of the IPS Subsidiaries has filed a consent under
Code Section 341(f) concerning collapsible corporations. None of IPS and the
IPS 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 IPS and the IPS 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 IPS 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 IPS and the IPS Subsidiaries in filing their Tax Returns.

(h) Since July 1, 1993, IPS has not had an ownership change within the
meaning of Section 382(g) of the Code.



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SECTION 4.18 Insurance.

(a) Section 4.18 of the IPS Disclosure Schedule sets forth a complete and
accurate list of all insurance policies in force naming IPS, any IPS Subsidiary
or directors or employees thereof as a loss payee or for which IPS or any IPS
Subsidiary has paid or is obligated to pay all or part of the premiums.
Neither IPS nor any IPS Subsidiary has received notice of any pending or
threatened cancellation or premium increase (retroactive or otherwise) with
respect thereto, and each of IPS and the IPS Subsidiaries is in compliance with
all material conditions contained therein.

(b) Each of IPS and the IPS 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 IPS Material Contracts. Neither IPS nor an
IPS Subsidiary has been refused such insurance.

(c) IPS and each IPS 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 IPS or an IPS Subsidiary, or who are
independent contractors of IPS or an IPS Subsidiary, to maintain professional
liability and comprehensive general liability insurance from financially sound
and reputable insurers in amounts of, at a minimum, $1,000,000 per occurrence
and $3,000,000 in the aggregate.

SECTION 4.19 Brokers. No broker, investment banker, financial advisor or
other Person, other than Friend & Company, financial advisor to IPS, the fees
and expenses of which will be paid by IPS and are set forth in Section 4.19 of
the IPS Disclosure Schedule, is entitled to any brokers, finders, financial
advisors or other similar fee or commission in connection with the Merger
based upon arrangements made by or on behalf of IPS. IPS has delivered to
SurgiCare a complete and accurate copy of all agreements pursuant to which
Friend & Company is entitled to any fees and expenses payable directly or
indirectly by IPS or any IPS Subsidiary in connection the Merger.

SECTION 4.20 Employees. To the knowledge of IPS, no executive, key
employee, or group of employees has any plans to terminate employment with IPS
or the IPS Subsidiaries or any affiliates (including, but not limited to, any
physician groups). IPS and the IPS Subsidiaries have not experienced any labor
disputes or work stoppages due to labor disagreements. IPS and the IPS
Subsidiaries are in material compliance with all applicable Laws respecting
employment and employment practices and terms and conditions of employment.
IPS and the IPS Subsidiaries are not, nor have any of them ever been, a party
to any collective bargaining agreements and, to the knowledge of IPS, none of
IPS or any of the IPS Subsidiaries has been the subject of any organizational
activity. None of IPS nor any of the IPS 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 the
State of Georgia or any other applicable jurisdiction.



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SECTION 4.21 Transactions with Affiliates. Except as set forth in Section
4.21 of the IPS 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 IPS Disclosure
Schedule identifies each Person who is (or who may be deemed to be) an
Affiliate of IPS or any IPS Subsidiary. Without limiting the generality of the
foregoing, there are no amounts due or payable by IPS or any IPS Subsidiary to
any of the IPS Principal Stockholders or any of their Affiliates or associates
in connection with the Merger or otherwise.

SECTION 4.22 Stockholder Rights Agreement. Neither IPS nor any IPS
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 IPS Common Stock or any other equity
or debt securities of IPS or any IPS 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 Merger in accordance with the terms of this Agreement, and (c) otherwise
does not have an adverse effect on SurgiCare or Merger Sub or on the rights of
SurgiCare or Merger Sub under this Agreement.

SECTION 4.23 Opinion of Financial Advisor. The IPS Board has received the
written opinion of Friend & Company dated the date of this Agreement to the
effect that, as of the date of this Agreement, the consideration offered to the
IPS Stockholders in the Merger is fair from a financial point of view, and a
copy of the signed opinion has been provided to SurgiCare.

SECTION 4.24 Certain Payments. Neither IPS nor any IPS Subsidiary, nor to
IPS knowledge, their respective directors, officers, agents, affiliates or
employees, nor any other person acting on behalf of IPS or any IPS 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 IPS or any IPS 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 IPS or any IPS
Subsidiary.

ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 5.01 Conduct of Business by SurgiCare Pending the Merger.
SurgiCare agrees that, between the date of this Agreement and the Effective
Time, 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
IPS otherwise consents 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



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(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 Effective Time, directly or indirectly, do, or propose to do, any of
the following without the prior written consent of IPS (which consent will not
be unreasonably withheld):

(1) amend or change its certificate of incorporation or by-laws or
equivalent organizational documents (including without limitation the
SurgiCare Charter and SurgiCare By-Laws);

(2) 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);

(3) 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;

(4) 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;

(5) 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;

(6) sell, lease, license, encumber or subject to any Lien or
otherwise dispose of any SurgiCare Real Property;

(7) 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
SurgiCares existing



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revolving loan agreement, 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 $100,000;

(8) 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;

(9) make or authorize any capital expenditures, other than as set
forth in Section 5.01(ix) of the SurgiCare Disclosure Schedule;

(10) 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;

(11) (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;

(12) 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;

(13) 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;



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(14) 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;

(15) 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;

(16) except as provided in Section 5.01(b)(10), (i) establish,
adopt, enter into, amend, or terminate any collective bargaining
agreement or SurgiCare Employee 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;

(17) 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 Merger;

(18) agree in writing or otherwise to take any of the actions
described in clauses (1) through (17) above; or

(19) take any action (a) that would reasonably be expected to cause
any of SurgiCares or Merger Sub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 Merger
Sub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 Merger Sub to satisfy the conditions to closing set forth in Section
7.02.

SECTION 5.02 Conduct of Business by IPS Pending the Merger. IPS agrees
that, between the date of this Agreement and the Effective Time, except as set
forth in Section 5.02 of the IPS 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 IPS and the IPS Subsidiaries will be conducted only
in, and IPS and the IPS Subsidiaries will not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and

(b) IPS 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 IPS and the IPS
Subsidiaries (other than termination for cause) and to preserve the current
relationships of IPS and the IPS Subsidiaries with members or other



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customers, employees, suppliers, licensors, licensees and other Persons
with which IPS or any IPS 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 IPS and the IPS Subsidiaries
pursuant to IPS existing cash management policies or (z) as set forth in
Section 5.02 of the IPS Disclosure Schedule, neither IPS nor any IPS Subsidiary
will, between the date of this Agreement and the Effective Time, 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):

(1) amend or change its certificate of incorporation or by-laws or
equivalent organizational documents (including without limitation the IPS
Charter and IPS By-Laws);

(2) 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 IPS or any IPS
Subsidiary (except for the issuance of shares of IPS Common Stock
pursuant to the IPS Stock Options and IPS Warrants outstanding on the
date of this Agreement);

(3) 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;

(4) 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;

(5) 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;

(6) sell, lease, license, encumber or subject to any Lien or
otherwise dispose of any IPS Real Property;

(7) 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
IPS existing revolving loan agreement, 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 $100,000;

(8) 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 IPS Material Contract;



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(9) make or authorize any capital expenditures, other than as set
forth in Section 5.02(ix) of the IPS Disclosure Schedule;

(10) except for the acceleration of vesting of unvested IPS Stock
Options and IPS 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 IPS Option Plan or warrants or authorize cash payments in exchange
for any options, or warrants granted under any such plans;

(11) (a) increase the compensation payable or to become payable to
IPS or any IPS 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 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 IPS
or any IPS Subsidiary or (c) forgive any indebtedness of any employee of
IPS or any IPS Subsidiary;

(12) 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 IPS 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 IPS
or any IPS Subsidiary is a party;

(13) 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;

(14) 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;

(15) 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;

(16) except as provided in Section 5.02(b)(10), (i) establish,
adopt, enter into, amend, or terminate any collective bargaining
agreement or IPS Employee Benefit Plan, other than to the extent required
by any IPS Employee Benefit Plan or to comply with applicable Law, (ii)
take any action to accelerate any rights or benefits, or



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(iii) unless consistent with past practice, make any material
determinations not in the ordinary course of business, under any
collective bargaining agreement or IPS Employee Benefit Plan;

(17) 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 Merger;

(18) agree in writing or otherwise to take any of the actions
described in clauses (1) through (17) above; or

(19) take any action (a) that would reasonably be expected to cause
any of IPS 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 IPS 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 IPS 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 IPS, and IPS 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 or IPS, as the case
may be, 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 DCPS/MBS 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 IPS and its 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 A Common Shares in the
Merger and the Debt Exchange, as well as the DCPS/MBS Acquisition, the
Recapitalization, the Equity Financing, the Board Election and the New Equity
Plan. Each of SurgiCare and IPS shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC with respect



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thereto, and prior to the Effective Time, SurgiCare shall take all or any
action required under any applicable federal or state securities laws in
connection with the issuance of SurgiCare Class A Common Shares pursuant to the
Merger. IPS shall furnish all information concerning IPS as SurgiCare may
reasonably request in connection with such actions and the preparation of the
Proxy Statement. 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 IPS (such approval not to be unreasonably
withheld or delayed). Each of SurgiCare and IPS 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
Effective Time, 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 Effective Time, 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 IPS thereof. All documents that
SurgiCare is responsible for filing with the SEC in connection with the Merger
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 information supplied by IPS 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 Effective Time,
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



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the Effective Time, any event or circumstance relating to IPS or any IPS
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
IPS, IPS shall promptly inform SurgiCare.

(g) SurgiCare and IPS shall call and hold their respective Stockholders
Meetings as promptly as practicable and in accordance with applicable laws for
the purpose of voting upon the approval of the Merger, this Agreement and the
IPS Charter Amendment, in the case of IPS stockholders, and the issuance of
SurgiCare Class A Common Shares in the Merger, the DCPS/MBS Acquisition and the
Debt Exchange, as well as the Recapitalization, the Equity Financing, the Board
Election and the New Equity Plan, in the case of SurgiCares stockholders, and
SurgiCare and IPS shall use their reasonable best efforts to hold the
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 in the Merger and the Debt
Exchange, as well as the DCPS/MBS Acquisition, 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. IPS
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of the approval of the Merger, this Agreement and the IPS Charter
Amendment.

SECTION 6.02 Access to Information; Confidentiality. Subject to
applicable law, SurgiCare and IPS 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 Effective Time to
all their respective properties, books, contracts, commitments, personnel and
records and, during such period, SurgiCare and IPS 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
and IPS 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 or IPS, 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 Effective Time with any
reasonable requests made by or on behalf of the other party. Any confidential
information provided to SurgiCare or IPS hereunder will be subject to the terms
of the Non-Disclosure and Confidentiality Agreement between SurgiCare and IPS
dated June 18, 2003 (the Confidentiality Agreement); provided that SurgiCare,
Merger Sub and IPS may disclose such information as may be necessary in
connection with seeking required statutory approvals. Notwithstanding the
foregoing, each of the parties hereto shall not be required to provide any
information which it reasonably believes it may not provide to such other party
by reason of applicable Law, rules or regulations, which constitutes
information protected by attorney/client privilege, or which each of the
parties hereto is required to keep confidential by reason of contract,
agreement or understanding with third parties; provided that, with respect to
any such information, each of the parties hereto shall, or shall cause the
relevant Subsidiary to, provide the maximum amount of that information (or
shall endeavor to otherwise convey that information in



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a manner) that is consistent with the applicable Law, rule or regulation,
the maintenance of that privilege or the terms of the relevant contract, as
applicable. 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 No Solicitation of Transactions by SurgiCare.

(a) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement pursuant to Article VIII hereof, except as
provided in clause (b) below, SurgiCare will not, and will not permit or cause
any of the SurgiCare Subsidiaries to directly or indirectly, initiate, solicit,
negotiate, engage in discussions regarding, encourage or provide nonpublic
confidential information to facilitate, and SurgiCare will not, and will use
its reasonable best efforts to cause any officer, director or employee of
SurgiCare or any SurgiCare Subsidiary, or any attorney, accountant, investment
banker, financial advisor or other agent retained by it or any of the SurgiCare
Subsidiaries 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 SurgiCare or any SurgiCare Subsidiary
(which shall include, but not be limited to, a part of the business or
properties of SurgiCare or any SurgiCare Subsidiary constituting 10% or more of
the net revenues, net income or the assets of SurgiCare and the SurgiCare
Subsidiaries or any capital stock of SurgiCare or any SurgiCare Subsidiary)
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 transaction being referred to herein as a
SurgiCare Acquisition Transaction). SurgiCare immediately will cease and
cause to be terminated all activities, discussions or negotiations with any
parties with respect to any SurgiCare Acquisition Transaction, other than the
Merger.

(b) Notwithstanding the provisions of clause (a) above, the SurgiCare
Board may furnish information to or engage in discussions or negotiations with
any Person in response to an unsolicited written offer or proposal with respect
to a SurgiCare Acquisition Transaction (a SurgiCare Acquisition Proposal) if
and only to the extent that (I) the SurgiCare Board determines, in good faith
after consultation with its independent financial advisor and legal counsel,
that such SurgiCare Acquisition Proposal would (or reasonably could) constitute
a SurgiCare Superior Proposal, (II) 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 the SurgiCare stockholders under applicable Law, and (III) the SurgiCare
Board receives, prior to furnishing any such information or entering into any
discussions or negotiations with such Person, an executed confidentiality
agreement on terms no less favorable to SurgiCare than the Confidentiality
Agreement. For purposes of this Agreement, SurgiCare Superior Proposal means
a bona fideSurgiCare Acquisition Proposal (A) made by a third party that the
SurgiCare Board determines in its good faith judgment (after consultation with
its financial advisor) to be significantly more favorable to the SurgiCare
stockholders from a financial point of view than the Merger, taking into
account all of the terms of the SurgiCare Acquisition Proposal, including any
break-up fees, expense reimbursement provisions, financing requirements and
contingencies and conditions to closing, (B) that involves all of the
outstanding shares of SurgiCare Capital Stock or assets of SurgiCare and the
SurgiCare Subsidiaries, (C) that the SurgiCare Board determines in its good
faith judgment is reasonably



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likely to be consummated, taking into account all legal and regulatory
aspects of the proposal, (D) for which financing, to the extent required, is
then committed, and (E) does not contain any due diligence condition. The
SurgiCare Board may take and disclose to the SurgiCare stockholders a position
required by Rule 14e-2 under the Exchange Act.

(c) Neither the SurgiCare Board nor any committee thereof will, except as
expressly permitted by this Section 6.03(c), (i) withdraw, qualify or modify,
or propose publicly to withdraw, qualify or modify, in any manner adverse to
IPS, the approval or recommendation of the SurgiCare Board or such committee of
the Merger, the issuance of SurgiCare Class A Common Shares in the Merger or
this Agreement or otherwise seek in any manner to abandon the Merger or this
Agreement, (ii) endorse, approve, recommend or submit to the SurgiCare
stockholders, or propose publicly to endorse, approve, recommend or submit to
the SurgiCare stockholders, any SurgiCare Acquisition Transaction (other than
the Merger), or (iii) cause SurgiCare to enter into any letter of intent,
agreement in principle, acquisition agreement, memorandum of understanding or
other similar agreement or understanding (each, an Acquisition Agreement)
related to or with respect to any SurgiCare Acquisition Transaction.
Notwithstanding the foregoing, if SurgiCare has complied fully with this
Section 6.03 and the SurgiCare Board determines in good faith, after it has
received a SurgiCare Superior Proposal in compliance with this Section 6.03 and
after taking into account advice from independent outside legal counsel with
respect to its fiduciary duties to SurgiCare stockholders under applicable Law,
that such action is required for the SurgiCare Board to comply with its
fiduciary obligations to the SurgiCare stockholders under applicable Law, the
SurgiCare Board may (subject to this and the following sentences), take any of
the actions described in clauses (i) through (iii) of this Section 6.03(c)
(each a SurgiCare Subsequent Adverse Determination), but only at a time that
is after the fifth business day following IPS receipt of written notice from
SurgiCare advising IPS that the SurgiCare Board intends to make a SurgiCare
Subsequent Adverse Determination. Such written notice will specify the
material terms and conditions of such Superior Proposal (and include a copy
thereof with all accompanying documentation), identify the person making such
SurgiCare Superior Proposal and state that the SurgiCare Board intends to make
a SurgiCare Subsequent Adverse Determination. During such five business day
period, SurgiCare will provide a full opportunity for IPS to propose such
adjustments to the terms and conditions of this Agreement and the Merger as
would enable SurgiCare to proceed with its recommendation to the SurgiCare
stockholders without a SurgiCare Subsequent Adverse Determination.

(d) SurgiCare will notify IPS orally within 24 hours and in writing within
48 hours after receipt of any SurgiCare Acquisition Proposal, indication of
interest or request for nonpublic information relating to SurgiCare or a
SurgiCare Subsidiary in connection with a SurgiCare Acquisition Proposal or for
access to the properties, books or records of SurgiCare or any SurgiCare
Subsidiary by any Person or other entity or group that informs the SurgiCare
Board or the board of directors of any SurgiCare Subsidiary that it is
considering making, or has made, a SurgiCare Acquisition Proposal. Such notice
to IPS will indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact as well as
SurgiCares intention to furnish information to, or enter into discussions or
negotiations with, such Person. SurgiCare will use its reasonable efforts to
keep IPS informed of the status and details (including any change to the terms
thereof) of any such SurgiCare Acquisition Proposal. In addition to the other
requirements and limitations of this Section 6.03, in the event SurgiCare
intends to enter into a definitive agreement relating to a SurgiCare Superior
Proposal, SurgiCare



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will notify IPS in writing at least five business days prior to entering
into such definitive agreement, which notice will identify and detail the
proposed terms of such SurgiCare Superior Proposal. Unless this Agreement has
been terminated in accordance with Section 8.01, SurgiCare will call and hold
the SurgiCare Stockholders Meeting for the purpose of seeking the SurgiCare
Stockholder Approval whether or not the SurgiCare Board makes a SurgiCare
Subsequent Adverse Determination.

SECTION 6.04 No Solicitation of Transactions by IPS.

(a) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement pursuant to Article VIII hereof, except as
provided in clause (b) below, IPS will not, and will not permit or cause any of
the IPS Subsidiaries to directly or indirectly, initiate, solicit, negotiate,
engage in discussions regarding, encourage or provide nonpublic confidential
information to facilitate, and IPS will not, and will use its reasonable best
efforts to cause any officer, director or employee of IPS or any of the IPS
Subsidiaries, or any attorney, accountant, investment banker, financial advisor
or other agent retained by it or any of the IPS Subsidiaries 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 IPS or any IPS Subsidiary (which shall include, but not be
limited to, a part of the business or properties of IPS or any IPS Subsidiary
constituting 10% or more of the net revenues, net income or the assets of IPS
and the IPS Subsidiaries or any capital stock of IPS or any IPS Subsidiary)
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 IPS
Acquisition Transaction). IPS immediately will cease and cause to be
terminated all activities, discussions or negotiations with any parties with
respect to any IPS Acquisition Transaction, other than the Merger.

(b) Notwithstanding the provisions of clause (a) above, the IPS Board may
furnish information to or engage in discussions or negotiations with any Person
in response to an unsolicited written offer or proposal with respect to an IPS
Acquisition Transaction (an IPS Acquisition Proposal) if and only to the
extent that (I) the IPS Board determines, in good faith after consultation with
its independent financial advisor and legal counsel, that such IPS Acquisition
Proposal would (or reasonably could) constitute an IPS Superior Proposal, (II)
the IPS Board determines, in good faith after consultation with its legal
counsel, that the failure to take such action would constitute a breach by the
IPS Board of its fiduciary duties to the IPS stockholders under applicable Law,
and (III) the IPS Board receives, prior to furnishing any such information or
entering into any discussions or negotiations with such Person, an executed
confidentiality agreement on terms no less favorable to IPS than the
Confidentiality Agreement. For purposes of this Agreement, IPS Superior
Proposal means a bona fideIPS Acquisition Proposal (A) made by a third party
that the IPS Board determines in its good faith judgment (after consultation
with its financial advisor) to be significantly more favorable to the IPS
stockholders from a financial point of view than the Merger, taking into
account all of the terms of the IPS Acquisition Proposal, including any
break-up fees, expense reimbursement provisions, financing requirements, and
contingencies and conditions to closing, (B) that involves all of the
outstanding shares of IPS Capital Stock or assets of IPS and the IPS
Subsidiaries, (C) that the IPS Board determines in its good faith judgment is
reasonably likely to be consummated, taking



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into account all legal and regulatory aspects of the proposal, (D) for
which financing, to the extent required, is then committed, and (E) does not
contain any due diligence condition. The IPS Board may take and disclose to
the IPS stockholders a position required by Rule 14e-2 under the Exchange Act.

(c) Neither the IPS Board nor any committee thereof will, except as
expressly permitted by this Section 6.04(c), (i) withdraw, qualify or modify,
or propose publicly to withdraw, qualify or modify, in any manner adverse to
SurgiCare, the approval or recommendation of the IPS Board or such committee of
the Merger or this Agreement or otherwise seek in any manner to abandon the
Merger or this Agreement, (ii) endorse, approve, recommend or submit to the IPS
stockholders, or propose publicly to endorse, approve, recommend or submit to
the IPS stockholders, any IPS Acquisition Transaction (other than the Merger),
or (iii) cause IPS to enter into any Acquisition Agreement related to or with
respect to any IPS Acquisition Transaction. Notwithstanding the foregoing, if
IPS has complied fully with this Section 6.04 and the IPS Board determines in
good faith, after it has received an IPS Superior Proposal in compliance with
this Section 6.04 and after taking into account advice from independent outside
legal counsel with respect to its fiduciary duties to IPS stockholders under
applicable Law, that such action is required for the IPS Board to comply with
its fiduciary obligations to the IPS stockholders under applicable Law, the IPS
Board may (subject to this and the following sentences), take any of the
actions described in clauses (i) through (iii) of this Section 6.04(c) (each an
IPS Subsequent Adverse Determination), but only at a time that is after the
fifth business day following SurgiCares receipt of written notice from IPS
advising SurgiCare that the IPS Board intends to make an IPS Subsequent Adverse
Determination. Such written notice will specify the material terms and
conditions of such IPS Superior Proposal (and include a copy thereof with all
accompanying documentation), identify the person making such IPS Superior
Proposal and state that the IPS Board intends to make an IPS Subsequent Adverse
Determination. During such five business day period, IPS will provide a full
opportunity for SurgiCare to propose such adjustments to the terms and
conditions of this Agreement and the Merger as would enable IPS to proceed with
its recommendation to the IPS stockholders without an IPS Subsequent Adverse
Determination.

(d) IPS will notify SurgiCare orally within 24 hours and in writing within
48 hours after receipt of any IPS Acquisition Proposal, indication of interest
or request for nonpublic information relating to IPS or an IPS Subsidiary in
connection with an IPS Acquisition Proposal or for access to the properties,
books or records of IPS or any IPS Subsidiary by any Person or other entity or
group that informs the IPS Board or the board of directors of any IPS
Subsidiary that it is considering making, or has made, an IPS Acquisition
Proposal. Such notice to SurgiCare will indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact as well as IPS intention to furnish information to, or enter into
discussions or negotiations with, such Person. IPS will use its reasonable
efforts to keep SurgiCare informed of the status and details (including any
change to the terms thereof) of any such IPS Acquisition Proposal. In addition
to the other requirements and limitations of this Section 6.04, in the event
IPS intends to enter into a definitive agreement relating to an IPS Superior
Proposal, IPS will notify SurgiCare in writing at least five business days
prior to entering into such definitive agreement, which notice will identify
and detail the proposed terms of such IPS Superior Proposal. Unless this
Agreement has been terminated in accordance with Section 8.01, IPS will call
and hold the IPS Stockholders Meeting for the purpose of voting upon



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approval of this Agreement and the Merger whether or not the IPS Board
makes an IPS Subsequent Adverse Determination.

SECTION 6.05 Directors and Officers Indemnification and Insurance.

(a) SurgiCare and Merger Sub will, to the fullest extent permitted by Law,
cause the Surviving Corporation (from and after the Effective Time) to honor
all of IPS obligations to indemnify, defend and hold harmless (including any
obligations to advance funds for expenses) the current directors and officers
of IPS and the IPS Subsidiaries against all losses, claims, damages or
liabilities arising out of acts or omissions by any such directors and officers
occurring prior to the Effective Time to the maximum extent that such
obligations of IPS exist on the date of this Agreement. Without limiting the
foregoing, the by-laws of the Surviving Corporation will contain the provisions
that are set forth, as of the date of this Agreement, in Paragraphs 9 and 10 of
the Certificate of Incorporation of Merger Sub, which provisions will not be
amended, repealed or otherwise modified for a period of three years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who immediately prior to the Effective Time were directors,
officers, employees or other agents of IPS.

(b) IPS will maintain, through the Effective Time, IPS existing
directors and officers insurance in full force and effect without reduction
of coverage. From and after the Effective Time and for a period of three years
after the Effective Time, SurgiCare and Merger Sub will cause to be maintained
in effect the current policies of directors and officers liability insurance
maintained by IPS (provided that SurgiCare and Merger Sub may either (i)
substitute therefore policies with reputable and financially sound carriers or
(ii) maintain sufficient self insurance or similar arrangements in each case of
at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; provided,
however, that SurgiCare and Merger Sub will not be obligated to make aggregate
payments for such insurance in excess of $90,000 (the Maximum Premium). If
such insurance coverage cannot be obtained at all, or can only be obtained at a
cost in excess of the Maximum Premium, SurgiCare and Merger Sub will maintain
the most advantageous policies of directors and officers insurance obtainable
for the Maximum Premium.

(c) If the Surviving Corporation (or any of its successors or assigns)
transfers all or substantially all of its properties and assets to any Person,
then, and in each such case, proper provision will be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.05.

SECTION 6.06 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



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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. Without limiting the
foregoing, IPS will give SurgiCare and Merger Sub the opportunity to
participate in the defense of any stockholder litigation against IPS and/or its
directors relating to this Agreement or the Transactions and no settlement will
be agreed to without SurgiCare or Merger Subs consent, which consent will not
be unreasonably withheld.

SECTION 6.07 Public Announcements. SurgiCare and Merger Sub, on the one
hand, and IPS, 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 Agreement, 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.

SECTION 6.08 IPS Stock Options. Prior to the Effective Time, the IPS
Board (or, if appropriate, any committee thereof) shall adopt appropriate
resolutions and take all other actions necessary to (i) accelerate the
exercisability of all outstanding IPS Stock Options, (ii) provide for the
cancellation, effective immediately following the Effective Time, of all
outstanding IPS Stock Options not exercised prior to the Effective Time,
without any payment therefor, and (iii) terminate the IPS Option Plan as of
immediately following the Effective Time.

