Document:

EX-10.3 AMENDED AND RESTATED STOCK SUBSCRIPTION

 

EXHIBIT 10.3

Conformed Copy as amended by

First Amendment to Stock Subscription Agreement

dated as of July 16, 2004

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE
AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE SECURITIES PURCHASED
HEREUNDER MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND OTHER APPLICABLE LAWS PURSUANT TO REGISTRATION OR EXEMPTION
FROM REGISTRATION REQUIREMENTS THEREUNDER.

AMENDED AND RESTATED

STOCK SUBSCRIPTION AGREEMENT

        This Amended and Restated Stock Subscription Agreement is made as of
February 9, 2004 among SurgiCare, Inc., a Delaware corporation (“SurgiCare”),
and Brantley Partners IV, L.P. (the “Subscriber”). The Agreement amends and
restates in its entirety the Stock Subscription Agreement dated as of November
18, 2003 entered into between SurgiCare and the Subscriber (the “Prior
Agreement”).

RECITALS

        Prior to the date hereof, the Subscriber 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 Integrated Physician Solutions, Inc., a Delaware corporation
(“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 (the “Bridge
Investment”).

        SurgiCare has proposed to amend and restate its Certificate of
Incorporation to provide that, as amended and in effect at the closing of the
transactions contemplated by this Agreement, SurgiCare will be authorized to
issues shares of Class A Common Stock, par value $.001 per share (“Class A
Common”), Class B Common Stock, par value $.001 per share (“Class B Common”),
and Class C Common Stock par value $.001 per share (“Class C Common”), having
the terms described in the draft Amended and Restated Certificate of
Incorporation attached hereto as Exhibit A (the “Amended SurgiCare Charter”).
Simultaneously with the filing of the Amended SurgiCare Charter and pursuant
thereto, SurgiCare will effect a reverse stock split whereby each outstanding
share of common stock, par value $0.005 per share (the “Pre-Split Common
Stock”), of SurgiCare shall be reclassified and reduced to a fraction of a
share of Class A Common equal to the Reverse Split Fraction (as hereinafter
defined). Also, prior to or simultaneously with the filing of the Amended
SurgiCare Charter, all outstanding shares of Series A Preferred Stock, $0.001
par value per share (“SurgiCare Series A”), of SurgiCare and, unless otherwise
agreed by the Subscriber, Series AA Preferred Stock, $0.001 par value per share
(the “SurgiCare Series AA”), of SurgiCare shall be converted into shares of
Class A Common (the filing of the Amended SurgiCare Charter and the

 

conversion of the SurgiCare Series A and, if applicable, SurgiCare Series
AA being referred to herein as the “Recapitalization”).

        SurgiCare proposes to acquire (the “Acquisitions”), either directly or
indirectly through one or more subsidiaries: (i) IPS, pursuant to an Amended
and Restated Agreement and Plan of Merger dated as of the date hereof (the “IPS
- SurgiCare Merger Agreement”), among SurgiCare, IPS Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of SurgiCare, and IPS,
having the terms described in the draft Amended and Restated Agreement and Plan
of Merger attached hereto as Exhibit B, and (ii) Dennis Cain Physician
Solutions, Ltd., a Texas limited partnership (“DCPS”), and Medical Billing
Services, Inc., a Texas corporation (“MBS”), pursuant to an Agreement and Plan
of Merger (the “DCPS/MBS Merger Agreement” and, together
with the IPS —
SurgiCare Merger Agreement, the “Acquisition Agreements”), among SurgiCare,
DCPS/MBS Acquisition, Inc., a Texas corporation and a wholly-owned subsidiary
of SurgiCare, DCPS, MBS and the Sellers party thereto, having the terms
described in the draft Amended and Restated Agreement and Plan of Merger
attached hereto as Exhibit C.

        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 Acquisitions, Brantley
III, SurgiCare and IPS wish to have the Brantley III Notes exchanged for shares
of Class A Common on the terms and conditions set forth in an Amended and
Restated Debt Exchange Agreement in substantially the form attached hereto as
Exhibit D (the “Debt Exchange Agreement”; the transactions contemplated thereby
are referred to herein as the “Debt Exchange”).

        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 Acquisitions, 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 Class A Common on the terms and conditions set
forth in the Debt Exchange Agreement.

        The Subscriber is willing to purchase, and SurgiCare is willing to issue
and sell to the Subscriber, a number of shares of Class B Common equal to the
Subscription Securities (as hereinafter defined) in exchange for an aggregate
purchase price of $10,000,000 plus the Base Bridge Interest Amount (as hereinafter
defined), in immediately available funds, all on the terms and subject to
conditions set forth herein.

        It is understood that SurgiCare’s obligation to file the Amended SurgiCare
Charter and to consummate the Acquisitions, and the Subscriber’s obligation to
purchase the Subscription Securities pursuant to this Agreement, are subject to
satisfaction or waiver of various conditions, including but not limited to: (i)
completion by SurgiCare of additional financing (in addition to the equity
financing contemplated by this Agreement) on terms satisfactory to the
Subscriber (the “Refinancing”), in connection with which the debt liabilities
of each of IPS, DCPS, MBS and SurgiCare will be restructured, refinanced or
assumed, and (ii) various other conditions identified or referred to in Section
5 below (as applicable under the terms of such Section 5) and in the IPS —
SurgiCare Merger Agreement and the DCPS/MBS Merger Agreement.

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        It is anticipated that following execution and delivery of this Agreement,
among other things: (i) the Acquisitions will be consummated pursuant to the
Acquisition Agreements, (ii) the Debt Exchange will be consummated, (iii) the
Refinancing will be completed and (iv) SurgiCare and the Subscriber will enter
into a Registration Rights Agreement substantially in the form attached hereto
as Exhibit E (the “Registration Rights Agreement”).

        For United States federal income tax purposes, the purchase and sale of
the Subscription Securities under this Agreement, together with the
Acquisitions and the Debt Exchange, are intended to qualify as transfers to a
corporation controlled by the transferors under the provisions of Section 351
of the United States Internal Revenue Code of 1986, as amended.

AGREEMENT

        In consideration of the foregoing, and the representations, warranties,
covenants and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:

     1. Certain Definitions. In addition to the terms defined elsewhere in
this Agreement, as used in this Agreement the following terms shall have the
following meanings:

     1.1. The term “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.

     1.1A.
The term “Base Bridge Interest Amount” means an amount
equal to the
accrued but unpaid interest on the Base IPS Bridge Amount and Base
SurgiCare Bridge Amount under the Bridge Notes immediately prior to
the Closing.

     1.2. The term “Base IPS Bridge Amount” means an amount equal to
$790,000, which represents the
principal amount of loans advanced by Lakepoint to IPS on or prior to October 24, 2003
pursuant to IPS Bridge Notes.

     1.3. The term “Base SurgiCare Bridge Amount” means an amount equal to
$490,000, which
represents the principal amount of loans advanced by Lakepoint to SurgiCare on or prior
to October 24, 2003 pursuant to SurgiCare Bridge Notes.

     1.4. The term “Cash
Purchase Price” means the sum of (x) $10,000,000 plus
(y) the Base Bridge Interest Amount.

     1.5. The term “Class A Common Closing Price” means an amount equal to
the Five Day Average Price divided by the Reverse Split Fraction.

     1.6. The term “Closing” means the closing of the purchase of
Subscription Securities, as contemplated by Section 2 of this Agreement.

     1.7. The term “Dilutive Options and Warrants” means options and warrants
to purchase shares of Class A Common that have an exercise price immediately
after giving effect to the filing of the Amended SurgiCare Charter that is
equal to or less than the Assumed Market Price.

     1.8.
[Intentionally omitted.]

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     1.9.
[Intentionally omitted.]

     1.10. [Intentionally omitted.]

     1.11. The term “Five Day Average Price” means the average of the daily
average of the high and low price per share of the Pre-Split Common Stock on
the American Stock Exchange, or such other stock exchange or other similar
system on which the Pre-Split Common Stock shall be listed at the time, for
the five trading days immediately preceding the Closing Date.

     1.12. The term “Fully-Diluted SurgiCare Shares” means the number of
shares of Class A Common 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 Amended SurgiCare Charter and
the Recapitalization but prior to the Acquisitions, the Debt Exchange and the
issuance of the Class B Common to the Subscriber pursuant hereto, rounded up
to the nearest whole share. For purposes of this definition, “fully-diluted
basis” shall mean the number of shares of Class A Common that would be
outstanding assuming the exercise of all outstanding options, warrants and
rights to acquire shares of Class A Common and the conversion or exchange of
all securities convertible into, or exchangeable for, shares of Class A
Common, 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.

     1.13. The term “Person” means any individual, partnership, corporation,
limited liability company, association, trust, joint venture, unincorporated
organization or other entity.

     1.14. The term “Reverse Split Fraction” means a number equal to 0.10.

     1.15. The term “Specified Securities” means the Subscription Securities
and all shares of Class A Common which have been received upon conversion of
the Subscription Securities, other than any such securities which have been
sold in a registered public offering or to the public pursuant to Rule 144
under the Securities Act.

     1.16. The term “Subscription Securities” means a number of shares of
Class B Common equal to the sum of (a) (1) 1.02 multiplied by (2) the number
of Fully-Diluted SurgiCare Shares divided by (3) 0.49, plus (b) (1)
$2,720,000 divided by (2) (A) $0.125 divided by (B) the Reverse Split
Fraction.

     1.17. The term “Subsidiary” 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

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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.

2. Sale and Purchase of Subscription Securities.

     2.1. On the terms and subject to the conditions hereof, SurgiCare hereby
agrees to sell to the Subscriber, and by its acceptance hereof the Subscriber
agrees to purchase from SurgiCare for investment, on the Closing Date (as
defined in the IPS — SurgiCare Merger Agreement), the Subscription Securities
in exchange for (x) the Cash Purchase Price in immediately available funds.

     2.2. The sale and purchase of the Subscription Securities shall take
place at the same time and location as, and shall be substantially
contemporaneous with, the closings pursuant to the IPS — SurgiCare Merger
Agreement and the DCPS/MBS Merger Agreement. If at any time prior to the
Closing hereunder either of the Acquisition Agreements shall be terminated,
either party to this Agreement may, upon notice to the other, terminate this
Agreement, after which this Agreement will no longer be of any further force
or effect; provided, however, that no such termination of this Agreement
shall relieve any party from liability for breach prior to such termination
or from its obligations under Sections 9.3 hereof.

     2.3. At the Closing, against payment to SurgiCare of the Cash Purchase
Price by wire transfer of immediately available funds to a single account
specified by SurgiCare not less than three business days prior to the Closing, SurgiCare will deliver to the Subscriber
certificates for the Subscription Securities acquired pursuant to Section
2.1, registered in the name of the Subscriber.

     2.4. From time to time following the Closing Date, the Subscriber will
have the option to purchase additional shares of Class A Common for cash in
an amount up to an aggregate of $3,000,000. Each such additional investment
will be (a) subject to the approval of a majority of the members of the Board
of Directors of SurgiCare that are not affiliated with the Subscriber, (b)
consummated on a date mutually agreed by the Subscriber and SurgiCare and (c)
accomplished with documentation reasonably satisfactory to the Subscriber and
SurgiCare. The price per share of Class A Common to be paid by the
Subscriber upon the closing of any such additional investment will be the
lesser of (a) $0.125 divided by the Reverse Split Fraction and (b) 70%
multiplied by the average of the daily average of the high and low price per
share of the Class A Common on the American Stock Exchange, or such other
stock exchange or similar system on which the Class A Common shall be listed
at the time, for the twenty trading days immediately preceding the date of
such closing.

