PROSPECTUS SUPPLEMENT NO. 13 Filed Pursuant to Rule 424(b)(3)
To the Prospectus dated January 24, 1997 Registration No.: 333-1926
As Supplemented to date
11,048 Shares
of
Class B Common Stock of
Doctors Health System, Inc.
This Prospectus Supplement relates to the proposed acquisition (the
"Acquisition") of certain assets and liabilities (the "Acquired Business") of
Lawrence D. Marcus, M.D., P.A., a Maryland corporation ("Medical Practice") by
Doctors Health System, 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 11,048 shares (the "Share Consideration") of its Class B Common
Stock, par value $.01 per share (the "Class B Common Stock") and will pay
$71,023.58 ("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 10313 Georgia
Avenue, Suite 207, Silver Spring, Maryland, 20902, telephone number (301)
681-8951. 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 and the Acquired Business 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.
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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.
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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 April 25, 1997.
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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 Supplement No. 2. 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 is a
Maryland Limited Liability Company organized in 1996 to conduct medical
practices in Montgomery County Maryland.
Medical Practice. The Medical Practice is a Maryland corporation which
conducts business through a Physician, office manager and nurse in Silver
Spring, Maryland.
The Acquisition; Closing
Pursuant to the Agreement and Plan of Merger (the "Acquisition Agreement")
between Medical Practice and Doctors Health, (i) Medical Practice shall transfer
to Doctors Health all of its right, title and interest in and to 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 11,048 shares (the "Share Consideration") of its Class B Common Stock to
Dr. Lawrence D. Marcus, and (iv) Doctors Health shall pay $71,023.58 ("Cash
Consideration") to Dr. Lawrence D. Marcus, 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 before April 30,
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 Stockholders 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."
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Certain Federal Income Tax Consequences of the Acquisition
Medical Practice is urged to consult its own tax advisors as to the
specific tax consequences to it of the Acquisition. See "Proposed Acquisition of
Medical Practice and Doctors Health - Certain Federal Income Tax Consequences."
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 in 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 to 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 six months ended December 31, 1996, recorded a net
loss of approximately $6.6 million and $6.7 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 and
Montgomery Newco, Inc., a subsidiary of Doctors Health, shall merge and the
separate existence of Medical Practice shall cease, (ii) Montgomery Newco shall
transfer to Doctors Health Montgomery, LLC 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 11,048 shares (the
"Share Consideration") of its Class B Common Stock to Dr. Lawrence D. Marcus,
and (iv) Doctors Health shall pay $71,023.58 ("Cash Consideration") to Dr.
Lawrence D. Marcus, on the terms and subject to the conditions set forth in the
Acquisition Agreement.
Background of the Acquisition
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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 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 medial
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
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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.
Accounting Treatment
The Acquisition will be accounted for as a purchase transaction for
financial reporting purposes under APB 16.
Certain Federal Income Tax Consequences
The following discussion of the material federal income tax consequences
of the Acquisition has been prepared in accordance with applicable disclosure
regulations. The individual circumstances of a Physician in the Medical Practice
may affect the tax consequences of the Acquisition. In addition, no information
is prepared herein with respect to the tax consequences of the Acquisition to
such Physician under applicable foreign, state or local laws. ACCORDINGLY, THE
PHYSICIAN IS ADVISED TO CONSULT HIS OWN TAX ADVISOR AS TO THE SPECIFIC
CONSEQUENCES OF THE ACQUISITION TO HIM.
In the opinion of Venable, Baetjer and Howard, LLP, counsel to Montgomery
Newco, Inc. and Doctors Health, the Merger will constitute a tax-free
reorganization under Section 368(a) of the Code, and Doctors Health, Montgomery
Newco, Inc. and Lawrence Marcus, M.D., P.A. will each be a party of the
reorganization within the meaning of Section 368(b) of the Code.
In rendering such opinion, counsel has relied upon the facts that are
described herein, upon certain customary representations made by the management
of Medical Practice and by the management of Doctors Health and upon certain
assumptions. Such opinion is also based upon the Code, regulations currently in
effect thereunder, current administrative rulings and practice by the Service,
and judicial authority, all of which are subject to change. Any such change
could affect the continuing validity of such opinion and this discussion. No
ruling has been sought from the Internal Revenue Services as to the federal
income tax consequences of the Merger, and the opinion of counsel is not binding
on the Internal Revenue Service or any court.
As a tax-free reorganization, the Merger will have the following federal
tax consequences for the Physician and Medical Practice (except for cash
received by the Physician):
(i) No gain or loss will be recognized by Medical Practice as a result of
the Merger;
(ii) No gain or loss will be recognized by Physician with respect to
shares of Class B Common Stock received from Doctors Health in exchange for
Physicians equity interest in Medical Practice; and
(iii) The tax basis of the shares of Class B Common Stock received by the
Physician will be equal to the aggregate tax basis of the Physician's equity in
the Medical Group.
The foregoing discussion is intended only as a summary of the material
federal income tax consequences of the Merger and does not purport to be a
complete analysis or listing of all potential tax effects relevant to a decision
whether to vote in favor of approval and adoption of the Merger Agreement. The
discussion does not address the tax consequences arising under the laws of any
state, locality or
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foreign jurisdiction. Holders of Medical Practice common stock are urged to
consult their own tax advisors concerning the federal, state, local and foreign
tax consequences of the Merger to them.
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 merge
into Montgomery Newco, Inc. and the separate existence of Medical Practice shall
lease, (ii) Montgomery Newco 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
11,048 shares (the "Share Consideration") of its Class B Common Stock to the
Physician, and (iv) Doctors Health shall pay $71,023.58 ("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
promptly with 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 stockholder 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.
Employment Agreement
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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 designee) 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:
Access to Information. Medical Practice shall afford to Doctors Health and
Medical Group and their respective accountants, counsel, financial advisors and
other representatives reasonable access during normal business hours throughout
the period prior to the earlier of the termination of the Acquisition Agreement
or the Closing Date to all of their respective properties, books, contracts,
commitments and records (including, but not limited to, tax returns) and, during
such period, shall furnish promptly to one another (i) a copy of each report,
schedule and other document filed or received by any of them pursuant to the
requirements of federal or state securities laws or filed by any of them with
the Commission in connection with the transactions contemplated by the
Acquisition Agreement or which may have a material effect on their respective
businesses, properties or personnel and (ii) such other information concerning
their respective businesses, properties and personal as they shall reasonably
request. The parties shall hold and shall use their reasonable best efforts to
hold in strict confidence all confidential information obtained in the course of
their respective investigations.
In the event that the Acquisition Agreement is terminated in accordance
with its terms, each party shall promptly return to the other all non-public
written material provided pursuant to this section and shall not retain any
copies, extracts or other reproduction in whole or in part of such written
material.
BUSINESS OF DOCTORS HEALTH
The business of Doctors Health is described in the Prospectus.
BUSINESS OF MEDICAL PRACTICE
The Medical Practice conducts an internal medicine practice at 10313
Georgia Avenue, Suite 207, Silver Spring, Maryland. The Medical Practice
conducts its business through one physician, Dr. Lawrence D. Marcus and an
office staff consisting of one office manager, and one nurse.
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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 offices, 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.
In addition to the restrictions on resale that may be imposed on
"affiliates" under the Securities Act, the share 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 Doctors Health's Stockholders Agreement (a cop of which is attached
hereto as Annex B) which provides significant contractual restrictions on the
resale of such Class B Common Stock until 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 Stockholders Agreement provides that the
signatories may sell and transfer the stock of the Company held by them only
pursuant to such agreement. The Stockholders Agreement contemplated that Doctors
Health may redeem shares of the Class B Common Stock upon an "Involuntary
Transfer" resulting generally from the insolvency of a stockholder or upon
divorce of an individual stockholder. "Voluntary Transfers" are permitted only
after a stockholders offers its stock , upon the same terms and conditions
contained in the offer it wishes to accept, to all other stockholders on the
terms set forth in the Stockholders Agreement. Individual stockholders may in
certain circumstances make estate planning transfers for the benefit of
themselves or family members on certain conditions.
Under the Stockholders Agreement, in the event of an "Involuntary
Transfer" or the death or disability of a management Stockholder, the purchase
of the stock and the transferring stockholder may agree on the purchase price of
the stock to be sold in such event. If the parties cannot agree on a price, the
price shall be the fair market value of the stock, as determined by a jointly
selected appraiser, as of the last day of the calendar month immediately
preceding the event giving rise to the purchase of the stock, in accordance with
the procedures set forth in the Stockholders Agreement. in the event of a
"Voluntary Transfer", the purchase price to be paid by the other stockholders or
Doctors Health, if they exercise their options to purchase the stock, will be
the price at which the stockholder proposes to transfer his stock to the
proposed third party transferee.
LEGAL MATTERS
The validity of the Class B Common Stock offered hereby have been passed
upon for the Company by Venable, Baetjer and Howard, LLP, Baltimore, Maryland.
ATTACHMENTS
Annex A - Agreement and Plan of Merger
Annex B - Stockholders Agreement (delivered to Medical Practice as
Prospectus Supplement No. 2)
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APPENDIX A
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AGREEMENT AND PLAN OF MERGER
by and among
DOCTORS HEALTH SYSTEM, INC.,
DOCTORS HEALTH MONTGOMERY, LLC.
MONTGOMERY NEWCO, INC.,
DR. LAWRENCE D. MARCUS
and
LAWRENCE MARCUS, M.D., P.A.
Dated as of April __, 1997
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of this
______ day of April, 1997 by and among DOCTORS HEALTH SYSTEM, INC. a Maryland
corporation ("DHS"), MONTGOMERY NEWCO, INC., a Maryland corporation and a
wholly-owned subsidiary of DHS ("Newco"), DOCTORS HEALTH MONTGOMERY, LLC, a
Maryland LLC (the "LLC"), LAWRENCE MARCUS, M.D., P.A., Maryland professional
service corporation (the "PA"), and DR. LAWRENCE D. MARCUS, who constitute the
stockholder of the PA (the "Physician" or the "PA Stockholder").
RECITALS
WHEREAS, the Physician have determined to terminate their practice of
medicine through the PA and have agreed to transfer their medical practice as
conducted through the PA to DHS and to become members and employees of
Montgomery LLC pursuant to a Professional Services Employment Agreement and a
Practice Participation Agreement of even date herewith;
WHEREAS, DHS, Newco, Montgomery LLC, and the PA desire that the PA and
Newco merge on the terms and conditions contained herein (the "Merger");
WHEREAS, in furtherance of the Merger, each of the Boards of Directors of
DHS, the PA and Newco, and the stockholder of the PA and Newco, have deemed the
Merger to be advisable and in the best interests of such entities and their
respective stockholder upon the terms and conditions herein contained; and
WHEREAS, each of the Boards of Directors of DHS, the PA and Newco, and the
stockholder of the PA and Newco, have approved the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) Subject to the terms and conditions hereof, at the
Effective Time (as herein defined), (i) the PA shall be merged with and into
Newco (the "Merger"), (ii) the separate existence of the PA shall cease, (iii)
Newco shall continue as the surviving corporation, and (iv) the issued and
outstanding shares of the PA Common Stock (the "PA Common Shares") shall be
converted into the right to receive the consideration set forth in Section 1.5
hereof (the "Merger Consideration") in accordance with the Articles of Merger
attached hereto as Exhibit A (the "Articles of Merger").
(b) Simultaneously upon execution of this Agreement, the
parties hereto shall cause the Merger to be consummated by the filing of the
Articles of Merger with the Maryland State Department of Assessments and
Taxation ("SDAT"), together with any other documents required by law to
effectuate the Merger, all of which shall be prepared, executed and delivered by
the appropriate parties as promptly as required. The Merger shall become
effective as of the time and date the Articles of Merger are filed and accepted
for record (the "Effective Time").
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(c) Except as specifically set forth herein, the identity,
existence, purposes, powers, objects, franchises, privileges, rights, property
and immunities of Newco and DHS shall continue unaffected and unimpaired by the
Merger.
(d) At the Effective Time, the PA Common Shares issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, automatically
be converted into, and constitute a right to receive, the Merger Shares.
(e) At the Effective Time, all of the shares of Newco Common
Stock issued and outstanding immediately prior to the Effective Time (the "Newco
Shares") shall remain issued and outstanding and unchanged.
1.2 Surrender of Certificates: Conversion of PA Common Shares.
(a) Upon surrender of the certificates representing the PA
Common Shares to DHS, together with an Assignment Separate from Certificate duly
executed by the PA Stockholder of the PA Common Shares, the PA Stockholder shall
receive, as soon as practicable thereafter and in exchange therefor, the Merger
Consideration issued to each of the PA Stockholder in proportion to their
ownership interest in the P.A.
(b) From and after the Effective Time, the PA Stockholder
shall cease to have any rights as a stockholder of the PA, except the right to
enforce the obligation of DHS to issue to them the Merger Consideration.
1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at or immediately following the
Effective Time at the offices of Doctors Health System, 10451 Mill Run Circle,
10th Floor, Owings Mills, Maryland. The date of the Closing is referred to
herein as the "Closing Date." The parties agree that the Merger and all other
transactions contemplated by this Agreement and the other documents executed and
delivered in connection with the Merger (the "Merger Documents") shall be deemed
to have occurred on, and shall be treated for financial accounting purposes as
being effective from and as of, the Effective Time.
1.4 Deliveries by the PA and the PA Stockholder. At the Closing, the
PA and the PA Stockholder shall deliver the following to DHS and Newco:
(a) Merger Documents. A certified copy of the executed
Articles of Merger and a copy of the Stockholder Agreement, signed by each of
the PA Stockholder.
(b) Governmental Consents. Evidence of such federal, state or
other government or governmental agency or authority certificates, permits,
licenses and other authorizations, authorities and approvals which are necessary
to consummate the Merger and all other transactions contemplated in this
Agreement and in the other Merger Documents; and
(c) Charter Documents. Certified copies of the Articles of
Incorporation and Bylaws of the PA;
(d) Other Documents. Such other instruments and documents as
are contemplated hereby or by any of the other Merger Documents or which counsel
to DHS or Newco reasonably requests as necessary or appropriate to carry out the
terms and provisions hereof or thereof.
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1.5 Deliveries by Newco and DHS.
(a) Prospectus. A Prospectus which is part of a Registration
Statement which has been declared effective by the Securities and Exchange
Commission and one or more Prospectus Supplements which contain more recent
information regarding DHS than the Prospectus.
(b) Merger Consideration. As consideration for the Merger, the
PA Stockholder shall in the aggregate receive the following consideration:
(i) Cash. Cash in the amount of $71,023.58.
(ii) Class B Common Stock. One or more certificates
representing 11,048 shares of the Class B Common Stock of DHS (the "Merger
Shares").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DHS AND NEWCO
2.1 Doctors Health and Newco represent and warrant to the Physician
as of the Closing Date as follows:
(a) Organization and Power. Each of Doctors Health and Newco
is a corporation duly incorporated and organized, validly existing and in good
standing under the laws of the State of Maryland. Each of Doctors Health and
Newco has full power and authority (corporate and other) to own and hold its
properties and to conduct its business as currently conducted.
(b) Authorization of Agreement. The execution, delivery and
performance of this Agreement and the other Closing Documents to which Doctors
Health or Newco are a party have been duly and validly authorized by Doctors
Health or Newco and executed on behalf of Doctors Health or Newco, and no other
proceedings are necessary to authorize this Agreement.
(c) Class B Common Stock. The Board of Directors of Doctors
Health has authorized the issuance of the Merger Shares to the Physician, and
upon issuance to the Physician of the Merger Shares, the Merger Shares shall
constitute fully paid and nonassessable shares of the Class B Common Stock of
Doctors Health.
(d) Registration Statement. The Merger 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.
(e) Representations and Warranties of the Physician. The
Physician hereby represents and warrants to the other parties hereto as of the
Closing Date as follows:
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE PA AND THE PA STOCKHOLDER
3.1 The PA and the PA Stockholder hereby, jointly and severally,
represent, warrant and covenant to DHS and Newco as follows:
(a) Ownership of Practice; Title to and Condition of Assets.
Except as listed on Schedule 3.1, 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.
(b) 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.
(c) 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.
(d) Litigation. There are no lawsuits, proceedings or
investigations pending or threatened against the Physician or the Physician's
Medical Practice.
(e) Contracts. Schedule 3.1(e) 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.
(f) 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.
(g) Financial Statements.. Attached as Schedule 3.1(g) is a
true and complete copy of an internally prepared or audited accrual basis
financial statement of the Medical Practice dated as of ___________________.
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 3.1(g).
(h) Receipt of Prospectus. The Physician acknowledges that he
has received the Prospectus.
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ARTICLE IV
INDEMNIFICATION
4.1 Tax Indemnities and Related Matters.
(a) Tax Indemnities Provided by the PA Stockholder. In
addition to the indemnities provided by PA Stockholder and the PA in Sections
4.2 and 4.3 of this Article V, the PA Stockholder will provide DHS and Newco
with an indemnity for Taxes as follows. The PA Stockholder agree to pay,
indemnify defend and hold harmless DHS and Newco and all of the members of their
affiliated group within the meaning of Section 1504 of the Code from and against
any and all Taxes of the PA with respect to any period (or any portion thereof)
up to and including the Effective Time, except for Taxes of the PA which are
reflected as current liabilities for Taxes on the PA Financial Statements.
(b) Tax Indemnity Provided by DHS and Newco. DHS and Newco
agree to pay, indemnify, defend and hold harmless the PA Stockholder from and
against any and all Taxes of Newco with respect to any period (or any portion
thereof) beginning after the Effective Time. In no event will DHS or Newco
indemnify the PA Stockholder or the PA for Taxes that arise as a result of a
failure of the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code unless such failure is due to a breach of any
representation, warranty or covenant of DHS or Newco under the terms of this
Agreement or the other Merger Documents.
(c) Procedures Relating to Indemnification of Tax Claims.
(i) If a claim for Taxes shall be made by any taxing
authority in writing (a "Tax Claim") which, if successful, might result in an
indemnity payment pursuant to Section 4.1(a) or (b) hereof, the party seeking
the indemnification (the "Tax Indemnified Party") shall notify the other party
(the "Tax Indemnifying Party") in writing of such Tax Claim within fifteen (15)
days of receipt of the Tax Claim from the taxing authority. Upon notice to the
Tax Indemnified Party, within fifteen days (15) after receipt of the notice of
such Tax Claim from the Tax Indemnified Party, the Tax Indemnifying Party may
assume (at its own cost and expense) control of and contest such Tax Claim. If
such control is assumed, the Tax Indemnifying Party may, in its reasonable
discretion, pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto, and
may, in its reasonable discretion, either pay the Tax Claim and sue for a refund
where applicable law permits such refund suits or contest such Tax Claim in any
permissible manner. In no case shall the Tax Indemnified Party or its designated
affiliates settle or otherwise compromise any Tax Claim referred to in the
preceding sentence without the Tax Indemnifying Party's prior written consent,
which consent may not be unreasonably withheld.
(ii) Alternatively, if the Tax Indemnifying Party
requests in writing within fifteen (25) days after receipt of notice of such Tax
Claim from the Tax Indemnified Party, the Tax Indemnified Party shall contest
such Tax Claim. The Tax Indemnifying Party shall be obligated to pay all
reasonable out-of-pocket costs and expenses (including legal fees and expenses)
which the Tax Indemnified Party or its designated affiliates may incur in so
contesting such Tax Claim as such costs and expenses are incurred: Under the
terms of this Section 4.1(c)(ii), the Tax Indemnified Party shall have the full
right to contest such Tax Claim except that the Tax Indemnifying Party shall
have the right, at its option and expense and with counsel of its choice, to
participate in such contest. The Tax Indemnifying Party shall be entitled to
settle or agree to pay in full such Tax Claim (in its sole discretion) and
thereafter pursue its right under this Agreement.
(iii) If the Tax Claim has not been contested, the Tax
Indemnifying Party shall pay the Tax Indemnified Party all indemnity amounts
with respect to such Tax Claim within ten (10) days after receipt by the Tax
Indemnifying Party of a written demand therefor. If the Tax Indemnifying
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Party has assumed control of the contest of such Tax Claim as provided above (or
has requested the Tax Indemnified Party to contest such proposed adjustment
within the time provide above), the Tax Indemnifying Party shall pay the Tax
Indemnified Party all indemnity amounts with respect to such Tax Claim within
ten (10) days after such Tax Claim is paid by the Indemnified Party or a Final
Determination has been made with respect to such Tax Claim.
(iv) For purposes of this Section 4.1(c), a "Final
Determination" shall mean (x) the entry of a decision of a court of competent
jurisdiction at such time as an appeal may no longer be taken from such decision
or (y) the execution of a closing agreement or its equivalent between the
particular taxpayer and the Internal Revenue Service, as provided in Section
7121 and Section 7122, respectively, of the Code, or a corresponding agreement
between the particular taxpayer and the particular state or local taxing
authority.