SECTION 6.09 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 6.10 Listing of SurgiCare Class A Common Shares. SurgiCare shall
use its best efforts to cause the SurgiCare Class A Common Shares to be issued
in the Merger to be approved for listing, upon official notice of issuance, on
the AMEX or on The NASDAQ SmallCap Market.

SECTION 6.11 Amendment or Waiver of Agreements. After the date hereof
and prior to the Effective Time or earlier termination of this Agreement,
SurgiCare shall not amend or waive, or agree to any amendment to or waiver of,
any material provision of the DCPS/MBS Acquisition Agreement, the Stock
Subscription Agreement or the Debt Exchange Agreement without the prior written
consent of IPS.



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SECTION 6.12 Form S-3 Eligibility. SurgiCare shall use its best efforts
to maintain 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 during the term of this Agreement.

SECTION 6.13 IPS Audited Financial Statements. As soon as reasonably
practicable following the date of this Agreement, IPS shall deliver to
SurgiCare the audited consolidated balance sheets of IPS and the IPS
Subsidiaries as of December 31, 2002 and 2001, together with the related
consolidated statements of income and cash flows for the periods then ended,
all certified by BDO Seidman, LLP, IPS independent public accountants and
Arthur Andersen LLP, IPS former independent public accountants, respectively.

ARTICLE VII
CONDITIONS TO THE MERGER

SECTION 7.01 Conditions to the Obligations of Each Party. The obligations
of IPS, SurgiCare and Merger Sub to consummate the Merger pursuant to Section
1.02 hereof are subject to the satisfaction or waiver (where permissible) of
the following conditions:

(a) Stockholder Approvals. The SurgiCare Stockholder Approval and the IPS
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 Merger illegal or otherwise prohibiting
consummation of the Merger, the Debt Exchange, the Equity Financing, the
Recapitalization or the DCPS/MBS Acquisition; provided that the party relying
on a failure of this condition has complied with its obligations under Section
6.06.

(c) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated or obtained.

(d) DCPS/MBS Acquisition. The DCPS/MBS Acquisition shall have been
consummated concurrently with the Merger.

(e) Equity Financing. The Equity Financing shall have been consummated
concurrently with the Merger.

(f) Debt Exchange. The Debt Exchange shall have been consummated
concurrently with the Merger.

SECTION 7.02 Conditions to the Obligations of SurgiCare and Merger Sub.
The obligations of SurgiCare and Merger Sub to consummate the Merger are
subject to the satisfaction or, where permissible, the waiver by SurgiCare of
the following additional conditions:



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(a) Representations and Warranties. Each of the representations and
warranties of IPS contained in this Agreement shall be true and correct in all
material respects as of the Effective Time, as though made at and as of the
Effective Time, 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 Date, or as of such particular date, as the case may be), and SurgiCare
and Merger Sub shall have received a certificate of the Chief Executive Officer
or Chief Financial Officer of IPS to that effect.

(b) Agreements and Covenants. IPS shall have performed or complied with
all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and SurgiCare and Merger
Sub shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of IPS 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 Merger shall have been obtained from and made with
all Governmental Entities and all consents from third parties under any IPS
Material Contract or other material agreement, contract, license, lease or
other instrument to which IPS or any IPS Subsidiary is a party or by which it
is bound required as a result of the transactions contemplated by this
Agreement or the Merger 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 an IPS 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 Merger Subs full rights of ownership or operation of
any portion of the business or assets of IPS, or to compel SurgiCare or Merger
Sub to dispose of or hold separate all or any portion of the business or assets
of IPS, (iii) seeks to impose limitations on the ability of SurgiCare or Merger
Sub to exercise full rights of ownership of the shares of IPS Capital Stock
acquired pursuant to the Merger, including, without limitation, the right to
vote any shares of IPS Capital Stock acquired or owned by SurgiCare or Merger
Sub on all matters properly presented to the IPS stockholders, (iv) seeks to
require divestiture by SurgiCare or Merger Sub of any shares of IPS Capital
Stock, or (v) that otherwise would have an IPS Material Adverse Effect.

(f) Certified Copies. At the Closing, IPS shall have delivered certified
copies of (i) the resolutions duly adopted by the IPS Board authorizing the
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby applicable to it and the Transactions, (ii) the IPS Charter
and IPS By-Laws and (iii) the tabulation of the stockholder vote taken at the
IPS Stockholders Meeting.

(g) Director Resignations. At the Closing, except as otherwise mutually
agreed by IPS and SurgiCare, IPS shall have delivered signed letters of
resignation from each



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director of IPS and of each IPS Subsidiary, pursuant to which each such
director resigns from his position as a director of IPS and of each IPS
Subsidiary and makes such resignation effective at or prior to the Effective
Time.

(h) Documents and Proceedings. All documents that IPS delivers and all
proceedings of IPS shall be in form and substance reasonably satisfactory to
SurgiCare and its counsel.

(i) Appraisal Shares. No more than 15% of the shares of IPS Capital Stock
shall be Appraisal Shares.

(j) Employment Agreements. Each of Terrence Bauer and Steve Murdock shall
have entered into an employment agreement with SurgiCare in substantially the
form attached hereto as Exhibit E 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 Effective Time and such individuals shall
be in the employ of IPS immediately prior to the Effective Time and no such
individual shall have indicated his intention to terminate his employment with
the Surviving Corporation or SurgiCare following the Effective Time.

(k) Opinion. SurgiCare shall have received an opinion of Morris, Manning
& Martin, LLP, counsel to IPS, in form and substance as set forth on Exhibit F
hereto.

(l) Registration Rights. All existing registration rights of holders of
IPS Capital Stock shall have been terminated and SurgiCare and Merger Sub shall
have received a certificate to such effect signed on behalf of IPS by the
President or Chief Financial Officer of IPS.

(m) Investment Letters. There shall not be more than 30 holders of IPS
Capital Stock immediately prior to the Effective Time that have not delivered
to SurgiCare executed investment letters (the Investment Letters) in
substantially the form set forth on Exhibit G hereto with each of question 3
and any clause of question 4 thereof answered in the affirmative.

(n) No Alternative Transactions. No tender offer, exchange offer, merger
or other transaction in respect of shares of IPS Capital Stock or material
assets of IPS or any IPS Subsidiary shall have been commenced by any Person.

SECTION 7.03 Conditions to the Obligations of IPS. The obligations of IPS
to consummate the Merger are subject to the satisfaction or, where permissible,
the waiver by IPS of the following additional conditions:

(a) Representations and Warranties. Each of the representations and
warranties of SurgiCare and Merger Sub contained in this Agreement shall be
true and correct in all material respects as of the Effective Time, as though
made on and as of the Effective Time, 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 shall be true in
all respects as of the Effective Time, or as of such particular date, as the
case may be), and IPS shall have received a



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certificate of the Chief Executive Officer or Chief Financial Officer of
SurgiCare and Merger Sub to that effect.

(b) Agreements and Covenants. Each of SurgiCare and Merger Sub shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time and IPS shall have received a certificate of the Chief Executive Officer
or Chief Financial Officer of SurgiCare and Merger Sub 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 Merger 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 Merger 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.

(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 Merger Subs full rights of ownership or operation of
any portion of the business or assets of IPS, or to compel SurgiCare or Merger
Sub to dispose of or hold separate all or any portion of the business or assets
of IPS, (iii) seeks to impose limitations on the ability of SurgiCare or Merger
Sub to exercise full rights of ownership of the shares of IPS Capital Stock
acquired pursuant to the Merger, including, without limitation, the right to
vote any shares of IPS Capital Stock acquired or owned by SurgiCare or Merger
Sub on all matters properly presented to the IPS stockholders, (iv) seeks to
require divestiture by SurgiCare or Merger Sub of any shares of IPS Capital
Stock, 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 E 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 Effective Time and such individual shall be in the employ of
SurgiCare immediately prior to the Effective Time and such individual shall not
have indicated his intention to terminate his employment with SurgiCare
following the Effective Time.

(g) Certified Copies. At the Closing, (A) each of SurgiCare and Merger
Sub shall have delivered certified copies of (i) the resolutions duly adopted
by each of SurgiCares and Merger Subs board of directors 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 approving this Agreement and the



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Transactions and the tabulation of the stockholder vote thereof, and (iii)
the certificate of incorporation and the by-laws of each of SurgiCare and
Merger Sub.

(h) Opinion. IPS shall have received an opinion of Strasburger & Price,
LLP, counsel to SurgiCare and Merger Sub, in form and substance as set forth on
Exhibit H 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 the SurgiCare or Merger
Sub delivers and all proceedings of SurgiCare and Merger Sub shall be in form
and substance reasonably satisfactory to IPS and its counsel.

(k) Resyndication of SurgiCare Subsidiaries. The capital structure of
each SurgiCare Subsidiary shall have been resyndicated in a manner satisfactory
to IPS.

(l) 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 Effective Time.

(m) Amendment of SurgiCare By-Laws. The SurgiCare By-Laws shall have been
amended and restated in the form of Exhibit I hereto and shall continue to be
in full force and effect as of the Effective Time.

(n) Conversion of SurgiCare Preferred Stock. All shares of SurgiCare
Series A and SurgiCare Series AA shall have been redeemed or converted into
SurgiCare Class A Common Shares, and no shares of SurgiCare Series A or
SurgiCare Series AA shall be outstanding at the Effective Time.

(o) Director Resignations and Elections; Officers. At the Closing,
SurgiCare shall have delivered signed letters of resignation from each director
of SurgiCare and, except as otherwise mutually agreed by IPS and SurgiCare, of
each SurgiCare Subsidiary, pursuant to which each such director resigns from
his position as a director of SurgiCare and of each SurgiCare Subsidiary and
makes such resignation effective at or prior to the Effective Time. At the
Effective Time, the SurgiCare Board shall consist of Terrence Bauer, Keith
LeBlanc, two individuals designated by Brantley IV, and three outside directors
reasonably satisfactory to IPS, and the officers of SurgiCare shall be as
follows:

Terrence Bauer
    
    Chief Executive OfficerKeith LeBlanc
    
    PresidentSteve Murdock
    
    Chief Financial Officer


(p) No Waivers or Amendments. No amendment to or waiver of any material
provision of the Stock Subscription Agreement (including the exhibits thereto),
the Debt Exchange Agreement or the DCPS/MBS Acquisition Agreement shall have
been made after the date hereof without the written consent of IPS.



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(q) Termination of Warrants. The Brantley Warrants shall have been
terminated, effective at the Effective Time, pursuant to documentation
reasonably satisfactory to IPS.

(r) Settlement of Litigation. All outstanding litigation matters and
legal proceedings involving SurgiCare or its Subsidiaries shall have been
settled on terms satisfactory to IPS.

(s) Due Diligence. IPS shall have completed and be satisfied in its sole
discretion with the results of its legal, accounting, tax, regulatory and
business due diligence review of SurgiCare, DCPS and MBS.

(t) AMEX or NASDAQ Listing. The SurgiCare Class A Common Shares to be
issued in the Merger shall have been authorized for listing on the AMEX or on
The NASDAQ SmallCap Market, subject to official notice of issuance.

ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND EXPENSES

SECTION 8.01 Termination. This Agreement may be terminated and the Merger
and the other Transactions may be abandoned at any time prior to the Effective
Time, notwithstanding any requisite approval and adoption of this Agreement and
the Transactions, as follows:

(a) by mutual written consent duly authorized by the boards of directors
of each of SurgiCare and IPS;

(b) by either SurgiCare or IPS, 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 Merger; 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 or IPS, by giving written notice to the other
party, if the Effective Time has not occurred on or before
October 31, 2004;

(d) by IPS if (X) the SurgiCare Board (i) has made a SurgiCare Subsequent
Adverse Determination, or publicly resolves to make a SurgiCare Subsequent
Adverse Determination, (ii) fails to recommend to the SurgiCare stockholders
that they approve the issuance of SurgiCare Class A Common Shares in the Merger
and give the SurgiCare Stockholder Approval, or (iii) fails to reconfirm the
recommendation referred to in clause (ii) above within five business days after
IPS requests in writing that such recommendation be reaffirmed, or fails to
publicly announce that the SurgiCare Board is not recommending any alternative
SurgiCare Acquisition Proposal within five business days after IPS requests in
writing that such announcement be made, (Y) SurgiCare has breached its
obligations under Section 6.03, or (Z) a tender offer or exchange offer for 10%
or more of the outstanding shares of stock of SurgiCare is commenced, and the
SurgiCare Board fails to recommend against acceptance of



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such tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance or rejection of such tender
offer or exchange offer by its stockholders);

(e) by SurgiCare if (X) the IPS Board (i) has made an IPS Subsequent
Adverse Determination, or publicly resolves to make an IPS Subsequent Adverse
Determination, (ii) fails to recommend to the IPS stockholders that they
approve this Agreement and the Merger and give the IPS Stockholder Approval, or
(iii) fails to reconfirm the recommendation referred to in clause (ii) above
within five business days after SurgiCare requests in writing that such
recommendation be reaffirmed, or fails to publicly announce that the IPS Board
is not recommending any alternative IPS Acquisition Proposal within five
business days after SurgiCare requests in writing that such announcement be
made, (Y) IPS has breached its obligations under Section 6.04, or (Z) a tender
offer or exchange offer for 10% or more of the outstanding shares of stock of
IPS is commenced, and the IPS Board fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance or rejection of such tender offer or
exchange offer by its stockholders);

(f) by either SurgiCare or IPS, 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;

(g) by either SurgiCare or IPS, by giving written notice to the other
party, if the IPS Stockholder Approval is not obtained at the IPS Stockholders
Meeting or any adjournment thereof duly called and held in accordance with
Section 6.01(g) hereof;

(h) by SurgiCare, by giving written notice to IPS, upon a breach of any
representation, warranty, covenant or agreement on the part of IPS set forth in
this Agreement, or if any representation or warranty of IPS has become untrue,
in 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 IPS 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;

(i) by IPS, by giving written notice to SurgiCare, upon a breach of any
representation, warranty, covenant or agreement on the part of SurgiCare or
Merger Sub set forth in this Agreement, or if any representation or warranty of
SurgiCare or Merger Sub 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 IPS if IPS is, at the time, in breach of this Agreement;

(j) prior to the SurgiCare Stockholders Meeting, by SurgiCare (A) if the
SurgiCare Board has authorized SurgiCare, subject to complying with the terms
of Section 6.03 of this Agreement, to enter into a definitive agreement with
respect to a SurgiCare Superior Proposal and SurgiCare has notified IPS in
writing that it intends to enter into such an agreement (which notification
will identify the offeror and detail the proposed terms of such SurgiCare



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Superior Proposal), and (B) IPS has not made, within five business days of
receipt of SurgiCares written notification of its intention to enter into a
definitive agreement with respect to a SurgiCare Superior Proposal, an offer
that the SurgiCare Board determines, in good faith after consultation with its
financial advisors, is at least as favorable, from a financial point of view,
to the stockholders of SurgiCare as the SurgiCare Superior Proposal; provided,
however, that such termination pursuant to this clause (j) will not be
effective unless and until SurgiCare has paid to IPS the amounts described in
Section 8.03 hereof as applicable to this Section 8.01(j);

(k) prior to the IPS Stockholders Meeting, by IPS (A) if the IPS Board has
authorized IPS, subject to complying with the terms of Section 6.04 of this
Agreement, to enter into a definitive agreement with respect to an IPS Superior
Proposal and IPS has notified SurgiCare in writing that it intends to enter
into such an agreement (which notification will identify the offeror and detail
the proposed terms of such IPS Superior Proposal), and (B) SurgiCare has not
made, within five business days of receipt of IPS written notification of its
intention to enter into a definitive agreement with respect to an IPS Superior
Proposal, an offer that the IPS Board determines, in good faith after
consultation with its financial advisors, is at least as favorable, from a
financial point of view, to the stockholders of IPS as the IPS Superior
Proposal; provided, however, that such termination pursuant to this clause (k)
will not be effective unless and until IPS has paid to SurgiCare the amounts
described in Section 8.03 hereof as applicable to this Section 8.01(k);

(l) by IPS, by written notice to SurgiCare, if the condition to closing
set forth in Section 7.03(i) has not been met;

(m) by SurgiCare, by written notice to IPS, if the condition to closing
set forth in Section 7.02(n) has not been met;

(n) prior to the SurgiCare Stockholders Meeting, by SurgiCare if the
SurgiCare Board has made a SurgiCare Subsequent Adverse Determination and the
SurgiCare Board has determined in good faith (after consultation with legal
counsel) that holding the SurgiCare Stockholders Meeting would constitute a
breach by the SurgiCare Board of its fiduciary duties to SurgiCares
stockholders under applicable Law; provided, however, that such termination
pursuant to this clause (n) will not be effective unless and until SurgiCare
has paid to IPS the amounts described in Section 8.03 hereof as applicable to
this Section 8.01(n); and

(o) prior to the IPS Stockholders Meeting, by IPS if the IPS Board has
made an IPS Subsequent Adverse Determination and the IPS Board has determined
in good faith (after consultation with legal counsel) that holding the IPS
Stockholders Meeting would constitute a breach by the IPS Board of its
fiduciary duties to IPS stockholders under applicable Law; provided, however,
that such termination pursuant to this clause (o) will not be effective unless
and until IPS has paid to SurgiCare the amounts described in Section 8.03
hereof as applicable to this Section 8.01(o).

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 or Merger Sub or IPS or any of



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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 Merger 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 Merger and the other Transactions.

(b) SurgiCare will reimburse IPS for all Expenses incurred by or on behalf
of IPS prior to termination of this Agreement in connection with this Agreement
and the Transactions, upon the termination of this Agreement:

(1) by SurgiCare or IPS pursuant to Section 8.01(f);

(2) by IPS pursuant to Section 8.01(d), Section 8.01(i) or Section
8.01(l); or

(3) by SurgiCare pursuant to Section 8.01(j) or Section 8.01(n).

(c) IPS will reimburse SurgiCare for all Expenses incurred by or on behalf
of SurgiCare prior to termination of this Agreement in connection with this
Agreement and the Transactions, upon the termination of this Agreement:

(1) by SurgiCare or IPS pursuant to Section 8.01(g);

(2) by SurgiCare pursuant to Section 8.01(e), Section 8.01(h) or
Section 8.01(m); or

(3) by IPS pursuant to Section 8.01(k) or Section 8.01(o).

(d) Each of SurgiCare and IPS acknowledges that the agreements contained
in this Section 8.03 are an integral part of the Transactions, and that,
without these agreements, the other party would not enter into this Agreement;
accordingly, if either SurgiCare or IPS fails to pay the amounts due pursuant
to this Section 8.03, and, in order to obtain any such payment, the other party
commences a legal proceeding which results in a judgment against SurgiCare or
IPS, as the case may be, for the amounts set forth in this Section 8.03,
SurgiCare or IPS, as the case may be, will pay to the other party its costs and
expenses (including attorneys fees) in



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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 Effective Time. The covenants
and agreements in this Agreement will survive the Effective Time 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 Merger Sub:

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 IPS:

Integrated Physician Solutions, Inc.
1805 Old Alabama Road, Suite 350
Roswell, GA 30076
Facsimile No.: (678) 832-1888
Attention: Terrence L. Bauer

with a copy to:

Morris, Manning & Martin, LLP
1600 Atlanta Financial Center



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SECTION 9.03 Certain Definitions. For purposes of this Agreement, the
term:

(a) 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.

(b) Aggregate Merger Consideration shall mean a number of shares of
SurgiCare Class A Common Stock equal to the Fully-Diluted SurgiCare Shares
minusthe number of Brantley III Loan Conversion Shares minusthe number of
Brantley Capital Loan Conversion Shares.

(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) Brantley III Loan Amount means the aggregate principal amount of,
and all accrued and unpaid interest on, the Brantley III Notes outstanding
immediately prior to the Closing.