     2.5.
Immediately following receipt of the Cash Purchase Price by
SurgiCare, SurgiCare will pay to Lakepoint an amount equal to the
aggregate principal amount of, and all accrued but unpaid interest
on, the Bridge Notes outstanding immediately prior to the Closing,
such payment to be made by wire transfer of immediately available
funds to a single account specified by the Subscriber not less than
three business days prior to the Closing.

3. Representations and Warranties of SurgiCare. SurgiCare represents and
warrants to the Subscriber that:

     3.1. SurgiCare is duly organized, validly existing and in good standing
under the laws of the State of Delaware. SurgiCare has made available to the
Subscriber true and complete copies

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of SurgiCare’s Certificate of Incorporation and the By-Laws as in effect
on the date hereof. Prior to the Closing Date, such documents will be
amended to be, as of the Closing Date, in the respective forms of the Amended
SurgiCare Charter and Exhibit F (Form of Amended By-Laws).

     3.2. SurgiCare has or prior to the Closing Date will have taken all
corporate action required to authorize the execution and delivery of this
Agreement and the issuance of the Subscription Securities and the shares of
Class A Common issuable upon conversion of the Subscription Securities.

     3.3. The Subscription Securities, when issued and upon payment of the
purchase price therefor as contemplated by Section 2.1, will be duly
authorized, validly issued, fully paid and non-assessable. SurgiCare has
reserved for issuance upon conversion of the Subscription Securities shares
of its Class A Common in an amount at least equal to the number of shares
issuable upon such conversion (assuming for purposes of calculating such
amount that (a) conversion of Class B Common will take place within ten years
of the date of issuance, (b) no cash distributions will be paid to holders of
Class B Common prior to such conversion and (c) at the time of such
conversion the Applicable Price per Share (as defined in the Amended
SurgiCare Charter) will equal 50% of the Class A Common Closing Price). Upon
conversion of shares of Class B Common into Class A Common, the shares of
Class A Common issuable upon such conversion will be validly issued, fully
paid, non-assessable and free and clear of any and all preemptive or similar
preferential rights to purchase.

     3.4. All of the representations and warranties of SurgiCare set forth in
the IPS — SurgiCare Merger Agreement and the Debt Exchange Agreement are true
and correct; and as of the Closing Date such representations and warranties
will continue to be true and correct in all material respects (except for
such representations and warranties which are qualified as to materiality,
which will continue to be true in all respects). All of the representations
and warranties of SurgiCare set forth in the DCPS/MBS Merger Agreement will
be true and correct as of the date thereof; and as of the Closing Date such
representations and warranties will continue to be true and correct in all
material respects (except for such representations and warranties which are
qualified as to materiality, which will continue to be true in all respects).
SurgiCare has provided the Subscriber with true and complete copies of the
IPS — SurgiCare Merger Agreement, the Debt Exchange Agreement, the DCPS/MBS
Merger Agreement and all material agreements and other documents relating to
the Acquisitions, the Bridge Investment, the Debt Exchange and the
Refinancing, including, in each case, any and all amendments thereto, and the
transactions contemplated by the Amended SurgiCare Charter.

     3.5. Each of the Acquisition Agreements, the Debt Exchange Agreement,
the Registration Rights Agreement and this Agreement is, or at or prior to
the Closing will be, a legal, valid and binding obligation of SurgiCare and
each other party thereto, enforceable against SurgiCare and such other
parties in accordance with its respective terms.

     3.6. Immediately after the consummation of the transactions contemplated
hereby and by the Acquisition Agreements and the Debt Exchange Agreement, the
shares of stock and other equity interests of SurgiCare outstanding will be
owned by the Persons (or groups) and in the amounts set forth in Schedule 1
hereto.

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     3.7. In reliance on the representations and warranties of the Subscriber
contained in Section 4.2 hereof, no registration of the offer or sale of the
Subscription Securities to the Subscriber hereunder is required under the
Securities Act.

4. Representations and Warranties of the Subscriber. The Subscriber represents and warrants that:

     4.1. The Subscriber has full legal capacity, power and authority to
execute and deliver this Agreement and to fully perform its obligations
hereunder. The Subscriber has the funds, or access to the funds, necessary
to perform fully its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by the Subscriber and is the legal, valid
and binding obligation of the Subscriber enforceable against it in accordance
with the terms hereof and the consummation of the transactions contemplated
hereby has been duly and validly authorized by all necessary action on the
part of the Subscriber. The execution and delivery of this Agreement by the
Subscriber, and the performance by the Subscriber of its obligations
hereunder, will not result in a material breach or material default under any
organizational document, agreement, instrument or other document by which the
Subscriber is bound or otherwise result in a material violation of any
instrument, judgment, decree, order, statute, rule or regulation by which
Subscriber is bound.

     4.2. Investment Representations.

     (a) The Subscriber has been advised that the Subscription Securities
have not been registered under the Securities Act or any state securities
laws and, therefore, cannot be resold unless they are registered under the
Securities Act and applicable state securities laws or unless an exemption
from such registration requirements is available. The Subscriber is aware
that SurgiCare is under no obligation to effect any such registration with
respect to the Subscription Securities (except solely to the extent, if
any, provided in the Acquisition Agreements or the Registration Rights
Agreement) or to file for or comply with any exemption from registration.
The Subscriber is purchasing the Subscription Securities to be acquired
hereunder for its own account and not with a view to, or for resale in
connection with, the distribution thereof in violation of the Securities
Act. The Subscriber has such knowledge and experience in financial and
business matters, including investments in companies similar to SurgiCare,
that the Subscriber is capable of evaluating the merits and risks of such
investment, is able to incur a complete loss of such investment and is
able to bear the economic risk of such investment for an indefinite period
of time. The Subscriber is an accredited investor as that term is defined
in Rule 501 under Regulation D promulgated under the Securities Act. The
Subscriber was not organized for the sole purpose of investing in the
Subscription Securities.

     (b) The Subscriber has had an opportunity to discuss SurgiCare’s
business, management and financial affairs with SurgiCare’s executive
officers. The Subscriber has also had an opportunity to ask questions and
receive answers from the executive officers of SurgiCare concerning the
terms and conditions of the offering of the Subscription Securities and to
obtain the information it believe necessary or appropriate to evaluate the
suitability of an investment in the Subscription Securities.

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5. Conditions to Purchase of Subscription Securities.

     5.1. SurgiCare’s obligation to issue and sell the Subscription
Securities shall be subject to the satisfaction of the following conditions:

     (a) all representations and warranties of the Subscriber contained in
this Agreement shall be true and correct as of the Closing, and the
Subscriber shall have delivered to SurgiCare a certificate duly executed
on behalf of the Subscriber, by a general partner or other duly authorized
senior representative, certifying that the condition set forth in this
Section 5.1(a) has been satisfied; and

     (b) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligation to close under the Acquisition Agreements (other
than any conditions relating to the consummation of the purchase and sale
of the Subscription Securities under this Agreement or the Debt Exchange)
shall have been satisfied or waived by SurgiCare.

     5.2. The Subscriber’s obligation to purchase and pay for the
Subscription Securities shall be subject to the satisfaction of the following
conditions:

     (a) all representations and warranties of SurgiCare contained in this
Agreement shall be true and correct as of the Closing, and SurgiCare shall
have delivered to the Subscriber a certificate duly executed on behalf of
SurgiCare by its chief executive officer and chief financial officer
certifying that the condition set forth in this Section 5.2(a) has been
satisfied;

     (b) the Amended SurgiCare Charter shall have been authorized and
approved by all corporate and other action required therefor; and the
Amended SurgiCare Charter shall have been filed with the Secretary of
State of the State of Delaware and shall have become effective under the
General Corporation Law of the State of Delaware;

     (c) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligations to close under the Debt Exchange Agreement, and
all conditions to the obligation of Brantley III and Brantley Capital to
close under the Debt Exchange Agreement, shall have been satisfied without
giving effect to any waiver thereof other than waivers consented to in
writing by the Subscriber;

     (d) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligations to close under the IPS — SurgiCare Merger
Agreement, and all conditions to IPS’ obligation to close under the IPS —
SurgiCare Merger Agreement, shall have been satisfied without giving
effect to any waiver thereof other than waivers consented to in writing by
the Subscriber;

     (e) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligations to close under the DCPS/MBS Merger Agreement,
and all conditions to the obligation of DCPS and MBS to close under the
DCPS/MBS Merger Agreement, shall have been satisfied without

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giving effect to any waiver thereof other than waivers consented to
in writing by the Subscriber;

     (f) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, the Debt
Exchange and each of the Acquisitions shall have been consummated;

     (g) the Subscriber’s completion and satisfaction with the results of
its legal, accounting, tax, regulatory and business due diligence review
of IPS, SurgiCare, DCPS and MBS;

     (h) the Subscriber’s satisfaction with the form and substance of all
documentation with respect to the Debt Exchange, the Acquisitions and the
related transactions (including but not limited to execution and delivery
of agreements, in form and substance satisfactory to the Subscriber, with
respect to the continued employment of key personnel);

     (i) the Subscriber shall have received such other certificates,
opinions of counsel and other documents as the Subscriber shall have
specified in connection with the Closing, including without limitation
confirmations of legal opinions delivered by counsel to SurgiCare, IPS,
DCPS and MBS;

     (j) the Subscriber’s satisfaction that no material adverse change has
occurred between December 31, 2002 and the Closing Date with respect to
the business, assets, condition (financial or otherwise) or prospects of
SurgiCare, IPS, DCPS or MBS or any of their respective Subsidiaries (or
the Subscriber’s decision to elect to close notwithstanding any such
material adverse change but without waiving or releasing any other rights
of the Subscriber with respect to any such material adverse change);

     (k) the obtaining of all necessary governmental, regulatory and other
approvals, including but not limited to the approval by the stockholders
of IPS and SurgiCare, as provided in the IPS — SurgiCare Merger Agreement;

     (l) the Refinancing shall have been consummated on terms and in form
satisfactory to the Subscriber;

     (m) the trade payables of SurgiCare and its Subsidiaries shall have
been settled or restructured on terms satisfactory to the Subscriber;

     (n) all outstanding litigation matters and legal proceedings
involving SurgiCare or its Subsidiaries shall have been settled on terms
satisfactory to the Subscriber;

     (o) the Subscriber’s satisfaction that the Class A Common shall
continue to be listed on the American Stock Exchange or The NASDAQ
SmallCap Market from and after the Closing Date, and that the Class A
Common issuable upon conversion of the outstanding Class B Common has been
approved for such listing upon notice of issuance;

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     (p) SurgiCare shall have duly executed and delivered to the
Subscriber the Registration Rights Agreement and such other documents as
the Subscriber may reasonably request in connection with the transactions
contemplated hereby;

     (q) the capital structure of each SurgiCare Subsidiary shall have
been resyndicated in a manner satisfactory to the Subscriber; and

     (r) each of the Persons set forth on Schedule 2 hereto have entered
into a lock-up agreement in form and substance satisfactory to the
Subscriber.

