NON-COMPETITION AGREEMENT
EXHIBIT
10.12
THIS
NON-COMPETITION AGREEMENT (this “Agreement”)
is
made and entered into as of 12/12, 2005, by and among Xxxxx X. Xxxxxxx,
(“Purchaser”)
and
Xxxx Xxxx (“Obligor”).
The
Closing Date (as defined below)) shall be the “Effective
Date”
of
this
Agreement. Capitalized terms used and not defined herein shall have the same
meanings assigned to such terms in the Master Transaction Agreement.
RECITALS
A. This
Agreement is being entered into pursuant to Asset Purchase Agreements (herein
so
called) effective as of December 12, 2005, by and between Purchaser, as
purchaser and Ft. Worth Rehabilitation, Inc., a Texas corporation, and
Rehabilitation Physicians Network, Inc., a Texas corporation, as seller
(collectively, the “Clinic”);
B.
The
undersigned Obligor is an employee, director and/or officer of the
Clinic.
C.
This
Non-Competition Agreement is being entered into between the Purchaser and
Obligor as a condition of closing pursuant to the Asset Purchase Agreement,
pursuant to which the Purchaser shall acquire certain assets (“Acquired
Assets”)
of the
Clinic. The Asset Purchase Agreement, together with each of the exhibits
attached thereto (and documents to be executed in connection therewith), are
hereinafter collectively referred (and documents to be executed in connection
therewith), are hereinafter collectively referred to as the “Transaction
Documents.”
D.
Purchase
will pay the Clinic significant cash consideration in the Acquisition (herein
so
called) pursuant to the Asset Purchase Agreement, and Obligor shall benefit
therefrom as a shareholder of the Clinic.
E.
The
Obligor has valuable knowledge, relationships, experience and expertise in
the
management and operation of clinics for the delivery of physical therapy,
rehabilitation, work hardening services.
F. Purchaser
has entered into that certain MASTER TRANSACTION AGREEMENT (“Master
Transaction Agreement”),
dated
and effective as of 12/12/05, 2005, by and among Basic Health Care Networks
of
Texas, L.P., a Texas limited partnership, as purchaser, on the one hand (“Basic
Health”), and 303 MEDICAL CLINIC, P.A. , a Texas professional association, XXXXX
XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL CLINIC,
P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas
professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional
association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association,
X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association, and RED BIRD
URGENT CARE CLINIC, P.A., a Texas professional association, (collectively,
the
“Clinics”)
and
Purchase, as seller (the “Basic Health Acquisition”).
G.
Basic
Health intends to develop, establish, operate and manage additional work
hardening and other clinics (the “New
Clinics”)
at one
or more locations to be determined by Basic
Health.
H. As
a
condition and mutual inducement to the Acquisition, the Transaction Documents
contemplate, among other things, that the Obligor shall enter into this
Non-Competition Agreement effective on the Effective Date.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual promises made herein, Purchaser and
the Obligor hereby agree as follows:
1. Covenant
Not to Compete or Solicit.
Obligor
recognizes that entering into a competitive practice with the Purchaser would
deprive the Purchaser of some or all of its practice sources to the substantial
detriment of the Purchaser’s ongoing practice and Obligor acknowledges that the
Purchaser has a substantial interest in protecting itself from unfair
competition, including the improper use of Proprietary Information. In
consideration of the substantial compensation paid to Obligor by the Purchaser,
and the other benefits received by Obligor hereunder, Obligor agrees with the
Purchaser that the following restrictive covenants are reasonably designed
to
protect the legitimate interests of the Purchaser:
1.1 Covenant
Not to Compete.
Obligor
agrees that for so long as Obligor is employed by Purchaser or its assigns
and
for one year thereafter (“Restricted
Period”),
Obligor shall not, directly or indirectly, as an employee, employer, contractor,
consultant, agent, principal, shareholder, corporate officer, director, or
in
any other individual or representative capacity, engage or participate in any
business or practice within the Practice Territory (as defined herein) that
is
in competition in any manner whatsoever with the practice of the Purchaser,
the
New PA, and the New Clinics. The parties mutually acknowledge and agree as
follows:
(a) If
Obligor should set up an office and practice medicine within the Practice
Territory in competition with the practice of the Purchaser, it would cause
economic harm and loss of goodwill to the Purchaser resulting in immediate
and
irreparable loss, injuries, and damage to the Purchaser.
(b) Notwithstanding
anything to the contrary in this Section 1.1, physician is not prohibited from
owning less than five percent (5%) of the equity of any publicly-traded
entity.