(f) Brantley III Loan Conversion Shares means a number of SurgiCare
Class A Common Shares equal to the Brantley III Loan Amount divided bythe
Class A Common Closing Price, rounded up to the nearest whole share.

(g) Brantley Capital Loan Amount means the aggregate principal amount
of, and all accrued and unpaid interest on, the Brantley Capital Notes
outstanding immediately prior to the Closing.

(h) Brantley Capital Loan Conversion Shares means a number of SurgiCare
Class A Common Shares, rounded up to the nearest whole share, equal to the sum
of (i) the Brantley Capital Loan Amount divided bythe Class A Common Closing
Price plus (ii) the Brantley Capital Dividend Securities (as defined in the
Debt Exchange Agreement), if any. It is understood that there shall not be any
Brantley Capital Dividend Securities if the IPS Common/Series C Merger
Consideration is less than the product of 2,000,000 multiplied bythe Reverse
Split Fraction.

(i) Class A Common Closing Price means an amount equal to the Five Day
Average Price divided bythe Reverse Split Fraction.



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(j) 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.

(k) DCPS means Dennis Cain Physician Services, Ltd., a Texas limited
partnership.

(l) DCPS/MBS Acquisition means the transactions contemplated by the
DCPS/MBS Acquisition Agreement, including without limitation the issuance of
shares of SurgiCare Class A Common Stock and SurgiCare Class C Common Stock
pursuant thereto.

(m) DCPS/MBS Acquisition Agreement means the Agreement and Plan of
Merger dated as of February 9, 2004 among SurgiCare, DCPS/MBS Acquisition,
Inc., DCPS, MBS and the Sellers party thereto attached hereto as Exhibit K.

(n) 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.

(o) Employee Pension Benefit Plan has the meaning set forth in ERISA
Section 3(2).

(p) Employee Welfare Benefit Plan has the meaning set forth in ERISA
Section 3(l).

(q) 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.

(r) Fiduciary has the meaning set forth in ERISA Section 3(21).

(s) 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.

(t) 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 Merger, the Debt
Exchange or the DCPS/MBS Acquisition, rounded up to the nearest whole share.
For purposes of this definition, fully-diluted basis shall mean the number of
SurgiCare



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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 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.

(u) 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.

(v) 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:

(1) 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;

(2) all Trademarks;

(3) all registrations, applications, recordings, licenses,
common-law rights and Contracts relating thereto; and

(4) 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.

(w) IPS Common/Series C Merger Consideration shall mean a number of
SurgiCare Class A Common Shares equal to the lesser of (i) the Aggregate Merger
Consideration and (ii) the product of 2,000,000 multiplied bythe Reverse Split
Fraction, rounded up to the nearest whole share.

(x) IPS Employee Benefit Plan means any current (a) nonqualified
deferred compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b)



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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
IPS or any IPS Subsidiary or for which IPS or any IPS Subsidiary may have any
Liability.

(y) IPS 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 IPS and the IPS Subsidiaries
taken as a whole, or (ii) is reasonably likely to prevent or delay the
consummation of the Merger.

(z) [RESERVED.]

(aa) IPS Series A Merger Consideration shall
mean that portion of the Aggregate Merger Consideration equal to the
aggregate number of shares of SurgiCare Class A Common Stock
distributable in respect of all
outstanding shares of IPS Series A outstanding at the time of
the Merger in accordance with the IPS Charter (as amended by the IPS
Charter Amendment).

(bb) IPS Series A-1 Merger Consideration shall mean
that portion of the Aggregate Merger Consideration equal to the
aggregate number of shares of SurgiCare Class A Common Stock
distributable in respect of all outstanding shares of IPS Series A-1
outstanding at the time of the Merger in accordance with the
IPS Charter (as amended by the IPS Charter Amendment).

(cc) IPS Series A-2 Merger Consideration shall mean
that portion of the Aggregate Merger Consideration equal to the
aggregate number of shares of SurgiCare Class A Common Stock
distributable in respect of all outstanding shares of IPS Series A-2
outstanding at the time of the Merger in accordance with IPS Charter
(as amended by the IPS Charter Amendment).

(dd) IPS Series B Merger Consideration shall
mean that portion of the Aggregate Merger Consideration equal to the
aggregate number of shares of SurgiCare Class A Common Stock
distributable in respect of all outstanding shares of IPS
Series B outstanding at the time of the Merger in accordance
with the IPS Charter (as amended by the IPS Charter Amendment).



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(ee) IPS Subsidiary means any subsidiary of IPS.

(ff) knowledge means, with respect to IPS, the actual knowledge, after
reasonable inquiry, of the chief executive officer and chief financial officer
of IPS, and, with respect to SurgiCare, the actual knowledge, after reasonable
inquiry, of the executive officers of SurgiCare.

(gg) 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).

(hh) MBS means Medical Billing Services, Inc., a Texas corporation.

(ii) Multiemployer Plan has the meaning set forth in ERISA Section
3(37).

(jj) PBGC means the Pension Benefit Guaranty Corporation.

(kk) person or Person means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
person as defined in section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government.

(ll) Prohibited Transaction has the meaning set forth in ERISA Section
406 and Code Section 4975.

(mm) Reverse Split Fraction means a number equal to 0.10.

(nn) 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.

(oo) 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.



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(pp) 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 Merger.

(qq) SurgiCare Subsidiary means any subsidiary of SurgiCare.

(rr) 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.

(ss) 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.

(tt) 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.

(uu) Transactions means the Merger 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 DCPS/MBS 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
at any time prior to the Effective Time; provided, however, that after this
Agreement is adopted by the IPS stockholders, no such amendment will be made
that reduces the amount or changes the type of consideration into which each
share of IPS Capital Stock will be converted upon consummation of the Merger or
that otherwise by applicable Law requires the approval of the IPS stockholders
without the further approval of the IPS stockholders; provided, further, that
the prior written consent of Brantley Partners IV 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 Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto,



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(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 Merger Sub 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
IPS. 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 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 New York 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



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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 Merger Sub to IPS prior to the execution of this Agreement (the SurgiCare
Disclosure Schedule) and the disclosure schedule called for hereunder and
furnished by IPS to SurgiCare and Merger Sub prior to the execution of this
Agreement (the IPS Disclosure Schedule)) and the Confidentiality Agreement
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, including without limitation the
Prior Agreement, which Prior Agreement is terminated in its entirety. 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 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]



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IN WITNESS WHEREOF, SurgiCare, Merger Sub and IPS have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

SURGICARE, INC.By:
    
    \s\ Keith LeBlancName:
Title:
    
    Keith LeBlanc
CEOIPS ACQUISITION, INC.By:
    
    \s\ Keith LeBlancName:
Title:
    
    Keith LeBlanc
PresidentINTEGRATED PHYSICIAN SOLUTIONS, INC.By:
    
    \s\ Terrence L. BauerName:
Title:
    
    Terrence L. Bauer
President and CEO




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