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PROSPECTUS SUPPLEMENT NO. 28 Filed Pursuant to Rule 424(b)(3)
To the Prospectus dated January 24, 1997 Registration No.: 333-1926
As Supplemented to date
8,180 Shares
of
Class B Common Stock of
Doctors Health, Inc.
This Prospectus Supplement relates to the proposed acquisition (the
"Acquisition") of certain assets and liabilities (the "Acquired Business") of
Robert J. Ginsberg, M.D., who conducts his medical practice as a Maryland sole
proprietorship ("Medical Practice") by Doctors Health, Inc., a Maryland
corporation ("Doctors Health" or the "Company"), and Doctors Health Montgomery,
LLC, a Maryland limited liability company ("Medical Group"). At the closing of
the Acquisition, Doctors Health will issue 8,180 shares (the "Share
Consideration") of its Class B Common Stock, par value $.01 per share (the
"Class B Common Stock") and will pay $52,600.00 ("Cash Consideration") to the
Medical Practice in accordance with the Practice Transfer Agreement described in
this Prospectus Supplement.
Doctors Health's principal executive office is located at 10451 Mill Run
Circle, Tenth Floor, Owings Mills, Maryland 21117, telephone number (410)
654-5800. Medical Group's principal executive office is located at 10451 Mill
Run Circle, 10th Floor, Owings Mills, Maryland, telephone number (410) 654-5800.
Medical Practice's principal executive office is located at 2415 Musgrove Road,
#209, Silver Spring, Maryland 20904. The information presented in this
Prospectus Supplement concerning Doctors Health and Medical Group has been
provided by Doctors Health, and the information concerning Medical Practice has
been provided by Medical Practice.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER OF ANY
PERSON TO EXCHANGE OR SELL, OR A SOLICITATION FROM ANY PERSON OF AN OFFER TO
EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT, IN
ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT NOR ANY DISTRIBUTION OF THE
SECURITIES TO WHICH THIS PROSPECTUS SUPPLEMENT RELATES SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED THEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_______________
See "Risk Factors" on page S-3 for certain information that should be
considered in connection with an investment in securities of Doctors Health.
The date of this Prospectus Supplement is August 22, 1997.
<PAGE>
SUMMARY OF TRANSACTION
The following summary is qualified in its entirety by, and subject to the
more detailed information and financial statements contained in, this Prospectus
Supplement and the Prospectus dated January 24, 1997, as supplemented to date by
Prospectus Supplements No. 1 (10-Q), 14 (10-Q), 25 (8-K) and 26 (Shareholders
Letter Agreement). Unless otherwise defined herein, capitalized terms have the
meanings assigned to them in the Prospectus. See the definitions set forth in
the Glossary to the "Prospectus."
Parties to the Acquisition
Doctors Health. Doctors Health is a Maryland corporation organized in 1994
to develop and consolidate individual and groups of internists, pediatricians
and family practitioners, specialist physicians, hospitals and other health care
providers into primary care-driven, comprehensive managed care health care
delivery networks.
Doctors Health Montgomery, LLC. Doctors Health Montgomery, LLC ("Medical
Group") is a Maryland Limited Liability Company organized in 1996 to conduct
medical practices in Montgomery County Maryland.
Medical Practice. The Medical Practice is sole proprietorship which
conducts business through a Physician, office manager and nurse in Silver
Spring, Maryland.
The Acquisition; Closing
Pursuant to the Practice Transfer Agreement (the "Acquisition Agreement")
between Medical Practice, Medical Group and Doctors Health, (i) Medical Practice
shall transfer to Doctors Health all of its right, title and interest in and to
certain assets of the Medical Practice pursuant to the Acquisition Agreement,
subject to certain exclusions stated therein, (ii) Medical Practice shall
transfer to Medical Group all right, title and interest in and to any assets
used to provide laboratory services and other services ancillary to the Medical
Practice, (iii) Doctors Health shall issue 8,180 shares of its Class B Common
Stock (the "Share Consideration") to Dr. Robert J. Ginsberg and (iv) Doctors
Health shall pay $52,600.00 ("Cash Consideration") to Dr. Robert J. Ginsberg, on
the terms and subject to the conditions set forth in the Acquisition Agreement.
