Exhibit 4.2
DOCTORS HEALTH, INC. OPTION AGREEMENT
This Option Agreement (the "Option Agreement") is entered into
this ____ day of ______________, 199_, by and between Doctors Health, Inc., a
Delaware corporation ("DH"), and ("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 some or all
of such registered securities (the "Offering") the terms of which are set forth
in a Prospectus and one or more Prospectus Supplements (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 and, in connection therewith, has executed a [Sale
Agreement/Independent Practice Association Agreement/Employment Agreement](the
"Main Agreement[s]"). Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Main Agreement[s]".
4. Pursuant to the Offering and the Main Agreement[s], the
Company has agreed to grant Optionee an Option to acquire _____ shares of Class
B Common Stock.
AGREEMENTS:
In consideration of the foregoing and of the mutual agreements
herein contained and set forth in the Main Agreement[s], the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Option Agreement, the definitions set
forth in Sections 1.1 through 1.11 shall be applicable.
Section 1.1 Affiliate. "Affiliate" shall mean: (i)
any corporation in which DH owns, directly or indirectly, fifty percent
(50%) or more of the total combined voting power of all classes of stock of
such corporation; and (ii) any Core Medical Group which is affiliated with DH.
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 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 Option. "Option" shall mean the Option to
acquire that number of shares of Class B Common Stock of DH granted to Optionee
pursuant to this Option Agreement, and the terms set forth in the Prospectus and
the Main Agreement[s].
Section 1.7 Fair Market Value. "Fair Market Value" of a
share of Class B Common Stock on the Grant Date or Exercise Date, as the case
may be, shall mean the last reported sale price per share of Class B Common
Stock, regular way, or, in case no such sale takes place on such day, 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 Class B Common
Stock is not so listed or admitted to trading or included for quotation, the
last quoted price, or if the Class B Common Stock is not so quoted, the average
of the high 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 Class B
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 Class B Common Stock as selected in good faith by the
Company or by such other source or sources as shall be selected in good faith by
the Company. In the event that there is no external market for the Class B
Common Stock, the Fair Market Value of shares of Class B Common Stock shall be
determined by the Company in such other manner as it may deem appropriate. 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 Class B Common Stock is not listed or admitted to trading on a national
securities exchange or included for quotation on the NASDAQ-National Market, any
day other than a Saturday, a Sunday or a day in which banking institutions in
the State of Maryland are closed.
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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 shares of Class B Common Stock to be exercised pursuant to a notice of
exercise.
Section 1.9 Prospectus. "Prospectus" shall mean the
Prospectus and Prospectus Supplement 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 Main Agreement[s]. "Main Agreement[s]" shall
mean the [sale/independent practice association/employment] agreement between DH
and Optionee pursuant to which Optionee agreed to the terms of the Offering and
pursuant to which Optionee is entitled to receive the Options.
Section 1.11 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.
ARTICLE 2
ISSUANCE OF OPTIONS
Section 2.1 Issuance of Options. DH hereby grants to
Optionee, as of the date hereof (the "Grant Date") an Option to purchase
________ (_______) shares of Class B Common Stock at an Option Price of
____________________ ($________) per share, (the "Option Price") or such
adjusted number of shares of Class B Common Stock at such adjusted Option Price
as may be established from time to time pursuant to the provisions of Article V
hereof.
Section 2.2 Term of Option. The Option granted pursuant
to Section 2.1 shall expire on the day prior to the tenth anniversary of the
Grant Date, unless such Option terminates earlier pursuant to other provisions
of this Option Agreement.
ARTICLE 3
EXERCISE OF OPTIONS
Section 3.1 Exercisability of Option. The Option shall
be exercisable, in whole or in part, at any time on or after ____________,
199___ or, if earlier, upon Optionee's death, unless the Option has earlier
terminated pursuant to the provisions of this Option Agreement. Notwithstanding
anything to the contrary herein, the Option may not be exercised unless the
shares of Class B Common Stock issuable upon exercise of such Option are then
subject to a currently effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), and unless such other 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.
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Section 3.2 Manner of Exercise. The Option 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 shares of Class B Common Stock for which the Option is to be
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 Letter Agreement (as described in the
Prospectus) in such form as DH may prescribe. Notwithstanding anything herein to
the contrary, all Class B Common Stock issued pursuant to the Option shall be
subject to the terms and conditions of said Letter 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.
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 Option, in whole or in part, in accordance with
the terms of this Agreement and upon payment of the Aggregate Option Price, DH
shall issue to Optionee the number of shares of Class B Common Stock designated
by Optionee in the notice of exercise and for which payment was received. Such
shares to be so issued shall be fully paid and non-assessable.
Section 3.4 Reservation of Shares. DH shall at all times
reserve and keep available for issuance upon the exercise of the Option a number
of its authorized but unissued shares of Class B Common Stock that will be
sufficient to permit the exercise in full of the Option.
[Section 3.5 is applicable only to Options granted in
connection with acquisitions of medical practices.]
Section 3.5 Reacquisition Rights. As a condition to
exercising the Option, Optionee shall waive any rights which Optionee then has
to the reacquisition of such Optionee's practice. Upon such waiver, DH and
Optionee agree that such reacquisition rights shall be terminated and shall be
null and void and of no further force and effect.
ARTICLE 4
TERMINATION OF OPTION
Section 4.1 Upon Optionee's Death. Unless the Option is
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 Option 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 Option not
previously exercised, provided such exercise
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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 Letter Agreement in such form as DH may prescribe.
[Sections 4.2 and 4.3 are applicable only to Options granted in
connection with employment agreements.]
Section 4.2 Termination of Employment For Reason Other
Than Death, Disability, Retirement or Wrongful Termination. Unless earlier
terminated pursuant to the provisions of this Option Agreement, The Option shall
terminate, with respect to those shares of Class B Common Stock for 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,
Disability, Retirement or Wrongful Termination (as such terms are defined in the
Employment Agreement).
Section 4.3 Termination of Employment By Reason of
Disability, Retirement or Wrongful Termination. 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, Retirement or Wrongful Termination, the Option, with respect to any
shares that have not yet been exercised, may be exercised in whole or in part at
any time on or after the date of Disability, Retirement or Wrongful Termination,
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 Shares; Option
Price. Subject to the provisions of this Article 5, the Number of Shares and
Option Price of the Class B. Common Stock Subject to the Option shall be
adjusted 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 or (ii) a stock dividend, stock split, combination of shares,
exchange of shares or other change in capital structure 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 Option.
(b) If DH is the surviving entity in any merger or other
business combination then, the Option immediately after such merger or other
business combination, the Option 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
Option were exercised immediately prior to such merger or business combination,
and appropriate adjustments shall also be made to the Option Price.
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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 Option until such
shares of Class B Common Stock have been issued to Optionee upon due exercise of
the Option.
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 Option may be exercised only
by Optionee or, during the period Optionee is under a legal disability, by
Optionee's guardian or legal representative.
[Sections 6.3 and 6.4 to be included if Optionee is entering
into Employment Agreement]
Section 6.3 Non-Guarantee of Employment. Nothing in the
Offering, the Main Agreement[s] or this Option Agreement shall be construed as a
contract of employment between DH (or an Affiliate) 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.
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.
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ARTICLE 7
MISCELLANEOUS
Section 7.1 Entire Agreement; Modification. This Option
Agreement and the Main Agreement[s] contain 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 7.2 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 7.3 Governing Law. This Option Agreement shall be
governed by and construed under the laws of the State of Delaware without regard
to conflicts of law.
Section 7.4 Counterparts. This Option 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.
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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OPTIONEE
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[Signature]
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[Type or Print Name of Optionee]
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EXHIBIT A
Doctors Health, Inc.
00000 Xxxx Xxx Xxxxxx, 10th Floor
Owings Mills, Maryland 21117
Gentlemen:
I hereby exercise the Option granted to me on
____________________, 199____ (the "Grant Date"), by Doctors Health, Inc. (the
"Company"), subject to all the terms and provisions set forth in the Option
Agreement executed by me on the Grant Date, and notify you of my desire to
purchase ____________ shares of Class B Common Stock of DH at a price of
$___________ per share pursuant to the exercise of said Option. This will
confirm my understanding with respect to the shares to be issued to me by reason
of this exercise of the Option (the shares to be issued pursuant hereto shall be
collectively referred to hereinafter as the "Shares") as follows:
I am a party to a Letter Agreement with DH (or will be upon
DH's execution of the 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 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: $__________
Date:________________________ ____________________________________
(Optionee)
Received by Doctors Health, Inc. on
________________________________, 19______
By:_______________________________________