6. Covenants.

     6.1. SurgiCare will furnish each registered holder from time to time of
any of the Specified Securities the following:

     6.1.1 As soon available, and in any event within 120 days after the
end of each fiscal year of SurgiCare, the consolidated balance sheet of
SurgiCare and its subsidiaries as at the end of each such fiscal year and
the consolidated statements of income, cash flows and changes in
stockholders’ equity for such year of SurgiCare and its subsidiaries,
setting forth in each case in comparative form the figures for the next
preceding fiscal year, accompanied by the report of independent certified
public accountants of recognized national standing, to the effect that,
except as set forth therein, such consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior years and fairly present in all
material respects the financial condition of SurgiCare and its
subsidiaries at the dates thereof and the results of their operations and
changes in their cash flows and stockholders’ equity for the periods
covered thereby.

     6.1.2 As soon as available and in any event within 60 days after the
end of each fiscal quarter of SurgiCare, the consolidated balance sheet of
SurgiCare and its subsidiaries as at the end of such quarter and the
consolidated statements of income, cash flows and changes in stockholders’
equity for such quarter and the portion of the fiscal year then ended of
SurgiCare and its subsidiaries, setting forth in each case the figures for
the corresponding periods of the previous fiscal year in comparative form,
all in reasonable detail.

     6.1.3 Promptly after the filing thereof, any documents filed by
SurgiCare with the Securities and Exchange Commission.

     6.2. SurgiCare shall cause to be kept on an appropriate basis, and each
registered holder from time to time of any of the Specified Securities, and
each representative of any such holder, shall have access to, appropriate
books, records and accounts.

     6.3. From time to time upon request of any registered holder from time
to time of any of the Specified Securities, or any representative of any such
holder (including without limitation accountants and legal counsel),
SurgiCare will furnish to such holder or representative such information
regarding the business of SurgiCare and its Subsidiaries (including materials
furnished to the directors of SurgiCare or any of its Subsidiaries at or in
connection with meetings of their respective boards of directors or
committees thereof) as such holder or representative may reasonably request.
Each such holder or representative shall have the right

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during normal business hours to make an independent examination of the
books and records of SurgiCare and any of its Subsidiaries, to make copies,
notes and abstracts therefrom, and to discuss their business, affairs and
financial condition with the officers, employees and accountants of SurgiCare
and its Subsidiaries. Each such holder or representative shall have the
right during normal business hours to consult with and advise management of
SurgiCare and its Subsidiaries on significant business issues, including
management’s proposed annual operating plans, and management will make itself
available to meet with such holder or representatives regularly during each
year at SurgiCare’s and its Subsidiaries’ facilities at mutually agreeable
times for such consultation and advice and to review progress in achieving
said plans; provided, however, that no such holder or representative shall
thereby have any right to direct the management or policies of SurgiCare or
any of its Subsidiaries.

     6.4. If and for so long as the Subscriber holds Specified Securities and
does not have a representative on SurgiCare’s Board of Directors, SurgiCare
shall invite the Subscriber to send one representative (a “Representative”)
to attend in a nonvoting observer capacity all meetings of SurgiCare’s Board
of Directors and, in this respect, shall give the Subscriber’s Representative
copies of all notices, minutes, consents, and other material that SurgiCare
provides to its directors; provided, however, that SurgiCare reserves the
right to exclude the Subscriber’s Representative from access to any material
or meeting or portion thereof if SurgiCare believes upon advice of counsel
that such exclusion is reasonably necessary to preserve the attorney-client
privilege. The Subscriber’s Representative may participate in discussions of
matters brought to SurgiCare’s Board of Directors. The rights of the
Subscriber set forth in this Section shall also apply to all committees of
SurgiCare’s Board of Directors and to the boards of directors (and all
committees thereof) of all Subsidiaries of SurgiCare.

     6.5. SurgiCare shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common, solely for the purpose of
effecting the conversion of the shares of Class B Common, such number of its
shares of Class A Common as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Class B Common, and if at any
time the number of authorized but unissued shares of Class A Common shall not
be sufficient to effect the conversion of all then outstanding shares of
Class B Common, SurgiCare shall promptly take such corporate action as may be
necessary to increase its authorized but unissued shares of Class A Common to
such number of shares as shall be sufficient for such purpose.

     6.6. For so long as the Subscriber is the beneficial owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more
than 10% of the outstanding shares of Class A Common, the Subscriber will not
cover any short sales of shares of Class A Common by the Subscriber with
shares of Class A Common received upon conversion of shares of Class B Common
if the Class A Common price used to determine the number of shares of Class A
Common received upon such conversion is less than any price received in
connection with a short sale of shares of Class A Common by the Subscriber
during the previous three months.

7. Indemnification.

     7.1. SurgiCare will indemnify, exonerate, defend and hold the Subscriber
and each of its partners, shareholders, Affiliates, directors, officers,
fiduciaries, employees and agents and each

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of the partners, shareholders, affiliates, directors, officers,
fiduciaries, employees and agents of each of the foregoing (collectively, the
“Subscriber Indemnitees”) free and harmless from and against any and all
actions, causes of action, suits, losses (including, without limitation, any
diminution in the value of the Subscription Securities or in the shares of
Class A Common or other securities into which the Subscription Securities may
be converted in the future), liabilities, amounts paid in settlement,
judgments and damages, and any and all expenses, including, without
limitation, reasonable attorneys’ fees and disbursements (collectively, the
“Indemnified Losses”), incurred by the Subscriber Indemnitees or any of them
as a result of, arising out of, or relating to: (a) any breach of any
representation, warranty or agreement by SurgiCare or any misrepresentation
by SurgiCare in this Agreement or the Debt Exchange Agreement or (b) any
breach of any representation, warranty or agreement of SurgiCare, IPS, DCPS
or MBS or any misrepresentation by SurgiCare, IPS, DCPS, MBS or any of their
respective officers, directors, stockholders, owners or affiliates under the
IPS — SurgiCare Merger Agreement, the DCPS/MBS Merger Agreement or any other
agreement entered into (or certificate or instrument delivered) in connection
with any of such agreements or in connection with the transactions
contemplated thereby (without giving effect, in the case of the IPS —
SurgiCare Merger Agreement, to any update of disclosure schedules occurring
subsequent to the date hereof). If and to the extent that the foregoing
undertaking may be unenforceable for any reason, SurgiCare hereby agrees to
make the maximum contribution to the payment and satisfaction of each of such
Indemnified Losses which is permissible under applicable law. None of the
Subscriber Indemnitees shall be liable to SurgiCare or any of its affiliates
for any act or omission suffered or taken by such Subscriber Indemnitee that
does not constitute either breach of this Agreement or gross negligence or
willful misconduct.

     7.2. The Subscriber will indemnify, exonerate, defend and hold SurgiCare
harmless from and against any and all Indemnified Losses resulting from,
arising out of or relating to any breach of any representation, warranty or
agreement of the Subscriber in this Agreement or any misrepresentation by the
Subscriber in this Agreement. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Subscriber hereby agrees
to make the maximum contribution to the payment and satisfaction of such
Indemnified Losses of SurgiCare which is permissible under applicable law.

     7.3. If any third party notifies either SurgiCare or the Subscriber with
respect to any matter (a “Third Party Claim”) which may give rise to a claim
(an “Indemnified Claim”) with respect to which such notified party may seek
indemnification hereunder (such party, in such capacity, being referred to
herein as an “Indemnified Party”), then the Indemnified Party will promptly
give written notice to the party (the “Indemnifying Party”) against which
such indemnification may be sought; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party will
relieve the Indemnifying Party from any obligation under this Section 7,
except to the extent such delay actually and materially prejudices the
Indemnifying Party.

     7.3.1 The Indemnifying Party will be entitled to participate in the
defense of any Third Party Claim that is the subject of a notice given by
the Indemnified Party pursuant to Section 7.3. In addition, the
Indemnifying Party will have the right to defend the Indemnified Party
against the Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (a) the Indemnifying
Party gives written

-12-

 

notice to the Indemnified Party within fifteen days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against
the entirety of any and all Indemnified Losses the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (b) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have adequate financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (c) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief against
the Indemnified Party, (d) the Indemnified Party has not been advised by
counsel that an actual or potential conflict exists between the
Indemnified Party and the Indemnifying Party in connection with the
defense of the Third Party Claim, (e) the Third Party Claim does not
relate to or otherwise arise in connection with taxes or any criminal or
regulatory enforcement action, (f) settlement of, an adverse judgment with
respect to or the Indemnifying Party’s conduct of the defense of the Third
Party Claim is not, in the good faith judgment of the Indemnified Party,
likely to be adverse to the Indemnified Party’s reputation or continuing
business interests (including its relationships with current or potential
customers, suppliers or other parties material to the conduct of its
business) and (g) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently. If the Indemnifying Party does so
defend an Indemnified Party and such Indemnified Party elects to retain
separate co-counsel, such retention shall be at such Indemnified Party’s
sole cost and expense and the Party will cooperate with such
separate counsel to allow it to participate in the defense of the Third
Party Claim; provided, however, that the Indemnifying Party will pay the
fees and expenses of separate co-counsel retained by the Indemnified Party
that are incurred prior to Indemnifying Party’s assumption of control of
the defense of the Third Party Claim.

     7.3.2 The Indemnifying Party will not consent to the entry of any
judgment or enter into any compromise or settlement with respect to the
Third Party Claim without the prior written consent of an Indemnified
Party unless such judgment, compromise or settlement (a) provides for the
payment by the Indemnifying Party of money as sole relief for the
claimant, (b) results in the full and general release of such Indemnified
Party, as applicable, from all liabilities arising or relating to, or in
connection with the Third Party Claim and (c) involves no finding or
admission of any violation of law or the rights of any Person and no
effect on any other claims that may be made against the Indemnified Party.

     7.3.3 If the Indemnifying Party does not deliver the notice
contemplated by clause (a), or the evidence contemplated by clause (b), of
Section 7.3.1 within 15 days after the Indemnified Party has given notice
of the Third Party Claim, or otherwise at any time fails to conduct the
defense of the Third Party Claim actively and diligently, the Indemnified
Party may defend, and may consent to the entry of any judgment or enter
into any compromise or settlement with respect to, the Third Party Claim
in any manner it may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in
connection therewith). If such notice and evidence is given on a timely
basis and the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently but any of the other conditions in Section
7.3.1 or 7.3.2 is or becomes unsatisfied, the Indemnified Party may
defend, and may consent to the entry of any

-13-

 

judgment or enter into any compromise or settlement with respect to,
the Third Party Claim; provided, however, that the Indemnifying Party will
not be bound by the entry of any such judgment consented to, or any such
compromise or settlement effected, without its prior written consent
(which consent will not be unreasonably withheld or delayed). In the
event that the Indemnified Party conducts the defense of the Third Party
Claim pursuant to this Section 7.3.3 the Indemnifying Party will (a)
advance the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys’
fees and expenses) and (b) remain responsible for any and all other
Indemnified Losses that the Indemnified Party may incur or suffer
resulting from, arising out of, relating to, in the nature of or caused by
the Third Party Claim to the fullest extent provided in this Section 7.

     7.3.4 Each party to this Agreement, in its capacity as an
Indemnifying Party, hereby consents to the non-exclusive jurisdiction of
any court in which any Third Party Claim may brought against any
Indemnified Party for purposes of any claim which such Indemnified Party
may have against such Indemnifying Party pursuant to this Agreement in
connection with such Third Party Claim, and in furtherance thereof, the
provisions of Section 10.2 are incorporated herein by reference, mutatis
mutandis.

     7.4. The indemnification provisions of this agreement shall survive
without limitation as to time for as long as may be permitted under
applicable law and without regard to any expiration or termination of any
underlying representation, covenant or other obligation relating to or giving
rise to an indemnification obligation under this Agreement.

8. Restrictions on Transfer.

     8.1. Restrictive Securities Act Legend. All certificates representing
Specified Securities shall bear a legend in substantially the following form:

          “THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER
THE ACT COVERING THE TRANSFER OR A LEGAL OPINION OF COUNSEL ACCEPTABLE TO
THE ISSUER THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.”

     8.2. Termination of 8.1 Restrictions. The restrictions imposed by
Section 8 hereof upon the transferability of Specified Securities shall cease
and terminate as to any particular Subscription Securities (i) when, in the
opinion of Ropes & Gray LLP or other counsel reasonably acceptable to
SurgiCare, such restrictions are no longer required in order to assure
compliance with the Securities Act or (ii) when such Specified Securities
shall have been registered under the Securities Act or transferred pursuant
to Rule 144 thereunder. Whenever such restrictions shall cease and terminate
as to any Specified Securities or such Specified Securities shall be
transferable under paragraph (k) of Rule 144, the holder thereof shall be
entitled to receive from the Issuer, without expense, new certificates not
bearing the legend set forth in Section 8.1 hereof.

-14-

 

9. Miscellaneous.

     9.1. Entire Agreement; Prior Agreement Superseded. This Agreement and
the other agreements referred to herein set forth the entire understanding
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings relating to such subject matter,
including without limitation the Prior Agreement, which Prior Agreement is
terminated in its entirety.

     9.2. Amendment. This Agreement can be changed only by an instrument in
writing signed by the party against whom enforcement of such change is
sought.

     9.3. No-Shop; Break-up Fee and Expenses.

     9.3.1 SurgiCare will comply fully with the terms of the IPS —
SurgiCare Merger Agreement, including, without limitation, the provisions
of Section 6.03 thereof relating to non-solicitation of alternative
SurgiCare Acquisition Transactions (as defined in the IPS — SurgiCare
Merger Agreement), subject to the provisions of clause (b) of such Section
6.03.

     9.3.2 Except as set forth below, all Expenses (as defined below)
incurred in connection with this Agreement, the Acquisitions and the other
transactions contemplated hereby 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 (a) the due diligence review and analysis of SurgiCare, IPS,
DCPS, MBS, the Acquisitions and the other transactions contemplated
hereby, (b) the negotiation and documentation of related agreements and
(c) the proxy solicitation process as well as the process for obtaining
any governmental or other third party consent for the foregoing
transactions; and as used herein such term will specifically include all
“Expenses” as defined in the IPS — SurgiCare Merger Agreement.

     9.3.3 SurgiCare will reimburse the Subscriber for all Expenses
actually incurred by or on behalf of the Subscriber prior to termination
of the IPS — SurgiCare Merger Agreement, upon the termination of the IPS —
SurgiCare Merger Agreement:

     (a) by SurgiCare or IPS pursuant to (i) Section 8.01(c) of the IPS
— SurgiCare Merger Agreement if at the time of such termination any of
the conditions set forth in Section 7.03 of the IPS — SurgiCare Merger
Agreement have not been satisfied or (ii) Section 8.01(f) of the IPS —
SurgiCare Merger Agreement;

     (b) by IPS pursuant to Section 8.01(d), Section 8.01(i) or Section
8.01(l) of the IPS — SurgiCare Merger Agreement; or

     (c) by SurgiCare pursuant to Section 8.01(j) or Section 8.01(n) of
the IPS — SurgiCare Merger Agreement.

     9.3.4 In addition to any amount payable in accordance with Section
9.3.3, SurgiCare agrees to pay to Subscriber a non-refundable fee equal to
$3,000,000 if:

-15-

 

     (a) (i) SurgiCare or IPS terminates the IPS — SurgiCare Merger
Agreement pursuant to Section 8.01(c) or Section 8.01(f), and (ii)
SurgiCare consummates, or enters into an agreement or letter of intent
with respect to (or SurgiCare’s Board of Directors resolves or
announces an intention to enter into such agreement or letter of intent
with respect to), a Business Combination (as defined below) with any
Person, entity or group within 18 months of such termination;

     (b) IPS terminates the IPS — SurgiCare Merger Agreement pursuant
to Section 8.01(d) of the IPS — SurgiCare Merger Agreement;

     (c) (i) IPS terminates the IPS — SurgiCare Merger Agreement
pursuant to Section 8.01(i) or Section 8.01(l) of the IPS — SurgiCare
Merger Agreement, and (ii) SurgiCare consummates, or enters into an
agreement or letter of intent with respect to (or SurgiCare’s Board of
Directors resolves or announces an intention to enter into such
agreement or letter of intent with respect to), a Business Combination
with any Person, entity or group within 18 months of such termination;
or

     (d) SurgiCare terminates the IPS — SurgiCare Merger Agreement
pursuant to Section 8.01(j) or Section 8.01(n) of the IPS — SurgiCare
Merger Agreement.

     9.3.5 In addition to any other rights or remedies Subscriber may
have, in the event that SurgiCare breaches its obligations under Section 2
of this Agreement, SurgiCare agrees to (a) pay to Subscriber a
non-refundable fee equal to $3,000,000 (to the extent that such fee is not
payable under Section 9.3.4 hereof) and (b) reimburse the Subscriber for
all Expenses incurred by or on behalf of the Subscriber.

     9.3.6 Any payment required to be paid pursuant to this Section 9.3
will be made promptly by wire transfer of same day funds but in no event
later than:

     (a) in the case of termination by IPS, two business days following
such termination pursuant to Section 8.01 of the IPS — SurgiCare Merger
Agreement; provided, however, that any fee payable pursuant to Section
9.3.4(a) or (c) will be payable no later than two business days prior
to the closing of the Business Combination referred to in clauses
(a)(ii) and (c)(ii) of Section 9.3.4;

     (b) in the case of termination by SurgiCare, prior to the date of
such termination; provided, however, that any fee payable pursuant to
Section 9.3.4(a) will be payable prior to the occurrence of the first
to occur of the events described in Section 9.3.4(a)(ii); and

     (c) in the case of a payment due under Section 9.3.5, no later
than two business days following written demand by the Subscriber.

     9.3.7 For purposes of this Section 9.3, “Business Combination” means
(i) a merger, consolidation, share exchange, business combination or
similar transaction involving SurgiCare as a result of which SurgiCare’s
stockholders prior to such transaction cease to own at least 80% of the
voting securities of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof) in the proportion they
owned such shares

-16-

 

prior to such transaction, (ii) a sale, lease, exchange, transfer,
public offering in respect of, or other disposition of more than 20% of
the assets of SurgiCare and the SurgiCare Subsidiaries (as defined in the
IPS — SurgiCare Merger Agreement), taken as a whole, in either case, in a
single transaction or a series of related transactions, or (iii) the
acquisition, by a Person, group or entity of beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of more than 20% of the outstanding SurgiCare Old Common Stock
(as defined in the IPS — SurgiCare Merger Agreement) (or in the case of
any Person, group or entity beneficially owning in excess of 20% of the
SurgiCare Old Common Stock outstanding on the date hereof, the acquisition
of any additional shares of SurgiCare Old Common Stock by such Person,
group or entity), in either case, whether from SurgiCare or by tender or
exchange offer or otherwise.

     9.3.8 If the Closing occurs, SurgiCare agrees to pay on demand (i)
all Expenses actually incurred by the Subscriber (or any of its
affiliates) and (ii) any out-of-pocket expenses actually incurred by the
Subscriber, its general partner or any of the Subscriber’s other
affiliates in connection with the provision of services to SurgiCare or
any of its Subsidiaries or the attendance at any meeting of the board of
directors (or any committee thereof) of SurgiCare or any of its
Subsidiaries.

     9.3.9 SurgiCare acknowledges that the agreements contained in this
Section 9.3 are an integral part of this Agreement, and that, without
these agreements, Subscriber would not enter into this Agreement;
accordingly, if SurgiCare fails to pay any amounts due pursuant to this
Section 9.3, and, in order to obtain any such payment, the Subscriber
commences a legal proceeding which results in a judgment against SurgiCare
for such amounts, SurgiCare will pay to the Subscriber all costs and
expenses (including reasonable attorneys’ fees) in connection with such
proceeding, together with interest on all such amounts at the prime rate
of Citibank N.A. in effect on the date any such payment was required to be
made.

     9.4. Assignment. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors, assigns, heirs and
representatives; provided, however, that prior to the Closing, no assignment
of the Subscriber’s rights hereunder will, without the consent of SurgiCare,
relieve the Subscriber of its obligations hereunder; and, after the Closing,
the Subscriber may not assign any of the Subscriber’s rights hereunder except
in connection with a transfer of Specified Securities in compliance with the
terms and conditions of Section 8 of this Agreement.

     9.5. Survival. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery hereof and
transfer of any Subscription Securities.

     9.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same instrument.

10. Governing Law; Arbitration.

     10.1. Governing Law. This Agreement and all claims arising hereunder or
in connection herewith shall be governed by and construed in accordance with
the domestic substantive laws

-17-

 

of the State of New York, without giving effect to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.

     10.2. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof may be brought and maintained in the federal and
state courts within the County of New York of the State of New York. Each of
the parties hereto by execution hereof: (i) hereby irrevocably submits to
the jurisdiction of the federal and state courts within the County of New
York in the State of New York for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject matter
hereof and (ii) hereby waives to the extent not prohibited by applicable law,
and agrees not to assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that he or it is not subject
personally to the jurisdiction of the above-named courts, that he or it is
immune from extraterritorial injunctive relief or other injunctive relief,
that his or its property is exempt or immune from attachment or execution,
that any such action, suit or proceeding may not be brought or maintained in
one of the above-named courts, that any such action, suit or proceeding
brought or maintained in one of the above-named courts should be dismissed on
grounds of forum non conveniens, should be transferred to any court other
than one of the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court other than one
of the above-named courts, or that this Agreement or the subject matter
hereof may not be enforced in or by any of the above-named courts. Each of
the parties hereto hereby consents to service of process in any such suit,
action or proceeding in any manner permitted by the laws of the State of New
York, agrees that service of process by registered or certified mail, return
receipt requested, at the address specified below its signature hereon is
reasonably calculated to give actual notice and waives and agrees not to
assert by way of motion, as a defense or otherwise, in any such action, suit
or proceeding any claim that such service of process does not constitute good
and sufficient service of process.

     10.3. Waiver of Jury Trial. To the extent not prohibited by applicable
law which cannot be waived, each of the parties hereto hereby waives, and
covenants that he or it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether
now existing or hereafter arising and whether in contract or tort or
otherwise. Any of the parties hereto may file an original counterpart or a
copy of this Section 10.3 with any court as written evidence of the consent
of each of the parties hereto to the waiver of his or its right to trial by
jury.

     10.4. Reliance. Each of the parties hereto acknowledges that he or it
has been informed by each other party that the provisions of Section 10
constitute a material inducement upon which such party is relying and will
rely in entering into this Agreement and the transactions contemplated
hereby.