A copy of the Acquisition Agreement is attached to this Prospectus Supplement as
Annex A and is incorporated herein by reference.
The Acquisition is to be consummated as soon as practicable after all
approval and events required for the Acquisition have occurred and all
conditions precedent to the Acquisition have been fulfilled or waived or on such
other date on which Medical Practice and Doctors Health may agree (the "Closing
Date"). It is expected that the Closing Date will occur on or about August 22,
1997.
Resale of Class B Common Stock
The shares of Class B Common Stock offered to the Medical Practice by this
Prospectus Supplement have been registered under the Securities Act. The shares
will be subject to the Shareholders Letter Agreement attached hereto as Annex B
and therefore, will not be freely transferable. In addition, under the
Securities Act certain additional restrictions on transfer apply to resale of
share of the Class B Common Stock received by "affiliates" of Doctors Health.
There is no public market for the Class B Common Stock. See "Resale of Class B
Common Stock."
S-2
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RISK FACTORS
Financial Performance of Medical Practice and Doctors Health
Doctors Health negotiated the Share Consideration and Cash Consideration on
the basis of the presence of Medical Practice in a desirable geographic market
into which Doctors Health intends to expand. After the Closing Date, Doctors
Health will recruit additional primary care physicians in Montgomery County,
Maryland. There can be no assurance that after the Closing Date of the
Acquisition, such recruitment will be successful, that Medical Practice's
pre-Acquisition relationships with its patients will be beneficial to Doctors
Health and Medical Group, that Doctors Health will be able to successfully
develop an integrated health care delivery network in Montgomery County,
Maryland, or that Doctors Health can successfully integrate Medical Practice
into Global Capitated Contracts. See the sections in the Prospectus "Risk
Factors -- Uncertainty of Strategy; Acquisition Risks," "-- Integration of
Operations," and "-- Dependence of the Company on Core Medical Groups and IPAs."
Doctors Health has a limited operating history and for the fiscal year
ended June 30, 1996 and the nine months ended March 31, 1997, recorded a net
loss of approximately $6.6 million and $10.3 million, respectively. Doctors
Health is likely to record a net loss for the fiscal year ending June 30, 1997.
There can be no assurance that after the Closing Date Doctors Health will earn
operating profits.
Risk Factors set forth in the Prospectus dated January 24, 1997
The Risk Factors set forth in the Prospectus are incorporated herein by
reference and should be read carefully.
PROPOSED ACQUISITION OF MEDICAL PRACTICE BY DOCTORS HEALTH
The following description of the Acquisition does not purport to be
complete and is qualified in its entirety by reference to the Acquisition
Agreement, a copy of which is attached to this Prospectus Supplement as Annex A
and is incorporated herein. Representatives of Medical Practice are urged to
read the Acquisition Agreement in its entirety.
General
On the Closing Date of the Acquisition, (i) Medical Practice shall transfer
to Doctors Health certain of its assets; (ii) Medical Practice shall transfer
to Medical Group all right, title and interest in and to any assets used to
provide laboratory services and other services ancillary to the Medical
Practice, (iii) Doctors Health shall issue 8,180 shares (the "Share
Consideration") of its Class B Common Stock to Dr. Robert J. Ginsberg, and (iv)
Doctors Health shall pay $52,600.00 ("Cash Consideration") to Dr. Robert J.
Ginsberg, on the terms and subject to the conditions set forth in the
Acquisition Agreement.
Background of the Acquisition
The health care industry is undergoing rapid evolution, including the
consolidation of individual medical practices into larger medical groups and
independent practice associations as well as radical changes in the way
physicians are compensated for the delivery of medical services.
In Baltimore, Maryland, Washington, D.C., Northern Virginia and surrounding
regions, physicians have increasingly become affiliated with managed care and
medical management companies such as Doctors Health which provide physicians
with certain administrative, billing, bookkeeping and budgeting services.
Companies such as Doctors Health also provide the physicians with access to
Managed Care
S-3
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contracts and necessary tools to perform such contracts, including state of the
art disease management protocols, care management, referral management and
utilization review services. In this environment, Doctors Health has been
entering into contractual and equity ownership relationships with primary care
physicians, specialists and other health care providers in order to develop an
Integrated Health Care Delivery System that focuses on managed care.
Against this backdrop, Doctors Health and the Medical Practice
independently reached the conclusion that developing alliances with additional
provider groups and companies focusing on the efficient delivery of health care
would enhance their abilities to respond to changing conditions in the health
care industry.
Reasons for the Acquisition
As part of its business strategy, Doctors Health seeks to negotiate Global
Capitated Contracts by, among other things, providing Payors with established
health care delivery networks capable of providing for the delivery of medical
care to Enrollees of the HMO or other Payor. In order to accomplish this
strategy, Doctors Health seeks to establish networks throughout the Baltimore
and Washington metropolitan area, Northern Virginia and surrounding regions.
For Doctors Health, Medical Practice represents an opportunity to implement its
business plan in a market where it does not currently operate, and to earn
revenues through inclusion of Medical Practice in Doctors Health's Managed Care
contracts.
Approval by the Doctors Health Board
For the reasons described below, the Doctors Health Board has approved the
Acquisition.
Doctors Health continuously analyzes potential acquisition candidates in
Maryland, the District of Columbia and Virginia. The Doctors Health Board of
Directors believes that the Acquisition is fair to and in the best interests of
Doctors Health for the reasons described below. Accordingly, the Doctors Health
Board of Directors has approved the Acquisition Agreement and the Acquisition.
The Doctors Health Board of Directors consulted with Doctors Health
management and legal counsel. It considered the following factors to be
material to and in support of its final determination;
(i) The Acquisition is expected to enable Doctors Health to take
advantage of Medical Practice's existing goodwill, infrastructure and
leadership in Montgomery County, Maryland market in order to establish an
Integrated Health Care Delivery System in Montgomery County, Maryland. Such
expansion of Doctors Health's existing network is expected to enhance
Doctors Health's ability to win new Payor contracts and to attract
additional Enrollees.
(ii) The Acquisition and the efforts of Doctors Health to establish an
Integrated Health Care Delivery System are expected to substantially
increase Doctors Health's size in terms of revenues, profits, physicians and
locations which is expected to enhance Doctors Health's reputation in the
Mid-Atlantic region, making it easier to attract and retain new physicians
and win new Payor contracts.
In addition to the foregoing, the Doctors Health Board of Directors
generally considered those matters discussed under "RISK FACTORS". The Board of
Doctors Health concluded that the risks did not outweigh the advantages of the
Acquisition and that the Acquisition was in the best interests of Doctors Health
and its stockholders.
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<PAGE>
Accounting Treatment
The Acquisition will be accounted for as a purchase transaction for
financial reporting purposes under APB 16.
THE ACQUISITION AGREEMENT
Set forth below is a summary of the material terms of the Acquisition
Agreement. The following description does not purport to be complete and is
qualified in its entirety by reference to the Acquisition Agreement, a copy of
which is attached as Annex A to this Prospectus Supplement and is incorporated
by reference herein.
General
On the Closing Date of the Acquisition, (i) Medical Practice shall transfer
to Doctors Health certain of its assets; (ii) Medical Practice shall transfer to
Medical Group its right title and interest in and to any assets used to provide
laboratory services and other services ancillary to the Medical Practice, (iii)
Doctors Health shall issue 8,180 shares (the "Share Consideration") of its Class
B Common Stock to the Physician, and (iv) Doctors Health shall pay $52,600.00
("Cash Consideration") to the Physician, on the terms and subject to the
conditions set forth in the Acquisition Agreement.
Representations and Warranties
The Acquisition Agreement contains various representations and warranties
by Doctors Health relating to, among other things (i) organization and corporate
power and authority, (ii) authority to enter into and perform the Acquisition
Agreement, and (iii) that the shares of the Class B Common Stock to be issued
will be fully paid and nonassessable. The Acquisition Agreement contains
various representations and warranties by Physician and the Medical Practice
relating to, among other things, (i) ownership of the practice and title and
condition to assets, (ii) compliance with agreements, (iii) compliance with
laws, (iv) absence of litigation, (v) information as to contracts, (vi)
information as to taxes, and (vii) information as to financial statements and
accounts receivable.
Additional Covenants and Agreements
Pursuant to the Acquisition Agreement, Medical Practice and Physician have
agreed among other things (i) to provide to Medical Group or Doctors Health all
information necessary to allow such parties to comply with applicable law, and
(ii) to provide on the Closing Date an ASCII formatted file with patient
demographics and accounts receivable. If Medical Practice does not have the
capability to provide this information, Doctors Health will assist Medical
Practice in converting such information to a format acceptable to Doctors
Health. Pursuant to the Acquisition Agreement, each of the physicians
practicing with the Medical Practice have agreed that if the employment
agreement between such Physician and Medical Group (each, an "Employment
Agreement") is terminated under certain circumstances provided for in the
Employment Agreement, such physician agrees (a) to cooperate with Doctors
Health, Medical Group and each member of the Medical Group to organize a new
corporation or other entity to provide primary medical care and related
services, (b) to engage in the practice of medicine exclusively through such new
primary care entity, and (c) to enter into an employment agreement with such new
entity on terms substantially similar to the Employment Agreement and to use
best efforts to cause such new entity to enter into an agreement with Doctors
Health for the provision of assets, facilities and non-professional services,
substantially similar to the Physician Services Organization Agreement between
Doctors Health and Medical Group.
S-5
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Employment Agreement
At the Closing, the Physician shall enter into an Employment Agreement with
Medical Group. See "BUSINESS - Development of Integrated Health Care Delivery
System- Employment of Physicians by the Core Medical Group" in the Prospectus
dated January 24, 1997 for a description of the material terms of the Employment
Agreement.
Additions and Withdrawals of Physicians from Medical Group
Under the terms of the Acquisition Agreement, Doctors Health shall have the
exclusive authority (a) to negotiate the price and terms with respect to the
acquisition from time to time of the medical practices of such additional
physicians and such additional physician's employment by Medical Group or
additional medical groups organized by Doctors Health, and (b) to negotiate the
withdrawal of physicians from the Medical Group. In such connection, each
physician practicing with Medical Practice irrevocably appoints Doctors Health
and the Chairman of Medical Group (or their designees) as attorney-in-fact and
agent to execute any documents required to provide for the admission or
withdrawal of physicians as members of Medical Group and any other transaction
related to acquisition of medical practices, and releases and agrees to
indemnify and hold harmless Doctors Health and the Chairman of Medical Group and
their directors, officers, employees or shareholders from any claims arising in
connection with their performance of their duties in such connection.
Additional Agreements
Pursuant to the Acquisition Agreement, Medical Practice and Doctors Health
have made the following additional agreements:
BUSINESS OF DOCTORS HEALTH
The business of Doctors Health is described in the Prospectus.
BUSINESS OF MEDICAL PRACTICE
The Medical Practice conducts a family medicine practice at 2415 Musgrove
Road, #209, Silver Spring, Maryland 20904. The Medical Practice conducts its
business through one physician, Dr. Robert J. Ginsberg, and an office staff.
RESALE OF CLASS B COMMON STOCK
The shares of Class B Common Stock of Doctors Health offered by this
Prospectus Supplement have been registered under the Securities Act, allowing
persons or entities who are not "affiliates" of Doctors Health or Medical
Practice (as defined under the Securities Act, but generally including
directors, certain executive officers, and 10% or more stockholders of Doctors
Health or Medical Practice) to trade them freely and without restriction under
the Securities Act except as limited by certain contractual restrictions set
forth in the Stockholders Agreement or otherwise. Each person or entity who may
be deemed an "affiliate" of Doctors Health will be subject to certain
limitations imposed by the Securities Act, and the rules, regulations and
releases promulgated thereunder, with respect to the sale or other disposition
of the shares of Class B Common Stock to be received by the "affiliate" pursuant
to the Acquisition. This Prospectus does not cover any resales of Class B
Common Stock received by affiliates of Medical Practice.
