EXHIBIT 10.3
AMENDED AND RESTATED OPTION AGREEMENT
between
DOCTORS HEALTH SYSTEM, INC.
and
GENESIS HEALTH VENTURES, INC.
dated as of January 31, 1997
AMENDED AND RESTATED OPTION AGREEMENT
THIS AMENDED AND RESTATED OPTION AGREEMENT is entered into as of
January 31, 1997, by and between Doctors Health System, Inc., a Maryland
corporation (the "Company"), and Genesis Health Ventures, Inc., a Pennsylvania
corporation ("Genesis").
WHEREAS, the Company and Genesis entered into a Stock Purchase
Agreement dated September 4, 1996 (the "Stock Purchase Agreement") pursuant to
which Genesis purchased 571,428 shares of the Company's Series C Preferred
Stock, par value $17.50 per share (the "Series C Preferred Stock"); and
WHEREAS, the Company and Genesis Holdings have a wholly-owned
subsidiary of Genesis ("Holdings") have entered into a Note Purchase Agreement
(the "Note Purchase Agreement") and the Company has executed and delivered the
Convertible Subordinated Note of even date herewith pursuant to which Holdings
will provide the Company a $5 million loan facility; and
WHEREAS, the parties desire to enter into this Amended and Restated
Option Agreement in connection with the purchase by Genesis of additional shares
of Series C Preferred Stock.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
1. OPTION TO PURCHASE SHARES
Subject to the terms and conditions hereof, the Company hereby grants
to Genesis an option (the "Option") to purchase 250,000 shares (as adjusted
herein, the "Shares") of the Series C Preferred Stock. The exercise price of the
Option shall be $20.00 per share, payable by wire transfer in United States
Dollars (the "Option Price"), for a total consideration of $5,000,000. The
Option shall be immediately exercisable by Genesis at any time prior to its
expiration. The Option shall expire upon the earliest date on which one of the
following occurs (the "Option Termination Date"): (i) January 31, 2002; (ii) the
consummation of (a) a Qualified Public Offering, (b) a merger or similar
combination transaction of which the Company is not the survivor, or (c) a sale
or other disposition of substantially
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all of the Company's assets (any of (a)-(c) hereinafter referred to as a
"Qualified Transaction"); or (iii) consummation of the Permanent Financing as
defined in the Note Purchase Agreement dated January 31, 1997 by and among the
Company , Genesis and Genesis Holdings, Inc. (the "Note Purchase Agreement). The
Company shall provide Genesis with a written notice at least 30 days prior to
the consummation of any Qualified Transaction. For purposes of this Agreement, a
Qualified Public Offering shall mean an offering of the Company's Common Stock
registered under the Securities Act with (a) the net proceeds to the Company of
the sale of such Common Stock to equal or exceed $25,000,000, (b) a total market
capitalization of the Company at the time of such offering of at least
$100,000,000, (c) the net price per share to equal or exceed the weighted
average price paid by Genesis for each share of Series C Preferred Stock
outstanding immediately prior to such offering, plus all accrued but unpaid
dividends (whether declared or undeclared) and interest thereon, as
adjusted for stock splits, recapitalizations and similar transactions, and
(d) subject to a firm commitment underwriting conducted by a nationally
recognized underwriter reasonably acceptable to Genesis.
2. ADJUSTMENT IN NUMBER OF OPTION SHARES AND/OR OPTION PRICE
2.01. If the number of outstanding shares of Series C Preferred Stock
is increased or decreased or changed into or exchanged for a different number or
kind of stock or other securities of the Company by reason of any
recapitalization, reclassification (including any reclassification in connection
with a merger, consolidation or other business combination involving the
Company), stock split, reverse split, combination of shares of Series C
Preferred Stock, stock dividend or other distribution payable in capital stock,
or other increase or decrease in shares of Series C Preferred Stock effected
without receipt of consideration by the Company occurring after the date hereof,
a proportionate and appropriate adjustment shall be made by the Company in the
number and kind of shares subject to the Option, so that the proportionate
interest in the Company of Genesis immediately following such event shall, to
the extent practicable, be the same as immediately prior to such event. Any such
adjustment in the Option shall not change the aggregate Option Price with
respect to shares subject to the unexercised portion of the Option but shall
include a corresponding proportionate adjustment in the Option Price per share.
2.02. If, after the date hereof but prior to the Option Termination
Date (the "Adjustment Period"), the Company sells Series C Preferred Stock or
securities convertible into or exchangeable for Series C Preferred Stock, for a
price (the
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"Lower Offering Price") less than the weighted average price paid or to be paid
by Genesis for each share of Series C Preferred Stock then outstanding or
subject to the Option, plus all accrued but unpaid dividends and interest
thereon (the "Weighted Average Price"), the Option Price shall be adjusted to a
price equal to the quotient obtained by dividing:
(1) an amount equal to (x) the sum of (A) the total number of
shares of Series C Preferred Stock outstanding immediately prior to
such issuance or sale, plus (B) the total number of shares of Series C
Preferred Stock issuable upon exercise of all options, warrants and
other rights convertible or exchangeable for, or evidencing the right
to purchase shares of Series C Preferred Stock outstanding immediately
prior to such issuance or sale, if any, multiplied by (C) the Weighted
Average Price in effect immediately prior to such issuance or sale,
plus (y) the consideration, if any received or deemed to be received by
the Company upon such issuance or sale; by
(2) the sum of (A) the total number of shares of Series C
Preferred Stock outstanding immediately after such issuance or sale,
plus (B) the total number of shares of Series C Preferred Stock
issuable upon exercise of all options, warrants and other rights
convertible or exchangeable for, or evidencing the right to purchase
shares of Series C Preferred Stock outstanding immediately after such
issuance or sale, if any.
If, subsequent to such an adjustment, the Company issues or sells
additional shares of Series C Preferred Stock during the Adjustment Period, for
a price of less than the then applicable Weighted Average Price (as adjusted for
all prior adjustments), a further adjustment in the Option Price shall be made
in accordance with this Section 2.
3. PARTIAL EXERCISE
The Option shall be exercisable in whole or in part, at any time and
from time to time, after becoming exercisable and prior to termination of the
Option, provided, that no single exercise of the Option shall be for less than
10,000 Shares unless the number of Shares purchased is the total number at the
time available for purchase under this Option. In no event may the Option be
exercised for a fractional Share. The number of shares which may be purchased
upon exercise of the Option shall be reduced by the number of shares previously
purchased upon exercise of the Option.
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4. METHOD OF EXERCISE OF OPTION
Subject to the terms and conditions of this Option Agreement, Genesis
may exercise the Option with respect to all or any part of the Shares then
subject to such Option by giving the Company written notice of exercise,
specifying the number of Shares as to which the Option is being exercised. Such
notice shall be addressed to the Secretary of the Company at the Company's
principal office, and shall be effective upon delivery (by personal delivery,
fax or other delivery) to the Secretary of the Company. Such notice shall be
accompanied by cash (in U.S. Dollars) in an amount equal to the Option Price of
such Shares. The Company's obligations to issue Shares pursuant to this
Agreement are subject to the expiration, prior to an exercise of the Option, of
any waiting period applicable to the investment by Genesis in the Company
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
5. MANDATORY EXERCISE
5.01. Mandatory Exercise. Subject to the conditions set forth in
Sections 5.03 and 5.04, the Company may require Genesis to exercise the Option
with respect to such number of Shares as the Company shall determine in an
amount no greater than the number of Shares for which the Option may be
exercised at the end of any month which is the second consecutive month during
which the Company has received payment for a total of at least 20,000 Capitated
Medicare Lives. The Company's right to require a mandatory exercise of the
option shall terminate upon the closing of the Permanent Financing as defined in
the Note Purchase Agreement.
5.02. The obligations of Genesis to exercise the Option pursuant to
this Section 5 are subject to the fulfillment on or before each such exercise of
each of the following conditions:
5.02(a) The Company shall deliver a certificate in the form
attached as Exhibit A hereto dated as of the date of such exercise.
5.02(b) The Company shall have performed and complied with all
material agreements, obligations and conditions contained in the Stock
Purchase Agreement and the Restated Stockholders Agreement dated as of
the date hereof.
5.02(c) All consents, authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United
States or of any state or of any third party that are necessary in
connection with the exercise of the Option and the lawful issuance of
the Shares to Genesis
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pursuant to this Option Agreement shall have been duly obtained and
shall be effective on and as of such exercise other than those which
are not required to be obtained before such exercise.
5.02(d) There shall not have been any default or breach by the
Company (that has not been cured or waived) with respect to its
obligations (i) to holders of the Company's Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock under the
Company's articles of incorporation, (ii) to NationsBank, N.A. under
the Loan Agreement dated as of December 1, 1995 and (iii) under any
credit facility, including, without limitation, the facility currently
being negotiated with First National Bank of Maryland, N.A.
5.02(e) The expiration of any waiting period applicable to the
investment by Genesis in the Company required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
5.03 The Company shall provide Genesis with a written notice at least
30 days prior to a mandatory exercise pursuant to this Section 5. Such notice
shall set forth the number of Shares for which Genesis will be required to
exercise the Option, which number will not be less than 10,000 Shares.
5.04. For purposes of this Section 5, the term "Capitated Medicare
Lives" shall mean those Medicare-eligible persons living in Maryland, Delaware,
West Virginia and the District of Columbia and in the areas of Northern Virginia
and Southern Pennsylvania who, at the time of any calculation under this Section
5, are enrolled in (a) a "Medicare HMO" or similar Medicare managed care product
offered directly by the Company under contract with the United States Health
Care Financing Administration ("HCFA") and with respect to whom the Company
receives a capitation or other risk-based payment from HCFA, or (b) a "Medicare
HMO" or other similar Medicare managed care product offered by a health
maintenance organization or other payor with respect to which the Company agrees
to provide or arrange to provide all or substantially all of those services now
qualifying as "Medicare Part A" and "Medicare Part B" benefits under
arrangements that permit the Company to realize all or the preponderance of any
savings obtained by managing the provision of such services to enrolled Medicare
members.
6. LIMITATIONS ON TRANSFER
The Option is not transferable by Genesis, other than to a corporation
that, directly or indirectly, is wholly owned by Genesis, and shall not be
pledged or
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hypothecated (by operation of law or otherwise) or subject to execution,
attachment or similar processes.
7. RESERVATION OF STOCK
The Company shall at all times reserve and keep available, solely for
issuance and delivery upon exercise of the Option, the number of shares of
Series C Preferred Stock from time to time issuable upon exercise of the Option.
All shares of Series C Preferred Stock issuable upon exercise of the Option
shall be duly authorized and, when issued upon exercise and the payment of the
Option Price as provided herein, shall be validly issued, fully paid and
nonassessable with no liability on the part of Genesis.
8. RIGHTS AS SHAREHOLDER
Neither Genesis nor any successor or permitted assign shall be, or have
any of the rights or privileges of, a shareholder of the Company in respect of
any Shares issuable hereunder unless and until such Shares have been fully paid
and certificates representing such Shares have been endorsed, transferred and
delivered, and the name of Genesis (or of such successor or permitted assign)
has been entered as the shareholder of record on the books of the Company.
9. REORGANIZATIONS
9.1 Reorganization in Which the Company Is the Surviving Entity.
Subject to Section 9.2, if the Company shall be the surviving entity in any
reorganization, merger or consolidation of the Company with one or more other
entities, the Option shall pertain to and apply to the securities to which a
holder of the number of Shares subject to the Option would have been entitled
immediately following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so that the
aggregate Option Price thereafter shall be the same as the aggregate Option
Price of the Shares remaining subject to the Option immediately prior to such
reorganization, merger or consolidation.
9.2 Reorganization in Which the Company Is Not the Surviving
Corporation or Sale of Assets. Upon the dissolution or liquidation of the
Company, or upon a merger, consolidation or reorganization of the Company with
one or more other entities in which the Company is not the surviving entity, or
upon a sale of all or substantially all of the assets of the Company to another
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which the Company is the surviving entity) approved by the
Board of Directors of the Company which results in any person or entity, or
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persons or entities acting as a group or otherwise in concert owning 50 percent
or more of the combined voting power of all classes of stock of the Company, the
Option hereunder shall terminate, except to the extent provision is made in
writing in connection with such transaction for the continuation and/or the
assumption of the Option, or for the substitution for the Option of new options
covering the stock of a successor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares of
stock and exercise prices, in which event the Option shall continue in the
manner and under the terms so provided. The Company shall send written notice of
an event that will result in such a termination to Genesis not later than the
time at which the Company gives notice thereof to its shareholders but in no
event less than 30 days prior to such event.
10. ADJUSTMENTS
No fractional shares or units of other securities shall be issued
pursuant to any such adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding downward to the nearest
whole share or unit. Any disputes regarding adjustments in the Option Price or
number of Shares issuable upon exercise of the Option (including without
limitation any adjustments pursuant to Section 2 hereof) shall be resolved by an
independent arbitrator selected by the Company and Genesis.
11. MISCELLANEOUS PROVISIONS.
11.1 Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be faxed
and mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery, overnight or
express mail, addresses as follows:
(i) If to the Company:
Doctors Health System, Inc.
00000 Xxxx Xxx Xxxxxx
00xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(ii) If to Genesis:
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Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. XxXxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as it
is delivered to the addressee (with the return receipt, the delivery receipt, or
affidavit of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
11.2 Entire Agreement; Modification; Benefit. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
matters contemplated herein, supersede all prior oral and written memoranda and
agreements with respect to the matters contemplated herein, and may not be
modified, deleted or amended except by written instrument executed by the
parties. All provisions of this Agreement shall be binding upon, and shall inure
to the benefit of and be enforceable by, the parties hereto and their respective
successors and permitted assigns.
11.3 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed by
and construed in accordance with the laws of Maryland (but not including the
choice of law rules thereof).
11.4 Execution. To facilitate execution, this Agreement may be executed
in as many counterparts as may be required; and it shall not be necessary that
the signatures of, or on behalf of, each party, or the signatures of all persons
required
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to bind any party, appear on each counterpart; but it shall be sufficient that
the signature of, or on behalf of, each party, or the signatures of the persons
required to bind any party, appear on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement.
[Signatures commence on next page]
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IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement, or have caused this Agreement to be duly executed on their
behalf, as of the date first written above.
DOCTORS HEALTH SYSTEM, INC.
By:
_______________________________
Stewart B. Gold, President
GENESIS HEALTH VENTURES, INC.
By:
_______________________________
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Exhibit A
DOCTORS HEALTH SYSTEM, INC.
CERTIFICATE
Doctors Health System, Inc., a Maryland corporation (the "Company"), in
connection with the Amended and Restated Option Agreement (the "Option
Agreement") dated as of January ___, 1997 between the Company and Genesis Health
Ventures, Inc., a Pennsylvania corporation ("Genesis"), hereby represents and
warrants as of the date hereof (which representations and warranties shall be
deemed to include the disclosures with respect thereto so specified in the
schedules attached hereto) to the Investor as follows, with capitalized terms
used herein without definition having the meanings assigned to them in the Stock
Purchase Agreement dated as of September 4, 1996 between the Company and
Genesis:
1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland, and has the full and unrestricted corporate power and authority to
own, operate and lease its Assets, to carry on its business as currently
conducted, to execute and deliver the Option Agreement and to carry out the
transactions contemplated hereby. There is no state, country or territory
wherein the absence of licensing or qualification as a foreign corporation would
have a material adverse effect upon the business of the Company as currently
conducted.
2. Capitalization. The authorized capital stock of the Company and the
outstanding shares of capital stock of the Company as of the date hereof will be
as set forth in Schedule 2 hereto. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. No shares of capital stock
of the Company or any Subsidiary have been reserved for any purpose, other than
issuance of capital stock in amounts set forth in Schedule 2 (i) pursuant to the
Company's Omnibus Stock Option Plan , (ii) upon the conversion of Series A
Preferred Stock and the Series B Preferred Stock, (iii) upon the exercise of the
Common Stock Warrants (as defined in Schedule 2) and (iv) pursuant to the Option
Agreement. Except as set forth in Schedule 2, there are no outstanding
securities convertible into or exchangeable for the capital stock of the Company
or any of the Subsidiaries and no outstanding options, rights (preemptive or
otherwise), or warrants to purchase or to subscribe for any shares of such stock
or other securities of the Company or any of the Subsidiaries.
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3. Restrictions and Consents. There are no Agreements, Laws or other
restrictions of any kind to which the Company, any Subsidiary or any Medical
Group (or any asset thereof) is party or subject that would prevent or restrict
the execution, delivery or performance of the Option Agreement or result in any
penalty, forfeiture, Agreement termination, or restriction on business
operations of the Investor, the Company, any Subsidiary or any Medical Group as
a result of the execution, delivery or performance of the Option Agreement.
Schedule 3 lists all such Agreements and Laws that reasonably could be
interpreted or expected to require the consent or acquiescence of any person or
entity not party to the Option Agreement with respect to any aspect of the
execution, delivery or performance of the Option Agreement by the Company, any
Subsidiary or any Medical Group.
4. Authorization. The execution, delivery and performance by the
Company of the Option Agreement, the fulfillment of and compliance with the
terms and provisions thereof, and the consummation by the Company of the
transactions contemplated thereby, do not and will not: (a) require any consent
or approval of the stockholders of the Company that has not been obtained; (b)
conflict with, or violate any provision of, any Law having applicability to the
Company, any Subsidiary or any Medical Group or any of their respective Assets,
or any provision of the certificate or articles of organization or bylaws or
equivalent constituent document of the Company, any Subsidiary or any Medical
Group; (c) conflict with, or result in any breach of, or constitute a default
under any Agreement to which the Company, any Subsidiary or any Medical Group is
a party or by which it or any of its Assets may be bound; or (d) result in or
require the creation or imposition of or result in the acceleration of any
indebtedness, or of a material Encumbrance, or with respect to, the Company, any
Subsidiary or any Medical Group or any of the Assets now owned or hereafter
acquired by the Company, any Subsidiary or any Medical Group.
5. Regulatory Matters. The Company and the Subsidiaries and, to the
Company's knowledge, the Medical Groups and the physicians employed by the
Medical Groups have not knowingly or willfully failed to comply with the
regulatory matters described in this Section 5. Schedule 5 contains a list of
exceptions and disclosures that qualify the matters set forth in this Section 5,
where applicable.
5.1. General Compliance with Law. The Company, the
Subsidiaries and, to the Company's knowledge, the Medical Groups have complied
and are in full compliance with all Laws except where a failure to comply,
singly or in the aggregate, would not have a material adverse effect on the
Company, the Subsidiaries and the Medical Groups, taken as a whole.
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5.2. Licenses and Permits. The Company, the Subsidiaries, the
Medical Groups and each of the physicians employed by such Persons have all
Permits any federal, state, local, foreign or other governmental agency,
instrumentality, commission, authority, board or any other Person, necessary to
conduct their business as now being conducted except where the failure to have
any such Permit does not have a material adverse effect on the Company, the
Subsidiaries and the Medical Groups, taken as a whole. All Permits of the
Company and the Subsidiaries and, to the Company's knowledge, the Medical Groups
and each of the physicians employed by such Medical Groups are valid and in full
force and effect except where the failure to have any such Permit does not have
a material adverse effect on the Company, the Subsidiaries and the Medical
Groups, taken as a whole. No notice to, declaration, filing or registration
with, or Permit or consent from, any governmental or regulatory body or
authority, or any other Person or entity, is required to be made or obtained by
the Company or any of the Subsidiaries or Medical Groups in connection with the
execution, delivery or performance of this Purchase Agreement and the
consummation of the transactions contemplated hereby. Notwithstanding the
foregoing, the Company is not required to obtain any Permit to do business as a
health maintenance organization, insurance company, or other risk-bearing health
care entity under the Laws and regulations of Maryland or the Laws and
regulations of any other jurisdiction in which the Company, the Subsidiaries or
the Medical Groups do business.
5.3. Fraud and Abuse Matters. To the Company's knowledge, the
Company, the Medical Groups, and all persons and entities providing services for
the Company or the Medical Groups, have not engaged in any activities which are
prohibited or could form the basis for criminal penalties, civil monetary
penalties or a mandatory or permissive exclusion from the Medicare, Medicaid or
other federal and state health care programs under ss. ss. 1320a-7, 1320a-7a,
1320a-7b, or 1395nn of Title 42 of the United States Code, the federal CHAMPUS
statute, or any regulations promulgated thereunder, or similar or related
federal, state and local statutes, common law or regulations. Without in any way
limiting the foregoing, the Company, the Medical Groups, and, to the knowledge
of the Company, all persons and entities providing services for the Company or
the Medical Groups have not engaged in any of the following activities:
(i) knowingly and willingly made or caused to be
made any false statement or representation of a material fact in any
application for any benefit or payment;
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(ii) knowingly and willingly made or caused to be
made any false statement or representation of a material fact for
use in determining rights to any benefit or payment;
(iii) presenting or causing to be presented a claim
for reimbursement under CHAMPUS, Medicare, Medicaid, or other state
healthcare program that is for an item or service that the person
presenting or causing to be presented knows or should know was not
provided as claimed, or presenting a claim that the person presenting
knows or should know is false or fraudulent;
(iv) having knowledge of the occurrence of any event
affecting (a) his/her initial or continued right to any benefit or
payment or (b) the initial or continued right to any benefit or payment
of any other individual in whose behalf he/she has applied for or is
receiving such benefit or payment, conceals or fails to disclose such
event with an intent fraudulently to secure such benefit or payment
either in a greater amount or quantity that is due or when no such
benefit or payment is authorized;
(v) offering, paying, soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind (a) in return for
referring, or to induce the referral of, an individual to a person for
the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part by CHAMPUS, Medicare
or Medicaid, or other state health care program, or (b) in return for,
or to induce, the purchase, lease, or order of, or arranging for or
recommending the purchase, lease, or order of, any good, facility,
service, or item for which payment may be made in whole or in part by
CHAMPUS, Medicare or Medicaid, or other state health care program;
(vi) making or causing to be made or inducing or
seeking to induce the making of any false statement or representation
(or omitting to state a fact required to be stated therein or necessary
to make the statements contained therein not misleading) of a material
fact with respect to (a) the conditions or operations of a facility in
order that the facility may qualify for CHAMPUS, Medicare, Medicaid or
other state health care program certification, or (b) information
required to be provided under ss. 1124A of the Social Security Act (42
U.S.C. ss. 1320a-3);
(vii) submitting or causing to be submitted bills or
requests for payment under Medicare, Medicaid or other state health
care program containing charges substantially in excess of usual
charges; or
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(viii) furnishing or causing to be furnished items or
services to patients substantially in excess of the needs of such
patients.
5.4. Health Care Entity. The Company is not a "health care
entity" which provides "designated health services" for purposes of federal
Medicare/Medicaid physician self-referral and anti-kickback laws and regulations
and similar Maryland Laws and regulations.
6. Binding Obligation. The Option Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms.
7. Offering of Shares. Neither the Company nor any Person acting on its
behalf has offered the Series C Preferred or any similar securities of the
Company for sale to, solicited any offers to buy the Series C Preferred or any
similar securities of the Company from or otherwise approached or negotiated
with respect to the Company with any Person other than the Investor and a
limited number of other "Accredited Investors" (as defined in Rule 501(a) under
the Securities Act). Neither the Company nor any other Person acting on its
behalf has taken or will take any action prior to the exercise (including,
without limitation, any offering of any securities of the Company under
circumstances which would require the integration of such offering with the
offering of the Series C Preferred under the Securities Act and the rules and
regulations of the Commission thereunder) which might subject the offering,
issuance and sale of the Series C Preferred to the registration requirements of
Section 5 of the Securities Act.
8. Disclosure. No representation or warranty by the Company herein
contains or will contain any untrue or misleading statement of material fact or
omits or will omit any fact necessary to make the statements of material fact
contained herein or therein, in light of the circumstances under which made, not
misleading.
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IN WITNESS WHEREOF, the undersigned has signed this Certificate on
behalf of Doctors Health System, Inc. this ___ day of _______________.
DOCTORS HEALTH SYSTEM, INC.
By:
____________________________
Name:
Title:
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OFFICER'S CERTIFICATE
GENESIS HEALTH VENTURES, INC.
The undersigned, Xxxx X. XxXxxxxxx, Senior Vice President of Genesis
Health Ventures, Inc., a Pennsylvania corporation (the "Investor"), pursuant to
Stock Purchase Agreement between the Investor and Doctors Health System, Inc.
dated September 4, 1996 (the "Purchase Agreement") and the Amended and Restated
Option Agreement between the Investor and Doctors Health System, Inc. dated
January ___, 1997 (the "Option Agreement"), hereby certifies on behalf of the
Investor as follows:
1. The representations and warranties made by the Investor in the
Purchase Agreement are true and correct in all material respects as of the date
hereof.
2. The Investor has performed and complied with all agreements and
conditions required by the Purchase Agreement to be performed or complied with
by it prior to the date hereof.
3. No action or proceeding by or before any governmental authority has
been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which is reasonably expected to restrain, prohibit or
invalidate the transactions contemplated by the Purchase Agreement.
4. Attached as Exhibit I hereto is a true and correct copy of the
resolutions duly adopted by the Board of Directors of the Investor at a meeting
held on August 21, 1996 and such resolutions are in full force and effect on the
date hereof, have not been amended, altered or repealed, and are the only
resolutions by the Board of Directors of the Investor.
1
IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate as of January ___, 1997.
______________________________
Xxxx X. XxXxxxxxx
Senior Vice President
The undersigned, _______________________________ of the Investor,
hereby certifies that Xxxx X. XxXxxxxxx is, on and as of the date hereof, a duly
elected, qualified and acting Senior Vice President of the Investor and the
signature set forth above is his genuine signature.
Dated: _____________________________
2