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SurgiCare, Inc.
Amended and Restated Stock Subscription Agreement

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound by
the terms hereof, have caused this Agreement to be executed, under seal, as of
the date first above written by their officers or other representatives
thereunto duly authorized.

	 	 	 	 	 
	THE ISSUER:
	 	SURGICARE, INC.
	 
	 	 	 	 
	

	 	By:
	 	\s\ Keith LeBlanc
	

	 	 	 	
 
	

	 	Name:
	 	Keith LeBlanc
	

	 	Title:
	 	CEO
	 
	 	 	 	 
	

	 	Address:
	 	12727 Kimberly Lane, Suite 200
	

	 	 	 	Houston, TX 77024
	 
	 	 	 	 
	THE SUBSCRIBER:
	 	BRANTLEY PARTNERS IV, L.P
	 
	 	 	 	 
	

	 	By:
	 	Brantley Venture Management IV, L.P.,
	

	 	 	 	its general partner
	 
	 	 	 	 
	

	 	By
	 	\s\ Paul H. Cascio
	

	 	 	 	
 
	

	 	    Name:
	 	Paul H. Cascio
	

	 	    Title:
	 	General Partner
	 
	 	 	 	 
	

	 	Address:
	 	Lakepoint
	

	 	 	 	3201 Enterprise Pkwy., Suite 350
	

	 	 	 	Beachwood, OH 44122

 

 

Schedule 1

to Amended and Restated Stock Subscription Agreement

Pro Forma Equity Ownership at Closing

	 	 	 
	Holder or Group
	 	Shares

	Brantley Partners IV, L.P., as the Subscriber under

	 	100% of the outstanding shares of Class B Common
	this Stock Subscription Agreement.

	 	as of Closing (which, after satisfaction of
	

	 	preference amount, will be convertible into and
	

	 	constitute approximately 56% of Class A Common
	

	 	before dilution by shares issued in connection
	

	 	with DCPS/MBS Acquisition and management option
	

	 	plan)
	 
	 	 
	Former stockholders of SurgiCare, Inc.

	 	A number of shares of Class A Common,
	

	 	representing 50% of the outstanding shares of
	

	 	Class A Common as of Closing (which, assuming
	

	 	payment to Class B holders of full preference
	

	 	amount in cash and then conversion of Class B
	

	 	shares, will represent approximately 22% of Class
	

	 	A Common before dilution by shares issued in
	

	 	connection with DCPS/MBS Acquisition and
	

	 	management option plan)
	 
	 	 
	Former debt holders and stockholders of Integrated

	 	A number of shares of Class A Common,
	Physicians Solutions, Inc. (“IPS”) (which will include

	 	representing 50% of the outstanding shares of
	Brantley III and Brantley Capital in their capacity as

	 	Class A Common as of Closing (which, assuming
	stockholders and debt holders of IPS)

	 	payment to Class B holders of full preference
	

	 	amount in cash and then conversion of Class B
	

	 	shares, will represent approximately 22% of Class
	

	 	A Common before dilution by shares issued in
	

	 	connection with DCPS/MBS Acquisition and
	

	 	management option plan)
	 
	 	 
	DCPS/MBS Sellers (assumes a Class A Common Closing

	 	A number of shares of Class C Common equal to
	Price of at least $.70 per share)

	 	18,278,800 times the Reverse Split Fraction. In
	

	 	addition, a number of shares of Class A Common
	

	 	equal to 757,575 times the Reverse Split Fraction
	

	 	will be reserved for issuance upon the direction
	

	 	of the DCPS/MBS Sellers
	 
	 	 
	Management Option Plan

	 	A number of shares of Class A Common equal to
	

	 	approximately 10% of the total Class A Common
	

	 	outstanding after all of the transactions
	

	 	contemplated by this Agreement (including the
	

	 	Acquisitions) will be reserved for issuance upon
	

	 	exercise of options issued to management
	

	 	(including options issued to replace former
	

	 	options issued by IPS)

 

 

Schedule 2

to Amended and Restated Stock Subscription Agreement

American International Industries, Inc.

International Diversified Corporation, Ltd.

 

 

Exhibits

Exhibit A — Form of Amended SurgiCare Charter

Exhibit B — Form of IPS — SurgiCare Merger Agreement

Exhibit C — Form of DCPS/MBS Merger Agreement

Exhibit D — Form of Debt Exchange Agreement

Exhibit E — Form of SurgiCare Registration Rights Agreement

Exhibit F — Form of Amended and Restated By-Laws for SurgiCareEX-10.4 AMENDED AND RESTATED DEBT EXCHANGE AGREEME

 

EXHIBIT 10.4

Conformed Copy as amended by

First Amendment to Debt Exchange Agreement

dated as of July 16, 2004

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE
AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE SECURITIES PURCHASED
HEREUNDER MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND OTHER APPLICABLE LAWS PURSUANT TO REGISTRATION OR EXEMPTION
FROM REGISTRATION REQUIREMENTS THEREUNDER.

AMENDED AND RESTATED

DEBT EXCHANGE AGREEMENT

        This Amended and Restated Debt Exchange Agreement is made as of February
9, 2004 among SurgiCare, Inc., a Delaware corporation (“SurgiCare”), Brantley
Venture Partners III, L.P. (“Brantley III”) and Brantley Capital Corporation
(“Brantley Capital”; each of Brantley III and Brantley Capital is sometimes
referred to herein as a “Subscriber” and collectively as the “Subscribers”).
The Agreement amends and restates in its entirety the Debt Exchange Agreement
dated as of November 18, 2003 entered into between SurgiCare and the
Subscribers (the “Prior Agreement”).

RECITALS

        Prior to the date hereof, Brantley III advanced a total of $1,271,171 in
loans to Integrated Physician Solutions, Inc., a Delaware corporation (“IPS”),
pursuant to one or more promissory notes (collectively, the “Brantley III
Notes”).

        Prior to the date hereof, Brantley Capital advanced a total of $1,985,448
in loans to IPS pursuant to one or more promissory notes (collectively, the
“Brantley Capital Notes”; the Brantley III Notes and the Brantley Capital Notes
are sometimes referred to herein collectively as the “Exchange Notes”). In
connection with the issuance of one or more of the Brantley Capital Notes, IPS
agreed to pay to Brantley Capital the amount of $593,100 in respect of accrued
dividends (the “Brantley Capital Dividend Amount”), which amount remains
outstanding as of the date hereof.

        SurgiCare has proposed to amend and restate its Certificate of
Incorporation to provide that, as amended and in effect at the closing of the
transactions contemplated by this Agreement, SurgiCare will be authorized to
issues shares of Class A Common Stock, par value $.001 per share (“Class A
Common”), Class B Common Stock, par value $.001 per share (“Class B Common”),
and Class C Common Stock, par value $.001 per share (“Class C Common”), having
the terms described in the draft Amended and Restated Certificate of
Incorporation attached hereto as Exhibit A (the “Amended SurgiCare Charter”).
Simultaneously with the filing of the Amended SurgiCare Charter and pursuant
thereto, SurgiCare will effect a reverse stock split whereby each outstanding
share of common stock, par value $0.005 per share (the “Pre-Split Common
Stock”), of SurgiCare shall be reclassified and reduced to a fraction of a
share of Class A Common as contemplated by the Brantley IV Subscription
Agreement (as hereinafter defined).

 

        Brantley Partners IV, L.P. (“Brantley IV”) proposes to make an investment
(the “Brantley IV Investment”) in SurgiCare consisting of cash and the
contribution of certain notes issued by IPS and SurgiCare evidencing loans made
by Brantley IV to them. Such investment will be made pursuant to an Amended and
Restated Stock Subscription Agreement dated as of the date hereof (the
“Brantley IV Subscription Agreement”) between SurgiCare and Brantley IV, having
the terms described in the draft thereof attached hereto as Exhibit B.

        SurgiCare proposes to acquire (the “Acquisitions”), either directly or
indirectly through one or more subsidiaries: (i) IPS, pursuant to an Amended
and Restated Agreement and Plan of Merger dated as of the date hereof (the “IPS
- SurgiCare Merger Agreement”), among SurgiCare, IPS Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of SurgiCare, and IPS,
having the terms described in the draft Agreement and Plan of Merger attached
hereto as Exhibit C; and (ii) Dennis Cain Physician Solutions, Ltd., a Texas
limited partnership (“DCPS”), and Medical Billing Services, Inc., a Texas
corporation (“MBS”), pursuant to an Agreement and Plan of Merger (the “DCPS/MBS
Merger Agreement” and, together with the IPS — SurgiCare Merger Agreement, the
“Acquisition Agreements”), among SurgiCare, DCPS/MBS Acquisition, Inc., a Texas
corporation and a wholly-owned subsidiary of SurgiCare, DCPS, MBS and the
Sellers party thereto, having the terms described in the draft Agreement and
Plan of Merger attached hereto as Exhibit D.

        Each Subscriber is willing to exchange the Exchange Notes held by such
Subscriber and, in the case of Brantley Capital, the right to receive the
Brantley Capital Dividend Amount, for a number of shares of Class A Common
determined as set forth herein, and SurgiCare is willing to effect such
exchange, all on the terms and conditions set forth herein.

        For United States federal income tax purposes, the exchange of the
Exchange Notes and the right to receive the Brantley Capital Dividend Amount
for shares of Class A Common under this Agreement, together with the
Acquisitions and the Brantley IV Investment, are intended to qualify as
transfers to a corporation controlled by the transferors under the provisions
of Section 351 of the United States Internal Revenue Code of 1986, as amended.

AGREEMENT

        In consideration of the foregoing, and the representations, warranties,
covenants and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:

     1. Certain Definitions. In addition to the terms defined elsewhere in
this Agreement, as used in this Agreement the following terms shall have the
following meanings:

     1.1. The term “Brantley III Exchange Securities” means a number of
shares of Class A Common equal to the Brantley III Loan Amount divided by the
Class A Common Closing Price, rounded up to the nearest whole number.

     1.2. The term “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.

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     1.3. The term “Brantley Capital Dividend Securities” means a number of
shares of Class A Common equal to the number of shares of Class A Common, if
any, that Brantley Capital would receive pursuant to Section 2.01(a)(i)(C) of
the IPS – SurgiCare Merger Agreement if Brantley Capital held a number of
additional IPS Series A-2 Shares (as defined in the IPS – SurgiCare Merger
Agreement) immediately prior to the Effective Time (as defined in the IPS –
SurgiCare Merger Agreement) representing a claim (in respect of liquidation
preference and accrued but unpaid dividends) equal to the Brantley Capital
Dividend Amount (assuming solely for purposes of calculating such number of
shares that Brantley Capital would receive pursuant to Section 2.01(a)(i)(C)
of the IPS — SurgiCare Merger Agreement that the amount of the Brantley
Capital Dividend Securities is zero). It is understood that in determining
the number of shares that Brantley Capital would receive pursuant to Section
2.01(a)(i)(C) of the IPS — SurgiCare Merger Agreement as set forth in the
preceding sentence, the additional IPS Series A-2 Shares deemed to be held by
Brantley Capital for purposes of such calculation shall be deemed to be pari
passu with all outstanding IPS Series A-2 Shares and shall be subject to any
applicable pro rata distribution provisions affecting such IPS Series A-2
Shares.

     1.4. The term “Brantley Capital Exchange Securities” means a number of
shares of Class A Common equal to the Brantley Capital Loan Amount divided by
the Class A Common Closing Price, rounded up to the nearest whole number.

     1.5. The term “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.

     1.6. The term “Class A Common Closing Price” means an amount equal to
the Five Day Average Price divided by the Reverse Split Fraction.

     1.7. The term “Closing” means the closing of the purchase of
Subscription Securities, as contemplated by Section 2 of this Agreement.

     1.8. The term “Five Day Average Price” means the average of the daily
average of the high and low price per share of the Pre-Split Common Stock on
the American Stock Exchange, or such other stock exchange or other similar
system on which the Pre-Split Common Stock shall be listed at the time, for
the five trading days immediately preceding the Closing Date.

     1.9. The term “Person” means any individual, partnership, corporation,
limited liability company, association, trust, joint venture, unincorporated
organization or other entity.

     1.10. The term “Reverse Split Fraction” means a number equal to 0.10.

     1.11. The term “Specified Securities” means the Subscription Securities,
other than any such securities which have been sold in a registered public
offering or to the public pursuant to Rule 144 under the Securities Act.

     1.12. The term “Subscription Securities” means, collectively, the
Brantley III Exchange Securities, the Brantley Capital Exchange Securities
and the Brantley Capital Dividend Securities.

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     1.13. The term “Subsidiary” 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.

     2. Exchange of Exchange Notes for Subscription Securities.

     2.1. On the terms and subject to the conditions hereof, SurgiCare hereby
agrees to sell to each Subscriber, and by its acceptance hereof such
Subscriber, severally and not jointly or jointly and severally with the other
Subscriber, agrees to purchase from SurgiCare for investment, on the Closing
Date (as defined in the IPS — SurgiCare Merger Agreement), such Subscriber’s
Subscription Securities in exchange for the surrender of the Exchange Notes
held by such Subscriber to SurgiCare for cancellation and, in the case of
Brantley Capital, the right to receive the Brantley Capital Dividend Amount.

     2.2. The exchange of the Exchange Notes and the right to receive the
Brantley Capital Dividend Amount for the Subscription Securities shall take
place at the same time and location as, and shall be substantially
contemporaneous with, the closings pursuant to the Brantley IV Subscription
Agreement, the IPS — SurgiCare Merger Agreement and the DCPS/MBS Merger
Agreement. If at any time prior to the Closing hereunder the Brantley IV
Subscription Agreement or either of the Acquisition Agreements shall be
terminated, any party to this Agreement may, upon notice to the others,
terminate this Agreement, after which this Agreement will no longer be of any
further force or effect; provided, however, that no such termination of this
Agreement shall relieve any party from liability for breach prior to such
termination.

     2.3. At the Closing, against surrender of the Exchange Notes by or on
behalf of each Subscriber to SurgiCare for cancellation, SurgiCare will
deliver to such Subscriber certificates for the Subscription Securities to be
acquired by such Subscriber acquired pursuant to Section 2.1, registered in
the name of such Subscriber. Brantley Capital agrees that it shall have no
further rights in respect of the Brantley Capital Dividend Amount following
the Closing, whether or not any Brantley Capital Dividend Securities are
issued hereunder.

     3. Representations and Warranties of SurgiCare. SurgiCare represents and
warrants to the Subscriber that:

     3.1. SurgiCare is duly organized, validly existing and in good standing
under the laws of the State of Delaware. SurgiCare has made available to the
Subscriber true and complete copies of SurgiCare’s Certificate of
Incorporation and the By-Laws as in effect on the date hereof. Prior to the
Closing Date, such documents will be amended to be, as of the Closing Date,
in the respective forms of the Amended SurgiCare Charter and Exhibit E (Form
of Amended By-Laws).

     3.2. SurgiCare has or prior to the Closing Date will have taken all
corporate action required to authorize the execution and delivery of this
Agreement and the issuance of the Subscription Securities.

-4-

 

     3.3. The Subscription Securities, when issued upon exchange of the
Exchange Notes and the right to receive the Brantley Capital Dividend Amount
as contemplated by Section 2.1, will be duly authorized, validly issued,
fully paid and non-assessable and free and clear of any and all preemptive or
similar preferential rights to purchase.

     3.4. All of the representations and warranties of SurgiCare set forth in
the Brantley IV Subscription Agreement are true and correct; and as of the
Closing Date such representations and warranties will continue to be true and
correct in all material respects (except for such representations and
warranties which are qualified as to materiality, which will continue to be
true in all respects). All of the representations and warranties of SurgiCare
set forth in the IPS – SurgiCare Merger Agreement are true and correct; and
as of the Closing Date such representations and warranties will continue to
be true and correct in all material respects (except for such representations
and warranties which are qualified as to materiality, which will continue to
be true in all respects). All of the representations and warranties of
SurgiCare set forth in the DCPS/MBS Merger Agreement will be true and correct
as of the date thereof; and as of the Closing Date such representations and
warranties will continue to be true and correct in all material respects
(except for such representations and warranties which are qualified as to
materiality, which will continue to be true in all respects). SurgiCare has
provided each Subscriber with true and complete copies of the Brantley IV
Subscription Agreement, the IPS – SurgiCare Merger Agreement, the DCPS/MBS
Merger Agreement and all material agreements and other documents relating to
the Acquisitions and the Brantley IV Investment, including, in each case, any
and all amendments thereto, and the transactions contemplated by the Amended
SurgiCare Charter.

     3.5. Each of the Brantley IV Investment Agreement, each of the
Acquisition Agreements and this Agreement is, or at or prior to the Closing
will be, a legal, valid and binding obligation of SurgiCare and each other
party thereto, enforceable against SurgiCare and such other parties in
accordance with its respective terms.

     3.6. Immediately after the consummation of the transactions contemplated
hereby and by the Acquisition Agreements and the Brantley IV Investment
Agreement, the shares of stock and other equity interests of SurgiCare
outstanding will be owned by the Persons (or groups) and in the amounts set
forth in Schedule 1 hereto.

     3.7. In reliance on the representations and warranties of each
Subscriber contained in Section 4.2 hereof, no registration of the offer or
sale of the Subscription Securities to such Subscriber hereunder is required
under the Securities Act.

     4. Representations and Warranties of the Subscribers. Each Subscriber,
severally and not jointly or jointly and severally with the other Subscriber,
represents and warrants with respect to such Subscriber that:

     4.1. Such Subscriber has full legal capacity, power and authority to
execute and deliver this Agreement and to fully perform its obligations
hereunder. This Agreement has been duly authorized, executed and delivered
by such Subscriber and is the legal, valid and binding obligation of such
Subscriber enforceable against it in accordance with the terms hereof, and
the consummation of the transactions contemplated hereby has been duly and
validly authorized by

-5-

 

all necessary action on the part of such Subscriber. The execution and
delivery of this Agreement by such Subscriber, and the performance by such
Subscriber of its obligations hereunder, will not result in a material breach
or material default under any organizational document, agreement, instrument
or other document by which such Subscriber is bound or otherwise result in a
material violation of any instrument, judgment, decree, order, statute, rule
or regulation by which such Subscriber is bound.

     4.2. Investment Representations.

     (a) Such Subscriber has been advised that the Subscription Securities
to be acquired by such Subscriber pursuant hereto have not been registered
under the Securities Act or any state securities laws and, therefore,
cannot be resold unless they are registered under the Securities Act and
applicable state securities laws or unless an exemption from such
registration requirements is available. Such Subscriber is aware that
SurgiCare is under no obligation to effect any such registration with
respect to the Subscription Securities or to file for or comply with any
exemption from registration. Such Subscriber is acquiring the
Subscription Securities to be acquired hereunder for its own account and
not with a view to, or for resale in connection with, the distribution
thereof in violation of the Securities Act. Such Subscriber has such
knowledge and experience in financial and business matters, including
investments in companies similar to SurgiCare, that such Subscriber is
capable of evaluating the merits and risks of such investment, is able to
incur a complete loss of such investment and is able to bear the economic
risk of such investment for an indefinite period of time. Such Subscriber
is an accredited investor as that term is defined in Rule 501 under
Regulation D promulgated under the Securities Act. Such Subscriber was
not organized for the sole purpose of investing in the Subscription
Securities to be acquired by such Subscriber.

     (b) Such Subscriber has had an opportunity to discuss SurgiCare’s
business, management and financial affairs with SurgiCare’s executive
officers. Such Subscriber has also had an opportunity to ask questions
and receive answers from the executive officers of SurgiCare concerning
the terms and conditions of the offering of the Subscription Securities to
be acquired by such Subscriber pursuant hereto and to obtain the
information it believe necessary or appropriate to evaluate the
suitability of an investment in such Subscription Securities.

     5. Conditions to Acquisition of Subscription Securities.

     5.1. SurgiCare’s obligation to issue and sell the Subscription
Securities shall be subject to the satisfaction of the following conditions:

     (a) all representations and warranties of each Subscriber contained
in this Agreement shall be true and correct as of the Closing, and each
Subscriber shall have delivered to SurgiCare a certificate duly executed
on behalf of such Subscriber, by a general partner or other duly
authorized senior representative, certifying that the condition set forth
in this Section 5.1(a) has been satisfied; and

-6-

 

     (b) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligation to close under the Acquisition Agreements (other
than any conditions relating to the consummation of the purchase and sale
of the Subscription Securities under this Agreement or the Brantley IV
Investment) and the Brantley IV Subscription Agreement shall have been
satisfied or waived by SurgiCare.

     5.2. Each Subscriber’s obligation to purchase and pay for the
Subscription Securities to be acquired by such Subscriber pursuant hereto
shall be subject to the satisfaction of the following conditions:

     (a) all representations and warranties of SurgiCare contained in this
Agreement shall be true and correct as of the Closing, and SurgiCare shall
have delivered to such Subscriber a certificate duly executed on behalf of
SurgiCare by its chief executive officer and chief financial officer
certifying that the condition set forth in this Section 5.2(a) has been
satisfied;

     (b) the Amended SurgiCare Charter shall have been authorized and
approved by all corporate and other action required therefor; and the
Amended SurgiCare Charter shall have been filed with the Secretary of
State of the State of Delaware and shall have become effective under the
General Corporation Law of the State of Delaware;

     (c) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligations to close under the Brantley IV Subscription
Agreement, and all conditions to Brantley IV’s obligation to close under
the Brantley IV Subscription Agreement, shall have been satisfied, without
giving effect to any waiver thereof other than waivers consented to in
writing by such Subscriber;

     (d) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligations to close under the IPS — SurgiCare Merger
Agreement, and all conditions to IPS’ obligation to close under the IPS -
SurgiCare Merger Agreement, shall have been satisfied, without giving
effect to any waiver thereof other than waivers consented to in writing by
such Subscriber;

     (e) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, all conditions
to SurgiCare’s obligations to close under the DCPS/MBS Merger Agreement,
and all conditions to the obligation of DCPS and MBS to close under the
DCPS/MBS Merger Agreement, shall have been satisfied, without giving
effect to any waiver thereof other than waivers consented to in writing by
such Subscriber;

     (f) on the Closing Date, substantially contemporaneously with the
issuance and sale of the Subscription Securities hereunder, the Brantley
IV Investment and each of the Acquisitions shall have been consummated;

-7-

 

     (g) such Subscriber’s completion and satisfaction with the results of
its legal, accounting, tax, regulatory and business due diligence review
of IPS, SurgiCare, DCPS and MBS;

     (h) such Subscriber’s satisfaction with the form and substance of all
documentation with respect to the Brantley IV Investment, the Acquisitions
and the related transactions (including but not limited to execution and
delivery of agreements, in form and substance satisfactory to such
Subscriber, with respect to the continued employment of key personnel);

     (i) such Subscriber shall have received such other certificates,
opinions of counsel and other documents as such Subscriber shall have
specified in connection with the Closing, including without limitation
confirmations of legal opinions delivered by counsel to SurgiCare, IPS,
DCPS and MBS;

     (j) such Subscriber’s satisfaction that no material adverse change
has occurred between December 31, 2002 and the Closing Date with respect
to the business, assets, condition (financial or otherwise) or prospects
of SurgiCare, IPS, DCPS or MBS or any of their respective Subsidiaries (or
such Subscriber’s decision to elect to close notwithstanding any such
material adverse change but without waiving or releasing any other rights
of such Subscriber with respect to any such material adverse change);

     (k) the obtaining of all necessary governmental, regulatory and other
approvals, including but not limited to the approval by the stockholders
of IPS and SurgiCare, as provided in the IPS — SurgiCare Merger Agreement;
and

     (l) such Subscriber’s satisfaction that the Class A Common shall
continue to be listed on the American Stock Exchange or The NASDAQ
SmallCap Market from and after the Closing Date.

     6. Covenants.

     6.1. SurgiCare will furnish each registered holder from time to time of
any of the Specified Securities the following:

     6.1.1 As soon available, and in any event within 120 days after the
end of each fiscal year of SurgiCare, the consolidated balance sheet of
SurgiCare and its subsidiaries as at the end of each such fiscal year and
the consolidated statements of income, cash flows and changes in
stockholders’ equity for such year of SurgiCare and its subsidiaries,
setting forth in each case in comparative form the figures for the next
preceding fiscal year, accompanied by the report of independent certified
public accountants of recognized national standing, to the effect that,
except as set forth therein, such consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior years and fairly present in all
material respects the financial condition of SurgiCare and its
subsidiaries at the dates thereof and the results of their operations and
changes in their cash flows and stockholders’ equity for the periods
covered thereby.

     6.1.2 As soon as available and in any event within 60 days after the
end of each fiscal quarter of SurgiCare, the consolidated balance sheet of
SurgiCare and its subsidiaries

-8-

 

as at the end of such quarter and the consolidated statements of
income, cash flows and changes in stockholders’ equity for such quarter
and the portion of the fiscal year then ended of SurgiCare and its
subsidiaries, setting forth in each case the figures for the corresponding
periods of the previous fiscal year in comparative form, all in reasonable
detail.

     6.1.3 Promptly after the filing thereof, any documents filed by
SurgiCare with the Securities and Exchange Commission.

     6.2. SurgiCare shall cause to be kept on an appropriate basis, and each
registered holder from time to time of any of the Specified Securities, and
each representative of any such holder, shall have access to, appropriate
books, records and accounts.

     6.3. From time to time upon request of any registered holder from time
to time of any of the Specified Securities, or any representative of any such
holder (including without limitation accountants and legal counsel),
SurgiCare will furnish to holder or representative such information regarding
the business of SurgiCare and its Subsidiaries (including materials furnished
to the directors of SurgiCare or any of its Subsidiaries at or in connection
with meetings of their respective boards of directors or committees thereof)
as such holder or representative may reasonably request. Each such holder or
representative shall have the right during normal business hours to make an
independent examination of the books and records of SurgiCare and any of its
Subsidiaries, to make copies, notes and abstracts therefrom, and to discuss
their business, affairs and financial condition with the officers, employees
and accountants of SurgiCare and its Subsidiaries. Each such holder or
representative shall have the right during normal business hours to consult
with and advise management of SurgiCare and its Subsidiaries on significant
business issues, including management’s proposed annual operating plans, and
management will make itself available to meet with such holder or
representatives regularly during each year at SurgiCare’s and its
Subsidiaries’ facilities at mutually agreeable times for such consultation
and advice and to review progress in achieving said plans; provided, however,
that no such holder or representative shall thereby have any right to direct
the management or policies of SurgiCare or any of its Subsidiaries.

     6.4. If and for so long as a Subscriber holds Specified Securities and
does not have a representative on SurgiCare’s Board of Directors, SurgiCare
shall invite such Subscriber to send one representative (a “Representative”)
to attend in a nonvoting observer capacity all meetings of SurgiCare’s Board
of Directors and, in this respect, shall give such Subscriber’s
Representative copies of all notices, minutes, consents, and other material
that SurgiCare provides to its directors; provided, however, that SurgiCare
reserves the right to exclude such Subscriber’s Representative from access to
any material or meeting or portion thereof if SurgiCare believes upon advice
of counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege. Such Subscriber’s Representative may participate
in discussions of matters brought to SurgiCare’s Board of Directors. The
rights of such Subscriber set forth in this Section shall also apply to all
committees of SurgiCare’s Board of Directors and to the boards of directors
(and all committees thereof) of all Subsidiaries of SurgiCare.

     7. Indemnification.

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     7.1. SurgiCare will indemnify, exonerate, defend and hold each
Subscriber and each of its partners, shareholders, affiliates, directors,
officers, fiduciaries, employees and agents and each of the partners,
shareholders, affiliates, directors, officers, fiduciaries, employees and
agents of each of the foregoing (collectively, the “Subscriber Indemnitees”)
free and harmless from and against any and all actions, causes of action,
suits, losses (including, without limitation, any diminution in the value of
the Subscription Securities or in other securities into which the
Subscription Securities may be converted in the future), liabilities, amounts
paid in settlement, judgments and damages, and any and all expenses,
including, without limitation, reasonable attorneys’ fees and disbursements
(collectively, the “Indemnified Losses”), incurred by the Subscriber
Indemnitees or any of them as a result of, arising out of, or relating to:
(a) any breach of any representation, warranty or agreement by SurgiCare or
any misrepresentation by SurgiCare in this Agreement or the Brantley IV
Subscription Agreement or (b) any breach of any representation, warranty or
agreement of SurgiCare, IPS, DCPS or MBS or any misrepresentation by
SurgiCare, IPS, DCPS, MBS or any of their respective officers, directors,
stockholders, owners or affiliates under the IPS — SurgiCare Merger
Agreement, the DCPS/MBS Merger Agreement or any other agreement entered into
(or certificate or instrument delivered) in connection with any of such
agreements or in connection with the transactions contemplated thereby
(without giving effect, in the case of the IPS – SurgiCare Merger Agreement,
to any update of disclosure schedules occurring subsequent to the date
hereof). If and to the extent that the foregoing undertaking may be
unenforceable for any reason, SurgiCare hereby agrees to make the maximum
contribution to the payment and satisfaction of each of such Indemnified
Losses which is permissible under applicable law. None of the Subscriber
Indemnitees shall be liable to SurgiCare or any of its affiliates for any act
or omission suffered or taken by such Subscriber Indemnitee that does not
constitute either breach of this Agreement or gross negligence or willful
misconduct.

     7.2. Each Subscriber, severally and not jointly or jointly and severally
with the other Subscriber, will indemnify, exonerate, defend and hold
SurgiCare harmless from and against any and all Indemnified Losses resulting
from, arising out of or relating to any breach of any representation,
warranty or agreement of such Subscriber in this Agreement or any
misrepresentation by such Subscriber in this Agreement. If and to the extent
that the foregoing undertaking may be unenforceable for any reason, such
Subscriber hereby agrees to make the maximum contribution to the payment and
satisfaction of such Indemnified Losses of SurgiCare which is permissible
under applicable law.

     7.3. If any third party notifies either SurgiCare or either Subscriber
with respect to any matter (a “Third Party Claim”) which may give rise to a
claim (an “Indemnified Claim”) with respect to which such notified party may
seek indemnification hereunder (such party, in such capacity, being referred
to herein as an “Indemnified Party”), then the Indemnified Party will
promptly give written notice to the party (the “Indemnifying Party”) against
which such indemnification may be sought; provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party will
relieve the Indemnifying Party from any obligation under this Section 7,
except to the extent such delay actually and materially prejudices the
Indemnifying Party.

     7.3.1 The Indemnifying Party will be entitled to participate in the
defense of any Third Party Claim that is the subject of a notice given by
the Indemnified Party pursuant to

-10-

 

Section 7.3. In addition, the Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party so long as
(a) the Indemnifying Party gives written notice to the Indemnified Party
within fifteen days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any and all Indemnified
Losses the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (b) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have
adequate financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (c) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief against the Indemnified Party, (d) the Indemnified Party
has not been advised by counsel that an actual or potential conflict
exists between the Indemnified Party and the Indemnifying Party in
connection with the defense of the Third Party Claim, (e) the Third Party
Claim does not relate to or otherwise arise in connection with taxes or
any criminal or regulatory enforcement action, (f) settlement of, an
adverse judgment with respect to or the Indemnifying Party’s conduct of
the defense of the Third Party Claim is not, in the good faith judgment of
the Indemnified Party, likely to be adverse to the Indemnified Party’s
reputation or continuing business interests (including its relationships
with current or potential customers, suppliers or other parties material
to the conduct of its business) and (g) the Indemnifying Party conducts
the defense of the Third Party Claim actively and diligently. If the
Indemnifying Party does so defend an Indemnified Party and such
Indemnified Party elects to retain separate co-counsel, such retention
shall be at such Indemnified Party’s sole cost and expense and the
Indemnifying Party will cooperate with such separate counsel to allow it
to participate in the defense of the Third Party Claim; provided, however,
that the Indemnifying Party will pay the fees and expenses of separate
co-counsel retained by the Indemnified Party that are incurred prior to
Indemnifying Party’s assumption of control of the defense of the Third
Party Claim.

     7.3.2 The Indemnifying Party will not consent to the entry of any
judgment or enter into any compromise or settlement with respect to the
Third Party Claim without the prior written consent of an Indemnified
Party unless such judgment, compromise or settlement (a) provides for the
payment by the Indemnifying Party of money as sole relief for the
claimant, (b) results in the full and general release of such Indemnified
Party, as applicable, from all liabilities arising or relating to, or in
connection with the Third Party Claim and (c) involves no finding or
admission of any violation of law or the rights of any Person and no
effect on any other claims that may be made against the Indemnified Party.

     7.3.3 If the Indemnifying Party does not deliver the notice
contemplated by clause (a), or the evidence contemplated by clause (b), of
Section 7.3.1 within 15 days after the Indemnified Party has given notice
of the Third Party Claim, or otherwise at any time fails to conduct the
defense of the Third Party Claim actively and diligently, the Indemnified
Party may defend, and may consent to the entry of any judgment or enter
into any compromise or settlement with respect to, the Third Party Claim
in any manner it may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in
connection therewith). If such notice and evidence is given on a

-11-

 

timely basis and the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently but any of the other conditions
in Section 7.3.1 or 7.3.2 is or becomes unsatisfied, the Indemnified Party
may defend, and may consent to the entry of any judgment or enter into any
compromise or settlement with respect to, the Third Party Claim; provided,
however, that the Indemnifying Party will not be bound by the entry of any
such judgment consented to, or any such compromise or settlement effected,
without its prior written consent (which consent will not be unreasonably
withheld or delayed). In the event that the Indemnified Party conducts
the defense of the Third Party Claim pursuant to this Section 7.3.3 the
Indemnifying Party will (a) advance the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys’ fees and expenses) and (b) remain
responsible for any and all other Indemnified Losses that the Indemnified
Party may incur or suffer resulting from, arising out of, relating to, in
the nature of or caused by the Third Party Claim to the fullest extent
provided in this Section 7.

