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PROSPECTUS SUPPLEMENT NO. 67 Filed Pursuant to Rule 424(b)(3)
To the Prospectus dated January 5, 1998, Registration No.: 333-1926
As Supplemented To Date
Option to Purchase
200 Shares
of
Class B Common Stock
This Prospectus Supplement relates to the issuance by Doctors Health, Inc.,
a Delaware corporation ("Doctors Health") of an Option (the "Option") to
purchase 200 shares of its Class B Common Stock par value $.01 per share ("the
Class B Common Stock") pursuant to Option Agreement (the "Option Agreement") to
be entered into among Clare Marie T. Rodgers ("Employee") and Doctors Health.
This Prospectus Supplement should be read in conjunction with the Prospectus
dated January 5, 1998 and the Prospectus Supplement No. 62 dated February 13,
1998 which contains the Company's Quarterly Report on Form 10-Q for the period
ended December 31, 1997; and Prospectus Supplement No. 70 which contains the
Shareholders Letter Agreement.
Doctors Health's principal executive office is located at 10451 Mill Run
Circle, Tenth Floor, Owings Mills, Maryland 21117, telephone number (410)
654-5800.
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 FROM
ANY PERSON, 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" referred to on page S-2 hereof for certain information
that should be considered in connection with an investment in securities of
Doctors Health.
The date of this Prospectus Supplement is March 5, 1998.
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RISK FACTORS
Financial Performance of Doctors Health
Doctors Health has a limited operating history and for the fiscal year
ended June 30, 1997 and the six months ended December 31, 1997, recorded a net
loss of approximately $14.8 million and $8 million, respectively. Doctors
Health is likely to record a net loss for the fiscal year ending June 30, 1998.
There can be no assurance that Doctors Health will earn operating profits after
completion of this transaction.
Risk Factors set forth in the Prospectus dated January 5, 1998
The Risk Factors set forth in the Prospectus are incorporated herein by
reference and should be read carefully by investors.
PROPOSED OPTION AGREEMENT AMONG DOCTORS HEALTH AND CLARE MARIE T. RODGERS
The following description of the transactions contemplated by the Option
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Option Agreement, a copy of which is attached to this
Prospectus Supplement as Annex A and is incorporated herein. Employee is urged
to read the Option Agreement in its entirety.
Vesting
The Option is immediately exercisable unless the Option has earlier
terminated pursuant to the provisions of the Option Agreement.
General
Pursuant to the Option Agreement, Doctors Health has granted to Employee an
option to purchase 200 shares of Doctors Health Class B Common Stock for an
exercise price of $7.50 per share.
Termination
Options granted to Employee shall terminate with respect to any shares of
Class B Common Stock as to which the Option has not been exercised effective on
the date Employee is no longer employed by Doctors Health, Anne Arundel Medical
Group, or an affiliate of Doctors Health for any reason other than Employee's
death or Disability.
RESALE OF OPTION AND CLASS B COMMON STOCK
The Option and the Shares offered by this Prospectus Supplement have been
registered under the Securities Act. The shares issuable upon exercise of the
Option will be subject to the Stockholders Agreement attached hereto as Annex B
and therefore, will not be freely transferable. The Option is nontransferable.
In addition, there is no public market for the Option or the Class B Common
Stock.
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.
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ANNEXES
Annex A - Option Agreement between Doctors Health, Inc. and Clare Marie T.
Rodgers.
Annex B - Form Shareholders Letter Agreement (delivered to Employee as
Prospectus Supplement No. 70).
Annex C - Quarterly Report on Form 10-Q for the period ended December 31,
1997 (delivered to Employee as Prospectus Supplement No. 62).
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ANNEX A
DOCTORS HEALTH, INC.
OPTION AGREEMENT
This Option Agreement (the "Option Agreement") is entered into this
____day of March, 1998, by and between Doctors Health, Inc., a Maryland
corporation ("DH"), and Clare Marie T. Rodgers ("Optionee").
RECITALS:
1. DH has registered certain shares of its Class B Common Stock, par
value $.01 per share ("Class B Common Stock") and options to acquire Class B
Common Stock ("Options") with the Securities and Exchange Commission ("SEC") and
with certain applicable states.
2. Pursuant to such registration, DH is offering of some or all of
such registered securities (the "Offering"), the terms of which are set forth in
a Prospectus and a Prospectus Supplement (together referred to herein as the
"Prospectus") that are part of the registration statement on Form S-1 filed with
the SEC (the "Registration Statement").
3. Optionee desires to acquire the securities offered pursuant to
the terms of the Offering in connection with her employment with Anne Arundel
Medical Group, LLC, an affiliate of Doctors Health.
4. Pursuant to the Offering, the Company has agreed to grant
Optionee Options to purchase 200 shares of Class B Common Stock.
AGREEMENTS:
In consideration of the foregoing, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Option Agreement, the definitions set forth
in Sections 1.1 through 1.12 shall be applicable.
Section 1.1 Affiliate. "Affiliate" shall mean any entity, whether
now or hereafter existing, which controls, is controlled by, is under common
control with, or whose medical practice is affiliated with, the Corporation
(including, but not limited to, joint ventures, limited liability companies, and
partnerships). For this purpose, "control" shall mean ownership of 50% or more
of the total combined voting power of all classes of stock or interests of the
entity.
Section 1. 2 Class B Common Stock. "Class B Common Stock" shall mean
shares of DH's authorized but unissued Class B common stock, par value of one
cent ($0.01) per share.
Section 1. 3 Exercise Date. "Exercise Date" shall mean the date on
which the Compensation Committee of DH (the "Committee") receives the written
notice required under Section 3.2 of this Option Agreement that Optionee has
exercised the Option.
Section 1. 4 Grant Date. "Grant Date" shall mean the date on which
DH issues an Option to Optionee pursuant to this Option Agreement.
Section 1. 5 Offering. "Offering" shall mean the offering of
securities by DH pursuant to which Optionee is acquiring the Options, the terms
of which are set forth in the Prospectus.
Section 1. 6 Options. "Options" shall mean those options to acquire
shares of Class B Common Stock of DH granted to Optionee pursuant to this Option
Agreement, each such option, upon proper exercise, entitling the Optionee to one
share of Class B Common Stock pursuant to the terms set forth in the Prospectus
and this Option Agreement.
Section 1.7 Fair Market Value. "Fair Market Value" of a share of the
Corporation's Common Stock for any purpose on a particular date shall be
determined in a manner such as the Committee shall in good faith determine to be
appropriate; provided, however, that if the Common Stock is publicly traded,
then Fair Market Value shall mean the last reported sale price per share of
Common Stock, regular way, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on a national
securities exchange or included for quotation on the Nasdaq-National Market, or
if the Common Stock is not so listed or admitted to trading or included for
quotation, the last quoted price, or if the Common Stock is not so quoted, the
average of the high
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bid and low asked prices, regular way, in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer in use, the principal other
automated quotations system that may then be in use or, if the Common Stock is
not quoted by any such organization, the average of the closing bid and asked
prices, regular way, as furnished by a professional market maker making a market
in the Common Stock as selected in good faith by the Committee or by such other
source or sources as shall be selected in good faith by the Committee. If, as
the case may be, the relevant date is not a trading day, the determination shall
be made as of the next preceding trading day. As used herein, the term "trading
day" shall mean a day on which public trading of securities occurs and is
reported in the principal consolidated reporting system referred to above, or if
the Common Stock is not listed or admitted to trading on a national securities
exchange or included for quotation on the Nasdaq-National Market, any business
day.
Section 1.8 Option Price. "Option Price" shall mean the price per
share of Common Stock at which the Option may be exercised. "Aggregate Option
Price" shall mean the Option Price multiplied by the number of Options to be
exercised pursuant to a notice of exercise.
Section 1.9 Prospectus. "Prospectus" shall mean the Prospectus and
any Prospectus Supplements that are part of the Registration Statement filed on
Form S-1 by DH and which set forth the terms of the Offering.
Section 1.10 Registration Statement. "Registration Statement" shall
mean the registration statement filed by DH with the SEC with respect to the
registration of the securities of DH, some or all of which are the subject of
the Offering.
Section 1.11 Change in Control. "Change in Control" shall mean (i)
a liquidating distribution to DH shareholders (or similar event); (ii) a
combination, consolidation or merger where DH is not the survivor; (iii) any
sale, exchange or other disposition of all or substantially all of DH's assets;
or (iv) any public offering of DH's Securities at a company value of at least
$25,000,000 with proceeds to DH of at least $15,000,000.
Section 1.12 Disability. "Disability" shall mean Grantee becomes
physically, mentally or emotionally disabled, whether totally or partially, as
determined by an independent qualified physician, so that Grantee is, in the
good faith determination of the Committee, substantially unable to perform his
assigned duties for (i) a period of two (2) consecutive months, or (ii) shorter
periods aggregating two (2) months during any twelve (12) month period, and
Anne Arundel Medical Group terminates Grantee's employment as a result thereof.
ARTICLE 2
ISSUANCE OF OPTIONS
Section 2.1 Issuance of Options. DH hereby grants to Optionee, as of
the date hereof (the "Grant Date") Two Hundred (200) Options to purchase shares
of Class B Common Stock at an exercise price of Seven Dollars and Fifty Cents
($7.50) per share (the "Option Price"), or such adjusted number of Options at
such adjusted Option Price as may be established from time to time pursuant to
the provisions of Article 5 hereof. Each Option, upon proper exercise thereof in
accordance with this Option Agreement, entitles Optionee to purchase one share
of DH Class B Common Stock.
ARTICLE 3
EXERCISE OF OPTIONS
Section 3.1 Exercisability of Options. The Options shall vest and be
exercisable, in whole or in part, at the rate of 20% per year, commencing on
December 14, 1998, unless the Options have earlier terminated pursuant to the
provisions of this Option Agreement. The Option may not be exercised unless such
action or consent as may be required by federal or state law relating to the
issuance or distribution of securities shall have been taken or obtained.
Section 3.2 Manner of Exercise. The Options may be exercised, in
whole or in part, by delivering written notice of exercise to DH in such form as
DH may require from time to time. Such notice shall specify the number of
Options being exercised, and shall be accompanied by full payment of the
Aggregate Option Price. In addition, such notice shall be accompanied by (i) a
written acknowledgment of the restrictions on the transferability of the shares
of Class B Common Stock executed in the form of the letter attached hereto and
marked Exhibit A and (ii) a signed copy of a Stockholders Agreement in such form
as DH may prescribe. Notwithstanding anything herein to the contrary, all Class
B Common Stock issued pursuant to the Options shall be subject to the terms and
conditions of said Stockholders Agreement. Payment of the Aggregate Option Price
may be made (i) in cash, (ii) in a number of shares of Class B Common Stock
(including shares of Class B Common Stock acquired upon the exercise of an
option) having a total Fair Market Value on the Exercise Date equal to the
Aggregate Option Price, or (iii) by a combination of the foregoing.
Notwithstanding the foregoing, if the Common Stock is registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, unless the Committee
determines otherwise in its discretion, payment of the Option Price also may be
satisfied, in whole or in part, by delivery of a properly executed exercise
notice, together with irrevocable instructions; (i) to a brokerage firm approved
by the Committee to deliver promptly to DH the aggregate amount of sale or loan
proceeds to pay the Option Price and any withholding tax obligations that may
arise in connection with the exercise,
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and (ii) to DH to deliver the certificates for such purchased shares directly to
such brokerage firm. The Options may be exercised only in multiples of whole
shares of Class B Common Stock and no partial shares shall be issued.
Section 3.3 Issuance of Shares and Payment of Cash upon Exercise.
Upon exercise of the Options, in whole or in part, in accordance with the terms
of this Option Agreement and upon payment of the Aggregate Option Price, DH
shall issue to Optionee the number of shares of Class B Common Stock equal to
the number of Options being exercised and for which payment was received, in the
form of fully paid and non-assessable Class B Common Stock.
Section 3.4 Reservation of Shares. DH shall at all times reserve and
keep available for issuance upon the exercise of Options a number of its
authorized but unissued shares of Class B Common Stock that will be sufficient
to permit the exercise in full of all outstanding Options.
ARTICLE 4
TERMINATION OF OPTIONS
Section 4.1 Upon Optionee's Death. Unless such Options are earlier
terminated pursuant to the provisions of this Option Agreement, upon Optionee's
death Optionee's executor, personal representative or the person to whom the
Options shall have been transferred by will or the laws of descent and
distribution, as the case may be, may exercise all or any part of the Options
not previously exercised, provided such exercise occurs within twelve (12)
months after the date Optionee dies, but not later than the end of the stated
term of the Option and, provided further, that such person executes a
Stockholders Agreement in such form as DH may prescribe.
Section 4.2 Termination of Employment For Reason Other Than Death or
Disability. Unless earlier terminated pursuant to the provisions of this Option
Agreement, Options granted to Optionee shall terminate with respect to any
shares of Class B Common Stock as to which the Option has not been exercised, as
of the date Optionee is no longer employed by either DH or an Affiliate for any
reason other than Optionee's death or Disability.
Section 4.3 Termination of Employment By Reason of Disability.
Unless the Options have earlier terminated pursuant to the provisions of this
Option Agreement, in the event that Optionee ceases to be an employee of DH or
an Affiliate by reason of Disability, Options that have not yet been exercised
may be exercised in whole or in part at any time on or after the date of
Disability, but not later than the end of the stated term of the Option or as
otherwise provided by the provisions of Section 4.1 of this Option Agreement.
ARTICLE 5
ADJUSTMENTS
Section 5.1 Adjustment of Number of Options; Option Price. Subject
to the provisions of this Article 5, the Option Price shall be subject to
adjustment as follows:
(a) In the event any change is made to the Class B Common Stock
(whether by reason of (i) a merger, consolidation, reorganization or
recapitalization of DH or (ii) a stock dividend, stock split, combination of
shares, exchange of shares or other change in capital structure of DH effected
without receipt of consideration), then, appropriate adjustments shall be made
to the number of shares and Option Price of the Class B Common Stock subject to
the Options.
(b) If DH is the surviving entity in any merger or other
business combination then the Options outstanding immediately after such merger
or other business combination, shall be appropriately adjusted to apply and
pertain to the number and class of securities that would be issuable to the
Optionee in the consummation of such merger or business combination if the
Options were exercised immediately prior to such merger or business combination,
and appropriate adjustments shall also be made to the Option Price.
ARTICLE 6
MISCELLANEOUS
Section 6.1 No Rights of Stockholder. Optionee shall not have any of
the rights of a stockholder with respect to the shares of Class B Common Stock
that may be issued upon the exercise of the Options until such shares of Class B
Common Stock have been issued to Optionee upon the due exercise of the Options.
Section 6.2 Nontransferability of Option. The Option shall be
nontransferable otherwise than by will or the laws of descent and distribution.
During the lifetime of Optionee, the Options may be exercised only by Optionee
or, during the period Optionee is under a legal disability, by Optionee's
guardian or legal representative.
Section 6.3 Non-Guarantee of Employment. Nothing in the Offering or
this Option Agreement shall be construed as a contract of employment between DH,
the Pediatric Group (or an Affiliate), the Pediatric Group and Optionee, or as a
contractual right of Optionee to continue in the employ of DH or an Affiliate,
or as a limitation of the right of DH or an Affiliate to discharge Optionee at
any time.
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Section 6.4 Withholding Taxes. DH or any Affiliate shall have the
right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Class B Common Stock) due
Optionee the amount of any federal, state or local taxes required by law to be
withheld as the result of the exercise of the Option or the disposition of
shares of Class B Common Stock acquired pursuant to the exercise of the Option.
In lieu of such deduction, DH may require Optionee to make a cash payment to DH
or an Affiliate equal to the amount required to be withheld. If Optionee does
not make such payment when requested, DH may refuse to issue any Class B Common
Stock certificate until arrangements satisfactory to the Company for such
payment have been made.
Section 6.5 Agreement Subject to Charter and By-Laws. This Agreement
is subject to the Charter and By-Laws of DH, and any applicable federal or state
laws, rules or regulations.
Section 6.6 Headings. The headings in this Option Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Option Agreement.
Section 6.7 Notices. All notices and other communications made or
given pursuant to this Option Agreement shall be in writing and shall be
sufficiently made or given if hand delivered or mailed by certified mail,
addressed to Optionee at the address contained in the records of DH or an
Affiliate, or to DH for the attention of its Secretary at its principal office.
Section 6.8 Entire Agreement; Modification. This Option Agreement
contains the entire agreement between the parties with respect to the subject
matter contained herein and may not be modified, except in a written document
signed by each of the parties hereto.
Section 6.9 Counterparts. This Option Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and the same
instrument.
Section 6.10 Governing Law. This Option Agreement shall be governed
by and construed under the laws of the State of Maryland without regard to
conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the date first above written.
DOCTORS HEALTH, INC.
By:
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Stewart B. Gold, President
OPTIONEE
By:
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Clare Marie T. Rodgers
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EXHIBIT A
Doctors Health, Inc.
10451 Mill Run Circle, 10th Floor
Owings Mills, Maryland 21117
Gentlemen:
I hereby exercise _________ Options granted to me on March ____, 1998,
by Doctors Health, Inc. (the "Company"), subject to all the terms and provisions
of the Option Agreement dated March ____, 1998 and notify you of my desire to
purchase ____________ shares of Class B Common Stock of DH at a price of $7.50
per share pursuant to the exercise of said Options, for a total purchase price
of $_________.
I hereby confirm that I am a party to a Shareholders Letter Agreement with
DH (or will be upon DH's execution of the Shareholders Letter Agreement executed
by me and attached hereto) pursuant to which I have agreed to certain
restrictions on the transferability of the shares of Class B Common Stock issued
to me upon exercise of the Options and other matters relating thereto, and the
certificates for the Shares to be issued to me shall contain a legend to that
effect.
Total Amount Enclosed: $
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Date:
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(Optionee)
Received by Doctors Health, Inc. on
, 19
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By:
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Name:
Title:
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