STOCKHOLDER NON-COMPETITION AGREEMENT
THIS STOCKHOLDER NON-COMPETITION AGREEMENT (the "Agreement") is entered
into as of October 31, 1997, among BROWARD INSTITUTE OF ORTHOPAEDIC SPECIALTIES,
P.A., a Florida 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 partner in or stockholder or 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 August 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 among the Stockholders 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 such Stockholder's
status as an equity owner 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 acquisition of securities from BMJ pursuant to the
Restricted Stock Agreement, (ii) the Medical Group and its affiliates
conduct their business primarily in Broward County, Florida, 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 (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 such
Stockholder's resignation or termination of equity owner 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 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
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,
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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 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 such
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, (iii) the Medical Group exercises the Rescission Option set
forth in Section 14 of the Management Services Agreement or (iv) the
Stockholder exercises his disengagement right set forth in Section 14.2 of
the Management Services Agreement.
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, each 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
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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 a 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 a Stockholder's participation in any Competitive Business. Each
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, each Stockholder (if and
only if such Stockholder was, as of the Exit Date, an equity owner of the
Medical Group) may request (a "Termination Request") that BMJ and the
Medical Group terminate
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such Stockholder's obligations under paragraph (A) of Section 2(a) hereof.
Such request shall be made by a 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 accompanied
by a certified check payable to BMJ in an amount equal to one-half of that
amount (the "Buyout Amount") determined in accordance with the calculation
set forth below. The requesting 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 requesting
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).
The Buyout Amount equals:
2 x (MF x 1/P) x T/24
where;
MF = the Management Fee (as defined in the Management
Services Agreement) payable by the Medical Group for
the calendar year prior to the Exit Date;
P = the aggregate number of equity owners of the Medical
Group (including the Stockholder) as of the Exit Date;
and
T = the number of months remaining (rounded up to the
nearest whole number) in the Non-Compete Period
(determined as of the date of the Termination Request).
(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 a 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 such Stockholder of those patients to which such
Stockholder provided medical services prior to the Exit Date shall not be
deemed a breach of Section 2 hereof.
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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
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:
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(i) If to the Medical Group, to:
BROWARD INSTITUTE OF ORTHOPAEDIC
SPECIALTIES, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Administrator
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Broad and ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
(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.
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▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Held, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
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. 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
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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 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. The parties to this Agreement agree that jurisdiction and
venue in any action brought pursuant to this Agreement by any party hereto shall
lie exclusively in any Federal or state court located in Broward County, State
of Florida. By execution and delivery of this Agreement, the parties hereto
irrevocably submit to the jurisdiction of such courts for themselves and in
respect of their property with respect to such action. The parties hereto
irrevocably agree that venue would be proper in such court, and hereby waive any
objection that such court is an improper or inconvenient forum for the
resolution of such action. The parties hereto shall act in good faith and shall
refrain from taking any actions to circumvent or frustrate the provisions of
this Agreement.
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
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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.
BROWARD INSTITUTE OF ORTHOPAEDIC
SPECIALTIES, P.A.
By:
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Name:
Title:
STOCKHOLDER
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▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Worth, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Crantnopol, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Address for notices:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BMJ MEDICAL MANAGEMENT, INC.
By:
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Name:
Title:
