Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”), is made as of this 24th day of March
2014 by and between THE PROVIDENCE SERVICE CORPORATION, a Delaware corporation,
with its principal office located at 64 East Broadway Blvd, Tucson, Arizona,
85701 its successors and assigns (hereinafter collectively referred to as
“Company”), and HERMAN SCHWARZ an individual residing at
                                                                  (“Employee”).

 

BACKGROUND

 

WHEREAS, Employee is currently employed by the Company’s wholly-owned
subsidiary, Logisticare Solutions, LLC (“Logisticare”) as Logisticare’s Chief
Executive Officer (“CEO”) pursuant to an employment agreement dated as of May
17, 2011, as amended (the “Current Agreement”); and

 

WHEREAS, pursuant to Section 1 of the Current Agreement, the term of the
Employee’s employment under the Current Agreement will expire on March 22, 2014
and the Company desires that Employee continue to be employed as CEO of
Logisticare, and Employee desires to continue to be employed in such capacity
upon the expiration of the Current Agreement, all upon the terms and conditions
set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the facts, mutual promises, and covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:

 

1. Expiration of Current Agreement and Employment and Term under this Agreement.

 

(a) The Company and Employee hereby agree that Employee’s employment by
Logisticare under the Current Agreement will continue after March 22, 2014. The
Company hereby agrees that Logisticare will employ Employee and Employee hereby
agrees under the terms of this Agreement to work in the employ of Logisticare,
for the period commencing on March 22, 2014 (the “Effective Date”), and if not
previously terminated in accordance with the terms of this Agreement, ending at
the close of business on March 21, 2016 (the “Term”), and upon the terms and
conditions set forth in this Agreement, subject to earlier termination pursuant
to Section 5 below.

 

(b) In the event of a Change in Control of Logisticare (as defined herein), the
Company, Employee and Logisticare agree that the Company’s payment and other
obligations hereunder and the Company shall have no further payment or other
obligations to Employee hereunder (other than Section 7(e)).

 

2. Office and Duties.

 

(a) During the Term, Employee shall serve as CEO of Logisticare, and shall
report directly to the Chief Executive Officer (“CEO”) of the Company and be
subject to the CEO’s supervision, control and direction. Employee shall also
serve on the Board of Directors of the Company (the “Company’s Board”) and/or
Logisticare (“Logisticare’s Board”) as may be requested from time to time.

 

 
 

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(b) In his capacity as CEO of Logisticare, Employee shall have such authority,
perform such duties, discharge such responsibilities and render such services as
are customary to, and consistent with his position, subject to the authority and
direction of the CEO, and shall perform such additional duties and
responsibilities as may be from time to time assigned to him by the CEO. In
addition, Employee acknowledges and agrees that he shall observe and comply with
all of the Company’s policies and procedures, and comply with all of the
directives of the Company’s Board.

 

(c) During the Term, Employee shall render his services diligently, faithfully
and to the best of his ability, and shall devote substantially all of his
working time, energy, skill and best efforts to the performance of his duties
hereunder, in a manner that will further the business and interests of the
Company and Logisticare.

 

(d) During the Term, Employee shall not be engaged in any business activity
which, in the reasonable judgment of the Chief Executive Officer of the Company,
conflicts with Employee’s duties hereunder, whether or not such activity is
pursued for pecuniary advantage.

 

3. Compensation.

 

(a) Base Salary. In consideration of the services rendered by Employee to
Logisticare during the Term, Employee shall receive an annual base salary of
Four Hundred Thirty-Two Thousand and 00/100 Dollars ($432,000.00) (“Base
Salary”), payable in equal periodic installments in accordance with
Logisticare’s regular payroll practices in effect from time to time. During the
Term, Employee’s Base Salary shall be reviewed at least annually by the
Company’s Board and/or a committee of the Company’s Board which has been
delegated responsibility for employee compensation matters (such committee to be
referred to herein as the “Compensation Committee”) in accordance with the
compensation policies and guidelines of the Company, and may be modified as a
result of such review at the sole discretion of the Company’s Board and/or the
Compensation Committee.

 

(b) Bonus Plans/Incentive Compensation Programs. In addition to Base Salary,
during the Term, Employee shall be eligible to participate in any bonus plans or
incentive compensation programs, if any, as may be in effect from time to time,
at a level consistent with his position and with the Company’s then current
policies and practices (“Bonus”).

 

(c) Benefits.

 

(i) During the Term, Employee also shall be entitled to participate in all
fringe benefits, if any, as may be in effect from time to time which are
generally available to the Company’s senior executive officers, and such other
fringe benefits as the Company’s Board and/or Compensation Committee shall deem
appropriate, subject to eligibility requirements thereof (collectively, the
“Benefits”).

 

(ii) During the Term, in addition to the foregoing Benefits, the Company shall,
subject to the terms hereof, use its reasonable efforts to procure (if such term
insurance is not already in effect on the date of this Agreement) and maintain
term life insurance on the life of Employee for a period of five (5) years Such
life insurance shall be in the amount of One Million and 00/100 Dollars
($1,000,000). Employee shall be the owner of the term life insurance policy
obtained by the Company, and shall have the absolute right to designate the
beneficiaries thereunder. The premiums in respect of such policy shall be paid
by the Company for the shorter of (A) the period of five (5) years commencing on
the later of (1) the date of this Agreement or (2) the date the insurance goes
into effect or (B) the period Employee is employed by the Company hereunder;
premiums in respect thereof shall thereafter be paid by Employee.

