U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
SURGICARE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 58-1597246
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6699 CHIMNEY ROCK, SUITE 105 77081
HOUSTON, TEXAS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER: (713) 665-1406
SECURITIES TO BE REGISTERED UNDER SECTION 12(B) OF THE ACT: NOT APPLICABLE
SECURITIES TO BE REGISTERED UNDER SECTION 12(G) OF THE ACT:
COMMON STOCK, $.005 PAR VALUE
SERIES A REDEEMABLE PREFERRED STOCK, $.001 PAR VALUE
<PAGE>
SURGICARE, INC.
FORM 10-SB
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2 Management's Discussion and Analysis or Plan of Operation
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, Promoters and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
other Shareholder Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
PART F/S Financial Statements
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
<PAGE>
Part I
ITEM 1. DESCRIPTION OF BUSINESS
THE COMPANY
SurgiCare was incorporated in Delaware on February 24, 1984 as
Technical Coatings Incorporated. On September 10, 1984 its name was changed to
Technical Coatings, Inc. ("TCI"). Immediately prior to July 1999, TCI was an
inactive company. On July 11, 1999, TCI changed its name to SurgiCare Inc., and
at that time changed its business strategy to developing, acquiring and
operating freestanding ambulatory surgery centers. On July 23, 1999, SurgiCare
acquired all of the issued and outstanding shares of common stock of Bellaire
Surgicare, Inc. a Texas corporation ("Bellaire"), in exchange for the issuance
of 9,860,000 shares of common stock, par value $.005 per share ("Common Stock")
and 1,350,000 shares of Series A Redeemable Preferred Stock, par value $.001 per
share ("Series A Preferred"), of SurgiCare to the holders of Bellaire's common
stock. Bellaire is now a wholly owned subsidiary of SurgiCare. Throughout this
document we may refer occasionally to SurgiCare meaning SurgiCare and it's
subsidiary Bellaire.
SurgiCare is authorized to issue up to 50,000,000 shares of common
stock, par value $.005 per share, and 20,000,000 shares of preferred stock, par
value $.001 per share.
At the present time SurgiCare conducts its operations through its
wholly owned subsidiary, Bellaire. SurgiCare's current management personnel
were, immediately prior to the acquisition of Bellaire, management personnel of
Bellaire. Bellaire owns and operates an ambulatory surgery center located in
Houston, Texas. This center provides a wide range of high volume, lower-risk
surgical procedures. These procedures are performed within a cost structure that
enables Bellaire to charge fees which management believes are generally less
than those charged by hospitals and hospital based out patient surgery centers.
SurgiCare's principal executive offices are located at 6699 Chimney Rock
Rd, Suite 105, Houston, Texas 77081, and its telephone number is 713-665-1406.
INDUSTRY OVERVIEW
In recent years, government programs, private insurance companies,
managed care organizations and self-insured employers have implemented various
cost-containment measures to limit the growth of healthcare expenditures. These
cost-containment measures, together with technological advances, have resulted
in a significant shift in the delivery of healthcare services away from
traditional inpatient hospitals to more cost-effective alternate sites,
including ambulatory surgery centers.
According to the industry publication SMG Marketing Group Inc.'s,
Freestanding Outpatient Surgery Center Directory, (June 1998):
Outpatient surgical procedures represented approximately 73% of
all surgical procedures performed in the United States in 1997 and
the number of outpatient surgery cases increased 71% from 3.1
million in 1993 to 5.3 million in 1997.
As of December 31, 1997, there were 2,634 freestanding ambulatory
surgery centers in the U.S., of which 155 were owned by hospitals
and 704 were owned by corporate entities. The remaining 1,775
centers were independently owned, primarily by physicians.
SurgiCare believes that the following factors have contributed to the
growth of ambulatory surgery:
COST-EFFECTIVE ALTERNATIVE
Ambulatory surgery is generally less expensive than hospital inpatient
surgery. In addition, SurgiCare believes that surgery performed at a free
standing ambulatory surgery center is generally less expensive than
hospital-based ambulatory surgery for a number of reasons, including
Lower facility development costs.
More efficient staffing and space utilization.
Specialized operating environment focused on costcontainment.
SurgiCare believes that interest in ambulatory surgery centers has
grown as managed care organizations have continued to seek a cost-effective
alternative to inpatient services.
PHYSICIAN AND PATIENT PREFERENCE
SurgiCare believes that many physicians prefer ambulatory surgery
centers. SurgiCare believes that such centers enhance physicians' productivity
by providing them with greater scheduling flexibility, more consistent nurse
staffing and faster turnaround time between cases. This allows the physician to
perform more surgeries in a defined period.
In contrast, hospitals generally serve a broader group of physicians,
including those involved with emergency procedures, resulting in postponed or
delayed surgeries. Additionally, many physicians choose to perform surgery in a
free standing ambulatory surgery center because their patients prefer the
simplified admissions and discharge procedures and the less institutional
atmosphere.
NEW TECHNOLOGY
New technology and advances in anesthesia, which have been increasingly
accepted by physicians, have significantly expanded the types of surgical
procedures that are being performed in ambulatory surgery centers.
Enhanced endoscopic techniques and fiber optics have reduced the trauma
and recovery time associated with many surgical procedures. Improved anesthesia
has shortened recovery time by minimizing postoperative side effects such as
nausea and drowsiness, thereby avoiding, in some cases, overnight
hospitalization.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
The information contained herein contains certain forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby. Investors
are cautioned that all forward looking statements involve risks and uncertainty,
including, without limitation, the ability of SurgiCare to continue its
expansion strategy, changes in federal or state healthcare laws and regulations
or third party payer practices, SurgiCare's historical and current compliance
with existing or future healthcare laws and regulations and third party payer
requirements, changes in costs of supplies, labor and employee benefits, as well
as general market conditions, competition and pricing. Although SurgiCare
believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward looking statements
included in this Form 10SB will prove to be accurate. In view of the significant
uncertainties inherent in the forward looking statements included herein, the
inclusion of such information should not be regarded as a representation by
SurgiCare or any other person that the objectives and plans of SurgiCare will be
achieved. SurgiCare undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time.
BUSINESS PHILOSOPHY
SurgiCare believes that physician owned and operated surgical centers
have tended to be extremely profitable. This profitability results primarily
from the fact that physicians who own and operate an ambulatory surgical center
are the center's most significant customers, and benefactors.
SurgiCare believes that ambulatory surgical centers receive their
patient referrals almost exclusively from the operating physicians. Therefore it
becomes an extremely important role of a center's management to insure that the
operating physicians have everything they need, and that they are pleased with
the results that they are able to obtain at the center. If management and the
operating physicians are substantially the same, it becomes much easier to
insure that physician needs are meet, and that their experiences at the centers
are pleasant.
Furthermore, SurgiCare believes that when operating physicians own and
operate an ambulatory surgical center they become cost conscious. Without
allowing cost consciousness to detrimental to the patients, it may still have a
significant effect on the overall profitability of the center. For these
reasons, SurgiCare believes, physician owned ambulatory surgical centers have
historically been extremely profitable.
SurgiCare believes that the profitability of freestanding ambulatory
surgery centers tends to make them attractive to acquirers. Nevertheless,
following the acquisition of a physician owned center, evidence suggests that
the typical center's profitability will significantly decrease. SurgiCare
believes that this typical decline in profitability can be explained, in part,
because in many of such acquisitions the operating physician loses control of
the center. After a typical acquisition of an ambulatory surgery center, the
control of the center is typically vested in non-physician management. The
factors motivating the physician users to insure the center's profitability are
therefore typically removed.
SurgiCare's management structure consists of physicians and healthcare
professionals. SurgiCare's management have substantial experience in the
operations and management of ambulatory surgical centers. SurgiCare also expects
that it will issue its own shares, or other equity interests, to the physicians
who own and operate other centers which SurgiCare may acquire. SurgiCare
believes that it will thereby be able to substantially align the interests of
SurgiCare's management and shareholders with those of the physician owners of
centers which SurgiCare may acquire. SurgiCare also presently intends to permit
each surgery center to be substantially managed by its own board, which is
anticipated to consist of a majority of physicians associated with the center
and one or more representatives of SurgiCare. Based upon this approach,
SurgiCare expects that it will benefit from the substantial unity of goals and
motivations of its own management and shareholders with those of physicians who
have previously owned and operated a freestanding center acquired by SurgiCare.
SurgiCare therefore expects that with goals and motivations
substantially aligned, the profitability of centers which it acquires can be
maintained. As there are numerous factors which affect the profitability of
ambulatory surgery centers, including regulatory and liability matters, there
can, however, be no assurance that the profitability of any center or SurgiCare
as a whole will be maintained.
SurgiCare intends to apply its philosophy in the acquisition,
development and operation of physician owned / managed freestanding ambulatory
surgery centers.
THE ESSENTIAL COMPONENTS OF SURGICARE'S STRATEGY ARE:
Acquire physician owned ambulatory surgery centers.
SurgiCare expects to continue to grow through a combination of
acquisitions and development of physician owned / managed ambulatory
surgical centers throughout the United States.
Achieve Growth in Surgery Center Revenues and Profitability.
SurgiCare intends to enhance physician productivity and promote
increased same-center revenues and profitability by increasing
physician involvement, and creating operating efficiencies, including
improved scheduling, group purchasing programs and clinical
efficiencies.
SurgiCare is in the process of identifying ambulatory surgical centers
as potential acquisition targets, and has, in some cases, conducted preliminary
discussions with representatives of centers. All of such discussions have been
tentative in nature and there can be no assurance that SurgiCare will acquire
any center with whom discussions have been conducted. SurgiCare expects that
generally the acquisition of another surgery center will take the form of a
merger, stock-for-stock exchange or stock-for-assets exchange, and that in most
instances the target company will wish to structure the business combination to
be within the definition of a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended. SurgiCare may, however, use other
acquisition structuring techniques, including purchases of assets or stock for
cash or cash and stock, or through formation of one or more limited partnerships
or limited liability companies.
ACQUISITION AND DEVELOPMENT OF SURGERY CENTERS
Freestanding physician owned ambulatory surgery centers are licensed
outpatient surgery centers generally equipped and staffed for a wide variety of
medical specialty. SurgiCare anticipates that it will target centers that have
specialties that perform many high volume, lower-risk procedures that are
appropriate for the freestanding setting. Generally these centers may be
expected to have significantly lower capital and operating costs than the costs
of hospital and hospital based ambulatory surgery center alternatives that are
designed to provide more intensive services.
SurgiCare's development staff will identify existing centers that are
potential acquisition candidates and identify physician practices that are
potential partners for new center development in the medical specialties which
SurgiCare has targeted for development.
The candidates will then be evaluated against SurgiCare's project
criteria which may be expected to include several factors such as number of
procedures currently being performed by the practice, competition from and the
fees being charged by other surgical providers, relative competitive market
position of the physician practice under consideration, ability to contract with
payers in the market and state certificate of need ("CON") requirements for
development of a new center.
In the development of a new surgery centers, SurgiCare intends to work
in conjunction with Surgery Centers of America II ("SCOA"). SurgiCare believes
that its management has a certain expertise in acquiring, managing and operating
ambulatory surgical centers. However, in order to assure that its acquisition
and development activities are efficiently and thoroughly conducted, SurgiCare
has retained SCOA to assist it in these efforts.
In presenting the advantages to physicians of developing a new
freestanding ambulatory surgery center in partnership with SurgiCare, SurgiCare
anticipates that the SurgiCare and SCOA development staffs will emphasize the
following factors, among others:
1.Simplified administrative procedures.
2. The ability to schedule consecutive cases without preemption by
inpatient or emergency procedures.
3. Rapid turnaround time between cases.
4. The high technical competency of the center's clinical staff that
performs only a limited number of specialized procedures, and
state-of-the-art surgical equipment.
SurgiCare expects that, in conjunction with SCOA, it will provide the
following developmental services:
Financial feasibility pro forma analysis;
Assistance in state CON approval process;
Site selection;
Assistance in space analysis and schematic floor plan
design;
Analysis of local, state, and federal building codes;
Negotiation of equipment financing with lenders;
Equipment budgeting, specification, bidding, and
purchasing;
Construction financing;
Architectural oversight;
Contractor bidding;
Construction management;
Assistance with licensing;
Assistance with Medicare certification and third party
Managed care contracts.
SurgiCare currently intends that its ownership interests in its
freestanding ambulatory surgery centers will generally be 100%. The physicians
who had owned and operated a center acquired by SurgiCare, or who have newly
developed a center in partnership with SurgiCare, generally will become
substantial shareholders in SurgiCare. The local physicians will generally
continue to oversee their local operations. SurgiCare anticipates that the terms
of its acquisition agreements with new centers will include a provision for the
appointment of one or more physician partners from each newly acquired center to
a position on the Board of Directors of SurgiCare or on an advisory committee
that will advise SurgiCare's board or management on operational aspects of the
center.
REVENUES
SurgiCare's principal source of revenues is a facility fee charged for
surgical procedures performed in its surgery center. This fee varies depending
on the procedure, but usually includes all charges for operating room usage,
special equipment usage, supplies, recovery room usage, nursing staff and
medications. Facility fees do not include the charges of the patient's surgeon,
anesthesiologist or other attending physicians, which are billed directly to
third-party payers by such physicians.
Freestanding ambulatory surgery centers such as those in which
SurgiCare owns and intends to acquire, depend upon third-party reimbursement
programs, including governmental and private insurance programs, to pay for
services rendered to patients. SurgiCare derived approximately 23% of its net
revenues from governmental healthcare programs, including Medicare and Medicaid,
in the past trailing 12 month period.
The Medicare program currently pays ambulatory surgery centers and
physicians in accordance with fee schedules, which are prospectively determined.
On June 12, 1998, the Health Care Financing Agency of the U.S.
Department of Health and Human Services ("HCFA") published a proposed rule that
would update the rate setting methodology, payment rates, payment policies and
the list of covered surgical procedures for ambulatory surgery centers. The
proposed rule is subject to a comment period that has been extended until June
30, 1999, and provides for an implementation date that has been extended to a
date no earlier than January 2000.
The proposed rule would reduce the rates paid for certain ambulatory
surgery center procedures reimbursed by Medicare.
While the effects of the proposed rule, if adopted in its current form,
cannot be precisely forecasted, SurgiCare believes that if adopted in its
current form, the proposed HCFA rule would not directly have a material adverse
affect its annual revenues. However many third party payers, base their payment
structure on a percentage of the Medicare accepted rate. The adjustment of such
payers' rates to follow the rates propsoed in te rule could adversely affect
SurgiCare's annual revenues. There can be no assurance that HCFA will not modify
the proposed rule, before it is enacted in final form, in a manner that would
adversely impact SurgiCare's financial condition, results of operation and
business prospects.
In addition to payment from governmental programs, ambulatory surgery
centers derive a significant portion of their net revenues from private
healthcare reimbursement plans. These plans include both standard indemnity
insurance programs as well as managed care structures such as PPOs, HMOs and
other similar structures.
The strengthening of managed care systems nationally has resulted in
substantial competition among providers of services, including providers of
surgery center services. This competition would include companies with greater
financial resources and market penetration than SurgiCare. In order to better
compete in market penetration, SurgiCare has associated itself with SCOA.
SurgiCare believes that all payers, both governmental and private, will
continue their efforts over the next several years to reduce healthcare costs
and that their efforts will generally result in a less stable market for
healthcare services. While no assurances can be given concerning the ultimate
success of SurgiCare's efforts to contract with healthcare payers, SurgiCare
believes that its position as a low-cost alternative for certain surgical
procedures should enable its current center, and additional centers which it may
acquire, to compete effectively in the evolving healthcare marketplace
COMPETITION
There are several companies, many in niche markets, that acquire
existing freestanding ambulatory surgery centers. Many of these competitors have
greater resources than SurgiCare. The principal competitive factors that affect
the ability of SurgiCare and its competitors to acquire surgery centers are
price, experience, reputation, and access to capital.
Competition for Managed Care Contracts
SurgiCare believes that its current center can provide lower-cost, high
quality surgery in a more comfortable environment for the patient in comparison
to hospitals and to hospital based surgery centers with which SurgiCare competes
for managed care contracts. SurgiCare intends that any additional center which
it may acquire will be similarly situated.
GOVERNMENT REGULATION
The healthcare industry is subject to extensive regulation by a number
of governmental entities at the federal, state and local level. Regulatory
activities affect the business activities of SurgiCare by controlling its
growth, requiring licensure and certification for its facilities, regulating the
use of SurgiCare's properties, and controlling reimbursement to SurgiCare for
the services it provides.
Certificates of Need and State Licensing. CON regulations control the
development of ambulatory surgery centers in certain states. CONs generally
provide that prior to the expansion of existing centers, the construction of new
centers, the acquisition of major items of equipment or the introduction of
certain new services, approval must be obtained from the designated state health
planning agency. State CON statutes generally provide that, prior to the
construction of new facilities or the introduction of new services, a designated
state health planning agency must determine that a need exists for those
facilities or services. SurgiCare expects that its development of ambulatory
surgery centers will generally focus on states that do not require CONs.
However, acquisitions of existing surgery centers, even in states that require
CONs for new centers, generally do not require CON regulatory approval.
State licensing of ambulatory surgery centers is generally a
prerequisite to the operation of each center and to participation in federally
funded programs, such as Medicare and Medicaid. Once a center becomes licensed
and operational, it must continue to comply with federal, state and local
licensing and certification requirements in addition to local building and life
safety codes. In addition, each center is also subject to federal, state and
local laws dealing with issues such as occupational safety, employment, medical
leave, insurance regulations, civil rights and discrimination, and medical waste
and other environmental issues.
Insurance Laws. Laws in all states regulate the business of insurance
and the operation of HMOs. Many states also regulate the establishment and
operation of networks of healthcare providers. SurgiCare believes that its
operations are in compliance with these laws in the states in which it currently
does business. The National Association of Insurance Commissioners (the "NAIC")
recently endorsed a policy proposing the state regulation of risk assumption by
healthcare providers. The policy proposes prohibiting providers from entering
capitated payment or other risk sharing contracts except through HMOs or
insurance companies. Several states have adopted regulations implementing the
NAIC policy in some form. In states where such regulations have been adopted,
healthcare providers will be precluded from entering into capitated contracts
directly with employers and benefit plans other than HMOs and companies.
SurgiCare and its affiliated groups may in the future enter contracts with
managed care organizations, such as HMOs, whereby SurgiCare and its affiliated
groups would assume risk in connection with providing healthcare services under
capitation arrangements. If SurgiCare or its affiliated groups are considered to
be in the business of insurance as a result of entering into such risk sharing
arrangements, they could become subject to a variety of regulatory and licensing
requirements applicable to insurance companies or HMOs, which could have a
material adverse effect upon SurgiCare's ability to enter into such contracts.
With respect to managed care contracts that do not involve capitated
payments or some other form of financial risk sharing, federal and state
antitrust laws restrict the ability of healthcare provider networks such as
SurgiCare's specialty physician networks to negotiate payments on a collective
basis.
Reimbursement. SurgiCare depends upon third-party programs, including
governmental and private health insurance programs; to reimburse it for services
rendered to patients in its ambulatory surgery center. In order to receive
Medicare reimbursement, each ambulatory surgery center must meet the applicable
conditions of participation set forth by the Department of Health and Human
Services ("DHHS") relating to the type of facility, its equipment, personnel and
standard of medical care, as well as compliance with state and local laws and
regulations, all of which are subject to change from time to time. Ambulatory
surgery centers undergo periodic on-site Medicare certification surveys.
SurgiCare's existing center is certified as a Medicare provider. Although
SurgiCare intends for its current center and those which it may acquire to
participate in Medicare and other government reimbursement programs, there can
be no assurance that these centers will continue to qualify for participation.
Medicare-Medicaid Illegal Remuneration Provisions. The anti-kickback
statute makes unlawful knowingly and willfully soliciting, receiving, offering
or paying any remuneration (including any kickback, bribe, or rebate) directly
or indirectly to induce or in return for referring an individual to a person for
the furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part under Medicare or Medicaid. Violation is
a felony punishable by a fine of up to $25,000 or imprisonment for up to five
years, or both. The Medicare and Medicaid Patient Program Protection Act of 1987
(the "1987 Act") provides administrative penalties for healthcare practices
which encourage over utilization or illegal remuneration when the costs of
services are reimbursed under the Medicare program. Loss of Medicare
certification and severe financial penalties are included among the 1987 Act's
sanctions. The 1987 Act, which adds to the criminal penalties under preexisting
law, also directs the Inspector General of the DHHS to investigate practices
which may constitute over utilization, including investments by healthcare
providers in medical diagnostic facilities and to promulgate regulations
establishing exemptions or "safe harbors" for investments by medical service
providers in legitimate business ventures that will be deemed not to violate the
law even though those providers may also refer patients to such a venture.
Regulations identifying safe harbors were published in final form in July 1991
(the "Regulations").
The Regulations set forth two specific exemptions or "safe harbors" related
to "investment interests": the first concerning investment interests in large
publicly traded companies ($50,000,000 in net tangible assets) and the second
for investments in smaller entities. The corporate structure of SurgiCare and
its center do not meet all of the criteria of either existing "investment
interests" safe harbor as announced in the Regulations.
While several federal court decisions have aggressively applied the
restrictions of the anti-kickback statute, they provide little guidance as to
the application of the anti-kickback statute to SurgiCare or its subsidiary
company. SurgiCare believes that it is in compliance with the current
requirements of applicable federal and state law.
Notwithstanding SurgiCare's belief that the relationship of physician
partners to SurgiCare's surgery center should not constitute illegal
remuneration under the anti-kickback statute, no assurances can be given that a
federal or state agency charged with enforcement of the anti-kickback statute
and similar laws might not assert a contrary position or that new federal or
state laws might not be enacted that would cause the physician partners'
ownership interest in SurgiCare to become illegal, or result in the imposition
of penalties on SurgiCare or certain of its facilities. Even the assertion of a
violation could have a material adverse effect upon SurgiCare.
Prohibition on Physician Ownership of Healthcare Facilities. The so-called
"Stark II" provisions of the Omnibus Budget Reconciliation Act of 1993 amend the
federal Medicare statute to prohibit a referral by a physician for "designated
health services" to an entity in which the physician has an investment interest
or other financial relationship, subject to certain exceptions. A referral under
Stark II that does not fall within an exception is strictly prohibited. This
prohibition took effect on January 1, 1995. Sanctions for violating Stark II can
include civil monetary penalties and exclusion from Medicare and Medicaid.
Ambulatory surgery is not identified as a "designated health service", and
SurgiCare therefore does not believe that ambulatory surgery is otherwise
subject to the restrictions set forth in Stark II. Proposed regulations pursuant
to Stark II that were published on January 9, 1998 specifically provide that
services provided in any ambulatory surgery center and reimbursed under the
composite payment rate are not designated health services.
However, unfavorable final Stark II regulations or subsequent adverse court
interpretations concerning similar provisions found in recently enacted state
statutes could prohibit reimbursement for treatment provided by the physicians
affiliated with SurgiCare or its current or future centers to their patients.
SurgiCare cannot predict whether other regulatory or statutory provisions
will be enacted by federal or state authorities which would prohibit or
otherwise regulate relationships which SurgiCare has established or may
establish with other healthcare providers or the possibility of material adverse
effects on its business or revenues arising from such future actions. SurgiCare
believes, however, that it will be able to adjust its operations to be in
compliance with any regulatory or statutory provision, as may be applicable.
SurgiCare is subject to state and federal laws that govern the submission
of claims for reimbursement. These laws generally prohibit an individual or
entity from knowingly and willfully presenting a claim (or causing a claim to be
presented) for payment from Medicare, Medicaid or other third party payers that
is false or fraudulent. The standard for "knowing and willful" often includes
conduct that amounts to a reckless disregard for whether accurate information is
presented by claims processors.
Penalties under these statutes include substantial civil and criminal
fines, exclusion from the Medicare program, and imprisonment. One of the most
prominent of these laws is the federal False Claims Act, which may be enforced
by the federal government directly, or by a qui tam plaintiff on the
government's behalf. Under the False Claims Act, both the government and the
private plaintiff, if successful, are permitted to recover substantial monetary
penalties, as well as an amount equal to three times actual damages. In recent
cases, some qui tam plaintiffs have taken the position that violations of the
anti-kickback statute and Stark II should also be prosecuted as violations of
the federal False Claims Act. SurgiCare believes that it has procedures in place
to ensure the accurate completion of claims forms and requests for payment.
However, the laws and regulations defining the proper parameters of proper
Medicare or Medicaid billing are frequently unclear and have not been subjected
to extensive judicial or agency interpretation. Billing errors can occur despite
SurgiCare's best efforts to prevent or correct them, and no assurances can be
given that the government will regard such errors as inadvertent and not in
violation of the False Claims Act or related statutes.
EMPLOYEES
As of July 23, 1999, SurgiCare and its subsidiary employed approximately 18
persons, 13 of who were full-time employees and 5 of who were part-time
employees. Of the above, 2 were employed at SurgiCare's headquarters staff
office in Houston, Texas and the remaining employees were employed by Bellaire.
SurgiCare believes its relationship with its employees to be good.
ITEM 3. DESCRIPTION OF PROPERTY
SurgiCare's principal office is located at 6699 Chimney Rock Rd., Suite
105, Houston, Texas, 77081.SurgiCare currently occupies space within the
facility operated by its wholly owned subsidiary, Bellaire. This property is
approximately 10,000 square feet, occupying about half of both the first and
second floors of the building in which it is located. The property is leased
from an unaffiliated third party for a term that expires in March 2003, with an
annual rental of $ 172,081.92, payable monthly in the amount of $14,340.16.
SurgiCare maintains tenant fire and casualty insurance on its property located
in such building in an amount deemed adequate by SurgiCare.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, to the best knowledge of SurgiCare
as of August 9, 1999, with respect to each person known by SurgiCare to own
beneficially more than 5% of any class of SurgiCare's outstanding common stock.
Title of Class ....Name and address of Amount and nature of Percent of Class
Beneficial Owner ... Beneficial Ownership(a)
Common Stock ....... SCOA II 1,095,556 8.695%
1930 S. Bryant
Edmond, OK 73013
Common Stock ....... David Blumfield 804,444 (b) 6.357%
Series A Preferred . 7400 Fannin # 1100 100,000 (d) 7.407%
Houston, TX 77056
Common Stock ....... Sherman Nagler 804,444 (b) 6.357%
Series A Preferred . 1200 Binz 100,000 (d) 7.407%
Houston, TX 77004
Common Stock ....... William Bradbury 804,444 (b) 6.357%
Series A Preferred . 7400 Fannin #1100 100,000 (d) 7.407%
Houston, TX 77056
Common Stock ....... Robert Parker 804,444 (b) 6.357%
Series A Preferred . 1441 Memorial # 16 100,000 (d) 7.407%
Houston, TX 77079
Common Stock ....... Jeffery Penso 804,444 (b) 6.357%
Series A Preferred . 11006 Westheimer 100,000 (d) 7.407%
Houston, TX 77042
Common Stock ....... Gregory Mangum 804,444 (b) 6.357%
Series A Preferred . 4754 Beechnut 100,000 (d) 7.407%
Houston, TX 77096
Common Stock ....... Jeffery Ross 804,444 (b) 6.357%
Series A Preferred . 6624 Fannin #2450 100,000 (d) 7.407%
Houston, TX 77030
Common Stock ....... Michael Mineo 804,444 (b) 6.357%
Series A Preferred . 6699 Chimney Rock 100,000 (d) 7.407%
Houston, TX 77081
Common Stock ....... Bruce Miller 804,444 (b) 6.357%
Series A Preferred . 13737 S.W. Freeway 100,000 (d) 7.407%
Sugarland, TX 77478
Common Stock ....... Brain Zale 804,444 (b) 6.357%
Series A Preferred . 11320 S. Post Oak #1 100,000 (d) 7.407%
Houston, TX 77035
Common Stock ....... Son Nguyen 804,444 (b) 6.357%
Series A Preferred . 1120-A Dennis 100,000 (d) 7.407%
Houston, TX 77004
Common Stock ....... Long Nguyen 804,444 (b) 6.357%
Series A Preferred . 4007 Bellaire #FF 100,000 (d) 7.407%
Houston, TX 77025
Common Stock ....... Larry Likover 804,444 (b) 6.357%
Series A Preferred . 902 Frostwood #902 100,000 (d) 7.407%
Houston, TX
Common Stock ....... Shirley Browne 402,222 (c) 3.179%
Series A Preferred . P.O. Box 247 50,000 (d) 3.704%
Richmond, TX 77406
a. As of July 23, 1999, 12,654,351shares of common stock were issued and
outstanding. Unless otherwise noted, the security ownership disclosed in
the table is of record and beneficial.
b. Includes 74,074 shares held in trust pursuant to that Voting Trust
Agreement, dated, of July 28, 1999 (the "Voting Trust Agreement"), between
and among the shareholders and David Blumfield, D.P.M., trustee. A total of
1,000,000 shares of Common Stock have been deposited in the voting trust
created pursuant to such Voting Trust Agreement. Dr. Blumfield is deemed to
have sole voting power as to such shares.
c. Includes 37,037 shares held in trust pursuant to the Voting Trust
Agreement.
d. As of July 23, 1999, 1,350,000 shares of Series A Preferred were issued
and outstanding. Unless otherwise noted, the security ownership of such
Series A Preferred disclosed in the table is of record and beneficial.
(B) Security ownership of management.
The following table sets forth information, to the best knowledge of
SurgiCare as of July 23, 1999, with respect to the beneficial ownership of each
officer and director, and all directors and executive officers as a group.
Title of Class ....Name and address of Amount and nature of Percent of Class
Beneficial Owner ...Beneficial Ownership (a)
Common Stock .......David Blumfield 804,449 (b) 6.357%
Series A Preferred .7400 Fannin #1100 100,000 (c) 7.407%
Houston, TX 7705
Common Stock .......Jeffery Penso 804,449 (b) 6.357%
Series A Preferred .11006 Westheimer 100,000 (c) 7.407%
Houston, TX 77042
Common Stock .......Sherman Nagler 804,449 (b) 6.357%
Series A Preferred .1200 Binz 100,000 (c) 7.407%
Houston, TX 77004
Common Stock .......Michael Mineo 804,449 (b) 6.357%
Series A Preferred .6699 Chimney Rock 100,000 (c) 7.407%
Houston, TX 77081
Common Stock .......Charles S. Cohen 30,000 0.237%
5947 Bankside
Houston, TX 77096
All officers and dir 3,247,796 (a) 25.67%
(five persons) ..... 400,00 (b) 29.62%
a. As of July 23, 1999, 12,654,351 shares of Common Stock were issued and
outstanding. Unless otherwise noted, the security ownership disclosed in
the table is of record and beneficial.
b. Includes 74,074 shares held in trust pursuant to the Voting Trust
Agreement.
c. As of July 23, 1999, 1,350,000 shares of Series A Preferred were issued
and outstanding. Unless otherwise noted, the security ownership disclosed
in the table is of record and beneficial.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
SurgiCare's Directors and Executive Officers are as follows:
Name /Address ................. Position Age
David Blumfield ................... President and Chief Executive
7400 Fannin #1100 ................. Officer 41
Houston, TX 77056 ................. Director
Jeffery Penso
11006 Westheimer .................. Vice-President 44
Houston, TX 77042 ................. Director
Sherman Nagler
1200 Binz ......................... Secretary 44
Houston, TX 77004 ................. Director
Michael Mineo ..................... Treasurer
6699 Chimney Rock Houston, TX 77081 Director 55
Charles S. Cohen
5947 Bankside ..................... Chief Operating Officer 37
Houston, TX 77096 ................. Director
Dr. David Blumfield D.P.M. was elected as a Director and President and
Chief Executive Oficer of SurgiCare, Inc. on July 10, 1999. Dr. Blumfield has
served as President of Bellaire Surgicare, Inc. since March of 1995. He has been
in private practice for 15 years. He received his undergraduate degree in 1980
at Wilkes University, and then attended the Temple College of Podiatric
Medicine. He has been a diplomat of the American Board of Podiatric Surgery
since 1988.
Charles S. Cohen was elected as a Director and Chief Operating Officer of
SurgiCare, Inc. on July 10, 1999. Mr. Cohen has been the acting Chief Operating
Officer of Bellaire Surgicare, Inc. since September 1998. Prior to September of
1998, Mr. Cohen was the President of Medical Distributors International, Inc.
(MDI) he was elected to that position in November of 1994. He has serverd as a
Director of TMDI Medical, from 1995-1997. Both MDI and TMDI were involved with
the international purchasing, importing, and exporting of medical and surgical
equipment. Mr. Cohen was educated at the University of Missouri at Columbia in
business.
Dr. Jeffery Penso D.P.M. was elected as Director and Vice President of
SurgiCare, Inc. on July 10, 1999. Dr. Penso has served as Vice-President of
Bellaire Surgicare, Inc. since July of 1998. He has been in private practice for
16 years. He received his undergraduate degree in 1977 at University of Akron,
and then attended the Ohio College of Podiatric Medicine. He has been a Diplomat
of the American Board of Podiatric Surgery since 1988.
Dr. Michael Mineo D.P.M. was elected as Director and Treasurer of
SurgiCare, Inc. on July 10, 1999. Dr. Mineo has served as Vice-President of
Bellaire Surgicare, Inc. since March of 1995. He has been in private practice
for 29 years. He received his undergraduate degree in 1964 from Geneva College,
Beaver Falls, PA, and then attended the Ohio College of Podiatric Medicine. He
has been a Diplomat of the American Board of Podiatric Surgery since 1979, and a
Fellow of the American College of Foot Surgeons since 1980.
Dr. Sherman Nagler D.P.M. was elected as Director and Secretary of
SurgiCare, Inc. on July 10, 1999. Dr. Nagler has served as Secretary of Bellaire
Surgicare, Inc. since March of 1995. He has been in private practice for16
years. He received his undergraduate degree in 1977 at State University of New
York at Plattsburgh, and then attended the New York College of Podiatric
Medicine. He has been a Diplomat of the American Board of Podiatric Surgery
since 1985.
ITEM 6. EXECUTIVE COMPENSATION
The following table provides certain summary information concerning the
compensation for each of the highest paid persons who are officers or directors
of SurgiCare, Inc., and all other directors and officers as a group during the
current fiscal year. Each of the persons indicated received their compensation
as a director or officer of Bellaire.
Name ......... Principal Position Annual Compensation
David Blumfield ... President CEO $24,000
Charles S. Cohen ...Chief Operating Officer $75,000
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 21, 1999, the Board of Directors of both SurgiCare and Bellaire
unanimously approved SurgiCare's acquisition of 100% (1,350 shares) of the
issued and out standing common stock of Bellaire in exchange for 10,955,556
shares of SurgiCare's common stock and 1,350,000 shares of SurgiCare's Series A
Preferred. Following the closing of the transaction, Bellaire became a wholly
owned subsidiary of SurgiCare. At the time of the approval by both boards of
directors, the shareholders of Bellaire jointly held the majority of the issued
and outstanding shares of SurgiCare. In addition four of the five members of the
Board of Directors of SurgiCare each individually held 7.4% of the out standing
and issued shares of Bellaire.
In determining the amount and character of the consideration to be paid by
SurgiCare for the Bellaire stock, the boards of directors of both SurgiCare and
Bellaire considered numerous factors, including the then inactive status of
SurgiCare and prior offers that Bellaire had received for the acquisition of
Bellaire by others.
SurgiCare has entered into an Agreement, effective July 1,1999 with SCOA,
pursuant to which agreement SCOA will render certain administrative and other
services to SurgiCare. SurgiCare believes that the terms of such agreement are
no less favorable to SurgiCare than could be obtained from surgery center
management companies not affiliated with the Company.
ITEM 8. DESCRIPTION OF SECURITIES
Qualification. The following statements constitute summaries of the
material provisions of SurgiCare's Amended and Restated Certificate of
Incorporation (including the Certificate of Designation, Powers, Preferences and
Rights of Series A Redeemable Preferred Stock)("Certificate of Designation") and
Bylaws, as amended. Such summaries do not purport to be complete and are
qualified in their entirety by reference to the full text of the Amended and
Restated Certificate of Incorporation and Bylaws.
Authorized Capital Stock. SurgiCare's Amended and Restated Certificate of
Incorporation authorizes it to issue up to 50,000,000 shares of Common Stock,
$.005 par value per share, and 20,000,000 shares of Preferred Stock, $.001 par
value per share, in one or more classes or series with such designations,
rights, preferences and restrictions as may be determined from time to time by
the Board of Directors. Pursuant to the Certificate of Designation, the Board of
Directors has designated 1,650,000 shares of Preferred Stock as Series A
Redeemable Preferred Stock ("Series A Preferred"). 1,350,000 shares of Series A
Preferred were issued to shareholders of Bellaire in connection with SurgiCare's
acquisition of Bellaire, and are the only shares of Preferred Stock currently
outstanding. SurgiCare may issue shares of stock for such consideration (not
less than par value) and to such persons as the board of directors from time to
time determines. Such persons may include management, promoters or their
affiliates or associates, subject to the fiduciary duty of the Board to ensure
that the transactions are fair to SurgiCare.
Common and Preferred Stock. At the date of this registration statement,
SurgiCare had issued and out standing 12,654,351 shares of Common Stock and
1,350,000 shares of Preferred Stock, comprised entirely of the Series A
Preferred. All outstanding shares of Common Stock and Preferred Stock are
legally issued, fully paid and non-assessable.
COMMON STOCK
Liquidation Rights.
Upon liquidation or dissolution, and after payment of the any senior
securities, including holders of the Series A Preferred, each outstanding share
of Common Stock will be entitled to share equally in the remaining assets of
SurgiCare legally available for distribution to shareholders after the payment
of all debts and other liabilities.
Dividend Rights.
Except as to limitations contained in the Certificate of Designation
regarding the priority of specified dividends for the Series A Preferred, there
are no limitations or restrictions upon the rights of the Board of Directors to
declare dividends out of any funds legally available therefor. Since the
acquisition of Bellaire and the substantial redirection of SurgiCare's business,
SurgiCare has not paid dividends on shares of Common Stock, and it is not
anticipated that any dividends will be paid on shares of Common Stock in the
foreseeable future. SurgiCare expects to pay dividends on the Series A Preferred
in the amounts provided, out of funds legally available therefor. The Board of
Directors initially may follow a policy of retaining all or substantially all
earnings to finance the future growth of SurgiCare. Accordingly, future
dividends, if any, on shares of Common Stock will depend upon, among other
considerations, SurgiCare's need for cash to finance acquisitions, working
capital, and its financial condition at the time.
Voting Rights.
Holders of shares of Common Stock of SurgiCare are entitled to cast one
vote for each share held at all shareholders meetings (or by written consent in
lieu thereof) for all purposes.
Other Rights.
Shares of Common Stock are not redeemable, have no conversion rights and
carry no preemptive or other rights to subscribe to or purchase additional
shares of Common Stock in the event of a subsequent offering.
PREFERRED STOCK.
The Corporation is authorized to issue 20,000,000 shares of Preferred
Stock, par value $.001 per share, in one or more classes or series with such
designations, rights, preferences and restrictions as may be determined from
time to time by the Board of Directors. Pursuant to the Certificate of
Designation, the Board of Directors has designated 1,650,000 shares of Preferred
Stock as the Series A Preferred, of which 1,350,000 shares are the only shares
of Preferred Stock currently outstanding. The rights, preferences, privileges
and restrictions granted to and imposed on the Common Stock and the Series A
Preferred are identical in all respects, except that the holders of the Series A
Preferred have certain conversion rights, and dividend and liquidation
preferences as set forth below.
Rank and Issue Price.
The Series A Preferred Stock will rank prior to all of SurgiCare's Common
Stock and to any class or series of capital stock of SurgiCare not specifically
ranking by its terms senior to or on parity with any Series A Preferred Stock.
The Series A Preferred Stock will rank junior to any other class or series of
capital stock specifically ranking by its terms senior to the Series A Preferred
Stock and will rank on a parity with any class or series of capital stock
specifically ranking by its terms on parity with the Series A Preferred Stock,
in each case as to distribution of assets upon liquidation, dissolution or
winding up of SurgiCare, whether voluntary or involuntary. The Series A
Preferred Stock was issued at par value. For the purposes of the redemption
price, and liquidation preference, the deemed issued price of this series is $5
per share.
Dividend Preference.
Subject to the prior preferences and other rights of any senior securities,
the holders of Series A Preferred Stock are entitled to receive, out of funds
legally available for that purpose, cash dividends at the rate of $.48 per
annum, payable in monthly installments. The dividends are cumulative from the
date of the issuance of the Series A Preferred Stock and are payable in arrears,
when and as declared by the Board of Directors, on the first day of each month,
commencing on September 1, 1999.
Liquidation Preference In the event of any liquidation, dissolution or
winding up of SurgiCare, either voluntary or involuntary, the holders of the
Series A Preferred Stock will be entitled to receive, prior to any distribution
of any of the assets of SurgiCare to the holders of Common Stock by reason of
their ownership thereof, an amount per share equal to the price per share for
which the Series A Preferred Stock was originally issued plus all accrued or
declared and unpaid dividends on such share. After payment has been made to the
holders of the Series A Preferred Stock of the full amounts to which they are
entitled, then the entire remaining assets and funds of SurgiCare legally
available for distribution, if any shall be distributed equally among the
holders of Common Stock.
Conversion. The Series A Preferred Stock may be converted, at any time at
the direction of the holder on a 1to1basis into shares of Common Stock.
Redemption by the Company. The Series A Preferred Stock may not be redeemed
prior to the first anniversary of the date of issue of the Series A Preferred
Stock. Thereafter, the Series A Preferred Stock may be redeemed by SurgiCare,
upon vote of not less than two-thirds of the directors comprising the full Board
of Directors of SurgiCare, in cash at any time in whole or ratably if less than
all shares are redeemed, at the option of SurgiCare, at a redemption price per
share equal to the sum of $5 plus all accrued or declared and unpaid dividends
on such share.
Voting Rights. Holders of Series A Preferred Stock are entitled to one vote
for each share of Series A Preferred Stock held at all shareholders meetings for
all purposes.
Possible Adverse Effect on Change of Control. Subject to the rights of
senior securities, the Board of Directors may, without prior shareholder
approval, issue preferred stock with dividend, liquidation, conversion, voting
or other rights which could adversely affect the relative voting power or other
rights of the holders of common stock. Preferred stock could be used, under
certain circumstances, as a method of discouraging, delaying, or preventing a
change in control of SurgiCare. SurgiCare expects that it may issue additional
shares of preferred stock, in one or more series, with such rights and
preferences as to such matters, including dividends, liquidation preferences and
voting and conversion rights, as determined by the board of directors, in
connection with future acquisitions of ambulatory surgery centers. If SurgiCare
issues preferred stock, such issuance may have a dilutive effect upon the common
stockholders.
In addition, Article IX of SurgiCare's Certificate of Incorporation
provides that special meetings of the stockholders may be called only by the
Board of Directors, or by a majority of the members of the Board of Directors,
or by a committee of the Board of Directors which has been duly designated by
the Board of Directors with the power to call meetings, subject to such rights
of other persons to call special meetings as may be granted by the Certificate
of Incorporation, or any amendment thereto or any certificate filed under
Section 151(g) of the Delaware General Corporation Law. SurgiCare believes that
Article IX is necessary to provide for proper order in the conduct of its
corporate affairs, but recognizes that Article IX could have the effect of
discouraging or delaying a change of control of SurgiCare.
REPORTS TO SHAREHOLDERS
If SurgiCare's obligation to file reports with the Commission is
suspended, SurgiCare will no longer file such reports but it intends
to continue to furnish holders of SurgiCare's common stock and
preferred stock with quarterly financial reports containing un-audited
financial statements and annual reports containing audited financial
statements
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
SurgiCare's Common Stock currently is not traded on any national securities
exchange or other public market. SurgiCare's management intends to apply, or
assist in an appropriate application, for the qualification of its Common Stock
to be quoted on National Association of Securities Dealers, Inc.'s Over the
Counter Bulletin Board ("OTCBB"), but there can be no assurance that SurgiCare's
securities will become eligible to be quoted on the OTCBB or that any market
will develop for SurgiCare's securities.
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be an equity security that has a market
price (as defined) of less than $5.00 per share, subject to some exemptions. The
Commission's penny stock rules generally impose additional sales practice
requirements on broker/dealers who sell penny stocks to persons other than
established customers and accredited investors. SurgiCare's shares may be deemed
to be penny stock. The penny stock rules therefore may restrict the ability of
broker/dealers to sell SurgiCare's securities, and may adversely affect the
ability of SurgiCare stockholders to resell their shares in any secondary market
for its shares which develops
There has been no market for SurgiCare's stock in the last two years.
