EXECUTION COPY
STOCKHOLDER NON-COMPETITION AGREEMENT
THIS STOCKHOLDER NON-COMPETITION AGREEMENT (the "Agreement")
is entered into as of August 8, 1997, among XXXXXXX AND XXXXXXX, M.D.'S, P.A., a
Florida professional association (the "Medical Group"), the individual
identified on the signature page hereof (the "Stockholder"), and BONE, MUSCLE
AND JOINT, 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. The Stockholder is a partner in or stockholder or
employee of the Medical Group.
C. The Medical Group and BMJ have entered into a
Management Services Agreement dated as of the date hereof (the "Management
Services Agreement"), under which the Medical Group has agreed to cause the
Stockholder (among others) to execute this Agreement.
D. The 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 between the Stockholder and BMJ,
dated as of the date hereof (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 the
Stockholder's status as an equity owner or employee of the Medical Group, the
Stockholder 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) The Stockholder acknowledges that (i) he or she
is receiving benefits from the purchase of securities from BMJ pursuant to the
Restricted Stock Agreement, (ii) the Medical Group and its affiliates conduct
their business primarily in Palm Beach County, Florida, and (iii) due to the
highly competitive nature of theMedical Group's and BMJ's businesses, the value
and goodwill of the Medical Group's and BMJ's businesses would be substantially
impaired if the Stockholder engaged in a Competitive Business. Accordingly, the
Stockholder hereby agrees that, during the period (such period being referred to
herein as the "Non-Compete 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 the
Stockholder's resignation or termination of equity ownership status or
employment with the Medical Group (the earliest to occur of clause x, (y) or (z)
being referred to herein as the "Exit Date"), he or she will not:
(A) engage, directly or indirectly, in any
Competitive Business at any location within fifteen (15) 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),
provided that if the Stockholder becomes a partner in or other equity owner of
the Medical Group, the Restricted Territory shall be any location within
twenty-five (25) miles of any Medical Group office;
(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
equity owner 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 to terminate or materially diminish its relationship with
the Medical Group, BMJ, or any affiliate or subsidiary of the Medical Group or
BMJ; or
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(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 than 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
the Stockholder shall have no 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 exercises the Rescission Option set forth in Section 14
of the Management Services Agreement.
3. Confidentiality.
(a) The 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 the Stockholder's non-disclosure thereof is essential to this Agreement
and a condition to the Stockholder's use and possession thereof. The 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 the Stockholder distribute or in any way
disseminate Confidential Information, directly or indirectly, to any third party
or use Confidential Information for the 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, the Stockholder shall have
no 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 generally known and available in
the public domain through no fault of the Stockholder;
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(ii) is disclosed with the prior written consent of
the Medical Group or BMJ, as the case may be;
(iii) becomes known to the Stockholder from a source
other than the Medical Group or its affiliates or BMJ or its affiliates without
breach of this Agreement by the 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 the 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) The 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 the Stockholder's or his or her agents' failure to abide by the
provisions of this Section 3.
4. Acknowledgment.
The Stockholder acknowledges that the provisions of this
Agreement are not designed to prevent the 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 the 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. The Stockholder further acknowledges receiving sufficient
consideration under 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. Buyout of Non-Compete Covenant.
(a) At any time from and after the Exit Date, the
Stockholder may request (a "Termination Request") that BMJ and the Medical Group
terminate such Stockholder's obligations under paragraph (A) of Section 2(a)
hereof. Such request shall be made by the Stockholder in writing and shall be
delivered to the Medical Group and BMJ in accordance with Section 9 hereof. The
copy of the Termination Request addressed to BMJ shall be
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accompanied by a certified check payable to BMJ in an amount equal to one-half
of $110,000 (the total amount being referred to herein as the "Buyout Amount").
The Stockholder shall deliver the remaining one-half (the "Second Payment") of
the Buyout Amount to BMJ no later than the first anniversary of the initial
payment pursuant to the previous sentence (such one year period being referred
to herein as the "Payment Period"). Notwithstanding the foregoing, in the event
the Stockholder fails to deliver the Second Payment by the end of the Payment
Period, then the terms of this Section 5(a) shall automatically be deemed null
and void and the provisions of paragraph (A) of Section 2(a) hereof shall be
deemed operative again (with the duration of the Payment Period not to be
counted as part of the Non-Compete Period).
(b) Nothing contained herein shall be construed to in any
way limit or reduce the remedies available to the Medical Group and BMJ
hereunder in the event of a breach of Section 2(a) hereof prior to the delivery
of a Termination Request.
(c) Notwithstanding anything to the contrary contained
herein, in the event that the Stockholder delivers a Termination Request to the
Medical Group and BMJ and complies with the other provisions of Section 5(a)
above, any solicitation by the Stockholder of those patients to which the
Stockholder provided medical services prior to the Exit Date shall not be deemed
a breach of Section 2 hereof.
6. Survival; Remedies.
The Stockholder's covenants under this Agreement shall survive
termination of Stockholder's equity owner status or employment with the Medical
Group. The Stockholder acknowledges that a remedy at law for any breach or
threatened breach of the provisions of this Agreement would be inadequate and
therefore agrees that 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.
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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 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:
Fishman and Xxxxxxx, M.D.'s, P.A.
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, M.D.
Telecopier: (000) 000-0000;
with a copy to:
Xxxxx & Xxxxxxxx, P.A.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telecopier: (000) 000-0000;
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(ii) If to the Stockholder, to his or her address set
forth on the signature page hereto beneath his or her name;
and
(iii) If to BMJ, to:
Bone, Muscle and Joint, 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.
10. 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 both parties
hereto. This Agreement supersedes any and all prior agreements between the
parties hereto with respect to the matters covered hereby.
11. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to the laws and
principles thereof or of any other jurisdiction which would direct the
application of the laws of another jurisdiction.
12. 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 other party all costs and expenses,
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including attorneys' fees and accountants' fees, incurred in connection with
such dispute or controversy.
13. 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.
* * * *
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IN WITNESS WHEREOF, this Stockholder Non-Competition Agreement
has been executed and delivered as of the date first above written.
XXXXXXX AND XXXXXXX, M.D.'S, P.A.
By: ___________________________
Name:
Title:
STOCKHOLDER
______________________________
Name:
Address for notices:
______________________________
______________________________
______________________________
BONE, MUSCLE AND JOINT, INC.
By:___________________________
Name:
Title:
