STOCKHOLDER NON-COMPETITION AGREEMENT
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THIS STOCKHOLDER NON-COMPETITION AGREEMENT (the "Agreement") is
entered into as of December 23, 1996, effective as of November 1, 1996, by and
among SOUTH TEXAS SPINAL CLINIC, P.A., a (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 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, pursuant to a Restricted Stock
Agreement entered into by and 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 a partner in or employee of the Medical Group, the
Stockholder hereby agrees with the Medical Group as follows:
1. Definition.
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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 any other services provided by BMJ; provided,
however, that "Competitive Business" shall
exclude a Stockholder's full-time employment on the medical school faculty at
the University of Texas Health Science Center at San Antonio.
2. Agreement Not to Compete or Interfere with Business.
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(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 San Antonio, Texas, 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 the Stockholder engaged in a Competitive Business. Accordingly, the
Stockholder hereby agrees that, during the period commencing on the date hereof
and ending two years after the earliest of (i) the expiration of the Management
Services Agreement, (ii) the termination of the Management Services Agreement by
BMJ pursuant to Section 13.2 thereof, or (iii) the effective date of the
Stockholder's resignation or termination of his or her association 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 in which he or she produced more than fifty percent (50%) of his or
her gross revenue during any calendar year during the term of this
Agreement (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 of (or partner
in) the Medical Group, BMJ, any affiliate of the Medical Group, or any
subsidiary of BMJ to terminate his or her employment (or partnership
status) or engage in any Competitive Business within the Restricted
Territory;
(D) solicit, entice or induce any vendor, customer or
distributor of the Medical Group, BMJ, any affiliate of the Medical Group,
or any subsidiary of BMJ to terminate or materially diminish its
relationship with the Medical Group, BMJ, any affiliate of the Medical
Group, or any subsidiary of BMJ; or
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(E) otherwise knowingly damage, disparage or interfere with
the Medical Group, BMJ, any affiliate of the Medical Group, or any
subsidiary of BMJ;
provided, however, that nothing contained in this Agreement shall prohibit the
Stockholder from owning in the aggregate less than one percent (1.0%) of a class
of publicly-traded securities issued by any Competitive Business.
(b) The Medical Group acknowledges and agrees 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 Agreement terminates
such agreement pursuant to Section 13.3 thereof, or (iii) the Stockholder's
association or employment with the Medical Group is terminated without cause (if
permitted by the General Partnership Agreement of the Medical Group) by the
Medical Group and such termination is approved by BMJ.
3. Confidentiality.
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(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 constitutes the confidential and proprietary trade
secrets of the Medical Group or of BMJ 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 ("Medical
Group Confidential Information") or from BMJ ("BMJ Confidential Information")
(collectively, "Confidential Information") and under no circumstances shall the
Stockholder distributor 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 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;
(ii) is disclosed with the prior written consent of the
Medical Group or its affiliate or BMJ;
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(iii) becomes known to the Stockholder from a source other
than the Medical Group or its affiliates without breach of this Agreement
by the Stockholder and otherwise not in violation of the Medical Group's or
its affiliates' rights; 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 to seek a protective order or
otherwise prevent such disclosure.
(c) The Stockholder agrees to indemnify the Medical Group 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.
(d) The rights and obligations of the parties under this Section 3
shall survive for five (5) years following the expiration or termination of this
Agreement.
4. Acknowledgment.
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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 his or her 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 performing any obligations under
this Agreement.
5. Survival; Remedies.
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The Stockholder's covenants under this Agreement shall survive
termination of Stockholder's partnership 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 either the Medical Group or 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.
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6. Benefits of Agreement.
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This Agreement and the rights and obligations of the parties hereto
shall bind and inure to the benefit of any successor or successors of either the
Medical Group or 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.
7. Severability.
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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.
8. Notices.
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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, (c) sent by certified mail, postage
prepaid, return receipt requested, or (d) sent by facsimile if also sent by
nationally-recognized overnight courier for next day delivery, addressed as
follows:
If to the Medical Group, to:
South Texas Spinal Clinic, P.A.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Law Offices of Xxxxx Xxxxxxxxx
Nations Bank Plaza
000 Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
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If to the Stockholder, to:
x/x Xxxxx Xxxxx Spinal Clinic, P.A.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
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
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Held, Esq.
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.
9. Entire Agreement; Amendments; Prior Agreements.
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The foregoing is the entire agreement of 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.
10. Governing Law.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas without regard to the laws and principles thereof
or of any other jurisdiction which would direct the application of the laws of
another jurisdiction.
11. Attorneys' Fees.
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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, including
attorneys' fees and accountants' fees, incurred in connection with such dispute
or controversy.
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12. Headings.
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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.
IN WITNESS WHEREOF, this Agreement has been executed and delivered the
date first above written.
SOUTH TEXAS SPINAL CLINIC, P.A.
/s/ Xxxxxxx X. Xxxxxxx, M.D.
Name: Xxxxxxx X. Xxxxxxx, M.D.
Title: President
STOCKHOLDER
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Signature
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Printed Name
BONE, MUSCLE AND JOINT, INC.
By: /s/ Xxxxxx Xxxxxx, M.D.
Xxxxxx Xxxxxx, M.D.,
President and Chief
Executive Officer
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