Accordingly, there is no range of high and low bid prices for its Common Stock.
HOLDERS
SurgiCare believes that there were approximately 315 holders of record of
the Company's Common Stock, and 14 holders of the Company's Series A Preferred
as of July 23, 1999.
DIVIDENDS
SurgiCare has not paid dividends on shares of its Common Stock within the
last two years.
CONVERTIBLE SECURITIES AND RESTRICTED SECURITIES
Convertible Securities. At the date of filing of this registration
statement, there are 1,350,000 shares of Series A Preferred Stock outstanding.
Each share of Series A Preferred Stock is convertible at the option of the
holder into one share of Common Stock of SurgiCare.
No options or warrants to purchase shares of Common Stock or Series A
Preferred Stock have been issued by SurgiCare.
Restricted Securities.
As of July 23, 1999 there were approximately 315 holders of record of
SurgiCare's Common Stock and 14 holders of record of its Series A Preferred
Stock. Currently 11,055,556 of the 12,654,351 shares of Common Stock and all of
the shares of Series A Preferred Stock issued and outstanding are deemed to be
"restricted securities" within the meaning of Rule 144 promulgated under the
Securities Act and may be publicly resold only if registered under the
Securities Act in the future or sold in accordance with an applicable exemption
from registration, such as is set forth in Rule 144. SurgiCare believes that its
directors and officers constituting affiliates of SurgiCare currently own
3,247,776 restricted shares of Common Stock and 400,000 restricted shares of
Series A Preferred Stock.
In general, under Rule 144 as currently in effect, a person (including an
affiliate of SurgiCare) who beneficially has owned restricted securities that
were acquired from SurgiCare for at least one year prior to an intended sale
date is entitled to sell within any three-month period a number of shares that
does not exceed the greater of the following:
a. one percent of the number of shares of common stock then
outstanding; or
b. the average weekly reported trading volume of the common stock
during the four calendar weeks immediately preceding the date on which
notice of such sale is filed with the Securities and Exchange
Commission, provided that manner of sale and notice requirements and
requirements as to the availability of current public information
concerning SurgiCare are satisfied.
Under Rule 144(k), a person who has not been an affiliate of SurgiCare for
at least three months preceding the intended sale date and who beneficially has
owned restricted securities acquired from SurgiCare for at least two years prior
to the sale date, would be entitled to sell the shares without volume
limitations, manner of sale provisions, or notification requirements.
Shares owned by persons who, under the Securities Act, are deemed to be
affiliates of SurgiCare are subject to volume limitations, manner of sale
provisions, notification requirements, and requirements as to the availability
of current public information regarding SurgiCare, regardless of how long the
shares have been owned. As defined in Rule 144, an affiliate of an issuer is a
person that directly or indirectly through the use of one or more
intermediaries, controls, or is controlled by, or is under common control with,
the issuer. SurgiCare believes that Messrs. Blumfield, Penso, Nagler, Mineo and
Cohen (its directors and officers) are affiliates of SurgiCare.
TRANSFER AGENT
SurgiCare's transfer agent is First National Trust Company, their address
is 240 N. Jones Blvd, STE F-206, Las Vegas, NV 89107. Their toll free telephoned
number is 1-888-505-3721.
ITEM 2. LEGAL PROCEEDINGS
SurgiCare is not party to, and none of its property or holdings is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings that will have a material adverse effect upon SurgiCare's
condition or operation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On June 15, 1999, TCI retained Philip H. Salchli, Certified Public
Accountant, to serve as its independent accountant. Philip H. Salchli is a
member of the SEC Practice Section of the AICPA. Mr. Salchli preformed an
independent audit for both. The audit opinion was issued with no qualification
or modifications. On May 28, 1999, Bellaire retained Weinstein Spira & Company,
Certified Public Accountants, to serve as its independent accountants. Weinstein
Spira & Company, P.C. is also a member of the SEC Practice Section of the AICPA.
As of the date of this registration statement, Weinstein Spira & Company has
been retained as the principal independent public accountants for SurgiCare. To
the best of the knowledge of SurgiCare's current management, there have been no
disagreements between SurgiCare and either of its current or former accountants
during the last two years over any accounting policy or practice.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On July 2, 1999 SurgiCare issued 100,000 Shares of Common Stock to Marjorie
Kleiman Mintz, personally and as surviving spouse of Martin Kleiman, in exchange
for all of her rights, title and interest in a judgement owned by her in the
amount of $211,040.40 plus interest and attorney's fees, pursuant to Settlement
Agreement dated July, 7, 1999. The original judgement had been issued against
TCI in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County
Florida, on April 20, 1990.
Pursuant to the Settlement Agreement, Mrs. Kleiman Mintz agreed that for a
period of one year she would not sell more than 25% of the shares of Common
Stock received by her, increasing by 25% per year thereafter. The Settlement
Agreement further provides that if at any time the Common Stock reaches a market
price of $5.00 per share, and maintains that market price for a period of 90
days, all restrictions imposed by the Settlement Agreement would be released.
The stock issued is subject to the restrictions of Rule 144., and any
restriction imposed by that rule shall supersede any restrictions imposed, or
released, pursuant to the terms of the Settlement Agreement.
On July 23, 1999, SurgiCare issued 10,955,556 shares of its Common Stock,
valued at $0.005 per share par value, and 1,350,000 shares of its Series A
Preferred, with an issue price of $5.00 per share, to the shareholders of
Bellaire pursuant to a Stock Exchange Agreement dated July 23, 1999. The shares
were issued as part of a stock for stock exchange, upon the completion of which
SurgiCare became the sole shareholder of Bellaire.
On July 18,1999 SurgiCare issued 1,095,566 shares of its Common Stock
to SCOA pursuant to an agreement, dated July 1, 1999, among SurgiCare, SCOA and
Bellaire (the "SCOA Agreement"). The shares issued to SCOA were issued in
satisfaction of SCOA's rights, under a previous agreement with Bellaire, to
participate in the proceeds of any transaction resulting in a change of control
of Bellaire, and in connection with the agreed early termination of that
agreement.
The securities issued in the foregoing transactions were issued in reliance
on the exemption from registration and the prospectus delivery requirements of
the Securities Act of 1933, as amended (the 'Securities Act"), set forth in
Section 3(b) and/or Section 4(2) of the Securities Act and the regulations
promulgated thereunder. Each individual receiving the shares of SurgiCare Common
Stock and Series A Preferred Stock is believed by SurgiCare to be an "accredited
investor" as that term is defined under Rule 501 of Regulation D under the
Securities Act
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in relevant parts
as follows:
A corporation shall have power to indemnify any
person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise,
against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement,
conviction, or on a plea of no lo contendere or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal
action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
A corporation shall have power to indemnify any
person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action or suit
by or in the right of the corporation to procure a judgment in
its favor by reason of the feet that he is or was a director,
officer, employee, or agent of the corporation, or is or was
serving at there quest of the corporation as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue,
or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that
the court in which such action or suit was brought shall
determine on application that, despite the adjudication of
liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
To the extent that a director, officer, employee, or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding
referred to in 1) or (2) of this subsection, or in defense of
any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
The indemnification provided by this section shall
not be deemed exclusive of any other rights to which those
seeking indemnification may been titled under any bylaws,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
The foregoing discussion of indemnification merely summarizes certain
aspects of indemnification provisions and is limited by reference to the
above-discussed sections of the Delaware Corporation Law.
SurgiCare's Certificate of Incorporation and Bylaws provide that SurgiCare
"shall indemnify," and advance litigation expenses, to the full extent of its
power to do so, all directors, officers, employees, and/or agents. It is
anticipated that SurgiCare will indemnify its officers and directors to the full
extent permitted by the above-quoted statute.
Insofar as indemnification by SurgiCare for liabilities arising under the
Securities Act may be permitted to officers and directors of SurgiCare pursuant
to the foregoing provisions or otherwise, SurgiCare is aware that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
<PAGE>
PART F/S
FINANCIAL STATEMENTS
PHILIP H. SALCHLI
CERTIFIED PUBLIC ACCOUNTANT
To The Board of Directors
Technical Coatings, Inc.
Lubbock, Texas
Independent Auditor's Report
I have audited the accompanying balance sheet of Technical Coatings, Inc.
as of December 31, 1998 and 1997. This financial statement is the responsibility
of the Company's management. My responsibility is to express an opinion on this
financial statement based on my audit.
I conducted the audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Technical Coatings, Inc. as of
December 31, 1998 and 1997 in conformity with generally accepted accounting
principles.
Philip H. Salchli
July 2, 1999
11323 Olympia Drive Houston, Texas 77077-6417 (281) 496-3020
<PAGE>
Technical Coatings, Inc.
Notes to Balance Sheet
December 31, 1998 and 1997
Organization and Background
Technical Coatings Inc, was organized as a Delaware corporation on
July 13, 1984 and. operated various plant manufacturing facilities and
retail sales outlets that marketed paint, accessories and related products
through December 31, 1994. On October 2, 1990 a Plan of Reorganization was
approved for two of the wholly owned subsidiaries, TCI of Texas, Inc. and
TCI of Houston, Inc, TCI of Houston, Inc. continued in business until
December 31. 1994 at which time it ceased operations. A third company,
Technical Coatings of Miami, Inc. was sold to a third party during 1994. A
forth company, Atlas Plant Manufacturing Company, Inc., located in Austin,
Texas, elected to dissolve on April 27, 1989. Technical Coatings, Inc. (a
Delaware corporation) has had no operations since December 31, 1994 and,
with the single exception of recording accrued interest on a judgment as
described below, has recorded no transactions since then. During the years
ended December 31, 1997 and 1998 the Company earned no revenue and incurred
no expenses.
Judgment for Plaintiffs
On April 25, 1990 a final judgment in favor of the Plaintiffs was
recorded in the Circuit Court or the 11th Judiciary Circuit in and for Dade
County, Florida, the judgment in the principal amount of $211,040.40 bears
interest. at the rate of 12% per annum from April 12, 1990 until paid.
<PAGE>
Technical Coatings, Inc.
Balance Sheet
December 31,
1997 1998
ASSETS ........................................ $ -0- $ -0-
TOTAL ASSETS .................................. $ -0- $ -0-
--------
LIABILITIES & STOCKHOLDER'S EQUITY
Liabilities
Judgment payable .............................. $ 211,040 $ 211,040
Accrued interest on judgment .................. 195,562 20,847
Total liabilities, all current ................ 406,562 431,887
Stockholder's Equity
Common stock, 50,000,000 shares
authorized, 1,598,795 issued and
outstanding, $.005 par value ... 7,994 7,994
Retained deficit ..................... (414,516)
Total Stockholder's Equity ............... -0- -0-
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY $ -0- $ -0-
See accompanying notes to balance sheet
<PAGE>
Independent Auditors' Report
June 28, 1999
The Board of Directors
Bellaire Surgicare, Inc.
Houston, Texas
We have audited the accompanying Balance Sheets of Bellaire Surgicare, Inc. as
of December 31, 1998 and 1997, and the related Statements of Earnings,
Shareholders' Equity, and Cash Flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bellaire Surgicare, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
Weinstein Spira & Company, P.C.
<PAGE>
BELLAIRE SURGICARE, INC.
BALANCE SHEETS
December 31,
1998 1997
---------------------
ASSETS
Current Assets
Cash and cash equivalents .............. $ 57,049 $108,142
Accounts receivable (less allowance
for contractual adjustments
and doubtful accounts of $835,000 and
$378,000 at December 31,
1998 and 1997, respectively) ........... 923,432 566,765
Inventory .............................. 47,987 45,999
Prepaid expenses ....................... 26,210 30,038
Shareholder receivables ................ 48,750 20,500
Other current assets ................... 5,862 3,017
-------------------------
Total Current Assets ... ........... 1,109,290 774,461
Property and Equipment
Office furniture and equipment ......... 34,445 30,996
Medical and surgical equipment ......... 583,648 601,164
Leasehold improvements ................. 28,016 4,513
Computer equipment ..................... 38,175 36,237
-------------------------
684,284 672,910
Less: Accumulated depreciation ......... 401,988 307,512
-------------------------
282,296 365,398
-------------------------
$1,391,586 $1,139,859
-------------------------
December 31,
1998 1997
------------------------------
LIABILITIES
Current Liabilities
Current portion of capital lease obligations $ 7,386 12,534
Notes payable .......................... 545,278 560,814
Accounts payable ....................... 37,826 90,569
Accrued expenses ....................... 49,811 29,964
---------- ----------
Total Current Liabilities ............ 640,301 693,881
Long-Term Capital Lease Obligations .... 7,491 14,559
---------- ----------
647,792 708,440
SHAREHOLDERS' EQUITY
Common Stock, par value $.10, 1,000,000 shares
authorized, 1,400 issued ............... 140 140
Additional Paid-In Capital ............. 32,610 13,860
Retained Earnings ...................... 765,794 417,419
Less: Treasury stock, 150 shares at cost (54,750)
---------- ----------
743,794 431,419
---------- ----------
$ 1,391,586 $ 1,139,859
---------- ----------
See notes financial statements.
<PAGE>
BELLAIRE SURGICARE, INC.
STATEMENTS OF EARNINGS
For the Year Ended
December 31,
1998 1997
---------- ----------
Revenues, net ..........................$ 2,559,526$ 2,314,638
---------- ----------
Expenses
Surgical costs ......................... 469,528 544,003
Salaries, wages and benefits ........... 389,999 390,705
Contract services ...................... 31,871 33,179
Management fees ........................ 204,328 206,061
Rent ................................... 168,083 168,083
Depreciation and amortization .......... 131,559 134,683
Insurance .............................. 21,603 14,804
Professional fees ...................... 87,460 150,540
Interest expense ....................... 45,139 57,668
Repairs and maintenance ................ 52,154 29,365
Other operating expenses ............... 66,456 100,164
Taxes .................................. 28,605 15,411
---------- ----------
1,696,785 1,844,666
---------- ----------
Other Income
Gain on sale of property and equipment . 5,092
Miscellaneous income ................... 7,292 1,574
---------- ----------
12,384 1,574
---------- ----------
Net Earnings ........................... $ 875,125 $ 471,546
---------- ----------
See notes financial statements.
<PAGE>
BELLAIRE SURGICARE, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
Additional
Common Paid-In Treasury Retained Total
Stock Capital Stock Earnings Equity
--------- ----------- --------- -------- ----------
Balance -
December 31, 1996 $ 140 $ 13,860 $ 456,873 $ 470,873
Distributions ...... (511,000) (511,000)
Net Earnings ....... 471,546 471,546
--------- ----------- --------- -------- ----------
Balance -
December 31, 1997 140 13,860 417,419 431,419
Purchase of Treasury Stock $(146,000) (146,000)
Sale of Treasury Stock 18,750 91,250 110,000
Distributions ...... (526,750) (526,750)
Net Earnings ....... 875,125 875,125
--------- ----------- --------- -------- ----------
Balance -
December 31, 1998 .. $ 140 $ 32,610 $ (54,750)$ 765,794 $ 743,794
--------- ----------- --------- -------- ----------
See notes to financial statement
<PAGE>
BELLAIRE SURGICARE, INC.
STATEMENTS OF CASH FLOWS
For the Year Ended
December 31,
1998 1997
------------------------------
Cash Flows From Operating Activities
Net earnings ........................... $ 875,125 $ 471,546
Adjustments to reconcile net earnings to
net cash provided by operations:
Depreciation and amortization .......... 131,559 134,683
Gain on sale of property and equipment . (5,092)
(Increase) Decrease in:
Accounts receivable .................... (356,667) (50,095)
Inventory .............................. (1,988) 45,370
Prepaid expenses ....................... 3,828 (518)
Other current assets ................... (2,845) (3,017)
Increase (Decrease) in:
Accounts payable ....................... (52,743) 14,211
Accrued expenses ....................... 19,847 (24,846)
------------------------------
Net Cash Provided by Operating Activitie 611,024 587,334
------------------------------
Cash Flows From Investing Activities
Capital expenditures ................... (70,865) (17,080)
Collections on shareholder receivable .. 20,500) 7,500
Proceeds from sale of property and equip 27,500
------------------------------
Net Cash Used in Investing Activities .. (22,865) (9,580)
------------------------------
Cash Flows From Financing Activities
Borrowings on debt ..................... 78,500 656,000
Net payments on debt ................... (118,369) (719,055)
Principal payments on capital lease .... (12,216 (25,557)
Purchase of treasury stock ............. (121,667)
Sale of treasury stock ................. 61,250
Distributions .......................... (526,750) (511,000)
------------------------------
Net Cash Used in Financing Activities .. (639,252) (599,612)
------------------------------
Net Decrease in Cash and Cash Equivalent (51,093) (21,858)
Cash and Cash Equivalents - Beginning of 108,142 130,000
------------------------------
Cash and Cash Equivalents - End of Year 57,049$ 108,142
------------------------------
<PAGE>
For the Year Ended
December 31,
1998 1997
------------------------------
Non-Cash Transactions
Purchase of treasury stock with note
payable $ 24,333
------------------------------
Notes receivable from sale of treasury
stock collected subsequent to year end $ 48,750
------------------------------
Supplemental Cash Flow Information
Interest paid .......................... $ 46,938$ 54,993
------------------------------
See notes financial statements.
<PAGE>
BELLAIRE SURGICARE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 1 - Accounting Policies
Bellaire Surgicare, Inc. (the Company) maintains its accounts on the accrual
method of accounting in accordance with generally accepted accounting
principles. Accounting principles followed by the Company and the methods of
applying those principles which materially affect the determination of financial
position, results of operations and cash flows are summarized below:
Description of Business
The Company was formed in January, 1995 as a Texas corporation to operate a day
surgery center in Houston, Texas.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of
three months or less to be cash equivalents.
Revenue Recognition
Revenue is recognized on the date the procedures are performed, and accounts
receivable are recorded at that time. Revenues are reported at the estimated
realizable amounts from patients and third-party payers. Earnings are charged
with a provision for contractual adjustments and doubtful accounts based on fee
schedules, contracts and collection experience. Contractual adjustments and
accounts deemed uncollectible are applied against the allowance account.
Inventory
Inventory consists of medical and pharmaceutical supplies which are stated at
the lower of cost or market. Cost is determined under the first-in, first-out
method.
Property and Equipment
Property and equipment are presented at cost. Property, of approximately
$90,000, under capital lease is recorded at the present value of future minimum
lease payments. Depreciation and amortization are computed at rates considered
sufficient to amortize the cost of the assets, using the straight-line method
over their estimated useful lives as follows:
Office furniture and equipment 7 years
Medical and surgical equipment 5 years
Leasehold improvements 5 years
Computer equipment 5 years
Federal Income Tax
The Company has elected S corporation status for federal income tax purposes.
Under S corporation regulations, net losses are reportable for tax purposes by
the shareholders. Accordingly, no federal income taxes are included in the
accompanying financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 - Notes Payable
December 31,
1998 1997
------------------------
Note payable bearing interest at the prime rate,
secured by furniture, equipment and intangibles,
guaranteed by the shareholders, payable on demand
or in monthly installments of principal and interest
of $13,398hrough March, 2002 ....................... $457,792$ 537,063
Note payable to former owner, bearing interest at 8%,
secured by equipment, with monthly payments of
$3,193, maturing in March 1998 23,751
Non-interest-bearing unsecured note payable to a
former shareholder, due November 30, 1999 .......... 24,333
Note payable bearing interest at the prime rate,
secured by furniture, equipment and intangibles,
guaranteed by the shareholders, payable on demand or
in monthly installments of principal and interest of
$5,000 through January, 2000 63,153
------------------------
$545,278 $560,814
------------------------
Note 3 - Operating Lease
The Company leases its treatment facility from a shareholder under an operating
sublease which expires in 2003. Rent for 1998 and 1997 was $168,083. Minimum
payments under this lease agreement are as follows:
For the Year Ending December 31,
1999 $ 168,036
2000 168,036
2001 168,036
2002 168,036
2003 57,619
-------
$ 729,763
-------
Note 4 - Long-Term Capital Leases
The Company leases certain equipment from third parties. The leases are for a
sixty-month term expiring through 2000. The members have guaranteed the leases.
The following is a schedule of future minimum lease payments under the capital
leases, together with the present value of the net minimum lease payments as of
December 31, 1998:
For the Year Ending December 31,
1999 $ 8,148
2000 7,175
----------
15,323
Less: amount representing interest 446
Present value of minimum lease payments 14,877
Less: Current obligations 7,386
Long-term obligations under capital lease $ 7,491
----------
Note 5 - Management Fees
The Company has an agreement with a management company to manage the operations
of the treatment facility. Under the contract, the Company is required to pay 5%
of net monthly collected revenues and 10% of the amount distributed to
shareholders. Management fee expense was $204,328 and $206,061 in 1998 and 1997,
respectively. This agreement was terminated in July, 1999 concurrent with the
merger with Technical Coatings, Inc. (See Note 7.)
Note 6 - Related Party Transactions
As of December 31, 1998, the Company had non-interest-bearing receivables from
shareholders of $48,750 for the purchase of treasury stock.
As of December 31, 1997, the Company had a non-interest-bearing receivable from
a shareholder of $20,500.
During 1998 and 1997, the Company paid rent to a shareholder of $168,083.
Note 7 - Subsequent Event
In July, 1999, the Company merged with Technical Coatings, Inc., a
publicly-owned company, in a transaction which will be accounted for as a
purchase.
<PAGE>
SURGICARE, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
Current Assets
Cash and cash equivalents ................... $ 144,959
Accounts receivable (less allowance for contractua
adjustments and doubtful accounts of $1,226,096)
1,524,505
Inventory ................................... 50,000
Prepaid expenses ............................ 32,314
Shareholder receivables ..................... 18,819
Other current assets ........................ 4,450
-----------
Total Current Assets ............................. 1,775,047
Property and Equipment
Office furniture and equipment .............. 35,159
Medical and surgical equipment .............. 561,423
Leasehold improvements ...................... 28,016
Computer equipment .......................... 56,278
-----------
680,876
Less: Accumulated depreciation and amortization .. 405,909
-----------
274,967
-----------
$ 2,050,014
See notes to financial Statements
<PAGE>
July 31,1999
-----------
LIABILITIES
Current Liabilities
Current portion of capital lease obligations 19,447
Notes payable ............................... 555,860
Accounts payable ............................ 107,597
Accrued expenses ............................ 79,081
-----------
Total Current Liabilities ........................ 761,985
Long-Term Capital Lease Obligations .............. 38,538
-----------
800,523
SHAREHOLDERS' EQUITY
Series A Preferred Stock par value $.001 1,650,000
authorized, 1,350,000 issued 1,350
Common Stock, par value $.005, 50,000,000 shares
authorized, 12,654,351 issued 64,112
Additional Paid-In Capital ....................... 1,173,851
Retained Earnings ................................ 11,298
Less: Treasury stock, 150 shares at cost (1.120)
-----------
1,249,491
-----------
2,050,014
-----------
This reflects Retained Earnings since the
acquisition of Bellaire Surgicare, Inc.
See notes to financial Statements
<PAGE>
SURGICARE, INC.
CONSOLIDATED STATEMENT OF EARNINGS
For the Seven Months Ended
JULY 31, 1999
Revenues, net .................................... 2,439,134
---------------
Expenses
Surgical costs .............................. 337,906
Salaries, wages and benefits ................ 243,048
Contract services ........................... 17,879
Management fees ............................. 133,804
Rent ........................................ 100,911
Depreciation and amortization ............... 65,110
Insurance ................................... 13,978
Professional fees ........................... 25,561
Interest expense ............................ 25,625
Repairs and maintenance ..................... 30,359
Other operating expenses .................... 489,276
Taxes ....................................... 17,526
-----------
1,198,245
-----------
Other Income
Gain on sale of property and equipment
Miscellaneous income ........................ 4,658
-----------
4,658
Net Earnings .....................................$ 1,245,548
---------------
See notes to financial Statements
<PAGE>
SURGICARE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Additional
Preferred Common Paid-In Treasury Retained Total
Stock Stock Capital Stock Earnings Equity
Balance - December 0 0 0 0 0 0
Purchase of Stock . 1,350 64,112 65,462
Purchase of Subsidi 1,173,851 (77,600) 1,096,251
Purchase of Treasur (1,120) (1,120)
Distributions ..... (152,000) (152,000)
Net Earnings ...... 240,898 240,898
Balance July 31, 19 1,350 64,112 1,173,851 (1,120) 11,298 1,249,491
See notes to financial Statements
<PAGE>
SURGICARE, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 1999
Note 1 - Accounting Policies
Surgicare, Inc. and subsidiaries (the Company) maintain their accounts on the
accrual method of accounting in accordance with generally accepted accounting
principles. Accounting principles followed by the Company and the methods of
applying those principles which materially affect the determination of financial
position, results of operations and cash flows are summarized below:
Description of Business
The Company had a major stockholder change in July 1999. The Company also
purchased the majority of stock for Bellaire Surgicare, Inc which operates a day
surgery center in Houston, Texas. Bellaire Surgicare, Inc. was formed in January
1995. The acquisition of the stock of Bellaire Surgicare, Inc took place on July
1, 1999.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less to be cash equivalents.
Revenue Recognition
Revenue is recognized on the date the procedures are performed, and
accounts receivable are recorded at that time. Revenues are reported at the
estimated realizable amounts from patients and third-party payers. Earnings are
charged with a provision for contractual adjustments and doubtful accounts based
on fee schedules, contracts and collection experience. Contractual adjustments
and accounts deemed uncollectible are applied against the allowance account.
Inventory
Inventory consists of medical and pharmaceutical supplies which are stated
at the lower of cost or market. Cost is determined under the first-in, first-out
method.
Property and Equipment
Property and equipment are presented at cost. Property, of approximately
$90,000, under capital lease is recorded at the present value of future minimum
lease payments. Depreciation and amortization are computed at rates considered
sufficient to amortize the cost of the assets, using the straight-line method
over their estimated useful lives as follows:
Office furniture and equipment 7 years
Medical and surgical equipment 5 years
Leasehold improvements 5 years
Computer equipment 5 years
Acquisition of Bellaire Surgicare, Inc.
On July 21, 1999, the Board of Directors of both SurgiCare and Bellaire
unanimously approved SurgiCare's acquisition of 100% (1,350 shares) of the
issued and out standing common stock of Bellaire in exchange for 10,955,556
shares of SurgiCare's common stock and 1,350,000 shares of SurgiCare's Series A
Preferred. Following the closing of the transaction, Bellaire became a wholly
owned subsidiary of SurgiCare. At the time of the approval by both boards of
directors, the shareholders of Bellaire jointly held the majority of the issued
and outstanding shares of SurgiCare. In addition four of the five members of the
Board of Directors of SurgiCare each individually held 7.4% of the out standing
and issued shares of Bellaire.
In determining the amount and character of the consideration to be paid by
SurgiCare for the Bellaire stock, the Boards of Directors of both SurgiCare and
Bellaire considered numerous factors, including the then inactive status of
SurgiCare and prior offers that Bellaire had received for the acquisition of
Bellaire by others.
On June 30, 1999 the book value of Bellaire Surgicare Inc. was $ 1,160.594.
The accounting of the purchase of Bellaire Surgicare, Inc by Surgicare, Inc. is
as follows:
Common Stock 10,955,556 shares at par value $ 54,778
Series A Preferred Stock 1,350,000 shares at par value 1,350
Paid In Capital 1,152,379
For accounting purposes the above transaction was treated as a direct
purchase.
Rank and Issue Price. The Series A Preferred Stock will rank prior to all
of SurgiCare's Common Stock and to any class or series of capital stock of
SurgiCare not specifically ranking by its terms senior to or on parity with any
Series A Preferred Stock. The Series A Preferred Stock will rank junior to any
other class or series of capital stock specifically ranking by its terms senior
to the Series A Preferred Stock and will rank on a parity with any class or
series of capital stock specifically ranking by its terms on parity with the
Series A Preferred Stock, in each case as to distribution of assets upon
liquidation, dissolution or winding up of SurgiCare, whether voluntary or
involuntary. The Series A Preferred Stock was issued at par value. For the
purposes of the redemption price, and liquidation preference, the deemed issued
price of this series is $5 per share.
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER
3.1 Amended and Restated Certificate of Incorporation of SurgiCare, Inc.
3.2 Articles of Incorporation of Bellaire Surgicare, Inc.
3.3 By-Laws of Technical Coatings Incorporated (now SurgiCare, Inc.)
3.4 By-Laws of Bellaire Surgicare, Inc.
4.1 Certificate of Designation, Powers, Preferences and Rights of
Series A Redeemable Preferred Stock, par value $.001 per
share, of Surgicare, Inc.
9.1 Voting Trust Agreement, dated July 28, 1999, among David
Blumfield, D.P.M., individually and as trustee, and the
stockholders named therein.
10.1 Agreement, dated July 29, 1989, 1999, between SurgiCare, Inc.
and Surgery Centers of America II, Inc.
21 List of Subsidiaries of the SurgiCare
27 Financial Data Schedule
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
TECHNICAL COATINGS, INC.
(Including Change of Name to SurgiCare, Inc.)
(Formerly Technical Coatings Incorporated, incorporated July 20, 1984)
TECHNICAL COATINGS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),does hereby certify that:
I.
The name of the Corporation is Technical Coatings, Inc.
II.
The original Certificate of Incorporation of the Corporation, under the
name Technical Coatings Incorporated, was filed with the Delaware Secretary of
State on July 20, 1984.
III.
The Board of Directors of the Corporation, acting in accordance with
Sections 141(f), 242 and 245 of the General Corporation Law of the State of
Delaware, duly adopted resolutions and declared the advisability of such
resolutions to amend and restate the Certificate of Incorporation of the
Corporation to read in its entirety as follows:
ARTICLE I
The name of the corporation is SurgiCare, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purpose to be conducted or promoted is to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
(a) The Corporation is authorized to issue two classes of shares to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation shall have authority to issue is seventy fifteen
million (70,000,000) shares. The total number of shares of Common Stock which
the Corporation shall have authority to issue is fifty million (50,000,000)
shares, and the par value of each share of Common Stock is five-tenths of one
cent ($0.005). The total number of shares of Preferred Stock which the
Corporation shall have authority to issue is twenty million (20,000,000) shares,
and the par value of each share of Preferred Stock is one-tenth of one cent
($0.001). The Preferred Stock may be issued from time to time, in one or more
series, each series to be appropriately designated by a distinguishing letter or
title, prior to the issue of any shares thereof.
(b) The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions, if any), the redemption
price or prices, the liquidation preferences, any other designations,
preferences and relative, participating, optional or other special rights, and
any qualifications, limitations or restrictions thereof, of any wholly unissued
series of Preferred Stock, and the number of shares constituting any such
unissued series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend and rescind the bylaws of the Corporation.
ARTICLE VI
Notwithstanding Article V hereof, the bylaws may be rescinded, altered,
amended or repealed in any respect by the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66 2/3) of the outstanding voting stock
of the Corporation, voting together as a single class.
ARTICLE VII
The Board of Directors shall have that number of Directors set out in
the bylaws of the Corporation as adopted or as set from time to time by a duly
adopted amendment thereto by the Board of Directors or stockholders of the
Corporation acting in accordance with Article VI.
ARTICLE VIII
Elections of directors at an annual or special meeting of stockholders
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
ARTICLE IX
Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the Board of Directors, or by a
majority of the members of the Board of Directors, or by a committee of the
Board of Directors which has been duly designated by the Board of Directors and
whose powers and authority, as provided in a resolution of the Board of
Directors or in the Bylaws of the Corporation, include the power to call such
meetings, but such special meetings may not be called by any other person or
persons; provided, however, that if and to the extent that any special meeting
of stockholders may be called by any other person or persons specified in any
provisions of the Certificate of Incorporation or any amendment thereto or any
certificate filed under Section 151(g) of the Delaware General Corporation Law,
then such special meeting may also be called by the person or persons, in the
manner, at the times and for the purposes so specified.
ARTICLE X
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation; provided, however, that no
amendment, alteration, change or repeal may be made to Articles VI, IX or XII
without the affirmative vote of the holders of at least sixty-six and two-thirds
percent (66b%) of the outstanding voting stock of the Corporation, voting
together as a single class.
ARTICLE XI
Each reference in this Certificate of Incorporation to any provision of
the Delaware General Corporation Law refers to the specified provision of the
General Corporation Law of the State of Delaware, as the same now exists or as
it may hereafter be amended or superseded.
ARTICLE XII
To the fullest extent permitted by the General Corporation Law of the
State of Delaware, the Corporation shall indemnify and advance indemnification
expenses on behalf of all directors and officers of the Corporation. The
Corporation shall indemnify such other persons as may be required by statute or
by the bylaws of the Corporation. The Corporation may, to the full extent
permitted by Delaware law, purchase and maintain insurance on behalf of any
director or officer, or such other person as may be permitted by statute or the
bylaws of the Corporation, against any liability which may be asserted against
any director, officer or such other person and may enter into contracts
providing for the indemnification of any director, officer or such other person
to the full extent permitted by Delaware law. The liability of directors of the
Corporation (for actions or inactions taken by them as directors) for monetary
damages shall be eliminated to the fullest extent permissible under Delaware
law. If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further limiting or eliminating the
personal liability of directors, then the liability of the directors to the
Corporation shall be limited or eliminated to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended from time to
time. Any repeal or modification of this Article XII by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
IV.
Thereafter, pursuant to a resolution of the Board of Directors, this
Restated Certificate of Incorporation was duly approved by the holders of the
necessary number of shares of the Company's voting securities in accordance with
the provisions of Section 228, 242 and 245 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, Technical Coatings, Inc. has caused this
certificate to be signed by its duly authorized officer this 10 day of July,
1999.
TECHNICAL COATINGS, INC.
by:
David Blumfield, D.P.M.
President
Attest:
Sherman Nagler, D.P.M.
Secretary
<PAGE>
EXHIBIT 3.2
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CENTER FOR SPECIALIZED SURGERY, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, the undersigned corporation adopts the following Articles of Amendment to
its Articles of Incorporation:
I.
The name of the corporation is Center for Specialized Surgery, Inc.
II.
The following amendment to the Articles of Incorporation was adopted by the sole
Director of the corporation on December 29, 1994, changing the name of the
corporation as follows:
The Amendment alters Article I of the original Articles of Incorporation and the
full text of each provision altered is as follows:
"The name of the corporation is BELLAIRE SURGICARE, INC."
III.
No shares have been issued.
Dated: December 29, 1994.
CENTER FOR SPECIALIZED SURGERY, INC.
BY: ROBERT PARKER, D.P.M. SOLE
DIRECTOR
ARTICLES OF INCORPORATION
OF
CENTER FOR SPECIALIZED SURGERY, INC.
The undersigned natural person of the age of eighteen (18) years of age or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, hereby adopts the following Articles of Incorporation for such corporation.
ARTICLE I
The name of the corporation is Center for Specialized Surgery, Inc.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose for which the corporation is organized is to engage in the
transaction of any or all lawful business for which corporations may be
incorporated under the Texas Business Corporation Act.
ARTICLE IV.
The aggregate number of shares which the corporation shall have authority to
issue is 1,000,000 shares, with $. 10 par value.
ARTICLE V.
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of $1,000.00, consisting of
money, labor done or property actually received.
ARTICLE VI.
The street address of its initial registered office is:
450 Gears, Suite 600
Houston, TX 77067
The name of its initial registered agent at such address is:
J. Michael O'Donnell
ARTICLE IX.
A director of the corporation shall not be personally liable to the corporation
or its shareholders for monetary damages for any act or omission in his capacity
as a director, except to the extent otherwise expressly provided by a statute of
the State of Texas. Any repeal or modification of this Article shall be
prospective only, and shall not adversely affect any limitation of the personal
liability of a director of the corporation existing at the time of the repeal or
modification.
ARTICLE X.
Any action required by Texas Law to be taken at any annual or special meeting of
shareholders, or any action which may be taken at any annual or special meeting
of shareholders, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of shares having not less than
the minimum number of votes that would be necessary to take such action at a
meeting at which the holders of all shares entitled to vote on the action were
present and voted. Such a written consent shall meet all other requirements of
Texas law, if any.
ARTICLE XI.
The name and address of the Incorporator is:
J. Michael O'Donnell
450 Gears, Suite 600
Houston, TX. 77067
IN WITNESS WIMREOF, the undersigned has executed these Articles of
Incorporation on this the 15day of September, 1993
J. Michael O'Donnell, Incorporator
<PAGE>
EXHIBIT 3.3
BY-LAWS
OF
TECHNICAL COATINGS, INC.
ARTICLE I
OFFICES
SECTION 1 REGISTERED OFFICE. The registered office shall be established
and maintained at 100 W. Tenth Street, in the City of Wilmington, in the County
of New Castle, in the State of Delaware and The Corporation Trust Company is the
registered agent.
SECTION 1.2 OTHER OFFICES. The Corporation may have other offices,
either within or without the State of Delaware, at such place or places the
Board of Directors may from time to time appoint or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 ANNUAL MEETINGS. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as
properly may come before such meeting shall be held on the date, at the time and
place within or without the State of Delaware as may be designated by the Board
of Directors.
SECTION 2.2 SPECIAL MEETINGS. Special meetings of the stockholders for
any proper purpose or purposes may be called at any time by the Board of
Directors, the President, any Executive Vice President or any Vice President, to
be held on the date, at the time and place within or without the State of
Delaware as the Board of Directors, the President, Executive Vice President,
whichever has called the meeting, shall direct. A special meeting of the
stockholders shall be called by the President, and Executive Vice President, any
Vice President or Secretary whenever stockholders owning a majority of the
shares of the Corporation then issued and outstanding and entitled to vote on
all of the matters to be submitted to stockholders of the Corporation at such
special meeting shall make written application to the President, any Executive
Vice President, any Vice President or Secretary. Any such written request shall
state a proper purpose or purposes of the meeting and shall be delivered to the
President, any Executive Vice President, any Vice President or Secretary.
SECTION 2.3 NOTICE OF MEETING. Written notice, signed by the President,
any Executive Vice President, any Vice President, the Secretary or an Assistant
Secretary, of every meeting of stockholders stating the purpose or purposes for
which the meeting is called, and the date and time when, and the place where, it
is to be held shall be delivered either personally or by mail to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than fifty (50) days before the meeting, except as otherwise provided by
statute. If mailed, such notice shall be directed to a stockholder at his
address as it shall appear on the stock record book of the Corporation, unless
the stockholder shall have filed with the Secretary a written request that
notices intended for him or her be mailed to some other address, in which case
it shall be mailed to the address designated in such request.
SECTION 2.4 QUORUM. The presence at any meeting, in person or by proxy,
of the holders of record of a majority of the shares then issued and outstanding
and entitled to vote shall be necessary and sufficient to constitute a quorum
for the transaction of business, except where otherwise provided by statute.
SECTION 2.5 ADJOURNMENTS. In the absence of a quorum, stockholders
representing a majority of shares then issued and outstanding and entitled to
vote, present in person or by proxy, or, if no stockholder entitled to vote is
present in person or by proxy, any officer entitled to preside at or act as
secretary of such meeting, may adjourn the meeting from time to tome until a
quorum shall be present.
SECTION 2.6 VOTING. Directors shall be chosen by a plurality of the
votes cast at the election, and, except where otherwise provided by statute, all
other questions shall be determined by a majority of the votes cast on such
question.
SECTION 2.7 PROXIES. Any stockholders entitled to vote may vote by
proxy, provided that the instrument authorizing such proxy to act shall have
been executed in writing (which shall include telegraphing, cabling or other
means of electronically transmitted written copy) by the stockholder himself or
herself or by his or her duly authorized attorney.
SECTION 2.8 JUDGES OF ELECTION. The Board of Directors may appoint
judges of election to serve at any election of directors and at balloting on any
other matter that may properly come before a meeting of stockholders. If no such
appointment shall be made, or if any of the judges so appointed shall fail to
attend, or refuse or be unable to serve, then such appointment may be made by
the presiding officer of the meeting at the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 NUMBER. The initial number of Directors of the Corporation
shall be one. Thereafter, the number of directors which shall constitute the
whole Board of Directors shall be fixed from time to time by resolution of the
Board of Directors or stockholders (any such resolution of either the Board of
Directors or stockholders being subject to any later resolution of either of
them).
SECTION 3.2 ELECTION AND TERM OF OFFICE. Directors shall be elected at
the annual meeting of the stockholders. Each director (whether elected at an
annual meeting or to fill a vacancy or otherwise) shall continue in office until
a successor shall have been elected or until his or her death, resignation or
removal in the manner hereinafter provided, whichever shall first occur.
SECTION 3.3 VACANCIES AND ADDITIONAL DIRECTORSHIPS. If any vacancy
shall occur among the directors by reason of death, resignation, or removal, or
as the result of an increase in the number of directorships, the directors then
in office shall continue to act and may fill any such vacancy by a vote of the
directors then in office, though less than a quorum.
SECTION 3.4 MEETINGS. A meeting of the Board of Directors shall be held
for organization, for the election of officers and for the transaction of such
other business as may properly come before the meeting, within thirty (30) days
after each annual election of directors.
The Board of Directors by resolution may provide for the holding of
regular meetings and may fix the times and places at which such meetings shall
be held. Notice of regular meetings shall not be required to be given, provided
that whenever the time or place of regular meetings shall be fixed or changed,
notice of such action shall be mailed promptly to each director who shall not
have been present at the meeting at which such action was taken, addressed to
him or her at his or her residence or usual place of business, unless he or she
shall have filed with the Secretary a written request that notices intended for
him or her be mailed to some other address, in which case it shall be mailed to
the address designated in such request.
Special meetings of the Board of Directors may be called by the
President, any Executive Vice President, any Vice President or any two
directors, except if there are fewer than four (4) directors, then any one (1)
director. Except as otherwise required by statute, notice of each special
meeting shall be mailed to each director, addressed to him or her at his or her
residence or usual place of business, unless he or she shall have filed with the
Secretary a written request that notices intended for him or her be mailed to
some other address, in which case it shall be mailed to the address designated
in such request, or shall be sent to him or her at such place by telegram,
radiogram or cablegram, or telephoned or other electronic means, or delivered to
him or her personally, not later than two days before the day on which the
meeting is to be held. Such notice shall state the time and place of such
meeting, but need not state the purposes thereof, unless otherwise required by
statute, the Certificate of Incorporation of the Corporation or these By-Laws.
The Board of Directors may meet and transact any and all business of
the Corporation by means of a conference telephone or similar communications
equipment, provided that all persons participating in the meeting are able to
hear each other. Participation in a meeting by means of conference telephone or
similar communication shall constitute presence in person at such meeting.
Notice of any meeting need not be given to any director who shall
attend such meeting in person or who shall waive notice thereof, before or after
such meeting, in writing or by telegram, radiogram or cablegram or other means
of electronically transmitted written copy.
SECTION 3.5 QUORUM. One-third (1/3) of the total number of members of
the Board of Directors as constituted from time to time, but not less than two
(2), shall be necessary and sufficient to constitute a quorum for the
transaction of business, except that when the Board consists of one (1) director
pursuant to SECTION 3.1, then the one (1) director shall constitute a quorum. In
the absence of a quorum, a majority of those present at the time and place of
any meeting may adjourn the meeting from time to time until a quorum shall be
present and the meeting may be held as adjourned without further notice or
waiver. A majority of those present at any meeting at which a quorum is present
may decide any question brought before such meeting, except as otherwise
provided by law, the Certificate of Incorporation or these By-Laws.
SECTION 3.6 RESIGNATION OF DIRECTORS. Any director may resign at any
time by giving written notice of such resignation to the Board of Directors, the
President, any Executive Vice President, any Vice President or the Secretary.
Any such resignation shall take effect at the time specified therein or, if no
time be specified, upon receipt thereof by the Board of Directors or one of the
above named officers: and, unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.7 REMOVAL OF DIRECTORS. At any special meeting of the
stockholders, duly called as provided in these By-Laws, any director or
directors may, by the affirmative vote of the holders of a majority of all the
shares of stock issued and outstanding and entitled to vote for the election of
directors, be removed from office, either with or without cause. At such meeting
a successor or successors may be elected by a plurality of the votes cast, or if
any such vacancy is not so filled, it may be filled by the directors as provided
in SECTION 3.3 of the By-Laws.
SECTION 3.8 COMPENSATION OF DIRECTORS. Directors shall receive such
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES OF THE BOARD
SECTION 4.1 DESIGNATION, POWER, ALTERNATE MEMBERS AND TERM OF OFFICE.
The Board of Directors may, by resolution passed by a majority of the whole
Board of Directors, designate one (1) or more committee, to the extent provided
in such resolution, shall have and may authorize the seal of the Corporation to
be affixed to all papers which may require it The Board of Directors may
designate one (1) or more directors as alternate members of any committee who,
in the order specified by the Board of Directors, may replace any absent or
disqualified at any meeting of the committee. If at a meeting of any committee
one (1) or more of the members thereof should be absent or disqualified, and if
either the Board of Directors has not so designated any alternate member or
members, or the number of absent or disqualified, and if either the Board of
Directors has not so designated any alternate member or members thereof should
be absent or disqualified members exceeds the number of alternate members who
are present at such meeting, then the member of members of such committee
(including alternates) present at any meeting and not disqualified from voting,
whether or not he or she or they constitute a quorum, may unanimously appoint
another director to act at the meetings in the place of any such absent or
disqualified member. The term of office of the members of each committee shall
be as fixed from time to time by the Board, subject to the term of office of the
directors and these By-Laws; provided, however, that any committee member who
ceases to be a member of the Board of Directors shall ipso facto cease to be a
committee member. Each committee shall appoint a secretary, who may be the
Secretary or an Assistant Secretary of the Corporation.
SECTION 4.2 MEETINGS, NOTICES AND RECORDS. Each committee may provide
for the holding of regular meetings, with or without notice, and may fix the
time and place at which such shall be held upon call by or at the direction of
its chairman or, if there be no chairman, by or at the direction of any two (2)
of its members, at the time and place specified in the respective notices or
waivers of notice thereof. Notice of each special meeting of a committee shall
be mailed to each member of such committee, addressed to him or her at his or
her residence or usual place of business, unless he or she shall have filed with
the Secretary a written request that notices intended for him or her be mailed
to some other address, in which case it shall be mailed to the address
designated in such request, at least two (2) day before the day on which the
meeting is to be held, or shall be sent by telegram, radiogram or cablegram, or
other means of electronically transmitted written copy, addressed to him at such
place, or telephoned or delivered to him or her personally, not later than the
day before the day on which the meeting is to be held. Notice of any meeting of
a committee need not be given to any member thereof who shall attend the meeting
in person or who shall waive notice thereof by telegram, radiogram, cablegram or
other means of electronically transmitted written copy. Notice of any adjourned
meeting need not be given. Each committee shall keep a record of its
proceedings.
Each committee may meet and transact any and all business delegated to
that committee by the Board of Directors by means of a conference telephone or
similar communications equipment provided that all persons participating in the
meeting are able to hear and communicate with each other. Participation in a
meeting by means of conference telephone or similar communication shall
constitute presence in person at such meeting.
SECTION 4.3 QUORUM AND MANNER OF ACTING. At each meeting of any
committee the presence of one-third (1/3) but not less than two (2) of its
members then in office shall be necessary and sufficient to constitute a quorum
or the transaction of business, and the act of a majority of the members present
at any meeting at which a quorum is present shall be the act of such committee;
in the absence of a quorum, a majority of the members present at the time and
place of any quorum shall be present. Subject to the foregoing and other
provisions of these By-Laws and except as otherwise determined by the Board of
Directors, each committee may make rules for the conduct of its business. Any
determination made in writing and signed by all the members of such committee
shall be as effective as if made by such committee at a meeting.
SECTION 4.4 RESIGNATION. Any member of a committee may resign at any
time by giving written notice of such resignation to the Board of Directors, the
President, any Executive Vice President, any Vice President or the Secretary of
the corporation. Unless otherwise specified in such notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or any such
officer.
SECTION 4.5 REMOVAL. Any member of any committee may be removed at any time
by the affirmative vote of a majority of the whole Board of Directors with or
without cause.
SECTION 4.6 VACANCIES. If any vacancy hall occur in any committee by
reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to set until such vacancy is filled by the Board of Directors.
SECTION 4.7 COMPENSATION. Committee members shall receive such
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with reasonable expenses, if
any, as the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any committee member from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE V
OFFICERS
SECTION 5.1 EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be a President, one or more Vice-Presidents, a Treasurer and a
Secretary, all of whom shall be elected annually by the Directors, who shall
hold office during the pleasure of the Directors. In addition, the Board of
Directors may elect a Chairman of the Board of Directors. Except for the offices
of President and Secretary, any two offices or more may be held by one (1)
person. All vacancies occurring among any of the officers shall be filled by the
Directors. Any officer may be removed at any time by the affirmative vote of a
majority (unless the Certificate of Incorporation required a larger vote) of the
directors present at a regular meeting of Directors or at a special meeting of
Directors called for the purpose. The Board of Directors may create such other
officers as in its opionion are in the best interest of the Corporation
including one or more Executive Vice Presidents an one or more Vice President.
In addition, such other officers maybe appointed in accordance with the
provisions of SECTION 5.3.
SECTION 5.2 ELECTION, TERM OF OFFICE AND QUALIFICATIONS. Officers shall
be elected by the Board of Directors. Each such officer (whether elected at the
first meeting of the Board of Directors after the annual meeting of stockholders
or to fill a vacancy or otherwise) shall hold his or her office until the first
meeting of the Board of Directors after the next annual meeting of stockholders
and until his or her successor shall have been elected, or until his or her
death, in SECTION 5.4 or shall have been removed in the manner provided in
SECTION 5.5.
SECTION 5.3 SUBORDINATE OFFICERS AND AGENTS. The Board of Directors may
appoint other officers or agents (including one or more Assistant Vice
Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers), to hold office for such period, have such authority and perform
such duties as are provided in these By-Laws or as may be provided in the
resolutions appointing them. The Board of Directors may delegate to any officer
or agent the power to appoint any such subordinate officers or agents and to
prescribe their respective terms of office, authorities and duties.
SECTION 5.4 RESIGNATIONS. Any officer may resign at any time by giving
written notice of such resignation to the Board of Directors, the President, an
Executive Vice President, a Vice President or the Secretary. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or any such effect.
SETION 5.5 REMOVAL. Any officer specifically designated in SECTION 5.1
may be removed at any time, either with or without cause, at any meeting of the
Board of Directors by the vote of a majority of all the directors then in
office. Any officer or agent appointed in accordance with the provisions of
SECTION 5.3 may be removed, either with or without cause, by the Board of
Directors at any meeting, by the affirmative vote of a majority of the directors
present at such meeting, or by any superior officer or agent upon whom such
power of removal shall have been conferred by the Board of Directors. Such power
of removal from office shall not be abridged by any employment contract or other
agreement..
SECTION 5.6 VACANCIES A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these By-Laws for
regular election or appointment to such office.
SETION 5.7 THE CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one by elected, shall have and perform such duties as from time to
time may be assigned to him by the Board of Directors or the Executive
committee.
SECTION 5.8 THE PRESIDENT. The President shall be the chief executive
officer and the chief operating officer of the Corporation. subject to the
direction of the Board of Directors, he or she shall have general charge of the
business affairs and property of the Corporation and general supervision over
its officers and agents. The President shall preside at all meetings of the
stockholders and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President may sign, with any other
officer thereunto duly authorized, certificates of stock of the Corporation the
issuance of which shall have been duly authorized (the signature to which may be
facsimile signature), and may sign and execute in the name of the Corporation,
deeds, mortgages, bonds, contracts, agreements, other instruments duly
authorized by the Board of Directors, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent. From time to time he or she shall report to the Board of
Directors all matters within him or her knowledge which the interests of the
corporation may require to be brought to their attention. The President shall
also perform such other duties as are assigned by these By-Laws or as from time
to time may be assigned to his or her by the Board of Directors.
SETION 5.9 THE EXECUTIVE VICE PRESIENT AND VICE PRESIENT. At the
request of the President or in hi absence or disability, the Executive Vice
President designated by the Board of Directors or if there be no Executive Vice
President then the Vice President designated by the Board of Directors shall
perform all the duties of the President and, when so acting, shall have all the
powers of and be subject to all restriction upon the President. Any Executive
Vice President or Vice President may also sign, with any other officer thereupon
duly authorized, certificates of stock of the Corporation the issuance of which
shall have been duly authorized (the signature to which may be a facsimile
signature), an may sign and execute in the name of the Corporation deeds,
mortgages, bonds and other instruments duly signing and execution thereof shall
be expressly delegated by Executive Vice President and Vice President shall
perform such other duties as are assigned by these By-Laws or as from time to
time may be assigned by the Board of Directors or the President.
SECTION 5.10 THE SECETARY, The Secretary shall:
(i) record all the proceedings of the meetings of the stockholders, the
Board of Directors, and all committees of the Board of Directors in a book or
books to be kept for that purpose; (ii) cause all notices to be duly given in
accordance with the provisions of these By-Laws as required by statute; (iii)
whenever any committee shall be appointed in pursuance of a resolution of the
Board of Directors, furnish the chairman of such committee with a copy of such
resolution; (iv) be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing capital stock
of the Corporation prior to the issuance thereof and to all instrument the
execution of which duly authorized; (v) see that the lists, books, reports,
required by statute are properly kept and filed; (vi) have charge of the stock
record and stock transfer books of the Corporation, and exhibit such stock books
at all reasonable times to such persons as are entitled by statute to have
access thereto; (vii) sign (unless the Treasurer or an Assistant Secretary or an
Assistant Treasurer shall sign) certificates representing capital stock of the
Corporation the issuance of which shall have been duly authorized (the signature
to which may be a facsimile signature; and (viii) in general, perform all duties
incident to the office of Secretary and such other duties as are given to him or
her by these By-Laws or as from time to time may be assigned to him by the Board
of Directors or the President.
SECTION 5.11 ASISTANT SECRETARIES. At the request of the Secretary or
in his or her absence or disability, the Assistant Secretary designated by him
or her (or in the absence of such designation, the Assistant Secretary
designated by the Board of Directors or the President) shall perform all the
duties of the Secretary, and, when so acting, shall have all the powers of and
be subject to all restrictions upon the duties as from time to time may be
assigned to them by the Board of Directors, the President or the Secretary.
SECTION 5.12 THE TREASURER. The Treasurer shall:
(i) have charge of and supervision over and be responsible for the
fund, securities, receipts and disbursements of the Corporation; (ii) cause the
monies and other valuable effects of the Corporation to be deposited in the name
and to the credit of the Corporation in such banks or trust companies or with
such banker or other depositories as shall be selected in accordance with
SECTION 6.3 of these By-Laws or to be otherwise dealt with in such manner as the
Board of Directors may direct; (iii) cause the funds of the Corporation to be
disbursed by checks or drafts upon the authorized depositories of the
corporation, and cause to be taken and preserved proper vouchers for all monies
disbursed; (iv) render to the Board of Directors or the President, whenever
requested, a statement of the financial condition of the corporation and of all
his or her transactions as Treasurer; (v) cause to be kept at the Corporation's
principal office correct books of account of all its business and transaction
and such duplicate books of account as he or she duplicates thereof to be
exhibited to any director; (vi) be empowered, from time to time, to require from
the officers or agents of the corporation reports or statements giving such
financial transactions of the Corporation; (vii) sign (unless the Secretary or
an Assistant Secretary or Assistant Treasurer shall sign) certificates
representing stock of the Corporation the issuance of which shall have been duly
authorized (the signature to which may be a facsimile signature); and (viii) in
general, perform all duties incident to the office of Treasurer and such other
duties as are given to him or her by these By-Laws or as from time to time may
be assigned to him by the Board of Directors or the President.
SECTION 5.13 ASSISTANT TREASURERS. At the request of the Treasurer or
in his or her absence or disability, the Assistant Treasurer designated by him
or her (or in the absence of such designation, the Assistant Treasurer
designated by the Board of Directors or the President) shall perform all the
duties of the Treasurer, and, when so acting, shall have all the powers of and
be subject to all restrictions upon the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned by the
Board of Directors, the President or the Treasurer.
SECTION 5.14 SALARIES. The salaries of the officers of the Corporation
shall be fixed from time to time by the Board of Directors, except that the
Board of Directors may delegate to any person the power to fix the salaries or
other compensation of any officers or agents appointed in accordance with the
provisions of SECTION 5.3. No officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a director of the
Corporation.
SECTION 5.15 SURETY BONDS. If the Board of Directors shall so require,
any officer or agent of the Corporation shall execute to the Corporation a bond
in such sum and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful discharge of his or her duties, for all
property, fund or securities of the Corporation which may come into his or her
hand.
ARTICLE VI
CAPITAL STOCK
SECTION 6.1 STOCK CERTIFICATES. Every holder of capital stock of the
Corporation shall be entitled to have a certificate or certificates in such form
as shall be approved by the Board of Directors, certifying the number of shares
of capital stock of the corporation owned by him or her. The certificates
representing shares of capital stock shall be signed in the name of the
corporation by the Chairman of the Board, the President, an Executive Vice
President or a Vice President of the Board, the President, and Executive Vice
President or a Vice President and by the Secretary, an Assistant Secretary, the
Treasurer or an Assistant Treasurer (which signatures may be facsimiles) and
sealed with the seal of the Corporation (which seal may be a facsimile). In case
any officer, transfer agent or registrar who shall have signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer, transfer agent or registrar before such certificates are
issued, they may nevertheless be issued by the Corporation with the same effect
as if such officer, transfer agent, or registrar are still such at the date of
their issue.
SECTION 6.2 BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. The books and
records of the Corporation may be kept at such places, within or without the
State of Delaware as the Board of Directors may from time to time determine. The
stock record books and the blank stock certificate books shall be kept by the
Secretary or by any other officer or by the transfer agent or registrar, if any,
designated by the Board of Directors. There shall be entered on the stock book
of the shares represented thereby, the name of the person to whom such
certificate was issued and the date of issuance thereof.
SECTION 6.3 TRANSFERS OF SHARES. Transfers of shares of capital stock
of the Corporation shall be made on the stock records of the Corporation only
upon authorization by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary or with the transfer agent, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by duly execute
stock transfer power and the payment of all taxes thereon, if any. Except as
otherwise provided by law, the Corporation shall be entitled to recognize the
exclusive right of a person in whose name any share or shares stand on the
record of stockholders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or other
distributions, and to vote as such owner, and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person whether or not the Corporation shall have
express or other notice thereof.
SECTION 6.4 REGULATION. The Board of Directors may make such additional
rule and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the capital stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more agents or one or more registrars and
may further provide that no stock certificate shall be valid until countersigned
by one of such transfer agents and registered by one of such registrars. Nothing
herein shall be construed to prohibit the Corporation from acting as its own
transfer agent or registrar.
SECTION 6.5 LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of
any certificate representing any share or shares of the capital stock of the
Corporation shall immediately notify the Corporation of any loss, theft,
destruction, or mutilation of such certificate, and the Corporation may issue a
new certificate of stock in the place of any certificate theretofore issued by
it which the owner thereof shall alleged to have been lost, stolen or destroyed,
or which shall have been mutilated, and the Board of Directors may, in its
discretion, require such owner of his or her legal representatives to give to
the Corporation a bond in such sum, limited or unlimited, and in such form and
with such surety or sureties as the Board of Directors in its absolute
discretion shall determine, to indemnify the corporation against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate, or the issuance of a new certificate. Anything herein to
the contrary notwithstanding, the Board of Directors in its absolute discretion
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Delaware.
SECTION 6.6 STOCKHOLDER'S RIGHT OF INSPECTION Any stockholder of record
of the Corporation, in person or by attorney or other agent, shall upon written
demand under oath stating the purpose thereof, have the right during the usual
hours for business to inspect for any proper purpose the Corporation's stock
ledger, a list of its stockholders, an its other books and records, and to make
copies or extracts there from. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
which authorized the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in Delaware or at its principal place of business.
SECTION 6.7 DIVIDENDS AN RESERVES. Subject to any agreement to which
the Corporation is a party or by which it is bound, the Board of Director may
declare to be payable, in cash, in other property or in stock of the Corporation
of any class or series, such dividends in respect of outstanding stock of the
Corporation of any class or series as the Board of Directors may at any time
seem to be advisable. Before declaring any such dividend, the Board of Directors
may cause to be set aside, out of any fund or other property or assets of the
Corporation legally available for the payment of dividends, such sum or sums as
the Board of Directors, in its reserves to meet contingencies, to equalize
dividend, or to repair or maintain any property of the Corporation, or for such
other purpose as the Board of Directors may deem conductive to the best
interests of the corporation.
ARTICLE VII
EXECUTION OF INSTRUMENTS AND
DEPOSIT OF CORPORATE FUNDS
SECTION 7.1 EXECUTION OF INSTRUMENTS GENERALLY. The President, and
Executive Vice President, any Vice President, the Secretary or the Treasurer,
subject to the approval of the Board of Directors, may enter into any contract
or execute and deliver any instrument in the name and on behalf of the
Corporation. The Board of directors may authorize any contract or execute and
deliver any instrument in the name and on behalf of the Corporation, and such
authorization may be general or confined to specific instances.
SECTION 7.2 BORROWING. No loan or advances shall be obtained or
contracted for, by or on behalf of the Corporation and no negotiable paper shall
be issued in its name, unless and except as authorized by the Board of
Directors. Such authorization may be general or confined to specific instances.
Any officer or agent of the Corporation thereunto so authorized may obtain loans
and advances for the corporation, and for such loans and advances may make,
execute and deliver promissory, negotiable and non-negotiable notes, bonds, or
other negotiable and non-negotiable evidences of indebtedness of the
Corporation. Any officer or agent of the Corporation thereunto so authorized may
pledge, hypothcate or transfer as security and liabilities of the Corporation,
any and all stocks, bonds, other securities, personal property and real property
at any time held by the corporation, and to that end may endorse, assign and
deliver the same and do every act and thing necessary or proper in connection
therewith.
SECTION 7.3 DEPOSTIS. All fund of the Corporation not otherwise
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositories as the Board of
Directors may select, or as may be selected by any officer or officers or agent
or agent authorized to do so by the Board of Directors. Endorsements for deposit
to the credit of the Corporation in any of its duly authorized depositories
shall be made in such manner as the Board of Directors from time to time may
determine.
SECTION 7.4 CHECKS, DRAFT, ETC. All checks, drafts or other order for
the payment of money, and all negotiable and non-negotiable notes or other
negotiable or non-negotiable evidences of indebtedness issued in the name of the
Corporation, shall be signed by such officer or officers or agent or agent of
the Corporation, and in such manner, as from time to time shall be determined by
the Board of Directors.
SECTION 7.5 PROXIES. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
President, any Executive Vice President or any Vice President or by any other
person or persons thereunto authorized by the Board of Directors
ARTICLE VIII
RECORD DATES
SECTION 8.1 In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall be not more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, not withstanding the transfer of any such stock on the
books of the Corporation after any such record date filed by the Board of
Directors.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
or his or her testator or intestate is or was a director, officer, Scientific
Advisory Board member, employee or agent to the Corporation, or is or was
serving at the request of the Corporation (or any such constituent or
predecessor corporation) as a director, officer, Scientific Advisory Board
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the fullest extent allowed under the law.
ARTICLE IX
CORPORATE SEAL
SECTION 9.1 The Corporate seal shall be circular in form and shall bear
the name of the Corporation and the words and figures denoting its organization
under the laws of the State of Delaware and the year thereof and otherwise shall
be in such form as shall be approved from time to time by the Board of
Directors.
ARTICLE X
FISCAL YEAR
SECTION10.1 The fiscal year of the Corporation shall begin on January 1 and
shall terminate on the last day of December of each year.
ARTICLE XI
AMENDMENTS
SECTION 11.1 All By-Laws of the Corporation may be amended, altered or
repealed, and new By-Laws may be enacted, by the affirmative vote of the
stockholders or record of a majority of the issued and outstanding shares of
stock of the Corporation entitled to vote at any annual or special meeting, or
by the affirmative vote of a majority of the directors present at any regular or
special meeting of the Board of Directors.
ARTICLE XIII
ACTION WITHOUT A MEETING
SECTION 13.1 Any action which might have been taken under these By-Laws
by a vote of the stockholders at a meeting thereof may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken, shall be signed by the stockholders of the
issued and outstanding shares of capital stock of the Corporation having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted, provided that prompt notice shall be given to those
stockholders who have not so consented if less than unanimous written consent is
obtained. Any action which might have been taken under these By-Laws by vote of
the directors at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if all the members of the Board of Directors or
such committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of the Board of Directors or such
committee.
<PAGE>
EXHIBIT 3.4
BY-LAWS
OF
BELLAIRE SURGICARE, INC.
ARTICLE 1.
Offices
The principal office of the Corporation in the State of Texas shall be located
in the City of Houston, County of Harris. The Corporation may have such other
offices, either within or without the State of Texas, as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.
The registered office of the Corporation required by the Texas Business
Corporation Act to be maintained in the State of Texas may be, but need not be,
identical with the principal office in the State of Texas, and the address of
the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II.
Shareholders
Section 1. Annual Meeting. The annual meeting of the Shareholders shall be held
on the day and date determined by the Board of Directors for the purpose of
electing Directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Texas, such meeting shall be held on the succeeding
business day. If the election of Directors shall not be held on the day
designated herein for any annual meeting of the Shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to he held
at a special meeting of the Shareholders as soon thereafter as convenient.
Section 2. Special Meeting. Special meetings of the Shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President, and shall be called by the President at the request of the
holders of not less than one-tenth of all the outstanding shares of the
Corporation entitled to vote at the meeting.
Section 3. Place of Meeting. Meetings of Shareholders may be held at any place,
within or without the State of Texas, designated in the notice or waiver of
notice of the meeting. If no designation is so made, meetings of Shareholders
shall be held at the principal office of the Corporation.
Section 4. Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or persons calling the meeting to each Shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the
Shareholders at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose
of determining Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or Shareholders entitled to receive
payment of any dividend,- or in order to make a determination of Shareholders
for any other proper purpose, the Board of Directors of the Corporation may
provide that the stock transfer books shall be closed for a stated period but
not to exceed, in any case, fifty (50) days. If the stock transfer books shall
be closed for the purpose of determining Shareholders entitled to notice of or
to vote at a meeting of Shareholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of Shareholders, such date in any case to be not
more than fifty (50) days and, in case of a meeting of Shareholders, not less
than ten (10) days prior to the date on which the particular action requiring
such determination of Shareholders is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of Shareholders
entitled to notice of or to vote at a meeting of Shareholders, or Shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of Shareholders. When a determination of Shareholders
entitled to vote at any meeting of Shareholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof except
where the determination has been made by closing the stock transfer books and
the stated period of closing has expired.
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make, at least ten (10) days
before each meeting of Shareholders, a complete list of Shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each, which list for
a period of ten (10) days prior to such meeting shall be kept on file at the
registered office of the Corporation and shall be subject to inspection by any
Shareholder at any time during usual business hours. Such list shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any Shareholder during the whole time of the meeting. The original
stock transfer books shall be prima facie evidence as to Shareholders entitled
to examine such list or transfer books or to vote at any meeting of
Shareholders.
Section 7. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of the Shareholders. If less than a majority of the outstanding
shares is represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The Shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum.
Section 8. Proxies. Each proxy shall be revocable before it has been voted
unless the proxy form conspicuously states that the proxy of (a) a pledge, (b) a
person who Purchased or agreed to purchase, or owns or holds an option to
purchase, the shares, (c) a creditor of the corporation who extended its credit
under terms requiring the appointment, (d) an employee of the corporation whose
employment contract requires the appointment, or (e) a party to a voting
agreement created under the Texas Business Corporation Act. A revocable proxy
shall be deemed to have been revoked if the Secretary of the Corporation shall
have received at or before the meeting instructions or revocation or a proxy
bearing a later date, which instructions or proxy shall have been duly executed
and dated in writing by the shareholder.
Section 9. Voting of Shares. Each outstanding share entitled to vote shall be
entitled to one (1) vote upon each matter submitted to a vote at the meeting of
Shareholders. In the election of Directors of the Corporation, votes may not be
cumulated.
Section 10. Voting of Shares by Certain Holders. Shares standing in the name of
another corporation may be voted by such officer, agent or proxy as the by-laws
of such corporation may prescribe, or, in the absence of such provision, as the
board of directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be voted
by him, either in person or by proxy, without a transfer of such shares into his
name. Shares standing in the name of a trustee may be voted by him, either to
vote shares held by him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer into his name if authority to do so be contained in an
appropriate order of the court by which such receiver was appointed.
A Shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11. Order of Business and Rules of Procedure. The order of business at
all annual and special meetings of Shareholders shall, to the extent
practicable, be as follows:
(1) Call to order.
(2) Presentation of proof of due calling and notice of the meeting.
(3) Presentation and examination of proxies.
(4) Ascertainment and announcement of presence of quorum.
(5) Approval of waiver of approval of prior minutes.
(6) Report of officers.
(7) Nomination for Directors.
(8) Receiving motions and resolutions.
(9) Discussion of election of Directors, motions and resolutions.
(10) Vote on Directors, motions and resolutions.
(11) Any other unfinished business.
(12) Any other new business.
(13) Receipt of report of inspectors on results of election and
vote on motions and resolutions.
1. Adjournment.
In all matters pertaining to conduct of the Shareholders' meetings, including
each orderly adjournment thereof, the procedures set forth in Robert's Rules of
Order shall be followed. Legal counsel to the Corporation, or such other person
as is specified in the notice of the meeting, shall act as parliamentarian.
Section 12. Inspectors of Election. In advance of any meeting of Shareholders,
the Board of Directors shall appoint not less nor more than three (3) inspectors
of election. If there is no such appointment made in advance, or if any
appointed person refuses or fails to serve, the Chairman of the meeting shall
appoint a replacement. Inspectors of election shall determine the number of
shares outstanding, voting power of each share, shares represented at the
meeting, existence of a quorum, the authenticity, validity and effect of
proxies; shall receive votes, ballots, assents and consents, and hear and
determine all challenges and questions in any way arising in connection with a
vote; shall count and tabulate all votes, assents and consents, and determine
and announce results; and do all other acts as may be proper to conduct
elections or votes with fairness to all Shareholders.
ARTICLE III.
Board of Directors
Section 1. General Powers. The business affairs of the Corporation shall be
managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of Directors of the
Corporation shall be no less than one nor more than fifteen. Each Director shall
hold office until the next annual meeting of Shareholders and until his
successor shall have been elected and qualified. Any Director or the entire
Board of Directors may at any time be removed, with or without cause, by a vote
of the holders of a majority of the shares then entitled to vote at an election
of Directors or by the unanimous consent action of Shareholders as provided in
ArticleXII of these By-Laws. Directors need not be residents of the State of
Texas or Shareholders of the Corporation.
Section 3. Regular Meetings. A regular meeting of the Board of Directors shall
be held without notice other than this by-law immediately after, and at the same
place as, the annual meeting of Shareholders. The Board of Directors may provide
by resolution the time and place, either within or without the State of Texas,
for the holding of additional regular meetings without notice other than such
resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the President or any officer. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Texas, as the place for holding
any special meeting of the Board of Directors called by them.
Section 5. Notice. Notice of any special meeting shall he given at least two (2)
days previously thereto by written notice delivered personally or mailed to each
Director at his business address or by telegram. If mailed, such notice shall be
deemed to be delivered when deposited in the U. S. mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
The attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the board of Directors need be specified
in the notice of such meeting.
Section 6. Quorum. A majority of the number of Directors fixed by Section 2 of
Article III[ shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but if less than such majority is present at
a meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice.
Section 7. Manner of Acting. The act of the majority of the Directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors.
Section 8. Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of Directors. A Director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of any increase in the number of
Directors shall be filled by reason of any increase in the number of Directors
shall be filled by election at any annual meeting or at a special meeting of
Shareholders called for that purpose.
Section 9. Compensation. By resolution of the Board of Directors, the Directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefore.
Section 10. Presumption of Assent. A Director of the Corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forwarding such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 11. Committees. The Board of Directors may by resolution adopted by a
majority of the full Board of Directors designate from its members an Executive
Committee and one or more other committees, each of which shall exercise such
authority and responsibility as may be set forth in the resolution establishing
the same, subject to the provisions of Article 2.36A of the Texas Business
Corporation Act. Each such committee shall serve at the pleasure of the Board of
Directors, and shall establish its own administrative and operational rules and
procedures, but shall in all events keep accurate records of the actions taken
by it.
Section 12. Professional Standards Committee. The Professional Standards
Committee, a standing committee of the corporation, shall consist of the
Chairman of the Board/Chief Executive officer, three physicians (M.D.'s or
D.O.'s) and others as the Board shall appoint. This committee shall have the
power to create bylaws, rules or policies to ensure quality assurance subject to
Board approval of all bylaws, rules or policies implemented. A majority of the
members of this committee must have no financial interest in the corporation.
Section 13. Credentials Committee. The Credentials Committee, a standing
committee of the corporation, shall consist of the Chairman of the Board\Chief
Executive Officer, three physicians (M.D.'s or D.O.'s), and others as the Board
shall appoint. The Credentials Committee shall review the requirements for
appointment to the medical staff and shall work with the Professional Standards
Committee in improving and maintaining quality care and in defining the medical
staff requirements. Each person applying for medical staff privileges must be
approved by the Credentials Committee before medical staff privileges can be
granted.
Section 14. Executive Committee. The Executive Committee, a standing committee
of the corporation, shall consist of five members of the Board. This committee
shall along with the Chief Executive Officer, be responsible for the daily
operations of the corporation and shall supervise and manage the conduct and
activity of the Chief Executive Officer. In the absence of a quorum of the
Board, a quorum of the Executive Committee may act as the governing Board for
the corporation.
ARTICLE IV.
Officers
Section 1. Number. The officers of the Corporation shall include a President,
and a Secretary, and may include one (1) or more Vice-Presidents (the number
thereof to be determined by the Board of Directors), and a Treasurer, each of
who shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed to be necessary may also be elected or
appointed by the Board of Directors. Any two (2) or more offices may be held by
the same person.
Section 2. Election and Term of Office. The officers of the Corporation shall be
elected annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the Shareholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interest of the Corporation would be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term.
Section 5. President. Subject to the Board of Directors, the President shall be
chief executive officer of the Corporation and shall supervise and control all
of the business and affairs of the Corporation. He shall preside at all meetings
of the Shareholders and of the Board of Directors. He may sign, with the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, certificates for shares of the Corporation, any deed,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
shall be expressly delegated by the Board of Directors or by these By-Laws to
some other officer or agent of the Corporation, or shall be required by law to
be otherwise signed or executed; and in general shall perform duties incident to
the office of president and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 6. Vice-President. In the absence of the President or in the event of
his death, inability or refusal to act, the Vice-President (or in the event
there be more than one (1) VicePresident, the Vice-Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice-President may sign with the Secretary
or an Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. Secretarv. The Secretary shall: (a) keep the minutes of the
Shareholders' and of the Board of Directors' meetings in one (1) or more books
provided for that purpose; (b) see that all notices are given in accordance with
the provisions of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents the execution of which on behalf of
the Corporation under its seal is duly authorized; (d) keep a register of the
post office address of each Shareholder which shall be furnished to the
Secretary by such Shareholder; (e) sign with the President, or a Vice-President,
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general charge
of the stock, transfer books of the Corporation, and (g) in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 8. Treasurer. If required by the Board of Directors, The Treasurer shall
give a bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the Board of Directors shall determine. He shall: (a) have
charge and custody of and be responsible for all funds and securities of the
Corporation; receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of Article V of these By-Laws; and
(b) in general perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the President
or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bond for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed from time to
time by the Board of Directors and no officer shall be prevented from receiving
such salary by reason of the fact that he is also a Director of the Corporation.
ARTICLE V.
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the Corporation and
no evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the
Board of Directors. Such authority may be general or confined to specific
instances.
Section 3. Checks, Drafts. Etc-. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE VI.
Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a
Vice-President and by the Secretary or an Assistant Secretary. All certificates
for shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be canceled and no new certificate shall have been surrendered
and canceled, except that in case of a lost, destroyed-or mutilated certificate
a new one may be issued therefor upon such terms and indemnity to the
Corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the Corporation shall be
made only on the stock transfer books of the Corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
ARTICLE VII.
Fiscal Year
The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.
ARTICLE VIII.
Dividends
The Board of Directors may from time to time declare, and the Corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law and its Articles of Incorporation.
ARTICLE IX.
Seal
The Board of Directors shall provide a corporation seal which shall be circular
in form and shall have inscribed thereon the name of the Corporation and the
state of incorporation.
ARTICLE X.
Amendments
The Board of Directors shall have the power to alter, amend or repeal these
By-Laws or adopt new By-Laws, subject to amendment, repeal or adopting of new
By-Laws by action of the shareholders and unless the shareholders in amending,
repealing or adopting a new By-Law expressly provide that the Board of Directors
may not amend or repeal that By-Law. The Board of Directors may exercise this
power at any regular or special meeting at which a quorum is present by the
affirmative vote of two-thirds (2/3) of the Directors present at the meeting and
without any notice of the action taken with respect to the By-Laws having been
contained in the notice of waiver of notice of such meeting. Unless the
corporation's Articles of Incorporation or a By-Law adopted by the shareholders
provide otherwise as to all or some portion of the By-Laws, the corporation's
shareholders may amend, repeal or adopt new By-Laws even though the By-Laws may
have been amended by the Board of Directors.
ARTICLE XI.
Notice and Waiver of Notice
Whenever any notice whatever is required to be given under the provisions of
these By-Laws, said notice shall be deemed to be sufficient if given by
depositing the same in a post office box in a sealed postpaid wrapper addressed
to the person entitled thereto at his post office address, as it appears on the
books of the Corporation, and such notice shall be deemed to have been given on
the date of such notice shall be deemed to have been given on the date of such
mailing. A waiver of notice, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purposes
of, any regular or special meeting of the Board of Directors or Shareholders
need be specified in the waiver of notice of such meeting.
ARTICLE X111.
Action Without a Meeting
Section 1. Written Consent. Any action required or permitted to be taken at a
meeting of the Shareholders, Board of Directors, or any committee may be taken
without a meeting if a consent in writing, setting for the action so taken, is
signed by all the Shareholders, Directors, or committee members, as the case may
be; and such action shall have the same force and effect as a unanimous vote at
a meeting thereof duly and regularly called.
Section 2. Conference Telephone. Shareholders, Directors or members of any
committee may participate in and hold a meeting thereof by means of which all
persons participating in the meeting can hear each other, and participation in
such a meeting shall constitute presence in person at such meeting, except where
a person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Minutes of any such conference telephone meeting shall be
prepared and kept in the same manner as minutes of any other meeting.
ARTICLE XIII.
Indemnification of Officers, Directors and Employees
Section 1. Definitions. In this Article:
(a) "Indemnitee" means (i) any present or former Director, advisory director or
officer of the corporation, (ii) any person who while serving in any of the
capacities referred to in clause (i) hereof served at the corporation's request
as a director, officer, partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, and (iii) any
person nominated or designated by (or pursuant to authority granted by) the
Board of Directors or any committee thereof to serve in any of the capacities
referred to in clauses (i) or (H) hereof.
(b) "Official Capacity" means (i) when used with respect to a Director, the
office of Director of the corporation, and (ii) when used with respect to a
person other than a Director, the elective or appointive office of the
corporation held by such person or the employment or agency relationship
undertaken by such person on behalf of the corporation, but in each case does
not include service for any other foreign or domestic corporation or any
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise.
(c) "Proceeding" means any threatened, pending or complete action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit or proceeding.
Section 2. Indemnification. The corporation shall indemnify every Indemnitee
against all judgments, penalties (including excise and similar taxes), fines,
amounts paid in settlement and reasonable expenses actually incurred by the
Indemnitee in connection with any Proceeding in which he was, or is threatened
to be named defendant or respondent, or in which he was or is a witness without
being named a defendant or respondent, by reason, in whole or in part, of his
serving or having served, or having been nominated or designated to serve, in
any of the capacities referred to in Section 1, if it is determined in
accordance with Section 4 that the Indemnitee (a) conducted himself in good
faith, (b) reasonably believed, in the case of conduct in his Official Capacity,
that his conduct was in the corporation's best interests, and, in all other
cases, that his conduct was at least not opposed to the corporation's best
interests and (c) in the case of any criminal proceeding, had no reasonable
cause to believe that his conduct was unlawful; provided, however, that in the
event that an Indemnitee is found liable to the corporation or is found liable
on the basis that personal benefit was improperly received by the Indemnitee the
indemnification (i) is limited to reasonable expenses actually incurred by the
Indemnitee in connection with the Proceeding and (ii) shall not be made in
respect of any Proceeding in which the Indemnitee shall have been found liable
for willful or intentional misconduct in the performance of his duty to the
corporation. Except as provided in the immediately preceding proviso to the
first sentence of this Section 2, no indemnification shall be made under this
Section 2 in respect of any Proceeding in which such Indemnitee shall have been
(x) found liable on the basis that personal benefit was improperly received by
him, whether or not the benefit resulted from an action taken in the
Indemnitee's Official Capacity, or (y) found liable to the corporation. The
termination of any Proceeding by judgment, order, settlement or conviction, or
on a plea of nolo contendere or its equivalent, is not of itself determinative
that the Indemnitee did not meet the requirements set forth in clauses (a), (b)
or (c) in the first sentence of this Section 2. An Indemnitee shall be deemed to
have been found liable in respect of any claim, issue or matter only after the
Indemnitee shall have been so adjudged by a court of competent jurisdiction
after exhaustion of all appeals therefrom. Reasonable expenses shall, include,
without limitation, all court costs and all fees and disbursements of attorneys
for the Indemnitee.
Section 3. Successful Defense. Without limitation of Section 2 and in addition
to the indemnification provided for in Section 2, the corporation shall
indemnify every Indemnitee against reasonable expenses incurred by such person
in connection with any Proceeding in which he is a witness or a named defendant
or respondent because he served in any of the capacities referred to in Section
1, if such person has been wholly successful, on the merits or otherwise, in
defense of the Proceeding.
Section 4. Determinations. Any indemnification under Section 2 (unless ordered
by a court or competent jurisdiction) shall be made by the corporation only upon
a determination that indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of conduct. Such
determination shall be made (a) by the Board of Directors by a majority vote of
a quorum consisting of Directors, who, at the time of such vote, are not named
defendants or respondents in the Proceeding; (b) if such a quorum cannot be
obtained, then by a majority vote of a committee of the Board of Directors, duly
designated to act in the matter by a majority vote of all Directors (in which
designation Directors who are named defendants or respondents in the Proceeding
may participate), such committee to consist solely of two (2) or more Directors
who, at the time of the committee vote, are not named defendants or respondents
in the Proceeding; (c) by special legal counsel selected by the Board of
Directors or a committee thereof by vote as set forth in clauses (a) or (b) of
this Section 4, if the requisite quorum of all of the Directors cannot be
obtained therefor and such committee cannot be established, by a majority vote
of all of the Directors (in which Directors who are named defendants or
respondents in the Proceeding may participate); or (d) by the shareholders in a
vote that excludes the shares held by Directors that are named defendants or
respondents in the Proceeding. Determination as to reasonableness of expenses
shall be made in the same manner as the determination that indemnification is
permissible is made by special legal counsel, determination as to reasonableness
of expenses must be made in the manner specified in clause (c) of the preceding
sentence for the selection of special legal counsel. In the event a
determination is made under this Section 4 that the Indemnitee has met the
applicable standard of conduct as to some matters but not as to others, amounts
to be indemnified may be reasonably prorated.
Section 5. Advancement of Expenses. Reasonable expenses (including court costs
and attorney's fees) incurred by an Indemnitee who was or is a witness or was,
is or is threatened to be made a named defendant or respondent in a Proceeding
shall be paid by the corporation at reasonable intervals in advance of the final
disposition of such Proceeding, and without making any of the determinations
specified in Section 4, after receipt by the corporation of (a) a written
affirmation by such Indemnitee of his good faith belief that he has met the
standard of conduct necessary for indemnification by the corporation under this
Article and (b) a written undertaking by or on behalf of such Indemnitee to
repay the amount paid or reimbursed by the corporation if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article. Such written undertaking shall be an unlimited
obligation of the Indemnitee but need not be secured and it may be accepted
without reference to financial ability to make repayment. Notwithstanding any
other provision of this Article, the corporation may pay or reimburse expenses
incurred by an Indemnitee in connection with his appearance as a witness or
other participation in a Proceeding at a time when he is not named a defendant
or respondent in the Proceeding.
Section 6. Employee Benefit Plans. For purposes of this Article, the corporation
shall be deemed to have requested an Indemnitee to serve an employee benefit
plan whenever the performance by him of his duties to the corporation also
imposes duties on or otherwise involves services by him to the plan or
participants or beneficiaries of the plan. Excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall be deemed fines. Action taken or omitted by an Indemnitee with respect to
an employee benefit plan in the performance of his duties for a purpose
reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
Section 7. Other Indemnification and Insurance. The indemnification provided by
this Article shall (a) not be deemed exclusive or, or to preclude, any other
rights to which those seeking indemnification may at any time be entitled under
the corporation's Articles of Incorporation, any law, agreement or vote of
shareholders or disinterested Directors, or otherwise, or under any policy or
policies of insurance purchased and maintained by the corporation on behalf of
any indemnitee, both as to action in his Official Capacity and as to action in
any other capacity, (b) continue as to a person who has ceased to be in the
capacity by reason of which he was an Indemnitee with respect to matters arising
during the period he was in such capacity, and (c) insure to the benefit of the
heirs, executors and administrators of such a person.
Section 8. Notice. Any indemnification of or advance of expenses to an
Indemnitee in accordance with this Article shall be reported in writing to the
shareholders of the corporation with or before the notice or waiver of notice of
the next shareholders' meeting or with or before the next submission to
shareholders of a consent to action without a meeting and, in any case, within
the twelve-month period immediately following the date of the indemnification or
advance.
Section 9. Construction. The indemnification provided by this Article (a) are
for the benefit of, and may be enforced by, each Indemnitee of the corporation,
the same as if set forth in their entirety in a written instrument duly executed
and delivered by the Corporation and such Indemnitee and (b) constitute a
continuing offer to all present and future Indemnities. The corporation, by its
adoption of these By-Laws, (x) acknowledges and agrees that each Indemnitee of
the Corporation has relied upon and will continue to rely upon the provisions of
this Article in becoming, and serving in any of the capacities referred to in
Section 1 (a) of this Article, (y) waives reliance upon, and all notices of
acceptance of, such provisions by such Indemnities and (z) acknowledges and
agrees that no present or future Indemnitee shall be prejudiced in his right to
enforce the provisions of this Article in accordance with their terms by any act
or failure to act on the part of the corporation.
Section 10. Effect of Amendment. No amendment, modification or repeal of this
Article or any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnities to be indemnified by the
corporation, nor the obligation of the corporation to indemnify any such
Indemnities, under and in accordance with the provisions of the Article as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
The Undersigned certifies that the foregoing By-Laws have been adopted as the
first By Laws of Bellaire Surgicare, Inc., in accordance with the requirements
of the laws of the State of Texas.
DATED: 1995
David Blumfield W, D.P.M.
President
ATTEST:
Ben Po . M.D.
Secretary
<PAGE>
EXHIBIT 4.1 CERTIFICATE OF DESIGNATION,
POWERS, PREFERENCES AND RIGHTS OF
SERIES A REDEEMABLE PREFERRED STOCK
PAR VALUE $.001 PER SHARE
OF
SURGICARE, INC.
(Formerly Technical Coatings, Inc., incorporated July 20, 1984)
-------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-------------------
IT IS HEREBY CERTIFIED that:
1. The name of the company (hereinafter called the "Corporation") is
SurgiCare, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware.
2. The Amended and Restated Certificate of Incorporation of the
Corporation authorizes the issuance of Twenty Million (20,000,000) shares of
Preferred Stock, par value $.001 per share ("Preferred Stock"), and expressly
vests in the Board of Directors of the Corporation the authority provided
therein to issue any or all of said shares in one (1) or more series and by
resolution or resolutions to establish the designation and number and to fix the
relative rights and preferences of each series to be issued.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, and pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, has adopted the
resolutions set forth below creating the Series A Redeemable Preferred Stock:
RESOLVED, that One Million Six Hundred Fifty Thousand (1,650,000)
shares of the Twenty Million (20,000,000) authorized shares of Preferred Stock
of the Corporation shall be designated Series A Redeemable Preferred Stock,
$.001 par value per share, and shall possess the rights and preferences set
forth below:
Section 1. Designation and Amount. The shares of such series shall have
a par value of $.001 per share and shall be designated as Series A Redeemable
Preferred Stock (the "Series A Preferred Stock") and the number of shares
constituting the Series A Preferred Stock shall be One Million Six Hundred Fifty
Thousand (1,650,000). The Series A Preferred Stock shall be issued or offered at
a purchase price of Five Dollars ($5.00) per share (the "Original Issue Price").
Section 2. Rank. The Series A Preferred Stock shall rank: (i) junior to
any other class or series of capital stock of the Corporation hereafter created
specifically ranking by its terms senior to the Series A Preferred Stock (the
"Senior Securities"); (ii) prior to all of the Corporation's Common Stock, $.005
par value per share (the "Common Stock"); (iii) prior to any class or series of
capital stock of the Corporation hereafter created not specifically ranking by
its terms senior to or on parity with any Series A Preferred Stock of whatever
subdivision (collectively, with the Common Stock, "Junior Securities"); and (iv)
on parity with any class or series of capital stock of the Corporation hereafter
created specifically ranking by its terms on parity with the Series A Preferred
Stock ("Parity Securities") in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary (all such distributions being referred to collectively as
"Distributions").
Section 3. Dividends.
(a) Subject to the prior preferences and other rights of any Senior
Securities, the holders (the "Holders") of Series A Preferred Stock shall be
entitled to receive, out of funds legally available for that purpose, cash
dividends at the rate of $.48 per annum. Such dividends shall be cumulative from
the date of the issuance (the "Issue Date") of the Series A Preferred Stock and
shall be payable in arrears, when and as declared by the Board of Directors, on
the first day of each month thereafter (each such date being herein referred to
as a "Dividend Payment Date"), commencing on August 1, 1999. The monthly period
between consecutive Dividend Payment Dates shall hereinafter be referred to as a
"Dividend Period." Each such dividend shall be paid to the holders of record of
the Preferred Stock as their names appear on the share register of the
Corporation on the Record Date. As used above, the term "Record Date" means,
with respect to the dividend payable on the first day of a month, the fifteenth
day of the preceding month, or such other record date designated by the Board of
Directors of the Corporation with respect to the dividend payable on such
respective Dividend Payment Date. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without reference to any
Dividend Payment Date, to holders of record on such date, not exceeding 50 days
preceding the payment date thereof, as may be fixed by the Board of Directors.
(b) In the event that full cash dividends are not paid or made available to
the holders of all outstanding shares of Series A Preferred Stock and of any
Parity Securities, and funds available shall be insufficient to permit payment
in full in cash to all such holders of the preferential amounts to which they
are then entitled, the entire amount available for payment of cash dividends
shall be distributed among the holders of the Series A Preferred Stock and of
any Parity Securities ratably in proportion to the full amount to which they
would otherwise be respectively entitled, and any remainder not paid in cash to
the holders of the Series A Preferred Stock shall cumulate as provided in
Section 3(c) below.
(c) If, on any Dividend Payment Date, the holders of the Series A Preferred
Stock shall not have received the full dividends provided for in the other
provisions of this Section 3, then such dividends shall cumulate, whether or not
earned or declared, with additional dividends thereon for each succeeding full
Dividend Period during which such dividends shall remain unpaid. Unpaid
dividends for any period less than a full Dividend Period shall cumulate on a
day-to-day basis and shall be computed on the basis of a 360 day year.
(d) So long as any shares of Series A Preferred Stock shall be outstanding,
the Corporation shall not declare or pay on any Junior Securities any dividend
whatsoever, whether in cash, property or otherwise (other than dividends payable
in shares of the class or series upon which such dividends are declared or paid,
or payable in shares of Common Stock with respect to Junior Securities other
than Common Stock, together with cash in lieu of fractional shares), nor shall
the Corporation make any distribution on any Junior Securities, nor shall any
Junior Securities be purchased or redeemed by the Corporation or any subsidiary,
nor shall any monies be paid or made available for a sinking fund for the
purchase or redemption of any Junior Securities, unless all dividends to which
the holders of Series A Preferred Stock shall have been entitled for all
previous Dividend Periods shall have been paid or declared and a sum of money
sufficient for the payment thereof set apart.
(e) So long as any shares of Series A Preferred Stock shall be outstanding,
no dividend shall be paid on any share of Common Stock unless a dividend
(including the amount of any dividends paid pursuant to the above provisions of
this Section 3) is paid with respect to all outstanding shares of Series A
Preferred Stock in an amount for each such share of Series A Preferred Stock
equal to or greater than the aggregate amount of such dividends for all shares
of Common Stock into which each such share of Series A Preferred Stock could
then be converted.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the Holders of shares of Series A
Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Corporation's Amended and
Restated Certificate of Incorporation or any certificate of designation, and
prior in preference to any distribution to Junior Securities but in parity with
any distribution to Parity Securities, an amount per share equal to the sum of
the Original Issue Price, plus all accrued or declared and unpaid dividends on
such share, for each share of Series A Preferred Stock then held by such
Holders. If upon the occurrence of such event, and after payment in full of the
preferential amounts with respect to the Senior Securities, the assets and funds
available to be distributed among the Holders of the Series A Preferred Stock
and Parity Securities shall be insufficient to permit the payment to such
Holders of the full preferential amounts due to the Holders of the Series A
Preferred Stock and the Parity Securities, respectively, then the entire assets
and funds of the Corporation legally available for distribution shall be
distributed among the Holders of the Series A Preferred Stock and the Parity
Securities, pro rata, based on the respective liquidation amounts to which each
such series of stock is entitled by the Corporation's Amended and Restated
Certificate of Incorporation and any certificate(s) of designation relating
thereto. Neither the consolidation or merger of the Corporation into or with
another corporation or corporations, nor the sale of all or substantially all of
the assets of the Corporation to another corporation or corporations shall be
deemed a liquidation, dissolution or winding up of the affairs of the
Corporation within the meaning of this Section 4.
(b) Upon the completion of the distribution required by Section 4(a), if
assets remain in the Corporation, they shall be distributed to holders of Junior
Securities in accordance with the Corporation's Amended and Restated Certificate
of Incorporation including any duly adopted certificate(s) of designation.
Section 5. Conversion of Series A Preferred Stock. The record Holders of the
Series A Preferred Stock shall have conversion rights as follows:
(a) Right to Convert. Each record Holder of Series A Preferred Stock
shall be entitled to convert each outstanding share of Series A Preferred Stock
held by such Holder into one fully-paid and non-assessable share of Common
Stock. No payment or adjustment to the number of shares of Common Stock issuable
upon conversion of one share of Series A Preferred Stock shall be made on
account of any stock split, subdivision, reclassification, issue or sale of any
capital stock of the Corporation or other event.
(b) Mechanics of Conversion. In order to convert Series A Preferred
Stock into full shares of Common Stock, the Holder shall (i) deliver or fax a
copy of a fully executed notice of conversion ("Notice of Conversion") to the
Corporation at the office of the Corporation or to the Corporation's designated
transfer agent (the "Transfer Agent") for the Series A Preferred Stock stating
that the Holder elects to convert, which notice shall specify the date of
conversion, the number of shares of Series A Preferred Stock to be converted,
and a calculation of the number of shares of Common Stock issuable upon such
conversion (together with a copy of the front page of each certificate to be
converted) and (ii) surrender to a common courier for either overnight or two
(2) day delivery to the office of the Corporation or the Transfer Agent, the
original certificates representing the Series A Preferred Stock being converted
(the "Preferred Stock Certificates"), duly endorsed for transfer; provided,
however, that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
either the Preferred Stock Certificates are delivered to the Corporation or the
Transfer Agent as provided above, or the Holder notifies the Corporation or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subsection 5(b)(i) below).
(i) Lost or Stolen Certificates. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series A Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security reasonably satisfactory
to the Corporation, and upon surrender and cancellation of the Preferred Stock
Certificates, if mutilated, the Corporation shall execute and deliver new
Preferred Stock Certificates of like tenor and date. However, the Corporation
shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if the Holder contemporaneously requests the Corporation to convert
such Series A Preferred Stock into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The Corporation no later
than 6:00 p.m. (Houston, Texas time) on the third (3rd) business day after
receipt by the Corporation or its Transfer Agent of all necessary documentation
duly executed and in proper form required for conversion, including the original
Preferred Stock Certificates to be converted (or after provision for security or
indemnification in the case of lost, stolen or destroyed certificates, if
required), shall issue and surrender to a common courier for either overnight or
(if delivery is outside the United States) two (2) day delivery to the Holder as
shown on the stock records of the Corporation a certificate for the number of
shares of Common Stock to which the Holder shall be entitled as aforesaid.
(iii) Date of Conversion. The date on which conversion occurs (the
"Date of Conversion") shall be deemed to be the date such Notice of Conversion
is delivered or faxed to the Corporation or the Transfer Agent, as the case may
be, provided that the advance copy of the Notice of Conversion is delivered or
faxed to the Corporation on or prior to 6:00 p.m., Houston, Texas time, on the
Date of Conversion. The original Preferred Stock Certificates representing the
shares of Series A Preferred Stock to be converted shall be surrendered by
depositing such certificates with a common courier for either overnight or two
(2) day delivery, as soon as practicable following the Date of Conversion. The
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record Holder or
Holders of such shares of Common Stock on the Date of Conversion.
Section 6. Redemption by the Corporation.
(a) The Series A Preferred Stock shall not be redeemed in whole or in
part prior to the first anniversary of the Issue Date. On and after the first
anniversary of the Issue Date, the Series A Preferred Stock may be redeemed by
the Corporation, upon vote of not less than two-thirds of the directors
comprising the full Board of Directors of the Corporation, in cash at any time
in whole or (subject to the last sentence of Section 6(b) below), from time to
time in part, at the option of the Corporation, at a redemption price per share
equal to the sum of the Original Issue Price, plus all accrued or declared and
unpaid dividends on such share, for each share of Series A Preferred Stock then
held by such Holders.
(b) If less than all of the outstanding shares of Series A Preferred Stock
are to be redeemed, such shares shall be redeemed pro rata or by lot as
determined by the Board of Directors in its sole discretion.
(c) Notice of every proposed redemption of Series A Preferred Stock shall
be sent by or on behalf of the Corporation, by first class mail, postage
prepaid, to the Holders of record of the shares to be redeemed at their
respective addresses as they shall appear on the records of the Corporation, not
less than thirty (30) days nor more than sixty (60) days prior to the date fixed
for redemption (the "Redemption Date") (i) notifying such holders of the
election of the Corporation to redeem such shares and of the date of redemption,
(ii) stating the date on which the shares cease to be convertible, and the
Conversion Rate (iii) stating the place or places at which the shares called for
redemption shall, upon presentation and surrender of the certificates evidencing
such shares, be redeemed, and the Redemption Price therefor, and (iv) stating
the name and address of any Redemption Agent selected by the Corporation in
accordance with Section 6(d) below, and the name and address of the
Corporation's transfer agent for the Preferred Stock. The Corporation may act as
the transfer agent for the Series A Preferred Stock.
(d) Prior to the date on which there shall have been a public distribution
of the Preferred Stock, the Corporation may act as the redemption agent to
redeem the Preferred Stock. Thereafter the Corporation shall appoint as its
agent for such purpose a recognized stock transfer agent, which may be a bank or
trust company in good standing, organized under the laws of the United States of
America or any jurisdiction thereof, and may appoint any one or more additional
such agents. The Corporation or such bank or trust company are hereinafter
referred to as the "Redemption Agent." Following such appointment and prior to
any redemption, the Corporation shall deliver to the Redemption Agent
irrevocable written instructions authorizing the Redemption Agent, on behalf and
at the expense of the Corporation, to cause such notice of redemption to be duly
mailed as herein provided as soon as practicable after receipt of such
irrevocable instructions and in accordance with the above provisions. All funds
necessary for the redemption shall be deposited with the Redemption Agent in
trust at least two business days prior to the Redemption Date, for the pro rata
benefit of the holders of the shares so called for redemption, so as to be and
continue to be available therefor. Neither failure to mail any such notice to
one or more such holders nor any defect in any notice shall affect the
sufficiency of the proceedings for redemption as to other holders.
(e) If notice of redemption shall have been given as hereinbefore provided,
and the Corporation shall not default in the payment of the Redemption Price,
then each holder of shares called for redemption shall be entitled to all
preferences and relative and other rights accorded by this resolution until and
including the date prior to the Redemption Date. If the Corporation shall
default in making payment or delivery as aforesaid on the Redemption Date, then
each holder of the shares called for redemption shall be entitled to all
preferences and relative and other rights accorded by this resolution until and
including the date prior to the date (the "Final Redemption Date") when the
Corporation makes payment or delivery as aforesaid to the holders of the
Preferred Stock. From and after the Redemption Date or, if the Corporation shall
default in making payment or delivery as aforesaid, the Final Redemption Date,
the shares called for redemption shall no longer be deemed to be outstanding,
and all rights of the holders of such shares shall cease and terminate, except
the right of the holders of such shares, upon surrender of certificates
therefor, to receive amounts to be paid hereunder. The deposit of monies in
trust with the Redemption Agent shall be irrevocable except that the Corporation
shall be entitled to receive from the Redemption Agent the interest or other
earnings, if any, earned on any monies so deposited in trust, and the holders of
any shares redeemed shall have no claim to such interest or other earnings, and
any balance of monies so deposited by the Corporation and unclaimed by the
holders of the Preferred Stock entitled thereto at the expiration of two (2)
years from the Redemption Date (or the Final Redemption Date, as applicable)
shall be repaid, together with any interest or other earnings thereon, to the
Corporation, and after any such repayment, the holders of the shares entitled to
the funds so repaid to the Corporation shall look only to the Corporation for
such payment, without interest.
Section 7. Voting Rights. In addition to any special voting rights expressly
provided by the General Corporation Law of Delaware, and until each such share
is converted into a share of Common Stock, Holders of Series A Preferred Stock
shall be entitled to vote on matters to be voted on by the stockholders of the
Corporation, and shall be entitled to one vote for each such share held by them,
respectively, such votes to be counted together with all other shares of capital
stock having general voting powers and not separately as a class. In all cases
where the Holders of shares of Series A Preferred Stock have the right to vote
separately as a class, such Holders shall be entitled to one vote for each such
share held by them respectively.
Section 8. Protective Provision. So long as shares of Series A Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by the General Corporation Law of
Delaware) of the Holders of at least a majority of the then outstanding shares
of Series A Preferred Stock:
(a) alter or change the rights, preferences or privileges of the Series A
Preferred Stock or any Senior Securities so as to affect adversely the Series A
Preferred Stock; or
(b) increase the size of the authorized number of Series A Preferred Stock.
In the event Holders of at least a majority of the then outstanding shares of
Series A Preferred Stock agree to allow the Corporation to alter or change the
rights, preferences or privileges of the shares of Series A Preferred Stock,
pursuant to subsection (a) above, so as to affect adversely the Series A
Preferred Stock, then the Corporation will deliver notice of such approved
alteration or change to the Holders of the Series A Preferred Stock that did not
agree to such alteration or change (the "Dissenting Holders") and the Dissenting
Holders shall have the right for a period of thirty (30) days to convert
pursuant to the terms of this Certificate of Designation as they exist prior to
such alteration or change or continue to hold their shares of Series A Preferred
Stock subject to the approved alteration or change of the rights, preferences or
privileges of the Series A Preferred Stock.
Section 9. Notices. In the event of
(a) any taking by the Corporation of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation, or any transfer of all or substantially all of
the assets of the Corporation to any other corporation, limited liability
company, partnership (whether general or limited) or other person or firm a
majority of the equity interests in which shall not be owned by holders of
capital stock of the Corporation immediately thereafter, or
(c) any voluntary or involuntary dissolution, liquidation or winding up of
the Corporation, then and in each such event the Corporation shall mail or cause
to be mailed to each holder of Series A Preferred Stock a notice specifying (i)
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right and a description of such dividend, distribution
or right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective and (iii) the time, if any, that is
to be fixed, as to when the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares of Common Stock (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up. Such notice shall be mailed at
least thirty (30) days prior to the date specified in such notice on which such
action is to be taken. In addition to the foregoing, each holder of Series A
Preferred Stock shall be given, at the same times as holders of Common Stock,
all notices of corporate action or proposed corporate action given to holders of
Common Stock.
Section 10. Exclusion of Other Rights. Except as may otherwise be required
by law, the shares of Series A Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in this resolution (as such resolution may be amended
from time to time) and in the Corporation's Amended and Restated Certificate of
Incorporation. The shares of Series A Preferred Stock shall have no preemptive
or subscription rights.
Section 11. Headings. The headings of the various scetions and subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
Section 12. Severability of Provisions. If any right, preference or
limitation of the Series A Preferred Stock set forth in this resolution (as such
resolution may be amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other
rights, preferences and limitations set forth in this resolution (as so amended)
which can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
Section 13. Status of Reacquired Shares. Shares of Series A Preferred Stock
which have been issued and reacquired in any manner shall (upon compliance with
any applicable provisions of the laws of the State of Delaware) have the status
of authorized and unissued shares of Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
Section 14. Preference Rights. Nothing contained herein shall be construed
to prevent the Board of Directors of the Corporation from issuing one (1) or
more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series A Preferred
Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed on its behalf by its President this 25 day of July, 1999.
SURGICARE, INC.
By: Dr. David Blumfield
President
Attest:
Dr. Sherman Nagler
Secretary
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
<PAGE>
EXHIBIT 9.1 TECHNICAL COATINGS, INC.
VOTING TRUST AGREEMENT
1. Creation of Trust. The stockholders listed on Exhibit A hereto (the
"Stockholders") of Technical Coatings, Inc., a Delaware corporation (the
"Company"), hereby create the Voting Trust (the "Trust"), which shall be
governed in accordance with the terms of this trust agreement (the "Trust
Agreement"). The initial Trustee shall be David Blumfield, D.P.M.
2. Term of Trust. The Trust shall continue for a period of two (2)
years, unless it is sooner terminated by the decision of the Trustee or the
withdrawal of all Shares as hereinafter provided.
3. Deposit of Shares. The Stockholders hereby acknowledge and agree that
one or more certificates evidencing the total number of shares of the Company's
Common Stock ($.005 par value) set forth on the signature page(s) hereof (the
"Shares"), beneficially owned by the Stockholders as set forth on such signature
page(s) have been deposited and delivered to the Trustee, on behalf of such
Stockholders. All such certificates delivered to the Trustee as herein provided
shall be registered in the name of the Trustee or shall be endorsed or
accompanied by duly executed stock powers and such other assignments,
certificates of authority and consent to transfer instruments as may be
reasonably requested by counsel to the Trustee in order to transfer record
ownership of the Shares to the Trustee. Such Shares shall be registered in the
name of "Trustee, Voting Trust U/A dtd. July29 1999," and all certificates
representing the Shares shall contain a legend that such certificates are held
subject to the provisions of the Trust Agreement.
4. Issuance of Trust Certificates. In exchange for the certificates
evidencing the Shares delivered by each Stockholder hereunder, the Trustee shall
issue and deliver to each Stockholder a Trust certificate (the "Trust
Certificate") or certificates, substantially in the form attached hereto as
Exhibit A, representing, in the aggregate, the number of Shares deposited by
that Stockholder. Trust Certificates shall evidence the Stockholder's beneficial
interest in the Trust and the Shares deposited with the Trustee in accordance
herewith. The holder of a Trust Certificate shall have all rights of a holder of
the Shares represented by the Trust Certificate except as otherwise provided
herein. The Trust Certificates shall be non-transferable except to the extent
transfer is required by operation of law or order of any court having
jurisdiction thereof.
5. Powers and Duties of the Trustee.
(a) While this Trust Agreement is in effect and until the Shares are
withdrawn from the Trust as hereinafter provided, the Trustee, in his
unrestricted discretion, in person, by proxy or by written consent, shall have
the sole and unqualified right and power to vote the Shares for the election of
any person or persons as directors of the Company, and to act in connection with
the voting of the Shares in the same manner and to the same extent as if he was
the absolute owner thereof in his own right. On all other proposals or matters
which are required to be or which shall be submitted for a vote of the Company's
Common Stock, the Trustee shall be entitled to vote the Shares, for or against
such proposal or matter, or to refrain from voting, as he in his sole discretion
shall determine.
(b) The Trustee may request the Company to send proxy statements,
quarterly and annual reports and other reports and information directly to the
Stockholders at their addresses as shown by the records of the Trustee who shall
furnish a list of such names and addresses to the Company.
6. Term of Trustee; Election of Successor Trustee. The initial term of
office of the Trustee shall continue until the second anniversary of the date of
this Trust Agreement and for successive one-year terms thereafter.
7. Vacancies. The Trustee may resign by delivering a written resignation to
the Company, which shall forward a copy thereof to the Stockholders, and
thereupon a successor Trustee shall be designated in writing by Stockholders
holding Voting Trust Certificates representing not less than 66 2/3% of the
total number of Shares deposited hereunder. Upon a vacancy created by the death
or legal incompetence of a Trustee, such vacancy shall be filled as set out
above.
8. Withdrawal.
(a) No Stockholder may withdraw from the Trust any of the Shares
transferred to the Trustee hereunder unless Shares are withdrawn, pro rata, in
such amounts, and as authorized by the prior written consent of Stockholders
holding Voting Trust Certificates representing not less than 66 2/3% of the
total number of Shares then subject to this Trust Agreement. Any such authorized
withdrawal must be made by giving prior written notice thereof to the Trustee.
(b) Upon proper authorization of withdrawal in accordance with Section
8(a) hereof, the Trustee shall cause certificates representing the Shares so
withdrawn to be delivered to the withdrawing Stockholders in accordance with
their instructions approved in Section 8(a), and the withdrawing Stockholders
shall deliver to the Trustee the Trust Certificates duly endorsed to the Trustee
covering such Shares. Except as provided in Section 8(c) any Shares so withdrawn
shall no longer be subject to the provisions of the Trust Agreement. Upon
withdrawal, the Trustee shall not be obligated to deliver certificates for the
withdrawn Shares until such time as the withdrawing Stockholder has paid to the
Trustee his or her proportionate share of the expenses of the Trust which have
accrued through the date of withdrawal as set out in Section 13 including any
expenses which may have been paid by advances from other Stockholders, and all
expenses relating to such withdrawal, which shall be paid by the withdrawing
Stockholder.
(c) After notice of withdrawal of Shares hereunder is received by the
Trustee, the Shares covered thereby shall continue to be subject to the Trust
Agreement until the Trustee has received the Trust Certificates representing
such Shares as set out above. Until the date of such receipt, or thereafter if
the Stockholder owning such withdrawn Shares is unable to vote them because the
record date for such vote has passed, the Trustee will vote such Shares in
accordance with the written instructions of such Stockholder if such
instructions are received at lease five business days prior to the date of any
annual or special meeting of stockholders of the Company. In the absence of such
written instructions the Trustee shall have authority to vote these Shares as
they may determine in accordance with the provisions of the Trust Agreement.
9. Dividends and Distributions.
(a) Cash Dividends. The Trustee shall give the Company or its dividend
disbursing agent a list of the names and addresses of the then registered
holders of Trust Certificates, which list shall set forth the number of Shares
represented by the Trust Certificates registered in the name of each holder on
the record date for any cash dividends, and the Trustee shall request the
Company to make distribution of cash dividends, on behalf of the Trustee,
directly to each such registered holder of the Trust Certificates or to a bank
designated by the Trustee or by such holder. In the event that any cash
dividends are paid directly to the Trustee, the Trustee shall promptly pay over
such dividends to the then registered holders of Trust Certificates according to
their respective interests at the record date.
(b) Stock Dividends. If any dividend or distribution in respect of the
Shares held by the Trustee is paid, in whole or in part, in shares of Common
Stock of the Company or other voting shares of the Company, the Trustee shall
hold the certificates for such shares which are received on account of such
dividend and such shares shall thereafter for all purposes be treated as part of
the Shares. The holder of each Trust Certificate issued under this Trust
Agreement on the date for the determination of those stockholders of the Company
entitled to receive such dividend shall be entitled to receive a Trust
Certificate evidencing such holder's pro rata share of the number of shares
received as such dividend.
(c) Dividends in Other Assets. If any dividend or distribution in
respect of the Shares held by the Trustee is paid, in whole or in part, in
assets of the Company, the Trustee shall give the Company a list of the names
and addresses of the then registered holders of Trust Certificates, which list
shall set forth the number of Shares represented by the Trust Certificates
registered in the name of each holder on the record date, and the Trustee shall
request the Company to make such distribution, on behalf of the Trustee,
directly to each registered holder of the Trust Certificates. In the event the
distributions are paid directly to the Trustee, the Trustee shall promptly pay
over such distributions to the then registered holders of Trust Certificates
according to their respective interests at the record date.
(d) Mergers, etc. If, during the term hereof, the Company shall merge
or consolidate into or with another corporation or corporations or other
business entity, or if there shall be reorganization or recapitalization of the
Company, voting securities representing any such corporation or other business
entity received by the Trustee in exchange for or with respect to the Shares as
a result of such merger, consolidation, recapitalization or reorganization shall
be held by him in accordance with the terms hereof and shall thereafter for all
purposes be treated as part of the Shares. The Trustee shall issue and deliver
Trust Certificates representing such voting securities to the then registered
holders of Trust Certificates as their interests shall appear, against surrender
by such holders of any Trust Certificates registered in their name which
represented Shares which were surrendered by the Trustee pursuant to the terms
of such merger, consolidation, recapitalization or reorganization. Any other
consideration received by the Trustee in such a transaction shall be paid by the
Trustee to the then registered holders of Trust Certificates in accordance with
their respective interests at the applicable record date.
(e) Dissolution. If, during the term hereof, the Company shall be
dissolved or liquidated in such a manner as to entitle the holders of Capital
Stock to liquidating dividends, the Trustee shall request all such dividends to
be distributed directly by the Company to the holders of Trust Certificates in
proportion to their respective beneficial ownership in the Shares upon which
dividends are paid. In the event that such dividends are paid directly to the
Trustee, the Trustee shall promptly pay over such dividends to the then
registered holders of Trust Certificates according to their respective interests
at the record date.
(f) Rights Offerings. If any capital stock or other securities of the
Company are offered for subscription or otherwise to the holders of Common Stock
of the Company, the Trustee, promptly upon receipt of notice of such offer,
shall mail a copy thereof to each of the holders of the Trust Certificates. Upon
receipt by the Trustee, at least five business days prior to the last day fixed
by the Company for subscription and payment, of a request from any such
registered holder of Trust Certificates to subscribe on behalf of such holder,
accompanied by the sum of money required to pay for such stock or securities,
the Trustee shall make such subscription and payment, and upon receiving from
the Company the certificates for shares or securities so subscribed for, shall
issue to such holder a Trust Certificate in respect thereof if the same be
shares of Common Stock, but if the same be securities other than Common Stock,
the Trustee shall mail or deliver such securities to the holder of the Trust
Certificate on whose behalf the subscription was made, or may request the
Company to make delivery directly to the holder of the Trust Certificate
entitled thereto.
10. Transfer and Replacement of Voting Trust Certificates.
(a) The Trustee shall keep a record of all Trust Certificates issued by
the Trust upon the original issuance thereof in exchange for the Shares
deposited hereunder, or in exchange for any additional shares of Common Stock
deposited with the Trustee as provided herein, or upon the transfer of Trust
Certificates, or as a result of the release of Shares to the Stockholders. The
record of Trust Certificates shall be kept, and Trust Certificates may be
transferred, subject to applicable legal requirements including those under the
Securities Act of 1933, at the office of the Trustee or counsel for the Trustee.
The records so kept by the Trustee shall conform, as nearly as may be
practicable, to the form of stock ledger or statutory stock books which would be
used by a corporation or a transfer agent under similar circumstances, and shall
indicate, among other things, the names and addresses of all persons who are
holders of Trust Certificates, the number of Shares represented by the Trust
Certificates held by each of them and the dates when each of them became the
owners thereof.
(b) The Trust Certificates are to be non-transferable. If,
nevertheless, a Trust Certificate is transferred by operation of law or pursuant
to order of any court having jurisdiction thereof, transfer of such Trust
Certificate shall be accomplished by delivery of the Trust Certificates to the
Trustee, duly endorsed or accompanied by duly executed powers and by such other
assignments, certificates of authority and consent to transfer instruments as
may be reasonably requested by counsel to the Trustee in order to effect a
transfer of the Trust Certificates. Upon effecting any transfer, all Trust
Certificates so surrendered to the Trustee shall be canceled forthwith. The
Trustee may, in his sole discretion, treat the registered holder of any Trust
Certificates as the owner thereof for all purposes whatsoever, and shall not be
affected by any notice to the contrary. Upon the expiration or termination of
the Trust Agreement, the Shares will not be delivered to the Stockholders
without the surrender of the Trust Certificates representing such Shares,
properly endorsed for surrender. Each transferee of a Trust Certificate issued
hereunder shall, by his acceptance thereof, assent to and become a party to the
Trust Agreement and shall be deemed to be a Stockholder for purposes of the
Trust Agreement, and such acceptance shall have the same force and effect as if
such transferee had in fact executed the Trust Agreement.
(c) If any Trust Certificate shall become mutilated, lost, stolen or
destroyed, the Trustee may provide for the issuance of a new Trust Certificate
in lieu of such lost, stolen or destroyed Trust Certificate or in exchange for
such mutilated Trust Certificate, under such conditions with respect to
indemnity and otherwise as he in his sole discretion may prescribe.
11. Filings with SEC. The Trustee shall make all required filings with the
Securities and Exchange Commission, including filings on Schedule 13D and
amendments thereto under the Securities Exchange Act of 1934. Each Stockholder
and Trustee hereby agrees that the Trustee are authorized to make such filings
on his or her behalf, and that any such document (including Schedule 13D and
amendments thereto) may be executed and filed by the Trustee on behalf of all
Stockholders. The Trustee shall have primary responsibility to see that such
filings are made.
12. Expenses. The Trustee shall receive no compensation or commissions for
acting as Trustee. The Trustee shall have authority to pay necessary expenses in
connection with the business of the Trust and the expenses of the termination of
the Trust when it terminates, and may retain counsel and other professionals.
The Trustee shall be entitled to reimbursement for any reasonable out-of-pocket
expenses incurred by him in connection with the conduct of the business of the
Trust, upon presentation of receipts or other proper documentation to the
Trustee. The Trustee shall from time to time assess Stockholders for funds to
pay these expenses, in proportion to the number of shares contributed by each.
13. Liability.
(a) The Trustee shall not be liable for the consequence of any vote
cast or consent given and shall not incur any liability to any Stockholder,
except for willful misconduct evidencing bad faith or gross negligence. The
Stockholders agree to indemnify the Trustee hold him harmless from any and all
liabilities which he may incur as a result of carrying on the business of the
Trust and the termination thereof, except for willful misconduct evidencing bad
faith or gross negligence.
(b) No contract or other transaction between the Company and the
Trustee or any person, firm or corporation in which the Trustee may be
interested or with which he may be affiliated or in any way related, shall be
rendered invalid by the fact of their being a party thereto, or being interested
in or affiliated with or related to such person, firm or corporation, and the
Trustee, and any such person, firm or corporation are hereby relieved from any
liability by reason of the making of any Contract or participating in any
transaction wherein the Trustee or any such person, firm or corporation, may be
interested.
14. Amendments. The Trust Agreement may be amended at any time by the
written consent of Stockholders holding Voting Trust Certificates representing
at least 66 2/3% of the total number of Shares. The Trustee shall notify all
Stockholders in writing of any amendment.
15. Notice to Company. An executed or conformed counterpart of the Trust
Agreement, and all amendments thereto if any, shall be filed with the registered
office of the Company.
16. Termination. Upon termination of the Trust hereunder, either because of
the expiration of the trust term or the withdrawal of all Shares by the
Stockholders or the decision of the Trustee, the Trustee shall take all such
action as may be required to cause such Shares to be re-registered in the names
of the Stockholders who contributed them or transferred in accordance with their
written instructions.
17. Miscellaneous Provisions. Notice hereunder shall be in writing and
shall be addressed to any party hereunder at the address listed on the records
of the Trustee or such other address as a party may have notified the other
parties hereto in writing, or delivered to such person personally. Notices by
the Stockholders to the Trustee shall be sent to them at 6699 Chimney Rock,
Houston, Texas 77081, or to such other address as any party may notify the
others in accordance with the provisions hereof. All notices hereunder shall be
sent by certified or registered mail return receipt requested or delivered by
telex, telecopy, fax, telegram or similar method of communication. Such notice
shall be effective upon receipt. The Trust Agreement may not be terminated or
amended orally but only by an agreement in writing signed by the parties hereto,
except as set out above in Sections 14 and 16. The Trust Agreement shall be
binding upon the successors, assigns, executors and administrators of the
undersigned. It may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute a single
instrument. It shall not be effective as to any party until it has been executed
by all parties either individually or pursuant to a power of attorney.
18. Governing Law. This Trust shall be governed by and construed in
accordance with the laws of the State of Delaware.
Dated: As of July 28, 1999
Trustee:
DAVID BLUMFIELD D.P.M.
STOCKHOLDERS: No. of Shares:
_____________________________ 74,074
David Blumfield, D.P.M.
___________________________________ 74,074
Robert Parker D.P.M.
___________________________________ 74,074
Michael Mineo, D.P.M.
___________________________________ 74,074
Gregory Mangum, D.P.M.
___________________________________ 74,074
Sherman Nagler, D.P.M.
___________________________________ 74,074
William Bradbury, D.P.M.
___________________________________ 74,074
Jeffrey Ross, D.P.M.
___________________________________ 74,074
Brian Zale, D.P.M.
___________________________________ 74,074
Bruce Miller, D.P.M.
___________________________________ 74,074
Jeffrey Penso, D.P.M.
___________________________________ 37,037
Shirley Browne, M.D.
___________________________________ 74,074
Long Nguyen, M.D.
___________________________________ 74,074
Son Nguyen, M.D.
___________________________________ 74,074
Larry Likover, M.D.
<PAGE>
EXHIBIT A
__________ Shares
Technical Coatings, Inc.
Non-Transferable Voting Trust Certificate
This certifies that __________________________________________________
________________________________________________________________________________
is the beneficial owner of ________________ shares of __________________________
Common Stock ($.005 par value) of Technical Coatings, a Delaware corporation
(the Company"), which shares have been deposited with the Trustee of the Voting
Trust dated July 28, 1999 (the "Voting Trust"). Upon the surrender of this
certificate, when permitted by and in accordance with the terms of the Voting
Trust, the registered holder hereof will be entitled to receive a certificate
representing the same number of shares of the Company's Common Stock.
This certificate is issued subject to, and the holder by accepting the
same consents to, all the terms of the Voting Trust Agreement, a copy of which
will be made available to the holder hereof upon application to the Trustee at
the office of the Trustee,
Voting Trust interests represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or any state securities
law, and may not be assigned, sold or transferred in violation of such Act or
any such law.
Dated: _____________, 1999.
-----------------------------------------
Trustee
SURGICARE, INC.
Date: August ___, 1999
By:________________________
Name:______________________
Title:_______________________
<PAGE>
EXHIBIT 10.1
SURGERY CENTERS OF AMERICA, INC.
AFFILIATION AGREEMENT
This Affiliation Agreement (the "Agreement") is made effective the 1st
day of July, 1999, by and between SURGERY CENTERS OF AMERICA, INC., an Oklahoma
corporation ("SCOA") and BELLAIRE SURGICARE, INC., a Texas corporation
("Owner"), a wholly owned subsidiary of Surgicare, Inc, a Delaware corporation.
Recitals
A. Owner owns and operates a multi-speciality ambulatory surgery center
in Houston, Texas (the "Center"), and the Owner desires to retain certain
services of SCOA to assist Owner in conducting the business and services of the
Center.
B. SCOA desires to provide such services upon the terms and conditions
set forth herein.
NOW THEREFORE, in consideration of the foregoing mutual agreements and
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
DEFINITIONS
1.1 Certain Defined Terms - As used in this Agreement, the following
terms shall have the following meaning unless otherwise provided.
"SCOA" - Surgery Centers of America, Inc. an Oklahoma
corporation.
"Owner" - Bellaire Surgicare, Inc., a Texas corporation.
"Center" - a multi-specialty ambulatory surgery center to be
located at 6699 Chimney Rock, Houston, Harris County, Texas
77081.
GENERAL
2.1 Appointment
The Owner hereby retains SCOA and SCOA hereby accepts such retention,
to provide certain management-related materials and consulting services to
Owner, to assist Owner in the course of the conduct of the business of the
Center, all as hereinafter set forth.
2.2 Term
The term of this Agreement shall be for of twelve (12) months from the
date set forth on the first page hereof, and continue until termination by
mutual consent of SCOA and the Owner, or until otherwise terminated as
hereinafter set forth.
2.3 Termination
Notwithstanding the provisions of the foregoing Section 2.2,
termination of this Agreement may occur pursuant to the following
provisions:
2.3.1 Termination by Party Without Cause
This Agreement may be terminated by either party without cause at any
time after twelve months upon thirty (30) day prior written notice from the
terminating party to the non-terminating party, such termination to take
effect upon the expiration of such notice.
2.3.2 Termination for Cause
Either party to this Agreement may immediately terminate this
Agreement for cause in the event of a material breach of the Agreement by
the non-terminating party, which breach is not cured prior to expiration of
a ten (30) day written notice from the terminating party to the
non-terminating party, identifying the alleged breach. Termination will
become effective upon expiration of such notice, in the absence of cure by
the non-terminating party. Provided, however, if such breach cannot be
reasonably cured within such thirty (30) day period, SCOA may in good faith
commence performance to cure the breach within such thirty (30) day period
and shall diligently proceed therewith to completion.
2.3.3 Termination by Bankruptcy
This Agreement shall expire and automatically terminate if either
party shall file or have filed against it a petition in bankruptcy or any
petition seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or relief under the present or any future federal
bankruptcy act or any other present or future applicable federal, state, or
other statute or law, or seeking or consenting to acquiescing in the
appointment of any trustee, receiver, or liquidation of all or any
substantial part of its properties and such filing remains unresolved or is
not dismissed within ninety (90) days.
SERVICES AND MATERIALS TO BE PROVIDED BY SCOA
3.1 General Services
In that Owner intends to operate Center in substantial conformity with
the policies and procedures utilized by SCOA in the operation of SCOA's own
ambulatory surgery centers, SCOA agrees to designate Center as a
SCOA-affiliated center, and to include Center and Owner in any and all
managed care contracts entered into by SCOA with third party payors, either
by (a) including Owner's Center in the appendix listing centers included in
the contracts negotiated with third party payors, or (b) naming Owner's
Center as a SCOA affiliate in the text of the contract itself. Further SCOA
agrees to name Owner's Center as an affiliate center in any and all
agreements it has, or will enter into, with any group purchasing
organizations. These designations of affiliation will remain in effect
throughout the term of this Agreement.
3.2 Clinical Policies and Procedures
SCOA agrees to provide Owner with copies of all of its written
clinical policies and procedures manuals, either in text form or via
editable computer files, at Owner's option, and further SCOA agrees to
provide Owner with any and all updates revisions, etc., to such policies
and procedures in like form throughout the term of this Agreement.
3.3 Business Policies and Procedures
SCOA agrees to provide Owner with copies of all of its written
business clinical policies and procedures manuals, either in text form or
via editable computer files, at Owner's option, and further SCOA agrees to
provide Owner with any and all updates revisions, etc., to such policies
and procedures in like form throughout the term of this Agreement.
3.4. Retention of Title
It is expressly understood and agreed that all systems, methods,
manuals, procedures and controls provided by SCOA will be kept for the
exclusive use by Owner for its Center. All right title and interest in
these systems, methods, manuals, procedures and controls provided by SCOA
shall remain the property of SCOA. SCOA agrees to leave systems, methods,
manuals, procedures and controls in place for at least one hundred and
twenty (120) days subsequent to the termination of this Agreement. Owner
shall ultimately return to SCOA all such material including all manuals and
copyrighted materials.
FEES FOR SERVICES
4.1 Fees for Materials and Services
In consideration for all materials and services provided by SCOA to
Owner for its Center hereunder, Owner shall pay to SCOA a fee equal to two
percent (2%) of the "net monthly collected revenues" from the Center's cash
collections, with said monthly fees to be paid on the 15th day of each
month following the month earned. For purposes of this section, "net
monthly collected revenues" shall be defined as actual gross collections of
Center deposited in its bank, received from its gross charges placed on the
books, adjusted for all patient allowances, discounts, fixed fee write -
downs and bad debts.
4.2 Proration
In the event that this Agreement is effective on a day other than the
first day of the calendar month, the monthly fee payable hereunder shall be
prorated for such month.
4.3 Termination Payment
In the event of termination of this Agreement, the final payment due
SCOA hereunder shall be the payment due on the 15th day of the month next
subsequent to completion of the last full calendar month of the term of
this Agreement.
INDEMNIFICATION
5.1 Indemnification
In that Owner is responsible for management of its Center and SCOA is
not engaged, nor is it responsible, hereunder to provide actual management
services to the Center, Owner agrees to hold SCOA harmless, and fully
indemnify SCOA, from all loss or harm arising out of or related to the,
operations of the Center, from and after the effective date of this
Agreement; however, this grant of indemnity shall not extend to any claim
of Center which results from the failure of SCOA to provide materials under
Sections 3.2 and 3.3 hereof which are in compliance with all laws
applicable to the procedures and policies set forth in such materials.
MISCELLANEOUS
6.1 Disclosure of Relationships
SCOA agrees to fully inform the Owner if at any time during the term
of this Agreement, SCOA, its Officers or Directors, have an ownership
interest in any entity which provides goods or services to the Center.
6.2 Related Party Transactions
Subject to the disclosure requirements of Section 6.1, this Agreement
shall not prohibit SCOA from dealing or contracting with related or
affiliated entities in providing goods and/or services to the Center,
provided, such goods and/or services are offered at the prevailing market
rates to the Center.
6.3 Notices
All notices, requests, demands or other communications pursuant to
this Agreement or contemplated hereby shall be in writing and shall be
deemed to have been given when personally delivered or if mailed, by
registered or certified US Mail, postage prepaid, return receipt requested
upon such mailing to the parties at the addresses set forth below. Any
party may change the address to which such notices are given by giving
notice in the manner provided herein:
Notice to the Owner shall be addressed as follows:
Bellaire Surgicare, Inc.
6699 Chimney Rock Road
Houston, Texas 770801
Attn: David Blumfield, DPM, President
Notice to SCOA shall be addressed as follows:
Surgery Centers of America, Inc.
1601 S. State Street
Edmond, OK 73013
Attn: Dr. Joe H. Huffmyer, President
6.4 Entire Agreement
This Agreement represents the entire agreement between the parties
hereto and all prior understandings and agreements are hereby merged into
this Agreement. This Agreement may not be modified except by an instrument
in writing signed by the parties hereto.
6.5 Governing Law
This Agreement and all actions taken hereunder shall be governed by
and construed in accordance with the laws of the State of Texas. This
Agreement is performable in Harris County, Texas.
6.6. Binding Effect
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, representatives, successors and
permitted assigns.
6.7 Severability
If any of the provisions of this Agreement shall be construed to be
illegal or invalid, such construction shall not affect the legality or
validity of any of the other provisions hereof and the illegal or invalid
provisions hereof shall be deemed stricken and deleted herefrom to the same
extent as if never herein but all provisions hereof shall remain in full
force and effect.
6.8 Assignability
This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.
6.9 Attorneys' Fees
The prevailing party in an action arising under this Agreement or as a
result of its termination may recover reasonable attorneys' fees and costs
from the non-prevailing party, to include arbitration.
EXECUTED the 29 day of July, 1999, but effective the 1st day of July,
1999.
"SCOA" SURGERY CENTERS OF AMERICA, INC.
ATTEST:
___________________________ By: ______________________________
Assistant Secretary JOE H. HUFFMYER, President
"OWNER" BELLAIRE SURGICARE, INC.
ATTEST:
By: _______________________ By: ______________________________
Secretary David Blumfield, DPM, President
"OWNER" SURGICARE, INC.
ATTEST:
By: _______________________ By: ______________________________
Secretary Michael Mineo, DPM, Vice-President
<PAGE>
EXHIBIT 21
SUBSIDIARES OF SURGICARE, INC.
As of the date of this filing SurgiCare, Inc. had one wholly owned subsidary;
Bellaire Surgicare, Inc.
6699 Chimney Rock #200
Houston, TX 77081
<PAGE>
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