EXHIBIT 10.1
AGREEMENT
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This agreement (the "Agreement") is dated as of June 23, 2004 by and between
American International Industries, Inc., a Nevada corporation ("AII"), and
SurgiCare, Inc., a Delaware corporation ("SurgiCare").
WHEREAS, SurgiCare has entered into an Amended and Restated Stock Subscription
Agreement dated as of February 9, 2004 (as from time to time in effect, the
"Stock Subscription Agreement") with Xxxxxxxx Partners IV, L.P. ("Xxxxxxxx"),
pursuant to which Xxxxxxxx will make an equity investment in SurgiCare (the
"Financing");
WHEREAS, it is a condition to the closing of the Financing that SurgiCare file
an amended and restated certificate of incorporation (the "Amended Charter")
which, among other things, will effect a reclassification and a reverse split of
SurgiCare's common stock, $0.005 par value per share ("SurgiCare Common"), into
Class A Common Stock, $0.001 par value per share ("Class A Common");
WHEREAS, AII owns 900,000 shares of the Series AA Redeemable Preferred Stock,
$0.001 par value per share, of SurgiCare (the "Series AA Shares"), constituting
all of the issued and outstanding Series AA Shares;
WHEREAS, the Series AA Shares have a liquidation preference of $5.00 per share
or $4,500,000 in the aggregate;
WHEREAS, SurgiCare wishes to eliminate the preference of the Series AA Shares;
WHEREAS, in consideration of the elimination of such preference, AII and
SurgiCare have agreed to amend the terms of the Series AA Shares to provide,
among other things, for an automatic conversion of the Series AA Shares into
8,750,000 shares of SurgiCare Common (such shares, collectively with any shares
of Class A Common into which such shares are reclassified, the "Common Shares")
upon the later to occur of (x) approval of the listing of the Common Shares by
the American Stock Exchange LLC, NASDAQ or another nationally-recognized stock
exchange or trading system or (y) the consummation of the transactions
contemplated by Section 6.1 hereof (the date on which such conversion occurs
being referred to herein as the "Automatic Conversion Date"); and
WHEREAS, also in consideration of the elimination of such $4,500,000 preference,
AII and SurgiCare also have agreed to provide for certain arrangements with
respect to certain parcels of real property owned by SurgiCare set forth in
Section 6.1 hereof;
NOW, THEREFORE, for good and valuable consideration, the receipt which is hereby
acknowledged and accepted, the parties agree as follows:
FILING OF AMENDED CERTIFICATE OF DESIGNATION. As promptly as possible following
the execution and delivery of this Agreement, SurgiCare will file an amendment
to the Certificate of Designation of the Series AA Shares in substantially the
form attached hereto as Exhibit A. AII hereby consents to such filing and
amendment.
REPRESENTATIONS AND WARRANTIES OF AII. AII represents and warrants to
SurgiCare that: AII has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by AII of this Agreement and the consummation
by AII of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of AII. AII has duly executed and
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delivered this Agreement, and this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
As of the date hereof, AII has good and marketable title to, and is the sole
legal, record and beneficial owner of, the Series AA Shares and all claims in
respect thereof.
AII has been advised that, upon issuance, the Common Shares will not have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws and, therefore, such Common Shares may not be
resold unless they are registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration requirements is
available. AII is aware that SurgiCare is under no obligation to effect any such
registration with respect to such Common Shares or to file for or comply with
any exemption from registration. AII is receiving any Common Shares to be
acquired by AII upon conversion of the Series AA Shares for its own account and
not with a view to, or for resale in connection with, the distribution thereof
in violation of the Securities Act. AII has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the transactions contemplated by this Agreement, is able to incur a
complete loss of an investment, if any, in the securities of SurgiCare and is
able to bear the economic risk of such investment for an indefinite period of
time. AII is an accredited investor as that term is defined in Regulation D
under the Securities Act.
REPRESENTATIONS AND WARRANTIES OF SURGICARE. SurgiCare has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
SurgiCare of this Agreement and the consummation by SurgiCare of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of SurgiCare. SurgiCare has duly executed and
delivered this Agreement, and this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
LOCK-UP. Without the prior written consent of SurgiCare, AII will not, until the
earlier of December 31, 2004 or the Automatic Conversion Date, (a) directly or
indirectly, sell, transfer, assign, pledge, hypothecate, tender, encumber,
engage in a Constructive Sale (as defined below) or otherwise dispose of in any
manner any of the Series AA Shares, or any interest therein, or offer, consent
or agree to do any of the foregoing, (b) directly or indirectly, limit or
restrict its right to vote in any manner any of the Series AA Shares (other than
as set forth in this Agreement), including without limitation, by the grant of
any proxy (revocable or irrevocable), power of attorney or other authorization
in or with respect to any Series AA Shares, by depositing any Series AA Shares
into a voting trust, or by entering into a voting agreement, or consent or agree
to do any of the foregoing, or (c) take any action which would have the effect
of preventing or disabling AII from performing its obligations under this
Agreement. For purposes of this Agreement, "Constructive Sale" means a short
sale with respect to such security, entering into or acquiring an offsetting
derivative contract with respect to such security, entering into or acquiring a
futures or forward contract to deliver such security or entering into any
transaction that has substantially the same effect as any of the foregoing. AII
agrees and consents to (i) the entry of stop transfer instructions with
SurgiCare's transfer agent and register against the transfer of AII's Series AA
Shares except in compliance with the foregoing restrictions and (ii) the
inclusion of appropriate legends on the certificates representing the Series AA
Shares.
PROXIES. Contemporaneously with the execution of this Agreement, AII shall enter
into (a) an irrevocable proxy attached hereto as Exhibit B for all Series AA
Shares it owns expiring December 31, 2004 and (b) an irrevocable proxy attached
hereto as Exhibit C for all the Common Shares expiring with respect to any such
Common Shares upon the earlier of (x) the sale thereof by AII in an open market
transaction to an unaffiliated third party, (y) 60 days after the record date
for the SurgiCare meeting of stockholders to be held in connection with approval
of the Financing or (z) December 31, 2004.
REAL PROPERTY TRANSACTIONS. The parties acknowledge that: (a) SurgiCare owns the
following parcels of real property: a 735.66 acre tract of vacant land located
on the east side of a shell paved road leading to the Anahuac National Wildlife
Refuge, approximately two miles Xxxxx xx XX 0000, xx Xxxxxxxx Xxxxxx, Xxxxx; a
22.38 acre tract of land located on the east side of US 59 at the Old
Humble/Atascocita Road exit, and an adjacent 14.25 acre tract of land on the
west side of Homestead Road in Houston, Xxxxxx County, Texas; a 22,248
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square foot tract of land located on the northeast corner of Xxxxxx Road and
Riverside Drive, in Houston, Xxxxxx County, Texas; four tracts of land totaling
26.856 acres located on the southeast, northwest, and northeast corners of
Airport Boulevard and Xxxx Bayou and east side of 0xx Xxxxxx xxxxx xx Xxxxxxx
Xxxxxxxxx in Houston, Xxxxxx County, Texas; and a 12.216 net acre tract of land
located on the southwest corner of Airport Boulevard and Xxxx Bayou, Houston,
Xxxxxx County, Texas (collectively, the "Owned Properties"); (b) SurgiCare has
entered into contracts (the "Contracts") to sell certain of the Owned Properties
(the "Contracted Parcels") to certain third parties (the "Purchasers"); and (c)
SurgiCare and certain of its officers and affiliates are currently subject to or
threatened with Claims (as defined below) with respect to the Contracted Parcels
(the "Pending Claims"). SurgiCare agrees to use its reasonable best efforts to
cause the American Stock Exchange LLC, NASDAQ or another nationally-recognized
stock exchange or trading system, to approve the listing of the Common Shares,
subject to notice of issuance, on or before July 30, 2004. As soon as reasonably
practicable after SurgiCare gives notice to AII that the listing of the Common
Shares has been approved, subject to notice of issuance, by the American Stock
Exchange LLC, NASDAQ or another nationally-recognized stock exchange or trading
system (but in any event on or prior to the later of (i) July 16, 2004 or (ii)
two business days after the provision of such notice)), (x) AII will arrange for
the assumption, refinancing or purchase of the mortgages encumbering the Owned
Properties, (y) AII will assume SurgiCare's obligations under the Contracts, and
(z) AII will pay SurgiCare an amount in cash equal to $250,000; PROVIDED,
HOWEVER, if the consummation of the transactions contemplated by this sentence
is delayed as a result of a failure by SurgiCare to reasonably cooperate with
AII in connection with such transactions, AII will not be deemed in breach of
its obligations under this sentence during the period of such failure to
cooperate. Upon and simultaneous with compliance in full by AII with its
obligations set forth in the preceding sentence, (i) SurgiCare will transfer the
Owned Properties to AII and (ii) AII will have no further obligations regarding
(a) the land resale guarantee set forth in Section 2.2 of the Agreement dated
December 11, 2002 between AII, Texas Real Estate Enterprises, Inc., MidCity
Houston Properties, Inc., IDC, and Xxxxxx Xxxx and SurgiCare (the "December
Agreement") or (b) the Indemnification Agreement referenced in Section 4.1 of
the December Agreement.
AII to the fullest extent permitted by applicable law shall indemnify and hold
harmless SurgiCare and its officers, directors and affiliates (the "Indemnified
Parties") from and against any and all Losses (as defined below) suffered,
incurred or sustained by the Indemnified Parties or to which any of the
Indemnified Parties becomes subject, resulting from, arising out of or relating
to the Pending Claims and any other Claim to which any of the Indemnified
Parties is or becomes a party to or other participant in, or is threatened to be
made a party to or other participant in (it being understood that except as
provided in Section 6.4 with respect to Expenses (as defined below),
reimbursements of any such Losses shall be made as soon as practicable but in
any event no later than 15 days after written request (a "Claim Notice") is made
to AII accompanied by supporting documentation). SurgiCare shall give AII
written notice of any Claim (accompanied by such reasonable supporting
documentation as may be in SurgiCare's possession) as soon as practicable after
SurgiCare becomes aware thereof; provided that the failure of SurgiCare to give
such notice shall not relieve AII of its indemnification obligations under this
Agreement, except to the extent that such failure materially prejudices the
rights of AII.
In the case of the commencement of any action against the Indemnified Parties in
respect of which the Indemnified Parties may seek indemnification from AII
hereunder, AII will be entitled to participate therein, including, without
limitation, the negotiation and approval of any settlement of such action and,
to the extent that AII may wish to assume the defense thereof, with counsel
reasonably satisfactory to SurgiCare, and after notice from AII to SurgiCare of
AII's election so to assume the defense thereof, together with AII's written
acknowledgement and agreement that it will fully indemnify the Indemnified
Parties under the terms of this Agreement with regard to such Claim, AII will
not be liable to the Indemnified Parties under this Agreement for any Expenses
subsequently incurred by the Indemnified Parties in connection with the defense
thereof other than reasonable costs of investigation and preparation therefor
(including, without limitation, appearing as a witness and reasonable fees and
expenses of legal counsel in connection therewith). If in any action for which
indemnity may be sought hereunder AII shall not have timely assumed the defense
thereof with counsel reasonably satisfactory to SurgiCare, or
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SurgiCare shall have been advised by counsel that it would constitute a conflict
of interest for the same counsel to represent both the Indemnified Parties and
AII in such action, or if the Indemnified Parties may have separate or
additional defenses with regard to such action, the Indemnified Parties shall
have the right to employ counsel for the Indemnified Parties reasonably
satisfactory to AII in such action, in which event AII shall reimburse the
Indemnified Parties for all reasonable legal fees and expenses incurred by the
Indemnified Parties in connection with the defense thereof. AII shall in no
event be liable for any settlement of any action effected without its prior
written consent (which consent shall not be unreasonably withheld, delayed and
conditioned). AII shall not settle any Claim in any manner that would impose any
expense, penalty, obligation or limitation on the Indemnified Parties, or would
contain language other than a recitation of any amounts to be paid in
settlement, the fact of the settlement or the underlying claim relating to the
settlement, that could be viewed, in the sole discretion of SurgiCare, as an
acknowledgement of wrongdoing on the part of the Indemnified Parties or as
detrimental to the reputation of the Indemnified Parties, without SurgiCare's
prior written consent.
The Indemnified Parties' right to indemnification in this Section 6 shall
include the right of the Indemnified Parties to be advanced by AII any Expenses
incurred in connection with any Claim as such Expenses are incurred by the
Indemnified Parties.
For purposes of this Section 6, (a) a "Claim" means any threatened, pending or
completed civil action, suit or proceeding instituted against any Indemnified
Party by any Purchaser, or any affiliate of any Purchaser, in connection with or
related to the Contracts or the Contracted Parcels, (b) "Expenses" means all
reasonable attorney's fees and all other reasonable fees, costs, expenses and
obligations paid or incurred in connection with investigating, defending or
participating, or preparing to defend or participate in, any Claim, and (c)
"Loss" means any and all damages, judgments, fines, penalties, amounts paid or
payable in settlement, deficiencies, losses and Expenses (including all
interest, assessments, and other charges paid or payable in connection with or
respect of such Losses).
STATUS OF COMMON SHARES. The parties agree that the Common Shares issued to AII
on the Automatic Conversion Date upon conversion of the Series AA Shares shall
be deemed to have the holding period for purposes of Rule 144 under the
Securities Act commencing June 4, 2002, the date that the Series AA Shares were
originally acquired by AII. The parties further agree that, assuming AII and its
affiliates do not acquire any additional shares of capital stock of SurgiCare
(other than the Common Shares issued upon conversion of the Series AA Shares)
after the date of this Agreement, immediately following the later of (a) the
Automatic Conversion Date and (b) the closing of the Financing, AII will not be
deemed an affiliate of SurgiCare. Upon the request of AII following the later of
(a) the Automatic Conversion Date and (b) the closing of the Financing, assuming
AII and its affiliates have not acquired any additional shares of capital stock
of SurgiCare (other than the Common Shares issued upon conversion of the Series
AA Shares) after the date of this Agreement, SurgiCare will promptly instruct
its transfer agent and request its counsel to render a legal opinion that any
legend on the certificates evidencing the 8,750,000 shares of SurgiCare Common
issued to AII upon conversion of the Series AA Shares that restricts the
transfer thereof because such shares are "restricted securities" pursuant to
Rule 144 under the Securities Act be removed, and that such shares may be sold
by AII under Rule 144(k) as a non-affiliate of SurgiCare.
GENERAL OBLIGATIONS.
At any time and from time to time, the parties agree, at their expense, to take
such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement. Without limiting the
terms and provisions hereof, since a breach of the provisions of this Agreement
could not adequately be compensated by money damages, the parties shall be
entitled, in addition to any other right or remedy available to them, to an
injunction restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement; and in either case, no bond
or other security shall be required in connection therewith, and the parties
hereby consent to the issuance of such an injunction and to the ordering of
specific performance.
This Agreement and the exhibits hereto set forth the entire understanding of the
parties with respect to the subject matter hereof and supersede all existing
agreements among them concerning such subject matter.
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This Agreement may be amended or modified only by a written instrument duly
executed by each of the parties hereto.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered by personal delivery or by overnight
delivery or mailed by certified mail, return receipt requested (or by the most
nearly comparable method if mailed from or to a location outside of the United
States), or delivered against receipt to the party to whom it is to be given at
the address of such party set forth in the signature pages to this Agreement.
Any notice or other communication given by certified mail (or by such comparable
method) shall be deemed given at the time of mailing (or comparable act), except
for a notice changing a party's address, which will be deemed given at the time
of receipt thereof. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing
and, in the case of a corporate party, be authorized by a resolution of the
board of directors or by an officer of the waiving party.
The provisions of this Agreement shall be binding upon and inure to the benefit
of each party's respective successors, assigns, heirs, and personal
representatives.
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement.
The headings of this Agreement are solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to conflict
of laws. Each of the parties agrees that any action brought between the parties
may be brought in the state or federal courts located in Xxxxxx County, Texas,
and in no other place unless the parties expressly agree in writing to waive
this requirement or it is consolidated into another action related hereto. Each
of the parties consents to jurisdiction in that location and waives their right
to a trial by jury. Each of the parties will bear all of its own legal,
accounting, investment banking, and other expenses incurred in connection with
this Agreement.
The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent. No rule of strict construction will
be applied against any party. Any reference to a federal, state, local or
foreign statute or law will be deemed to also refer to all rules and regulations
as promulgated, unless the context requires otherwise. Thus, use of the word
"including" in this Agreement is intended by the parties to be by way of example
rather than limitation.
The exhibits identified in this Agreement are incorporated by reference and made
a part of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
AII INTERNATIONAL INDUSTRIES, INC.
By:/S/XXXXXX XXXX
-----------------
Name: Xxxxxx Xxxx, Chief Executive Officer
Address: 000 Xxxx Xxxxxx
Xxxxx, XX 00000
SURGICARE, INC.
By:/S/ XXXXX XXXXXXX
--------------------
Name: Xxxxx XxXxxxx, Chief Executive Officer
Address: 00000 Xxxxxxxxx Xxxx,
Xxxxx 000
Xxxxxxx, XX 00000
[Signature page to Agreement]
Exhibit A
AMENDED CERTIFICATE OF DESIGNATION,
POWERS, PREFERENCES AND RIGHTS OF
SERIES AA REDEEMABLE PREFERRED STOCK
PAR VALUE $.001 PER SHARE
OF
SURGICARE, INC.
(FORMERLY TECHNICAL COATINGS, INC., INCORPORATED JULY 20, 1984)
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PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
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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 AA Redeemable Preferred Stock:
RESOLVED, that Nine Hundred Thousand (900,000) shares of the Twenty Million
(20,000,000) authorized shares of Preferred Stock of the Corporation shall be
designated Series AA 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 AA Redeemable
Preferred Stock (the "Series AA Preferred Stock"), and the number of shares
constituting the Series AA Preferred Stock shall be Nine Hundred Thousand
(900,000).
SECTION 2. RANK. The Series AA Preferred Stock shall be pari passu with the
Series A Preferred Stock of the Corporation and with any class or series of
capital stock of the Corporation hereafter created specifically ranking by its
terms on parity with the Series AA 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. 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 AA
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
Five Dollars ($5.00), plus all accrued or declared and unpaid dividends on such
share, for each share of Series AA 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 AA Preferred Stock and Parity
Securities shall be insufficient to permit the payment to such Holders of the
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full preferential amounts due to the Holders of the Series AA 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 AA 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 3.
(b) Upon the completion of the distribution required by Section 3(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 4. CONVERSION OF SERIES AA PREFERRED STOCK. The Series AA Preferred
Stock may be converted as set forth in this Section 4:
(a) On the Automatic Conversion Date (as defined in the Agreement dated as
of June 23, 2004 by and between American International Industries, Inc., a
Nevada corporation, and the Corporation (the "Agreement")), each outstanding
share of Series AA Preferred Stock shall automatically convert into a number of
fully-paid and non-assessable shares of Common Stock, $0.005 par value per
share, of the Corporation ("Common Stock") equal to 8,750,000 divided by
900,000, without any further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the Corporation
or its transfer agent.
