STOCKHOLDER NON-COMPETITION AGREEMENT
THIS STOCKHOLDER NON-COMPETITION AGREEMENT (the "Agreement") is entered
into as of October 3, 1997, among VALLEY SPORTS SURGEONS, INC., a Pennsylvania
corporation (the "Management Company"), VALLEY SPORTS & ARTHRITIS SURGEONS,
P.C., a Pennsylvania professional corporation (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 partner in or an equity owner or employee of
the Medical Group.
C. BMJ and the Management Company are engaged in the business of
providing management, administrative, financial, marketing, information
technology and related services to professional medical organizations.
D. The Medical Group and the Management Company have entered into a
Management Services Agreement effective as of September 1, 1997 (the
"Management Services Agreement"), under which the Medical Group has agreed
to cause the Stockholders to covenant not to compete against the Management
Company.
E. Pursuant to the Stock Purchase Agreement dated as of the date
hereof (the "Stock Purchase Agreement") among BMJ and the Stockholders,
pursuant to which each Stockholder is receiving shares of BMJ capital stock
in exchange for shares of capital stock of the Management Company, each
Stockholder agreed to enter into a noncompetition agreement with BMJ and
the Management Company.
NOW, THEREFORE, in consideration of and as an inducement to BMJ's entering
into the Stock Purchase Agreement and the other agreements related thereto, and
in consideration of such Stockholder's status as (i) a partner in or equity
owner or employee of the Medical Group and (ii) a selling stockholder of the
Management Company, each Stockholder (for himself or herself only) hereby agrees
for the benefit of the Medical Group, the Management Company 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 or the Management Company.
2. Agreement Not to Compete or Interfere with Business.
(a) Each Stockholder acknowledges that (i) he or she is receiving
benefits from the acquisition of securities from BMJ pursuant to the Stock
Purchase Agreement, (ii) as the sole stockholder of the Management Company,
BMJ intends to benefit from the Management Services Agreement, (iii) the
Medical Group and its affiliates conduct their business primarily in Lehigh
County, Pennsylvania, and (iv) due to the highly competitive nature of the
Medical Group's, the Management Company's and BMJ's businesses, the value
and goodwill of their respective 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 the Management Company pursuant to Section
12.2 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, the Management Company, or any
affiliate or subsidiary of the Medical Group, the Management Company
or
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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, the Management Company, BMJ, or any affiliate or
subsidiary of the Medical Group, the Management Company, or BMJ to
terminate or materially diminish its relationship with the Medical
Group, the Management Company, BMJ, or any affiliate or subsidiary of
the Medical Group, the Management Company, or BMJ; or
(E) otherwise knowingly damage, disparage or interfere with the
Medical Group, BMJ, the Management Company or any affiliate or
subsidiary of the Medical Group, the Management Company, or 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) BMJ, the Management Company and the Medical Group acknowledge and
agree that such Stockholder shall have no further obligation pursuant to
this Agreement in the event that (i) the Medical Group terminates or
rescinds the Management Services Agreement pursuant to Section 12.1 or
Section 13 thereof, respectively, or (ii) either party to the Management
Services Agreement terminates such agreement pursuant to Section 12.3
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 or the Management Company and their respective
Affiliates constitutes the confidential and proprietary trade secrets of
the Medical Group, the Management Company or 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 or
the Management Company and/or any of their respective Affiliates (the "BMJ
Confidential Information" and, together with the Medical Group Confidential
Information, 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
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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, the Management Company or
their respective 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 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, the Management Company or
their respective Affiliates without breach of this Agreement by such
Stockholder, without breach of any agreement between the Medical
Group, the Management Company 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 the Management Company, BMJ or
their respective 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, the
Management Company or their respective 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, the Management Company or their respective 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 a Stockholder's knowledge of
confidential and proprietary information relating to the Medical Group, the
Management Company or BMJ or otherwise damaging or interfering with the business
of the Medical Group, the Management Company or BMJ or from a Stockholder's
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participation in any Competitive Business. Each Stockholder further acknowledges
receiving sufficient consideration under the Stock Purchase 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. 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, the
Management Company 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, the Management Company and BMJ
shall be entitled to injunctive relief; provided, however, that nothing
contained herein shall be construed as prohibiting the Medical Group, the
Management Company or BMJ from pursuing any other remedies available for any
such breach or threatened breach.
6. 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 or the Management Company by reorganization, merger or
consolidation or otherwise and any assignee of all or substantially all of the
business and properties of the Medical Group, the Management Company or BMJ.
7. 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.
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8. 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:
Valley Sports & Arthritis Surgeons, P.C.
0000 Xxxxx Xxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, M.D.
Telecopier: (000) 000-0000;
(ii) If to the Management Company, to:
Valley Sports Surgeons, Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: 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;
(iii) If to any Stockholder, to his or her address set forth on
the signature page hereto beneath his or her name; and
(iv) 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;
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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.
9. 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, the Management Company, BMJ and each of the
respective Stockholders for all purposes. This Agreement may be executed in
separate counterparts.
10. Entire Agreement; Amendments; Prior Agreements.
This Agreement, the Management Services Agreement and the Stock Purchase
Agreement and the other agreements referred to herein and therein 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.
11. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania without regard to the laws and
principles thereof or of any other jurisdiction which would direct the
application of the laws of another jurisdiction.
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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
losing party all costs and expenses, 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.
VALLEY SPORTS & ARTHRITIS
SURGEONS, P.C.
By:
--------------------------
Name:
Title:
BMJ MEDICAL MANAGEMENT, INC.
By: /s/ Xxxxxx Xxxxxx, M.D.
--------------------------
Xxxxxx Xxxxxx, M.D.
President and
Chief Executive Officer
VALLEY SPORTS SURGEONS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxxx
Secretary
STOCKHOLDERS:
/s/ Xxxxxx Xxxxxxx, M.D.
------------------------------
Xxxxxx Xxxxxxx, M.D.
Address for notices:
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
/s/ Xxxxxx XxXxxxxxxxx, M.D.
-----------------------------
Xxxxxx XxXxxxxxxxx, M.D.
Address for notices:
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
/s/ Xxxx Xxxxxxxxx, M.D.
-----------------------------
Xxxx Xxxxxxxxx, M.D.
Address for notices:
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
/s/ Xxxxx Xxxxxxx, M.D.
-----------------------------
Xxxxx Xxxxxxx, M.D.
Address for notices:
000 X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
/s/ Xxxxxxxxx Xxxxxxxxx, M.D.
-----------------------------
Xxxxxxxxx Xxxxxxxxx, M.D.
Address for notices:
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Address for notices:
