STOCKHOLDER NON-COMPETITION AGREEMENT
THIS STOCKHOLDER NON-COMPETITION AGREEMENT (the "Agreement") dated as of
November 26, 1997, among NEW JERSEY ORTHOPEDIC ASSOCIATES, P.A., a New Jersey
professional association (the "Medical Group"), each of the individuals
identified on the signature page hereof (each, a "Stockholder" and collectively,
the "Stockholders"), and BMJ MEDICAL MANAGEMENT, INC., a Delaware corporation
("BMJ"), with reference to the following facts:
A. The Medical Group is engaged in the business of providing orthopedic
medical and surgical services and related medical and ancillary services (the
"Medical Services") to the general public.
B. Each Stockholder is a shareholder and employee of the Medical Group.
C. BMJ is engaged in the business of providing management,
administrative, financial, marketing, information technology and related
services to professional medical organizations.
D. The Medical Group and BMJ have entered into a Management Services
Agreement effective as of November 1, 1997 (the "Management Services
Agreement"), under which the Medical Group has agreed to cause the Stockholders
to execute this Agreement.
E. Each Stockholder is acquiring stock in BMJ in connection with the
execution of the Management Services Agreement and pursuant to a Restricted
Stock Agreement entered into as of the date hereof among the Stockholders and
BMJ (the "Restricted Stock Agreement").
NOW, THEREFORE, in consideration of and as an inducement to BMJ's
entering into the Management Services Agreement, the Restricted Stock Agreement,
and the other agreements related thereto, and in consideration of such
Stockholder's status as a shareholder or employee of the Medical Group, each
Stockholder (for himself or herself only) hereby agrees for the benefit of both
the Medical Group and BMJ as follows:
1. Definition.
For all purposes of this Agreement, "Competitive Business" shall mean any
business that provides (i) orthopedic medical and surgical services and related
medical and ancillary
services to the general public, or (ii) administrative, billing, collection,
financial, marketing, information technology and operational services to
professional medical groups relating to such groups' provision of the
professional medical and related services described in clause (i), or (iii) any
other services provided by BMJ.
2. Agreement Not to Compete or Interfere with Business.
(a) Each Stockholder acknowledges that (i) he or she is receiving
benefits from the consideration being paid by BMJ hereunder and the acquisition
of securities from BMJ pursuant to the Restricted Stock Agreement, (ii) the
Medical Group and its affiliates conduct their business primarily in Monmouth
County, New Jersey, and (iii) due to the highly competitive nature of the
Medical Group's and BMJ's businesses, the value and goodwill of the Medical
Group's and BMJ's businesses would be substantially impaired if such Stockholder
engaged in a Competitive Business. Accordingly, each Stockholder hereby agrees
that, during the period commencing on the date hereof and ending two years after
the earliest to occur of (x) the expiration of the Management Services
Agreement, (y) the termination of the Management Services Agreement by BMJ
pursuant to Section 13.2 thereof, or (z) the effective date of such
Stockholder's resignation or termination of equity owner status or employment
with the Medical Group, he or she will not:
(A) engage, directly or indirectly, in any
Competitive Business at any location within twenty-five (25)
miles of any Medical Group office (the "Restricted
Territory"), whether such engagement shall be as an
employee, officer, director, owner, partner, advisor,
consultant, stockholder or other participant in any
Competitive Business (or in any similar capacity in which
the Stockholder derives an economic benefit from a
Competitive Business);
(B) assist others in engaging in any Competitive
Business within the Restricted Territory in the manner
described in the foregoing clause (A);
(C); solicit, entice or induce any employee or
stockholder of, or any partner in, the Medical Group, BMJ,
or any affiliate or subsidiary of the Medical Group or BMJ
to terminate his or her employment or partnership or
stockholder status with such entity or to engage in any
Competitive Business within the Restricted Territory;
(D) solicit, entice or induce any vendor, customer
or distributor of the Medical Group, BMJ, or any affiliate
or subsidiary of the Medical Group or BMJ
-2-
to terminate or materially diminish its relationship with
the Medical Group, BMJ, or any affiliate or subsidiary of
the Medical Group or BMJ; or
(E) otherwise knowingly damage, disparage or
interfere with the Medical Group, BMJ, or any affiliate or
subsidiary of the Medical Group or BMJ;
provided, however, that nothing contained in this Agreement shall prohibit the
Stockholder from owning in the aggregate less three percent (3.0%) of a class of
publicly-traded securities issued by any Competitive Business.
(b)BMJ and the Medical Group acknowledge and agree that no Stockholder
shall have any further obligation pursuant to this Agreement in the event that
(i) the Medical Group terminates the Management Services Agreement pursuant to
Section 13.1 thereof; (ii) either party to the Management Services Agreement
terminates such agreement pursuant to Section 13.3 thereof; or (iii) the Medical
Group rescinds the Management Services Agreement pursuant to Section 13.6
thereof.
3. Confidentiality.
(a) Each Stockholder acknowledges and agrees that certain information he
or she has received or will receive from the Medical Group and its affiliates or
from BMJ and its affiliates constitutes the confidential and proprietary trade
secrets of the Medical Group or of BMJ, as the case may be, and that such
Stockholder's non-disclosure thereof is essential to this Agreement and a
condition to such Stockholder's use and possession thereof. Each Stockholder
shall retain in strict confidence any and all such confidential information
received from the Medical Group and/or any of its affiliates (the "Medical Group
Confidential Information") or from BMJ and/or any of its affiliates (the "BMJ
Confidential Information") (collectively, the "Confidential Information") and
under no circumstances shall such Stockholder distribute or in any way
disseminate Confidential Information, directly or indirectly, to any third party
or use Confidential Information for such Stockholder's personal benefit without
the prior written consent of the Medical Group (in the case of Medical Group
Confidential Information) or without the prior written consent of BMJ (in the
case of BMJ Confidential Information).
(b) Notwithstanding the above, no Stockholder shall have any liability to
the Medical Group or its affiliates or to BMJ or its affiliates with respect to
Confidential Information which:
(i) was generally known and available in the public domain
at the time it was disclosed or becomes
-3-
generally known and available in the public domain through no fault of
such Stockholder;
(ii) is disclosed with the prior written consent of the
Medical Group or BMJ, as the case may be;
(iii) becomes known to such Stockholder from a source other
than the Medical Group or its affiliates or BMJ or its affiliates
without breach of this Agreement by such Stockholder, without breach
of any agreement between the Medical Group or BMJ, as the case may be,
and such source, and otherwise not in violation of the Medical Group's
or its affiliates' rights or the rights of BMJ or its affiliates; or
(iv) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided,
however, that such Stockholder shall provide prompt, advance notice
thereof to enable the Medical Group or its affiliate or BMJ or its
affiliates to seek a protective order or otherwise prevent such
disclosure.
(c)Each Stockholder agrees to indemnify the Medical Group or its
affiliates and BMJ or its affiliates for any damages the same may suffer as a
result of such Stockholder's or his or her agents' failure to abide by the
provisions of this Section 3.
4. Acknowledgment.
Each Stockholder acknowledges that the provisions of this Agreement are
not designed to prevent such Stockholder from earning a living or fostering his
or her own career. The provisions of this Agreement are designed to prevent any
third party from gaining unfair advantage from such Stockholder's knowledge of
confidential and proprietary information relating to the Medical Group or BMJ or
otherwise damaging or interfering with the business of the Medical Group or BMJ
or from such Stockholder's participation in any Competitive Business. Each
Stockholder further acknowledges receiving sufficient consideration under this
Agreement and the Restricted Stock Agreement to compensate him or her for any
losses he or she may suffer or incur as a result of losing any employment or
other professional opportunity as a result of entering into and fulfilling his
or her obligations under this Agreement.
5. Consideration.
As consideration for each Stockholder's covenants in favor of the Medical
Group, the Medical Group is providing each such Stockholder with continued
employment, and as consideration for each Stockholder's covenants in favor of
BMJ under this
-4-
Agreement, BMJ is paying to each such Stockholder that amount set forth opposite
such Stockholder's name on Annex I attached hereto, which amount shall be
payable simultaneously with the execution and delivery of this Agreement by
certified or cashier's check or wire transfer of funds.
6. Survival; Remedies.
Each Stockholder's covenants under this Agreement shall survive
termination of his or her equity owner status or employment with the Medical
Group. Each Stockholder acknowledges that a breach or threatened breach by such
Stockholder of this Agreement will cause irreparable damage and material loss to
BMJ and the Medical Group and that a remedy at law for any breach or threatened
breach of the provisions of this Agreement would be inadequate and therefore
agrees that each of the Medical Group and BMJ shall be entitled to injunctive
relief; provided, however, that nothing contained herein shall be construed as
prohibiting the Medical Group or BMJ from pursuing any other remedies available
for any such breach or threatened breach.
7. Benefits of Agreement.
This Agreement and the rights and obligations of the parties hereto shall
bind and inure to the benefit of any successors of the Medical Group and
successors of BMJ by reorganization, merger or consolidation or otherwise and
any assignee of all or substantially all of the business and properties of the
Medical Group or BMJ.
8. Severability.
It is the desire and intent of the parties hereto that the provisions of
this Agreement shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Agreement shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, if any one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to duration, geographical
scope, activity or subject, it shall be construed by limiting and reducing it,
so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.
9. Notices.
All notices or other communications required or permitted hereunder shall
-5-
be in writing and sufficient if (a)
delivered personally, (b) sent by nationally-recognized overnight
courier or (c) sent by certified mail, postage prepaid, return receipt
requested, addressed as follows:
(i) If to the Medical Group, to:
New Jersey Orthopedic Associates, P.A.
Freehold Office Plaza
Building 1
0000 Xxxxx 0 Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, M.D.
Telecopier: (000) 000-0000;
with a copy to:
Brach, Eichler, Xxxxxxxxx, Silver, Xxxxxxxxx,
Hammer & Gladstone
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000;
(ii) If to any Stockholder, to his or her address set forth on
the signature page hereto beneath his or her name; and
(iii) If to BMJ, to:
BMJ MEDICAL MANAGEMENT, INC.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx, M.D.
President
Telecopier: (000) 000-0000;
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Held, Esq.
Telecopier: (000) 000-0000;
or, in each case, to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such communication shall be deemed to have been given (a) when delivered, if
personally delivered, (b) on the business day after dispatch, if sent by
nationally-recognized overnight courier and (c) on the third business day after
dispatch, if sent by mail.
-6-
10. Relationship Among Stockholders.
No Stockholder shall have any responsibility for any breach of this
Agreement by any other Stockholder or for any representations, warranties, acts
or omissions of any other Stockholder. Each Stockholder is entering into this
Agreement for and on behalf of such Stockholder only, and no partnership, joint
venture, unincorporated association or any other legal entity is intended to be
formed by or among the Stockholders as a result of or in connection with this
Agreement. The parties have chosen to execute a single instrument for
convenience only, and this Agreement shall be construed as separate and several
agreements among the Medical Group, BMJ and each of the respective Stockholders
for all purposes. This Agreement may be executed in separate counterparts.
11. Entire Agreement; Amendments; Prior Agreements.
This Agreement, the Management Services Agreement and the Restricted
Stock Agreement constitute the entire agreement between the parties with respect
to the subject matter hereof and may not be amended, supplemented, canceled or
discharged except by a written instrument executed by the parties hereto. This
Agreement supersedes any and all prior agreements among all of the parties
hereto with respect to the matters covered hereby.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey without regard to the laws and principles
thereof or of any other jurisdiction which would direct the application of the
laws of another jurisdiction.
13. Attorneys' Fees.
In the event of any dispute or controversy arising out of or relating to
this Agreement, the prevailing party shall be entitled to recover from the
losing party all costs and expenses, including attorneys' fees and accountants'
fees, incurred in connection with such dispute or controversy.
14. Headings.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
* * * *
-7-
IN WITNESS WHEREOF, this Stockholder Non-Competition Agreement has been
executed and delivered as of the Signature Date.
NEW JERSEY ORTHOPEDIC
ASSOCIATES, P.A.
By:
---------------------------
Name:
Title:
BMJ MEDICAL MANAGEMENT, INC.
By:
---------------------------
Name:
Title:
STOCKHOLDERS:
------------------------------
Xxxx Xxxxxxxx, M.D.
Address for notices:
------------------------------
------------------------------
------------------------------
Xxxxxx X. Xxxxxx, M.D.
Address for notices:
------------------------------
------------------------------
------------------------------
Xxxxx X. Xxxxxxxxx, M.D.
Address for notices:
------------------------------
------------------------------