(c) Neither
the public in general nor any patients will be adversely affected by the
enforcement of the non-competition covenant, in that other similar providers
of
professional medical services are readily available within the restricted
area.
1.2 Practice
Territory.
The
Purchaser is actively engaged in the practice of general
family and urgent care and ancillary medical services such as rehabilitation
and
physical medicine
in
various locations within the Dallas and Fort Worth metropolitan areas, and
it is
therefore agreed that the term of “Practice
Territory”
shall
mean: a ten (10) mile radius of either Clinic. In the event that the provisions
of this Section 1.2 are deemed by a court of competent jurisdiction to exceed
the time, geographic or scope limitations permitted by applicable law, then
such
provisions shall be reformed to the maximum time, geographic or scope
limitations, as the case may be, permitted by applicable laws.
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1.3 Remedies.
Without
limiting other possible remedies to Purchaser for breach of this covenant,
Obligor agrees that injunctive or other equitable relief will be available
to
enforce the covenants of this provision, such relief to be without the necessity
of posting a bond, cash or otherwise. In any action to enforce any provision
of
this Section, the court may award reasonable attorneys’ fees, costs, and
expenses to the prevailing party.
1.4 Limitations
On Covenants.
Notwithstanding anything contained in this Section 1 or anywhere else in this
Agreement:
(a) Under
no
circumstance shall any provision of this Agreement be deemed to deny Obligor
access to a list of patients whom Obligor had seen or treated prior to or within
two (2) years after the closing of the Acquisition.
(b) After
closing of the Acquisition, the Purchaser (at its expense) shall provide Obligor
reasonably convenient and ready access to medical records of any or all of
the
Obligor’s patients upon authorization of such patient or patients and shall
provide copies of any such medical records for a reasonable fee as established
by the Texas State Board of Medical Examiners under Section 165.5 of Title
22,
Part 9, Chapter 165, of the Texas Administrative Code and Section 5.08(o) of
the
Texas Medical Practice Act.
(c) Any
access by Obligor to a list of patients or to patients’ medical records after
closing of the Acquisition shall not require that such list or records be
provided in a format different from that by which such records are maintained,
except by mutual consent of the Purchaser and Obligor.
(d) In
no
event shall Obligor be prohibited by this Agreement from providing continuing
care and treatment to a specific patient or patients (whom the Obligor treated
prior to the closing of the Acquisition) during the course of an acute illness
even after Obligor’s consulting relationship with the Purchaser has
terminated.
(e) The
covenants contained in this Agreement shall not apply to Obligor’s ownership,
management or other interest in (either directly or indirectly) those entities
listed on Exhibit
“A”
attached
hereto and made a part hereof for all purposes.
1.6 Proprietary
Information.
For
purposes of this Agreement, “Proprietary Information” means any and all
information and material disclosed by the Purchaser to the Obligor, or obtained
by Obligor through inspection or observation of Purchaser’s property or
facilities, including but not limited to intellectual property rights obtained
by Purchaser under the Asset Purchase Agreement (whether any of the foregoing
is
in writing, or in oral, graphic, electronic or any other form). Proprietary
Information, includes, without limitation, any (a) trade secret, know-how,
idea,
invention, process, protocol, procedure, technique, algorithm, program,
hardware, device, design, schematic, drawing, formula, data, plan, strategy
and
forecast of, and (b) technical, engineering, manufacturing, product, marketing,
servicing, financial, personnel and other information and materials of,
Purchaser and its employees, consultants (other than Obligor), investors,
affiliates, licensors, suppliers, vendors, customers, clients and other persons
and entities.
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2. Covenant
Not to Solicit.
For so
long as Obligor is employed by Purchaser or its assigns and for one year
thereafter, Obligor shall not request or advise, solicit or attempt to solicit
for the benefit of Obligor or any other person or entity any present or future
employee of the Purchaser, the New PA, or the New Clinics, to terminate
employment with such parties or to become an employee of Obligor or any other
person or entity.
3.
Miscellaneous.
(a) Governing
Law; Consent to Personal Jurisdiction.
(i) This
Agreement shall be governed by the laws of the State of Texas without reference
to rules of conflicts of law. Obligor and Purchaser each hereby consent to
the
personal jurisdiction of the state and federal courts located in Texas for
any
action or proceeding arising from or relating to this Agreement or relating
to
any arbitration in which the parties are participants.
(ii)
Any
claim, dispute or other controversy having a monetary amount of $100,000 or
less
(a “Controversy”)
relating to this Agreement shall be settled and resolved by binding arbitration
in Dallas, Texas before a single arbitrator under the rules of the American
Arbitration Association (“AAA”)
in
effect at the time a demand for arbitration is made. If there is any conflict
between the AAA rules and this arbitration clause, this arbitration clause
will
govern and determine the rights of the parties. The parties to this Agreement
(the “Parties”)
shall
be entitled to full discovery regarding the Controversy as permitted by
applicable codes of civil procedure. The arbitrator’s decision on the
Controversy shall be a final and binding determination of the Controversy and
shall be fully enforceable as an arbitration award in any court having
jurisdiction and venue over the Parties. The arbitrator shall also award the
prevailing Party any reasonable attorneys’ fees and reasonable expenses the
prevailing Party incurs in connection with the arbitration, and the
non-prevailing Party shall pay the arbitrator’s fees and expenses. The
arbitrator shall determine who is the prevailing Party. Each Party also agrees
to accept service of process for all arbitration proceedings in accordance
with
AAA’s rules.
(iii) The
obligation to arbitrate shall not be binding upon either party with respect
to a
controversy exceeding a monetary amount of $100,000, requests for temporary
restraining orders, preliminary injunctions or other procedures in a court
of
competent jurisdiction to obtain interim relief when deemed necessary by such
court to preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute between the
Parties.
(iv) The
provisions of this Section shall be construed as independent of any other
covenant or provision of this Agreement; provided that, if a court of competent
jurisdiction determines that any such provisions are unlawful in any way, such
court shall modify or interpret such provisions to the minimum extent necessary
to have them comply with the law.
(v) This
arbitration provision shall be deemed to be self-executing and shall remain
in
full force and effect after expiration or termination of this Agreement. In
the
event either party fails to appear at any properly noticed arbitration
proceeding, an award may be entered against such party by default or otherwise
notwithstanding said failure to appear.
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(b) Severability.
If any
portion of this Agreement is held by a court of competent jurisdiction to
conflict with any federal, state or local law, or to be otherwise invalid or
unenforceable, such portion of this Agreement shall be of no force or effect
and
this Agreement shall otherwise remain in full force and effect and be construed
as if such portion had not been included in this Agreement.
(c) No
Assignment.
Because
the nature of the Agreement is specific to the actions of Obligor, Obligor
may
not assign this Agreement. This Agreement shall inure to the benefit of
Purchaser and its successors and assigns.
(d) Notices.
All notices, consents and other communications hereunder shall be in writing
and
shall be deemed to have been given when delivered personally, on the next
business day when sent overnight by Federal Express or other nationally
recognized overnight courier service, or five (5) days after being mailed if
mailed by first-class, registered or certified mail, postage prepaid,
addressed:
If
to
Purchaser, addressed to:
Xx.
Xxxxx
Xxxxxxx
00000
Xxxxxxx Xxxx, 000X
Xxxxxxxxx,
XX 00000
e-mail:
xxxxxxxxxxx@xxxxxxx.xxx
Facsimile:
(000) 000-0000
If
to
the Obligor, addressed to:
Dr.
Xxxx
Xxxx
0000
Xxxxx Xx.
Xxxxxx,
XX 00000
or
at
such other address or addresses as the respective parties shall have furnished
to the other parties in writing.
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(e) Entire
Agreement.
This
Agreement contains the entire agreement and understanding of the parties and
supersedes all prior discussions, agreements and understandings relating to
the
subject matter hereof. This Agreement may not be changed or modified, except
by
an agreement in writing executed by Purchaser and Obligor.
(f) Waiver
of Breach.
The
waiver of a breach of any term or provision of this Agreement, which must be
in
writing, shall not operate as or be construed to be a waiver of any other
previous or subsequent breach of this Agreement.
(g) Headings.
All
captions and section headings used in this Agreement are for convenience only
and do not form a part of this Agreement.
(h) Counterparts.
This
Agreement may be executed in counterparts, and each counterpart shall have
the
same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.
(i) Termination.
This
Agreement shall terminate and be of no force and effect upon the earlier of
(a)
the third anniversary of the termination of Obligor’s consultancy with
Purchaser, or (b) upon the complete cessation of the Purchaser’s business as a
going concern in the Restricted Area.
[Remainder
of Page Left Blank Intentionally]
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IN
WITNESS WHEREOF, the Parties have executed this Non-Competition Agreement as
of
the date first written above.
| PURCHASER: | ||
| |
|
|
| /s/ Xxxxx Xxxxxxx | ||
|
Xxxxx Xxxxxxx |
||
| OBLIGOR: | ||
| |
|
|
| /s/ Xxxx Xxxx | ||
|
Xxxx Xxxx |
||
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