(d) Tax Return Filings and Related Payments. The accounting
firm retained by the PA and the PA Stockholder shall prepare the corporate
federal and state income tax returns of the PA for the tax year ending
immediately prior to the Effective Time. Grant Thornton, LLP or such other
accounting firm as DHS shall determine shall prepare or cause to be prepared,
and shall file, or cause to be filed, on a timely basis all other Tax Returns
with respect to Newco due after the Effective Time. In connection therewith, the
PA Stockholder shall be responsible for and shall pay any Taxes for which the PA
Stockholder have agreed to indemnify DHS and Newco pursuant to Section 4.1(a)
hereof. DHS and Newco will use reasonable efforts to provide the PA Stockholder
with copies of such Tax Returns (and related elections) covering the Taxes
described in Section 4.1(a), at least 10 days prior to the date DHS and Newco
plan to file such Tax Returns, accompanied by a statement calculating in detail
the PA Stockholder' obligation pursuant to Section 4.1(a) hereof. The PA
Stockholder may have these Tax Returns reviewed by accountants or attorneys at
their personal expense. The PA Stockholder shall pay to Newco the amount of
their indemnification obligations within ten (10) days of receiving copies of
such Tax Returns unless the parties are unable to agree on the amount of the
indemnification obligation hereunder, in which case the amount of the
indemnification obligation which is not in dispute shall be paid to Newco within
ten (10) days and the amount in dispute shall be resolved by a nationally
recognized accounting firm acceptable to both parties whose fees and expenses
shall be paid by Newco and the PA Stockholder in proportion to each party's
respective liability for Taxes as determined by the accounting firm. The PA
Stockholder shall pay the amount of Taxes determined by the accounting firm
within five days of receipt of such written determination, together with
interest based on the prime rate on such due date as such rate as published in
The Wall Street Journal (Eastern edition). Such interest shall accrue from the
date the payment was due to the taxing authority until the date Newco receives
payment. The PA Stockholder shall not file or cause to be filed an amended Tax
Return or claim for refund for the PA for any tax year or period ending on or
before the Effective Time without the consent of Newco and DHS.
(e) Certain Tax Information. The PA Stockholder, the PA, Newco
and DHS agree to cooperate and to file their federal and state income tax
returns in a manner consistent with the transactions contemplated by this
Agreement (including the preparation and filing of all information, schedules or
forms required pursuant to Income Tax Regulation 1.368-3, related to tax-free
reorganizations, which shall be prepared by DHS and reviewed by the PA's and the
PA Stockholder' accountants). The PA Stockholder, the PA, Newco and DHS agree to
cooperate and to furnish or cause to be furnished to each other (at reasonable
times and at no charge) upon request as promptly as practicable such information
(including access to books and records) pertinent to such tax filings or as may
be necessary in the preparation for any audit or the prosecution or defense of
any claim, suit or proceeding relating to any Tax Claim which may result in a
party being liable under the indemnification provisions of Section 4.1(a) and/or
(b) hereof.
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(f) For purposes of this Agreement,
(i) the term "Tax Returns" shall mean any return,
report, information return or other documents (including any related or
supporting information) required to be supplied to any taxing authority with
respect to Taxes; and
(ii) the term "Taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States
federal, state, local or foreign taxing authority, including, but not limited
to, income, gross receipts, ad valorem, excise, real property, personal
property, sales, use, transfer, franchise, employment, payroll withholding,
social security, Medicare or other taxes, including any interest, penalties, or
additions attributable thereto.
ARTICLE V
CONFIDENTIALITY
The parties hereto agree that the terms of this Agreement, the price
paid in connection with the Merger, the terms of the Professional Services
Employment Agreement between the PA Stockholder and Montgomery LLC and any other
oral or written agreement, financial information or data executed, provided to,
or gathered, developed, compiled or similarly obtained in any manner whatsoever
by any party in regard to the negotiation and consummation of the transactions
contemplated hereby is confidential and shall not be disclosed, duplicated or
distributed by any party to any third party, except as may be required by law or
government regulation, including without limitation as may be required by the
Securities Act of 1933 and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. DHS, the PA and the PA Stockholder
shall not make any public announcement or press release without the prior
written consent of the other party unless such disclosure is required by
applicable law, or governmental regulation. This obligation shall not apply to
information (1) which becomes publicly available through no action or inaction
on the part of any party, or (2) which is made available on a non-confidential
basis by third parties who, to any party's knowledge, are not bound by a
confidentiality obligation. This obligation of confidentiality shall survive the
termination or expiration of this Agreement, regardless of the reasons of any
such termination or expiration, for five years.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS OF PHYSICIAN
6.1. 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 Doctor Health as soon as practicable.
6.2. 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
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and will use his or her 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, 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.
6.3. 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.
6.4 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 6.4.
6.5 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 6.5 shall apply with
appropriate modifications to reflect the substitution of such additional medical
groups or other entities.
6.6 Accounts Receivable. The accounts receivable and trade payables
of the Medical Practice incurred prior to the Closing shall remain owned by or
the liability of the Physician, as the case may be. The Physician shall collect
such pre-closing accounts receivable and deposit them weekly into a Doctors
Health bank account. Such funds shall be used to pay the operating expenses of
the Medical Practice (including employee payroll and benefits, rent and other
operating expenses). After payment of expenses, Newco and Doctors Health shall
pay any net income to the Physician as compensation. After the Closing, the
Physician shall be responsible for the billing and collection of all revenues
from medical care
ARTICLE VII
MISCELLANEOUS
7.1 Survival. The representations and warranties contained in this
Agreement or in any instrument delivered hereunder shall survive the
effectiveness of the Merger contemplated hereby and shall not terminate until
the third anniversary of the Effective Time. The tax, environmental, and
specific indemnities provided in Article V and each of the other covenants and
agreements set forth herein shall survive until the expiration of the applicable
statutes of limitation for the matter(s) at issue or any specific period of time
set forth herein for such survival. Nothing contained herein, however, shall
affect the obligations of any party hereto to perform the agreements and
covenants on its part to be performed either before or after such date.
7.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies,
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obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Maryland, without regard to its conflict of laws
provision.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party below, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.
If to the PA or the PA Stockholder:
Lawrence D. Marcus, M.D.
10313 Georgia Avenue, Suite 207
Silver Spring, Maryland 20902
If to DHS or Newco: Doctors Health System, Inc.
10451 Mill Run Circle, 10th Floor
Owings Mills, Maryland 21117
Attention: President
Copy to: Doctors Health System, Inc.
10451 Mill Run Circle, 10th Floor
Owings Mills, Maryland 21117
Attention: Corporate Counsel
7.7 Finder's Fee. Each party hereto will indemnify and hold harmless
the others against and in respect of any claim for any finder's fee, brokerage
or other commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
7.8 Expenses. Except as provided in Article V hereof, each party
shall pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of this Agreement. If any action at law or
in equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.9 Amendments and Waivers.
(a) This Agreement may, to the maximum extent permitted by
applicable law, be amended by the parties hereto only by an instrument executed
by each of the parties hereto.
(b) Any term, provision or condition of this Agreement (other
than as
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prohibited by applicable law) may be waived in writing at any time by the party
which is entitled to the benefits thereof.
7.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provisions were so excluded and shall be enforceable in accordance with its
terms.
7.11 Definitions. Any capitalized terms not otherwise defined herein
shall have the meaning set forth in the Definition Appendix attached hereto as
Appendix A.
7.12 Third Party Beneficiary. The parties acknowledge and agree that
St. Joseph's Medical Center, Inc. is and shall be an express third party
beneficiary of and under this Agreement for the purpose and to the extent of
enforcing the representations and warranties set out in Articles II and III of
this Agreement as if it were a party hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement or
caused it to be executed as an instrument under seal by their authorized
officers as of the date and year first above written.
(signatures on following page)
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WITNESS/ATTEST: DOCTORS HEALTH SYSTEM, INC.
By:
- ------------------------- ----------------------------------
Stewart B. Gold, President
MONTGOMERY NEWCO, INC
By: (SEAL)
- ------------------------- ----------------------------------
Paul A. Serini, Vice President
DOCTORS HEALTH MONTGOMERY, LLC
By: (SEAL)
- ------------------------- ----------------------------------
Jeffrey P. Indrisano, M.D.
By: Thomas F. Mapp, Attorney-
in-Fact
By: (SEAL)
- ------------------------- ----------------------------------
Lawrence D. Marcus, M.D.
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