General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D General Statement of Beneficial Ownership 68 174K
2: EX-1 Stockholders Agreement 11 45K
3: EX-2 Investment and Registration Rights Agreement 21 75K
4: EX-3 Imdemnification Agreement 14 55K
5: EX-4 Transmittal Letter Re: Imdemnification Agreement 2 14K
6: EX-5 Escrow Agreement 12 46K
7: EX-6 Noncompete - E. Byron Hensley, Jr. 9 37K
8: EX-7 Noncompete - Thomas P. Riley 9 38K
9: EX-8 Agreement 6 33K
EX-7 — Noncompete – Thomas P. Riley
| EX-7 | 1st Page of 9 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
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EXHIBIT 7
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NONCOMPETE AND CONFIDENTIALITY AGREEMENT
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THIS AGREEMENT (the "Agreement") is made and entered into as of
this 27th day of January, 1995, by and between CHARTER MEDICAL
CORPORATION, a Delaware corporation with its corporate headquarters in
Atlanta, Georgia (the "Company"), and THOMAS P. RILEY ("Mr. Riley").
R E C I T A L S :
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1. National Mentor, Inc. ("Mentor") is a private provider of
behavioral healthcare services in the homes of trained
paraprofessionals and operates an outpatient clinic located in the
Boston, Massachusetts, metropolitan area (the "Business"). Mentor is
a wholly-owned subsidiary of Magellan Health Services, Inc., a
Delaware corporation ("Magellan").
2. Magellan merged with Charter Acquisition Subsidiary, Inc., a
wholly-owned subsidiary of the Company, on January 27, 1995, pursuant
to the Agreement of Merger, dated as of December 19, 1994, among the
Company, Charter Acquisition Subsidiary, Inc. and Magellan (the
"Merger Agreement").
3. Mr. Riley is a former stockholder of Magellan and an
executive officer of Mentor.
4. In connection with the Merger Agreement, the Company
acquired the "Confidential Information" and "Trade Secrets" (both as
defined below) of Mentor and, to protect the Company's substantial
investment in the Confidential Information and Trade Secrets, and to
protect the goodwill associated with the Company's customer
relationships, Mr. Riley and the Company (together, the "Parties")
have agreed to abide by the terms and conditions of this Agreement.
In consideration of the foregoing, and the representations,
warranties, covenants and agreements set forth in this Agreement and
in the Merger Agreement, the Parties hereby agree as follows:
1. Definitions. The following terms shall have the
===========
following meanings when used in this Agreement:
(a) "Competitor" shall mean any person or Entity engaged,
==========
wholly or partly, in the Business.
(b) "Competitive Position" shall mean: (i) the direct or
====================
indirect equity ownership (excluding equity ownership of a
publicly held company through the ownership of less than five
percent (5%) of its outstanding shares) of all or any portion of
a Competitor; or (ii) any employment, consulting or independent
contractor arrangement with any Competitor for the Services
described in this Agreement; provided that the foregoing shall
=============
not apply to any employment, consulting
or independent contractor arrangement with the parent company, a
division or a subsidiary of a Competitor which parent company,
division or subsidiary is not a Competitor.
(c) "Confidential Information" shall mean the proprietary
========================
and confidential data or information of the Company or Mentor,
other than "Trade Secrets" (as defined below), which is of
tangible or intangible value to the Company and is not public
information or is not generally known or available to the
Company's competitors but is known only to the Company and those
of its employees, independent contractors, consultants, customers
or agents to whom it must be confided in order to apply it to the
uses intended, including, without limitation, informal
information regarding the Company's customers or prospective
customers (such as lists containing the names, addresses and
telephone numbers and/or account information of customers and
prospective customers, but not including information that is
available to the public), marketing methods and business plans
gained by Mr. Riley as a result of his relationship with the
Company or Mentor.
(d) "Entity" shall mean any partnership, joint venture,
======
agency, governmental subdivision, association, firm, corporation
or entity.
(e) "Restricted Territory" shall mean the continental
====================
United States, except with respect to the operation of an
outpatient clinic, the Restricted Territory shall be the Boston,
Massachusetts, metropolitan area. The Parties agree to amend
this definition of "Restricted Territory" to reflect any
significant contraction of the areas where the Company conducts
the Business.
(f) "Services" shall mean Mr. Riley's performance of
========
executive services to Mentor in his capacity as its President and
Chief Operating Officer.
(g) "Trade Secrets" shall mean information of the Company
=============
or Mentor, including, but not limited to, technical or
nontechnical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial
data, financial plans, products plans, or lists of actual or
potential customers or suppliers, which: (x) derives economic
value, actual or potential from not being generally known to, and
not being readily ascertainable by proper means by, other persons
who can obtain economic value from their disclosure or use; and
(y) is the subject of efforts that are reasonable under the
circumstances to maintain their secrecy; including, without
limitation, formalized business, pricing, marketing, and customer
or prospective customer information.
(h) "Work Product" shall mean work product, property, data,
============
documentation or information of any kind, prepared, conceived,
discovered, developed or created by Mr. Riley for the Company or
Mentor or any of the Company's clients or customers while Mr.
Riley is employed by Mentor.
2. Consideration. The Company shall pay to Mr. Riley the sum
=============
of $350,339.00 in consideration of his undertakings set forth herein.
Such sum shall be paid to Mr. Riley on July 17, 1995, at Charter's
option, either in cash or by the issuance to him of such number of
freely transferrable whole shares of Charter Common Stock, valued at
the closing sale price on July 14, 1995, as reported by AMEX, together
with an amount of cash equal to any fractional shares, having a value
of $350,339.00. Mr. Riley acknowledges and agrees that such payment
constitutes sufficient and adequate consideration for the covenants
and agreements contained in this Agreement.
In addition to the foregoing, so long as Mr. Riley complies with
the terms of this Agreement in all material respects, the Company, for
one (1) year after the date his employment with the Company is
terminated, shall pay him an amount equal to his base salary and shall
continue to pay the premiums for his health insurance coverage, all to
the extent or as in effect, as the case may be, immediately prior to
the termination of his employment with the Company; provided, however,
that, after the date that is six months following the termination of
Mr. Riley's employment with the Company, the Company shall be entitled
to reduce the amount paid to him with respect to his base salary by
any amount earned by Mr. Riley from other employment taken by him
(other than a Competitive Position.) Such amount shall be paid to Mr.
Riley in accordance with the Company's normal payroll practices and
shall be subject to all applicable state and federal withholdings.
3. Nondisclosure; Ownership of Proprietary Property.
================================================
(a) Mr. Riley hereby acknowledges that by virtue of Mr.
Riley's relationship with Mentor, Mr. Riley has been exposed to
and will continue to be exposed to the Trade Secrets and
Confidential Information. Mr. Riley further acknowledges that it
is in the best business interest of the Company to maintain the
strict confidentiality of such Trade Secrets and Confidential
Information.
(b) In recognition of the need of the Company to protect
its legitimate business interests, Mr. Riley hereby covenants and
agrees that (i) with regard to each item constituting a Trade
Secret, at all times during his affiliation with the Company and
all times thereafter during which such item continues to
constitute a Trade Secret under applicable law; and (ii) with
regard to any Confidential Information, for two (2) years after
the date of the
termination of his employment with the Company, he shall regard
and treat each item constituting a Trade Secret or Confidential
Information as strictly confidential and wholly owned by Company
and will not, for any reason in any fashion, either directly or
indirectly, use, sell, lend, lease, distribute, license, give,
transfer, assign, show, disclose, disseminate, reproduce, copy,
appropriate or otherwise communicate any such item or information
to any Entity for any person or purpose other than strictly in
accordance with the express terms of this Agreement.
(c) To the greatest extent possible, any Work Product shall
be deemed to be "work made for hire" (as defined in the Copyright
Act, 17 U.S.C.A. 101 et. seq., as amended) and owned
== ===
exclusively by the Company. Mr. Riley hereby unconditionally and
irrevocably transfers and assigns to the Company all rights,
title and interest he may currently have or in the future may
have by operation of law or otherwise in or to any Work Product,
including, without limitation, all patents, copyrights,
trademarks, service marks and other intellectual property rights.
Mr. Riley agrees to execute and deliver to the Company any
transfers, assignments, documents or other instruments which the
Company may deem necessary or appropriate to vest complete title
and ownership of any Work Product, and all rights therein,
exclusively in the Company.
(d) Mr. Riley shall notify the Company as soon as
practicable of any unauthorized disclosure or use of any Trade
Secrets or Confidential Information by him or any other person of
which he becomes aware. Mr. Riley shall use reasonable efforts
to assist Company in the procurement or any protection of
Company's rights to or in any of the Trade Secrets or
Confidential Information; provided, however, that the foregoing
shall not require Mr. Riley to institute litigation to procure or
protect such rights.
(e) Immediately upon termination of his affiliation with
the Company, or at any point upon the specific request of the
Company, Mr. Riley shall return to the Company all written or
descriptive materials of any kind in his possession that
constitute or contain any Confidential Information or Trade
Secrets, and the confidentiality obligations of this Agreement
shall continue until their expiration under the terms of this
Agreement.
4. Non-Competition. Mr. Riley agrees that for one (1) year
===============
after the date his employment with the Company terminates, he will not
accept or enter into a Competitive Position with a Competitor located
in the Restricted Territory. So long as he is employed by the
Company, Mr. Riley shall not accept or enter into a Competitive
Position with a Competitor, no matter where located.
5. Nonsolicitation of Employees and Customers. Mr. Riley
==========================================
covenants and agrees that for one (1) year after his employment with
the Company terminates, he will not, either directly or indirectly,
alone or in conjunction with any other person or Entity: (a) solicit
any employee, consultant, contractor or other personnel of the
Company, Magellan or Mentor, to terminate, alter or lessen his
affiliation with the Company, Magellan or Mentor; or (b) solicit,
divert or appropriate any customer or actively sought prospective
customer of the Company, Magellan or Mentor for or on behalf of any
Competitor (provided, however, that after termination of his
employment with the Company, this restriction shall only apply to his
solicitation of customers or actively sought prospective customers
with whom he had material contact in connection with his performing
the Services for or on behalf of the Company).
6. Acknowledgment. Mr. Riley and the Company acknowledge and
==============
agree that the covenants set forth in Sections 3, 4, and 5 are
reasonable as to time, scope and territory given the Company's need to
protect its Trade Secrets, Confidential Information and its
substantial investment in its customer base, particularly given
(a) the complexity and competitive nature of the Company's business,
and (b) that he has sufficient skills to find alternative,
commensurate employment or consulting work in his field of expertise
that would not violate Section 3, 4, or 5.
7. Remedies: Damages, Injunctions and Specific Performance.
=======================================================
The Parties expressly understand and agree that the covenants and
agreements to be rendered and performed by Mr. Riley pursuant to
Section 3, 4 or 5 are special, unique, and of extraordinary character,
and in the event of any default, breach or threatened breach by him of
Section 3, 4 or 5 (collectively, the "Material Paragraphs"), the
Company shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either at law or
in equity, and shall be entitled to such legal and equitable relief,
including, without limitation, any proceedings to: (i) obtain damages
for any breach of this Agreement by him; (ii) order the specific
performance thereof by him; or (iii) enjoin him from breaching such
provisions.
If the Company shall seek to enjoin Mr. Riley from defaulting in
the performance of or breaching any provision or Section of this
Agreement, he shall waive and hereby waives the defense that the
Company has or will have an adequate remedy at law.
8. Miscellaneous Provisions.
========================
(a) Interpretation. Should any provision of this Agreement
==============
require judicial interpretation, the Parties agree that the
judicial body interpreting or construing such provision shall not
apply the assumption that the terms of this Agreement shall be more
strictly construed against either one or the other party because of
the rule of construction that an instrument is to be construed more
strictly against the drafting party, it being agreed that all of the
Parties and/or their agents have participated in the preparation of
this Agreement.
(b) Assignment; Successors in Interest. Neither this Agreement
==================================
nor any rights or obligations of Mr. Riley hereunder shall be
transferable or assignable by him without the prior written consent of
the Company, and any attempted transfer or assignment of this
Agreement by him not in accordance with this subsection shall be null
and void. This Agreement shall be binding upon and shall inure to the
benefit of the Parties and their permitted successors and assigns, and
any reference to a Party shall also be a reference to a permitted
successor or assign.
(c) Severability. All paragraphs and subparagraphs of this
============
Agreement are severable, and the unenforceability or invalidity of any
of the paragraphs or subparagraphs of this Agreement shall not affect
the validity or enforceability of the remaining paragraphs or
subparagraphs of this Agreement, but such remaining paragraphs or
subparagraphs shall be interpreted and construed in such a manner as
to carry out fully the intention of the Parties, provided, however,
-------- --------
that should any judicial body interpreting this Agreement deem any
provision of this Agreement to be unreasonably broad in time,
territory, scope or otherwise, it is the intent and desire of the
Parties that such judicial body, to the greatest extent possible,
reduce the breadth of such provision to the maximum legally allowable
parameters rather than deeming such provision totally unenforceable or
invalid. Mr. Riley acknowledges and agrees that the covenants and
agreements contained in this Agreement, including, without limitation,
the covenants and agreements contained in the Material Paragraphs,
shall be construed as covenants and agreements independent of each
other and of any other provision of this Agreement or any other
contract between the Parties and that the existence of any claim or
cause of action by him against the Company, whether predicated upon
this Agreement or any other contract, shall not constitute a defense
to the enforcement by the Company of such covenants, agreements and
the Material Paragraphs.
(d) Notices. All notices, communications and deliveries
=======
required or permitted by this Agreement shall be made in writing
signed by the Party making the same, shall specify the Section of this
Agreement pursuant to which it is given or being made, and shall be
deemed given or made on the date delivered if delivered by telecopy or
in person or on the third (3rd) business day after it is mailed if
mailed by registered or certified mail (return receipt requested)
(with postage and other fees prepaid) as follows:
To Charter:
Charter Medical Corporation
3414 Peachtree Road, N.E.
Suite 1400
Atlanta, Georgia 31326
Attn: Steve J. Davis
Telecopy No.: (404) 814-5795
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attn: Mr. Robert W. Miller
Telecopy No.: (404) 572-5144
To Mr. Riley:
3 Longridge Lane
Ipswich, MA 01938
with a copy to:
Sullivan & Worcester
One Post Office Square
Boston, MA 02109
Attn: Richard E. Teller
Telecopy No.: 617/338-2880
or to such other representative or at such other address of a
Party as such Party hereto may furnish to the other Parties in
writing. If notice is given pursuant to this subsection of any
assignment to a permitted successor or assign of a Party hereto
in accordance with this subsection, the notice shall be given as
set forth above to such successor or assign of such Party.
(e) Amendments. To the extent permitted by law, this
==========
Agreement may be amended by a subsequent writing signed by all of
the Parties.
(f) Controlling Law; Integration; Waiver. This Agreement
====================================
shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware. This Agreement
supersedes all negotiations, agreements and understandings among
the Parties with respect to the subject
matter of this Agreement and constitutes the entire agreement
among the Parties to this Agreement. The failure of any Party at
any time or times to require performance of any provisions of
this Agreement shall in no manner affect the right to enforce the
same. No waiver by any Party of any conditions, or of the breach
of any term, provision, warranty, representation, agreement or
covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition
or breach of any other term, provision, warranty, representation,
agreement or covenant contained in this Agreement.
(g) Time of the Essence; Computation of Time. Time is of
========================================
the essence for each and every provision of this Agreement.
Whenever the last day for the exercise of any privilege or the
discharge of any duty under this Agreement shall fall upon a
Saturday, Sunday or any date on which banks in Atlanta, Georgia
are closed, the Party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding day
which is a regular business day.
(h) Captions. The titles, captions and table of contents
========
contained in this Agreement are inserted in this Agreement only
as a matter of convenience and for reference and in no way
define, limit, extend or describe the scope of this Agreement or
the intent of any provision of this Agreement. Unless otherwise
specified to the contrary, all references to Sections are
references to Sections of this Agreement.
(i) Counterparts. This Agreement may be executed in two or
============
more counterparts, each of which shall be deemed an original, and
it shall not be necessary in making proof of this Agreement or
the terms of this Agreement to produce or account for more than
one of such counterparts.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed, as of the date first above written.
CHARTER MEDICAL CORPORATION:
===========================
(Corporate Seal)
Attest: By: /s/ Michael Catalano
--------------------------
Name: Michael Catalano
Title: Vice President Planning
and Development
By: Kirk D. McConnell
--------------------------
Name: Kirk D. McConnell
Title: Assistant Secretary
/s/ Thomas P. Riley
----------------------------
THOMAS P. RILEY
Witness:
/s/ Richard E. Teller
-----------------------------
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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| This ‘SC 13D’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 7/17/95 | | 3 |
| | 7/14/95 | | 3 |
| Filed on: | | 2/13/95 |
| | 1/27/95 | | 1 | | | | | DEF 14A |
| | 12/19/94 | | 1 |
| List all Filings |
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