     7.3.4 Each party to this Agreement, in its capacity as an
Indemnifying Party, hereby consents to the non-exclusive jurisdiction of
any court in which any Third Party Claim may brought against any
Indemnified Party for purposes of any claim which such Indemnified Party
may have against such Indemnifying Party pursuant to this Agreement in
connection with such Third Party Claim, and in furtherance thereof, the
provisions of Section 10.2 are incorporated herein by reference, mutatis
mutandis.

     7.4. The indemnification provisions of this agreement shall survive
without limitation as to time for as long as may be permitted under
applicable law and without regard to any expiration or termination of any
underlying representation, covenant or other obligation relating to or giving
rise to an indemnification obligation under this Agreement.

     8. Restrictions on Transfer.

     8.1. Restrictive Securities Act Legend. All certificates representing
Subscription Securities shall bear a legend in substantially the following
form:

     “THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER
THE ACT COVERING THE TRANSFER OR A LEGAL OPINION OF COUNSEL ACCEPTABLE TO
THE ISSUER THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.”

     8.2. Termination of 8.1 Restrictions. The restrictions imposed by
Section 8 hereof upon the transferability of Subscription Securities shall
cease and terminate as to any particular Subscription Securities (i) when, in
the opinion of Ropes & Gray LLP or other counsel reasonably acceptable to
SurgiCare, such restrictions are no longer required in order to assure
compliance with the Securities Act or (ii) when such Subscription Securities
shall have been registered under the Securities Act or transferred pursuant
to Rule 144 thereunder. Whenever such restrictions shall cease and terminate
as to any Subscription Securities or such Subscription Securities shall be
transferable under paragraph (k) of Rule 144, the holder thereof shall be

-12-

 

entitled to receive from the Issuer, without expense, new certificates
not bearing the legend set forth in Section 8.1 hereof.

     9. Miscellaneous.

     9.1. Entire Agreement; Prior Agreement Superseded. This Agreement and
the other agreements referred to herein set forth the entire understanding
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings relating to such subject matter,
including without limitation the Prior Agreement, which Prior Agreement is
terminated in its entirety.

     9.2. Amendment. This Agreement can be changed only by an instrument in
writing signed by the party against whom enforcement of such change is
sought.

     9.3. No-Shop; Expenses.

     9.3.1 SurgiCare will comply fully with the terms of the IPS –
SurgiCare Merger Agreement, including, without limitation, the provisions
of Section 6.03 thereof relating to non-solicitation of alternative
SurgiCare Acquisition Transactions (as defined in the IPS – SurgiCare
Merger Agreement), subject to the provisions of clause (b) of such Section
6.03.

     9.3.2 Except as set forth below, all Expenses (as defined below)
incurred in connection with this Agreement and the other transactions
contemplated hereby 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 (a) the due diligence
review and analysis of SurgiCare, IPS, DCPS, MBS, the Brantley IV
Investment, the Acquisitions and the other transactions contemplated
hereby, (b) the negotiation and documentation of related agreements and
(c) the proxy solicitation process as well as the process for obtaining
any governmental or other third party consent for the foregoing
transactions.

     9.3.3 If the Closing occurs, SurgiCare agrees to pay on demand (i)
all Expenses actually incurred by each Subscriber (or any of its
affiliates) and (ii) any out-of-pocket expenses actually incurred by such
Subscriber, its general partner or any of such Subscriber’s other
affiliates in connection with the provision of services to SurgiCare or
any of its Subsidiaries or the attendance at any meeting of the board of
directors (or any committee thereof) of SurgiCare or any of its
Subsidiaries.

     9.4. Assignment. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors, assigns, heirs and
representatives; provided, however, that prior to the Closing, no assignment
of the Subscriber’s rights hereunder will, without the consent of SurgiCare,
relieve the Subscriber of its obligations hereunder; and, after the Closing,
the Subscriber may not assign any of the Subscriber’s rights hereunder except
in connection with a transfer of the Subscription Securities in compliance
with the terms and conditions of Section 8 of this Agreement.

-13-

 

     9.5. Survival. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery hereof and
transfer of any Subscription Securities.

     9.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same instrument.

     10. Governing Law; Arbitration.

     10.1. Governing Law. This Agreement and all claims arising hereunder or
in connection herewith shall be governed by and construed in accordance with
the domestic substantive laws of the State of New York, without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction.

     10.2. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof may be brought and maintained in the federal and
state courts within the County of New York of the State of New York. Each of
the parties hereto by execution hereof: (i) hereby irrevocably submits to
the jurisdiction of the federal and state courts within the County of New
York in the State of New York for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject matter
hereof and (ii) hereby waives to the extent not prohibited by applicable law,
and agrees not to assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that he or it is not subject
personally to the jurisdiction of the above-named courts, that he or it is
immune from extraterritorial injunctive relief or other injunctive relief,
that his or its property is exempt or immune from attachment or execution,
that any such action, suit or proceeding may not be brought or maintained in
one of the above-named courts, that any such action, suit or proceeding
brought or maintained in one of the above-named courts should be dismissed on
grounds of forum non conveniens, should be transferred to any court other
than one of the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court other than one
of the above-named courts, or that this Agreement or the subject matter
hereof may not be enforced in or by any of the above-named courts. Each of
the parties hereto hereby consents to service of process in any such suit,
action or proceeding in any manner permitted by the laws of the State of New
York, agrees that service of process by registered or certified mail, return
receipt requested, at the address specified below its signature hereon is
reasonably calculated to give actual notice and waives and agrees not to
assert by way of motion, as a defense or otherwise, in any such action, suit
or proceeding any claim that such service of process does not constitute good
and sufficient service of process.

     10.3. Waiver of Jury Trial. To the extent not prohibited by applicable
law which cannot be waived, each of the parties hereto hereby waives, and
covenants that he or it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether
now existing or hereafter arising and whether in contract or tort or
otherwise. Any of the parties hereto may file an original counterpart or a
copy of this Section 10.3 with any court as written evidence of the consent
of each of the parties hereto to the waiver of his or its right to trial by
jury.

-14-

 

     10.4. Reliance. Each of the parties hereto acknowledges that he or it
has been informed by each other party that the provisions of Section 10
constitute a material inducement upon which such party is relying and will
rely in entering into this Agreement and the transactions contemplated
hereby.

-15-

 

SurgiCare, Inc.

Amended and Restated Debt Exchange Agreement

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound by
the terms hereof, have caused this Agreement to be executed, under seal, as of
the date first above written by their officers or other representatives
thereunto duly authorized.

	 	 	 	 	 	 	 
	The Issuer:
	 	SURGICARE, INC.
	 
	 	 	 	 	 	 
	 
	 	By:	 	\s\ Keith LeBlanc
	 
	 	 	 	
 
	

	 	Name:
	 	Keith
LeBlanc
	

	 	Title:
	 	CEO	 	 
	 
	 	 	 	 	 	 
	 
	 	Address:	 	12727 Kimberly Lane, Suite 200
	

	 	 	 	 	 	Houston, TX 77024
	 
	 	 	 	 	 	 
	The Subscribers:
	 	BRANTLEY VENTURE PARTNERS III, L.P
	 
	 	 	 	 	 	 
	 
	 	By:	 	Brantley Venture Management III, L.P., its
	 
	 	 	 	general partner
	 
	 	 	 	 	 	 
	 
	 	By	 	\s\ Paul H. Cascio
	 
	 	 	 	
 
	

	 	 	 	Name:
	 	 Paul H. Cascio
	

	 	 	 	Title:
	 	General Partner
	 
	 	 	 	 	 	 
	 
	 	Address:	 	Lakepoint
	

	 	 	 	 	 	3201 Enterprise Pkwy., Suite 350
	

	 	 	 	 	 	Beachwood, OH 44122
	 
	 	 	 	 	 	 
	 
	 	BRANTLEY CAPITAL CORPORATION
	 
	 	 	 	 	 	 
	 
	 	By	 	\s\ Paul H. Cascio
	 
	 	 	 	
 
	

	 	 	 	Name:
	 	 Paul H. Cascio
	

	 	 	 	Title:
	 	Vice President
	 
	 	 	 	 	 	 
	 
	 	Address:	 	Lakepoint
	

	 	 	 	 	 	3201 Enterprise Pkwy., Suite 350
	

	 	 	 	 	 	Beachwood, OH 44122

 

 

Schedule 1

to Amended and Restated Debt Exchange Agreement

Pro Forma Equity Ownership at Closing

	 	 	 
	Holder or Group
	 	Shares

	Brantley Partners IV, L.P., as the
Subscriber under the Brantley IV
Subscription Agreement.

	 	100% of the outstanding
shares of Class B Common as
of Closing (which, after
satisfaction of preference
amount, will be convertible
into and constitute
approximately 56% of Class
A Common before dilution by
shares issued in connection
with DCPS/MBS Acquisition
and management option plan)
	 
	 	 
	Former stockholders of SurgiCare, Inc.

	 	A number of shares of Class
A Common, representing 50%
of the outstanding shares
of Class A Common as of
Closing (which, assuming
payment to Class B holders
of full preference amount
in cash and then conversion
of Class B shares, will
represent approximately 22%
of Class A Common before
dilution by shares issued
in connection with DCPS/MBS
Acquisition and management
option plan)
	 
	 	 
	Former debt holders and stockholders of
Integrated Physicians Solutions, Inc.
(“IPS”) (which will include Brantley III
and Brantley Capital in their capacity as
stockholders and debt holders of IPS)

	 	A number of shares of Class
A Common, representing 50%
of the outstanding shares
of Class A Common as of
Closing (which, assuming
payment to Class B holders
of full preference amount
in cash and then conversion
of Class B shares, will
represent approximately 22%
of Class A Common before
dilution by shares issued
in connection with DCPS/MBS
Acquisition and management
option plan)
	 
	 	 
	DCPS/MBS Sellers (assumes a Class A
Common Closing Price of at least $.70 per
share)

	 	A number of shares of Class
C Common equal to
18,278,800 times the
Reverse Split Fraction. In
addition, a number of
shares of Class A Common
equal to 757,575 times the
Reverse Split Fraction will
be reserved for issuance
upon the direction of the
DCPS/MBS Sellers
	 
	 	 
	Management Option Plan

	 	A number of shares of Class
A Common equal to
approximately 10% of the
total Class A Common
outstanding after all of

 

 

	 	 	 
	

	 	the transactions
contemplated by this
Agreement (including the
Acquisitions) will be
reserved for issuance upon
exercise of options issued
to management (including
options issued to replace
former options issued by
IPS)

 

 

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	–
	 	Form of Amended and Restated SurgiCare Charter
	Exhibit B

	 	–

	 	Form of Brantley IV Subscription Agreement
	Exhibit C

	 	–

	 	Form of IPS — SurgiCare Merger Agreement
	Exhibit D

	 	–

	 	Form of DCPS/MBS Merger Agreement
	Exhibit E

	 	–

	 	Form of Amended and Restated By-Laws for SurgiCare

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