S-6
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In addition to the restrictions on resale that may be imposed on
"affiliates" under the Securities Act, the shares of Class B Common Stock of
Doctors Health received by persons or entities (whether or not they are deemed
to be "affiliates") pursuant to the Acquisition are and will be subject to the
terms of a Shareholders Letter Agreement (a copy of which is attached hereto as
Annex B) which provides significant contractual restrictions on the resale of
such Class B Common Stock until the occurrence of an initial public offering for
cash of the Common Stock of Doctors Health or other event constituting a "change
in control" of Doctors Health. The Shareholders Letter Agreement provides that
the signatories may sell and transfer the stock of the Company held by them only
pursuant to such agreement. The Shareholders Letter Agreement provides that
signatories may transfer stock of the Company only to members of such
stockholder's immediate family by will or state laws governing estates of a
deceased stockholder. Also a corporate stockholder may transfer stock of the
Company to such corporate stockholder's stockholders and a stockholder which is
a limited or general partnership may transfer stock of the Company to its
partners.
Under the Shareholders Letter Agreement, at any time after July 15, 1999,
the stockholder will be required to transfer his or her shares of stock of the
Company if The Beacon Group III - Focus ValueFund, L.P. ("Beacon"), the holder
of the Company's Series D Preferred Stock, determines to transfer or exchange
all of the Company's outstanding capital stock to a third party unrelated to
Beacon. The rights of Beacon to require transfer of a stockholder's shares of
common stock do not apply to an underwritten public offering of the Company or a
transfer to an affiliate of Beacon.
LEGAL MATTERS
The validity of the Class B Common Stock offered hereby has been passed
upon for the Company by Venable, Baetjer and Howard, LLP, Baltimore, Maryland.
ATTACHMENTS
Annex A - Practice Transfer Agreement
Annex B - Shareholders Letter Agreement (delivered to Medical Practice as
Prospectus Supplement No. 26)
S-7
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ANNEX A
PRACTICE TRANSFER AGREEMENT
By and among
Doctors Health Montgomery, LLC,
Doctors Health, Inc. and
Dr. Robert J. Ginsberg
August 22, 1997
<PAGE>
Practice Transfer Agreement
Table of Contents
Page
Section 1 INTRODUCTION 3
Section 2 TRANSFER OF MEDICAL PRACTICE;
PURCHASE PRICE 3
Section 3 REPRESENTATIONS AND WARRANTIES
OF DOCTORS HEALTH 4
Section 4 REPRESENTATIONS AND WARRANTIES
OF THE PHYSICIAN 5
Section 5 ADDITIONAL COVENANTS AND
AGREEMENTS OF THE PHYSICIAN 7
Section 6 ADDITION AND WITHDRAWAL OF
PHYSICIANS 7
Section 7 LITIGATION 8
Section 8 MISCELLANEOUS 8
2
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PRACTICE TRANSFER AGREEMENT
This Practice Transfer Agreement, dated as of the ____th day of
________, 1997 (the "Closing Date") by and among Doctors Health Montgomery,
LLC, a Maryland limited liability company (the "Medical Group"); Doctors
Health, Inc., a Maryland corporation ("Doctors Health"); and Dr. Robert J.
Ginsberg (the "Physician").
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. Purpose. The Physician has decided to transfer certain assets and
liabilities of his medical practice (the "Medical Practice") to Doctors Health
and the Medical Group and to engage in the practice of medicine exclusively
through and with the Medical Group and as an employee of the Medical Group.
Doctors Health and the Medical Group desire to acquire certain assets and
liabilities of the Medical Practice, and the Medical Group wishes to admit the
Physician as a member and to employ the Physician.
2. Transfer of the Medical Practice.
2.1. Transfer of Assets. The Physician transfers to Doctors Health
all of his or her right, title and interest in and to the Medical Practice,
including all assets relating thereto (excluding assets used by the Physician to
provide laboratory services and other services ancillary to his or her Medical
Practice and excluding the accounts receivables of the Medical Practice
outstanding on the Closing Date) as listed on Schedule 2.1(a). The Physician
transfers to the Medical Group all of his or her right, title and interest in
and to any assets used by the Physician to provide laboratory services and other
services ancillary to his or her Medical Practice as set forth on Schedule
2.1(b). The assets listed on Schedules 2.1(a) and 2.1(b) are referred to in
this Agreement as the "Assets."
2.2. Assumption of Liabilities.
(a) Doctors Health assumes the liabilities and obligations of
the Physician listed on Schedule 2.2(a) to the extent that such liabilities and
obligations relate to the conduct of the Medical Practice after the Closing
Date. The Medical Group assumes the liabilities and obligations of the
Physician listed on Schedule 2.2(b). Neither Doctors Health nor the Medical
Group assume any other liabilities or obligations of the Physician except as
listed on Schedules 2.2(a) and 2.2(b), respectively. The liabilities listed on
Schedules 2.2(a) and 2.2(b) are referred to in this Agreement as the
"Liabilities."
(b) On the Closing Date, the Physician shall have paid all trade
payables and other obligations or liabilities of the Medical Practice which have
been incurred on or before the Closing Date and, in any event, the Physician
shall be liable for all such trade payables without regard to when the Physician
receives an invoice with respect to such medical practice obligations. Doctors
Health does not assume any responsibility for payment of such medical practice
obligations.
2.3. Purchase Price. As payment for the transfer of the Assets to
Doctors Health and the Medical Group, Doctors Health has delivered to the
Physician the following (which shall constitute the "Purchase Price"):
(a) A check in the amount of $52,600.00; and
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(b) A stock certificate representing 8,180 shares of Class B
Common Stock of Doctors Health (the "Shares").
2.4. Closing Documents. The parties shall execute and deliver the
following closing documents which shall be effective as of ______________, 1997:
(i) Employment Agreement between the Physician and the Medical Group (the
"Employment Agreement"); (ii) Shareholders Letter Agreement; (iii) Amendment to
the Operating Agreement of the Medical Group admitting the physician as a member
of the Medical Group; (iv) any other documents executed in connection with this
Agreement (the "Closing Documents"). Doctors Health has delivered to the
Physician a Prospectus dated January 24,1997 and certain Prospectus Supplements
(Numbers 1, 14, 25, and 26) prepared pursuant to Doctors Health's Registration
Statement as defined below (collectively, the "Prospectus").
2.5. Employees. Effective on the date hereof, the Physician's
non-physician employees listed on Schedule 2.5 shall become employees of Doctors
Health or the Medical Group, as specified in such Schedule.
3. Representations and Warranties of Doctors Health. Doctors Health
represents and warrants to the Physician as of the Closing Date as follows:
3.1. Organization and Power. Doctors Health is a corporation duly
incorporated and organized, validly existing and in good standing under the laws
of the State of Maryland. Doctors Health has full power and authority
(corporate and other) to own and hold its properties and to conduct its business
as currently conducted.
3.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement and the other Closing Documents to which it is a
party have been duly and validly authorized by Doctors Health and executed on
behalf of Doctors Health, and no other proceedings are necessary to authorize
this Agreement.
3.3. Class B Common Stock. The Board of Directors of Doctors Health
has authorized the issuance of the Shares to the physician, and upon issuance to
the Physician of the Shares, the Shares shall constitute fully paid and
nonassessable shares of the Class B Common Stock of Doctors Health.
3.4. Registration Statement. The Shares have been registered pursuant
to the Securities Act of 1933 pursuant to a registration statement, which
includes a Prospectus and any Prospectus Supplements, covering the issuance of
shares of Class B Common Stock of Doctors Health (the "Registration Statement").
The Registration Statement is in effect and there are no stop orders issued by
federal or state authorities with respect to the issuance of securities pursuant
to the Registration Statement. The Registration Statement (i) complies as to
form in all material respects with the rules and regulations of the U.S.
Securities and Exchange Commission and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement contained therein, in light of
the circumstances under which they were or will be made, not misleading.
4. Representations and Warranties of the Physician. The Physician hereby
represents and warrants to the other parties hereto as of the Closing Date as
follows:
4.1. Ownership of Practice; Title to and Condition of Assets. Except
as listed on Schedule 4.1, the Physician owns and has good and marketable title
to all of the assets, rights, franchises and privileges used or usable in his or
her Medical Practice, free and clear of all liens or encumbrances of any kind.
The Assets are in good operating condition and repair, ordinary wear and tear
excepted. The Physician does not hold fee title to any real property related to
the Medical Practice.
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4.2. No Conflicts. The execution, delivery and performance by the
Physician of this Agreement and the other Closing Documents to which he is a
party do not conflict with or violate any contract or agreement to which the
Physician is subject.
4.3. Compliance With Laws. The Physician is not in violation of any
order, writ, decree, or judgment of any court, or governmental or regulatory
body which violation would (i) affect the legality, validity or enforceability
of this Agreement or any other Closing Documents or (ii) have a material adverse
effect on the Assets or the Physician's Medical Practice.
4.4. Litigation. There are no lawsuits, proceedings or investigations
pending or threatened against the Physician or the Physician's Medical Practice.
4.5. Contracts. Schedule 4.5 is a true and complete list of all
material contracts or agreements of the Physician related to the Medical
Practice (the "Contracts"). All of the Contracts are in full force and effect,
and there exists no default under any such Contract. There are no written or
oral binding "side agreements" with any Person whereby the Physician has agreed
to do any material act or thing beyond the requirements of the Contracts.
4.6. Taxes. The Physician has duly filed all Medical Practice and
personal federal, state and local tax returns, declarations or statements which
are required to be filed for all periods up to and through the Closing Date and
paid all taxes due.
4.7. Financial Statements. Attached as Schedule 4.7 is a true and
complete copy of an internally prepared or audited accrual basis financial
statement of the Medical Practice dated as of [a date not more than thirty days
prior to the Closing Date]. Such financial statements fairly and accurately
present the assets, liabilities and results of operations of the Medical
Practice and there are no undisclosed liabilities or obligations (contingent or
accrued) that are not reflected on such financial statements or set forth on
Schedule 4.7.
4.8 Receipt of Prospectus. The Physician acknowledges that he has
received the Prospectus.
5. Additional Covenants and Agreements of the Physician.
5.1. Information. The Physician agrees to provide to the Medical
Group or to Doctors Health promptly upon request all information necessary to
allow the Medical Group or Doctors Health to comply with applicable law,
including, without limitation, information relating to employees of the
Physicians and employee benefits provided by the Physician to such employees.
On the Closing Date, the Physician has provided Doctors Health an
ASCII-formatted file with patient demographics and an ASCII-formatted file with
demographics and accounts receivable. If the Physician does not have the
capability of providing this information, Doctors Health will assist the
Physician in converting such information to a format acceptable to Doctors
Health as soon as practicable.
5.2. Reformation of Group Practice. If the Employment Agreement
between the Physician and the Medical Group is terminated on the basis of
Section 4.7 of the Employment Agreement or otherwise as a result of the
Insolvency (as that term is defined in Section 4.7 of the Employment Agreement)
of the Medical Group, the Physician agrees to (a) cooperate with Doctors Health,
the Medical Group and each other Member of the Medical Group to organize a new
corporation, partnership or limited liability company to provide primary medical
care and related services and (b) to engage in the practice of medicine
exclusively through such new primary care entity. The Physician will enter into
an employment agreement with such new entity on terms substantially similar to
the terms of the Employment Agreement and will use his or her best efforts to
cause such new entity to enter into an agreement with Doctors
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Health for the provision of assets, facilities and non-professional services,
including management services, on terms, including provisions for Management
Fees, substantially similar to the terms of the Physician Services Organization
Agreement between Doctors Health and the Medical Group.
6. Addition and Withdrawal of Physicians. Doctors Health shall have
exclusive authority to (a) negotiate the price and terms with respect to the
acquisition from time to time of the medical practices of additional physicians
and such physicians' employment by the Medical Group or other Medical Groups
organized by Doctors Health, and (b) negotiate the withdrawal of physicians from
the Medical Group. Each party agrees to use its best efforts to permit the
addition and withdrawal of physicians as members of the Medical Group.
6.1. Appointment as Agent; Specific Performance; Release. The
Physician irrevocably appoints Doctors Health and the Chairman of the Medical
Group (or their designees) as his attorney in fact and agent to carry out the
provisions of this Section 6, to execute any document required to provide for
the admission or withdrawal of physicians as members of the Medical Group, and
any other transaction related to acquisition of medical practices. The parties
agree that such appointment is coupled with an interest. The Physician releases
and agrees to indemnify and hold harmless Doctors Health and the Chairman of the
Medical Group and their directors, officers, employees or shareholders from any
claims arising in connection with the performance of their duties under this
Section 6.
6.2. Acquisitions and Withdrawals Other Than Through The Medical
Group. If Doctors Health decides to acquire physician practices or services
through one or more additional medical groups or other entities and not through
the Medical Group, the foregoing provisions of this Section 6 shall apply with
appropriate modifications to reflect the substitution of such additional medical
groups or other entities.
7. Litigation. The parties hereby submit to the jurisdiction and venue
of the courts of the State of Maryland. NO PARTY SHALL ELECT A TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT.
8. Miscellaneous.
8.1. Notices. Any notices given with respect to this Agreement shall
be deemed given on the date of delivery if in writing and delivered or mailed by
registered or certified mail, postage prepaid, return receipt requested,
reliable overnight courier service, hand delivery or other delivery service
providing written evidence of delivery. When giving any notices hereunder, the
addresses shall be as follows:
If to Doctors Health or the
Medical Group:
Doctors Health System, Inc.
10451 Mill Run Circle
10th Floor
Owings Mills, Maryland 21117
Attention: Legal Services
Department
If to the Physician:
Dr. Robert J. Ginsberg
2415 Musgrove Road, #209
Silver Spring, MD 20904
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8.2 Entire Agreement. This Agreement and the other Closing Documents
contain the entire understanding among the parties with respect to the subject
matters contained in this Agreement and supersede any prior understanding and
agreements between or among them respecting such subject matters.
8.3 Severability. If any provision of this Agreement, or the
application thereof to any person or circumstances shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
8.4 Assignment. No party to this Agreement shall have any right to
transfer, convey or assign its rights or obligations under this Agreement to any
person or entity, except that Doctors Health may make such transfer conveyances
or assignments to any of its affiliates. Each party to this Agreement reserves
the right to change its name to any other name that it believes desirable or
appropriate to the operation of its business or otherwise.
8.5 Additional Documents And Acts. Each party agrees to execute and
deliver such additional documents and instruments (including a stockholders
agreement with each other Doctors Health stockholder) and to perform such
additional acts as may be reasonably necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this
Agreement, and the transactions contemplated by this Agreement.
8.6 Interpretation. This Agreement shall be governed by the laws of
the State of Maryland, without regard to principles of conflicts of laws.
8.7 Amendment. This Agreement, including the Exhibits, Appendices
and Schedules hereto, may not be amended, altered or modified except by
instrument in writing executed by each party hereto, including through its duly
authorized attorney-in-fact.
8.8 Survival. All warranties, representations, covenants,
undertakings and indemnifications of each party contained herein shall survive
closing and the execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal as of the day and year first above written.
ATTEST/WITNESS: DOCTORS HEALTH MONTGOMERY,
LLC
_______________________________ By:__________________________ (SEAL)
Jeffrey P. Indrisano, M.D.
By: Thomas F. Mapp, Attorney-in-
Fact for Jeffrey P. Indrisano
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<PAGE>
ATTEST: DOCTORS HEALTH, INC.
_______________________________ By: __________________________ (SEAL)
Stewart B. Gold, President
WITNESS: PHYSICIAN
________________________________ _____________________________ (SEAL)
Dr. Robert J. Ginsberg
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