(b) If the Automatic Conversion Date has not occurred, the Corporation
shall have the option to convert the 900,000 outstanding shares of Series AA
Preferred Stock into fully-paid and non-assessable shares of Common Stock in the
manner and subject to the conditions provided for in this Section 4(b) and
Section 4(c) hereof. No payment or adjustment to the number of shares of Common
Stock issuable upon conversion of one share of Series AA 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. The Corporation may
convert up to and including Three Hundred Thousand (300,000) shares of the
Series AA Preferred Stock of the Corporation to Common Stock on each of the
following three dates: July 30, 2004, June 4, 2005 and June 4, 2006 (the
"Optional Conversion Dates"). Any conversion shall be proportionate among the
Holders based on the number of Shares held by each on the Optional Conversion
Date. If the Corporation exercises its option to convert any shares pursuant to
this Section 4(b), it shall convert each such share to the number of shares of
Common Stock determined by the following formula: $5.00 divided by the value of
the Common Stock on the relevant Optional Conversion Date or $0.41, whichever is
greater. For the purposes of this Section 4, the value of Common Stock on the
relevant Optional Conversion Date shall be determined by the average closing
price of the stock on the twenty (20) trading days immediately preceding the
Conversion Date.
(c) Each option to convert shares on a particular Optional Conversion Date
may be exercised at any time prior to the Optional Conversion Date up to but not
later than fifteen (15) days before the Conversion Date (or, if the Optional
Conversion Date shall be July 30, 2004, such notice may be given at any time on
or prior to the Optional Conversion Date). To exercise an option to convert, the
Corporation shall deliver or fax a copy of a notice of conversion ("Notice of
Conversion") to each Holder of shares being converted at its address as it shall
appear on the records of the Corporation, which notice shall identify the Holder
of the shares to be converted, the date of conversion, the number of shares of
Series AA Preferred Stock to be converted, and a statement of the number of
shares of Common Stock issuable upon such conversion. The Corporation shall also
deliver or fax a copy of a Notice of Conversion if an
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automatic conversion occurs pursuant to Section 4(a) above. If the Corporation
exercises any option to convert or if an automatic conversion occurs pursuant to
Section 4(a) above, the Holder shall no later than three (3) business days after
receipt of the notice of conversion 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 AA 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 (or Class A Common, as
applicable) 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 4(c)(i) below.
(i) Upon receipt by the Corporation of evidence of the loss, theft,
destruction or mutilation of any Preferred Stock Certificates
representing shares of Series AA Preferred Stock, and in the case of
loss, theft or destruction, 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. The Corporation, however, shall not be obligated to
re-issue such lost or stolen Preferred Stock Certificates if such
Series AA Preferred Stock has been converted into Common Stock or
Class A Common.
(ii) 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 and 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 or
Class A Common to which the Holder shall be entitled as aforesaid.
(iii) The person or persons entitled to receive the shares of Common Stock
or Class A Common issuable upon such conversion shall be treated for
all purposes as the record Holder or Holders of such shares of Common
Stock or Class A Common on the Automatic Conversion Date or the
Optional Conversion Date, as applicable.
SECTION 5. REDEMPTION BY THE CORPORATION.
The Corporation shall have the following option (and, in certain
circumstances, obligation) to redeem the Series AA Preferred Stock, if the
Automatic Conversion Date has not occurred:
(a) The Corporation shall have the option (and, in the event that such
shares are not converted pursuant to Section 4, the Corporation shall have the
obligation) to redeem the 900,000 outstanding shares of Series AA Preferred
Stock in the manner and subject to the conditions provided for in this Section
5. The Corporation may (and, in the event that such shares are not converted
pursuant to Section 4, the Corporation shall) redeem up to and including Three
Hundred Thousand (300,000) shares of the Series AA Preferred Stock of the
Corporation on each of the three Optional Conversion Dates. Any redemption shall
be proportionate among the Holders based on the number of Shares held by each on
the Optional Conversion Date. If the Corporation exercises its option (or is
required) to redeem any shares pursuant to this Section 5, it shall redeem each
such share for $5.00 per share.
(b) If less than all of the outstanding shares of Series AA Preferred Stock
are to be redeemed, such shares shall be redeemed pro rata or by lot as
determined by the Corporation in its sole discretion. The Corporation may elect
to redeem shares of Series AA Preferred Stock in the order in which they
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would otherwise be converted, i.e., the Corporation may elect to redeem shares
convertible on the anniversary date immediately following the giving of the
notice or to any other shares. If the notice of election to redeem shares does
not specify to which shares it shall apply, it shall apply to the Series AA
Preferred Stock shares in the order in which they would otherwise be converted.
(c) Each option to redeem shares on a particular Optional Conversion Date
may be exercised at any time prior to the relevant Optional Conversion Date up
to but not later than fifteen (15) days before the Optional Conversion Date (or,
if the Optional Conversion Date shall be July 30, 2004, such notice may be given
at any time on or prior to the Optional Conversion Date). To exercise an option
to redeem, the Corporation shall deliver or fax a copy of a notice of redemption
("Notice of redemption ") to each Holder of shares being redeemed at its address
as it shall appear on the records of the Corporation, which notice shall
identify the Holder of the shares to be redeemed, the date of redemption, and
the number of shares of Series AA Preferred Stock to be redeemed The Corporation
may act as the transfer agent for the Series AA 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 is 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 five (5) business days after 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 mailed 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, then each holder of the
shares called for redemption shall be entitled to all preferences and relative
and other rights accorded by this Designation 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.
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SECTION 6. 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 or Class A Common, Holders
of Series AA 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 (1) 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 AA
Preferred Stock have the right to vote separately as a class, such Holders shall
be entitled to one (1) vote for each such share held by them respectively.
SECTION 7. PROTECTIVE PROVISIONS.
(a) So long as shares of Series AA 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 AA Preferred
Stock alter or change the rights, preferences or privileges of the Series AA
Preferred Stock or any Senior Securities so as to affect adversely the Series AA
Preferred Stock. In the event Holders of at least a majority of the then
outstanding shares of Series AA Preferred Stock agree to allow the Corporation
to alter or change the rights, preferences or privileges of the shares of Series
AA Preferred Stock, pursuant to subsection (a) above, so as to affect adversely
the Series AA Preferred Stock, then the Corporation will mail notice of such
approved alteration or change to the Holders of the Series AA 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
immediately following the date the notice was mailed to convert pursuant to the
terms of this resolution of Designation as they exist prior to such alteration
or change or continue to hold their shares of Series AA Preferred Stock subject
to the approved alteration or change of the rights, preferences or privileges of
the Series AA Preferred Stock.
(b) If at any time or times the Corporation shall issue shares of Series AA
Preferred Stock not designated herein or Series A Redeemable preferred stock not
issued and outstanding as of the date hereof, each Holder (i.e., holder of
Series AA Preferred Stock) shall be entitled to receive additional shares of
Series AA Preferred Stock in an amount determined by the following formula:
multiply the number of shares of Series AA Preferred Stock of the Holder
immediately prior to the new issuance by the number of shares of Series A and/or
Series AA Preferred Stock to be issued and divide the result by the aggregate
number of shares of Series A and Series AA Preferred Stock issued and
outstanding immediately prior to the new issuance. The rights provided for in
this Section 7(b) shall not apply to any shares for which the Series AA
Preferred Stock has been converted or any shares which have been redeemed.
SECTION 8. NOTICES TO SHAREHOLDERS. 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 classification 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,
5
then and in each such event the Corporation shall mail or cause to be mailed to
each holder of Series AA 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 AA
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 9. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required
by law, the shares of Series AA 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 AA Preferred Stock shall have no preemptive
or subscription rights, except as otherwise expressly provided for herein.
SECTION 10. HEADINGS. The headings of the various sections and subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
SECTION 11. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Series AA 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 12. STATUS OF REACQUIRED SHARES. Shares of Series AA 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 13. 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 AA Preferred
Stock.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly
executed on its behalf by its President this 23rd day of June 2004.
SURGICARE, INC.
By:/S/ XXXXX XXXXXXX
-----------------
Name: XXXXX XXXXXXX
-------------
Title: PRESIDENT AND CEO
-----------------
Attest:
By: /s Xxxxx X. Xxxxx
---------------------
Name: Xxxxx X. Xxxxx
-------------------
Title: Office Manager/Notary
------------------
7
IRREVOCABLE PROXY
OF
AMERICAN INTERNATIONAL INDUSTRIES, INC.
Name of Issuer: SURGICARE, INC.
---------------------
Number of Shares of Series AA Preferred Stock: 900,000
-------
The undersigned American International Industries, Inc. (the "Company"), as
holder of the shares described above, hereby revokes any previously executed
proxies with respect to such shares and appoints Xxxxx XxXxxxx as the Company's
proxy to attend all shareholders' meetings, vote, execute all consents, and
otherwise act for the Company in the same manner and with the same effect as if
the Company was personally present until December 31, 2004, in any case as Xx.
XxXxxxx shall deem appropriate in his sole discretion. Until that time, this
proxy shall be irrevocable unless terminated by mutual agreement of the parties.
This proxy is irrevocable and is coupled with an interest as is further
described in the Agreement between American International Industries, Inc. and
SurgiCare, Inc. dated the date hereof to which this proxy is Exhibit "B".
Dated: June 23, 2004
AMERCIAN INTERNATIONAL INDUSTRIES, INC.
By:/S/ XXXXXX XXXX
---------------
Xxxxxx Xxxx, President
8
IRREVOCABLE PROXY
OF
AMERICAN INTERNATIONAL INDUSTRIES, INC.
Name of Issuer: SURGICARE, INC.
----------------------
Number of Shares of Common Stock and Class A Common Stock: ANY AND ALL SHARES
RECEIVED UPON CONVERSION OF SERIES AA PREFERRED STOCK IN ACCORDANCE WITH SECTION
4(A) OF THE AMENDED CERTIFICATE OF DESIGNATION, POWERS, PREFERENCES AND RIGHTS
OF SERIES AA REDEEMABLE PREFERRED STOCK PAR VALUE $.001 PER SHARE OF SURGICARE,
INC.
The undersigned American International Industries, Inc. (the "Company"), as
holder of the shares described above, hereby revokes any previously executed
proxies with respect to such shares and appoints Xxxxx XxXxxxx (or, in the event
that Xx. XxXxxxx no longer serves as an executive officer of SurgiCare, Inc.,
such other executive officer of SurgiCare, Inc. as is designated by the board of
directors of SurgiCare, Inc.) as the Company's proxy to attend all shareholders'
meetings, vote, execute all consents, and otherwise act for the Company in the
same manner and with the same effect as if the Company was personally present,
in any case as Xx. XxXxxxx (or his successor) shall deem appropriate in his sole
discretion, until the earlier of (i) such time, if any, that such shares are
sold by the Company in open market transactions to third parties unaffiliated
with the Company, (ii) 60 days after the record date for the SurgiCare, Inc.
meeting of stockholders to be held in connection with approval of the Financing
(as defined in the Agreement described below) or (iii) December 31, 2004. Until
that time, this proxy shall be irrevocable unless terminated by mutual agreement
of the parties.
This proxy is irrevocable and is coupled with an interest as is further
described in the Agreement between American International Industries, Inc. and
SurgiCare, Inc. dated as the date hereof (the "Agreement") to which this proxy
is Exhibit "C".
Dated: June 23, 2004
AMERCIAN INTERNATIONAL INDUSTRIES, INC.
By:/S/ XXXXXX XXXX
---------------
Xxxxxx Xxxx, President
9