 

 
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Employee agrees to submit to any physical examination required by the insurer of
any such policy, and will otherwise cooperate with the Company in connection
with any life insurance on Employee’s life the Company may wish to obtain
provided, however, that the results of any such physical examination shall not
be shared with the Company or used in any way in connection with Employee’s
employment other than the procurement of insurance pursuant to this Subsection.
In the event Employee is determined to be suffering from a congenital defect or
other illness or condition which would preclude the Company from obtaining the
insurance referred to in the preceding paragraph at a cost substantially
equivalent to the cost of obtaining such insurance for a healthy individual of
Employee’s age and gender, the Company shall, in lieu of purchasing the
insurance in the amount set forth in the preceding paragraph, purchase the
amount of insurance, if any, that can be purchased at a cost substantially
equivalent to the cost of obtaining such insurance for a healthy individual of
Employee’s age and gender.

 

(d) Vacation. During the Term, Employee shall be entitled to the number of paid
vacation days in each calendar year as determined by the Company from time to
time for its senior executive officers. Vacation days which are not used during
any calendar year may not be accrued or carried-over to the next year, nor shall
Employee be entitled to compensation for unused vacation days.

 

(e) Business Expenses. During the Term, Logisticare shall pay or reimburse
Employee for all reasonable expenses incurred or paid by Employee in the
performance of Employee’s duties hereunder, upon timely presentation of expense
statements or vouchers and such other information as the Company or Logisticare,
as the case may be, may reasonably require and in accordance with the generally
applicable policies and practices of the Company.

 

(f) Withholding. All payments made pursuant to this Agreement shall be subject
to such withholding taxes as may be required by any applicable law.

 

4. Representations of Employee. Employee represents to the Company that: (a)
there are no restrictions, agreements or understandings whatsoever to which
Employee is a party that would prevent, or make unlawful, his execution of this
Agreement and his employment hereunder; (b) his execution of this Agreement and
his employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which he is a party, or by which
he is bound; and (c) he is of full capacity, free and able to execute this
Agreement and to enter into this Agreement with the Company.

 

 
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5. Termination. This Agreement and Employee’s employment hereunder shall
continue until terminated as provided herein. Upon termination of this Agreement
and Employee’s employment hereunder, Employee shall immediately resign his
position as a member of the Company’s Board or Logisticare’s Board if he is
serving in such capacity.

 

(a) Termination by Company for Cause. The Company shall have the right to
terminate this Agreement and Employee’s employment hereunder at any time for
“Cause”. For purposes of this Agreement, the term “Cause” shall mean the
following:

 

(i)   Employee commits fraud or theft against the Company or any of its
subsidiaries, affiliates, joint ventures and related organizations, including
any entity managed by the Company (collectively referred to as “Affiliates”), or
is indicted, convicted of, or pleads guilty or nolo contendere to, a felony; or

 

(ii)   In carrying out his duties hereunder, the Employee engages in conduct
that constitutes gross neglect or willful misconduct and that results, in either
case, in material economic harm to the Company or its Affiliates; or

 

(iii)  Employee materially breaches any provision of this Agreement (including
but not limited to the restrictive covenants contained in Section 7 below) or
breaches any fiduciary duty or duty of loyalty owed to the Company or its
Affiliates, and such breach continues uncured for a period of ten (10) days
after written notice from the Company to the Employee specifying the failure,
refusal, or violation and the Company’s intention to terminate this Agreement
for Cause; or

 

(iv)  Employee engages in conduct tending to bring the Company or its Affiliates
into public disgrace; or

 

(v)  Employee repeatedly neglects or refuses to perform his duties or
responsibilities as directed by the CEO, or violates any express direction of
any lawful rule or regulation established by the Company or Logisticare or the
Company’s Board or any committee established by the Company’s Board that is
consistent with the scope of Employee’s duties under this Agreement, and such
failure, refusal, or violation continues uncured for a period 10 days after
written notice from the Company to Employee specifying the failure, refusal, or
violation and the Company’s intention to terminate this Agreement for Cause; or

 

(vi)  Employee commits any acts or omissions resulting in or intended to result
in direct material personal gain to the Employee at the expense of the Company
or its Affiliates; or

 

(vii) Employee materially compromises trade secrets or other confidential and
proprietary information of the Company or its Affiliates.

 

“Cause” shall not include a bona fide disagreement over a corporate policy, so
long as Employee does not willfully violate on a continuing basis specific
written directions from the CEO, or the Company’s Board or any executive
committee of the Company’s Board, which directions are consistent with the
provisions of this Agreement. Action or inaction by Employee shall not be
considered “willful” unless done or omitted by him intentionally and without his
reasonable belief that his action or inaction was in the best interests of the
Company or its Affiliates, and shall not include failure to act by reason of
total or partial incapacity due to physical or mental illness.

 

 
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(b) Termination upon Death/Termination by Company upon Disability of Employee.
The Employee’s employment will terminate upon his death. The Company shall have
the right to terminate this Agreement and Employee’s employment hereunder at any
time upon the Disability of Employee. The term, “Disability”, as used herein,
means any physical or mental illness, disability or incapacity which prevents
Employee from performing the essential functions of his job, with or without
reasonable accommodations, hereunder for a period of not less than one hundred
fifty (150) consecutive days or for an aggregate of one hundred eighty (180)
days during any period of twelve (12) consecutive months. Periods where Employee
can perform the essential functions of his job with a reasonable accommodation
shall not be included in the determination of a Disability hereunder. During any
period of Disability, Employee agrees to submit to reasonable medical
examinations upon the reasonable request, and at the expense, of the Company.

 

(c) Termination By Company Without Cause. The Company shall have the right to
terminate this Agreement and Employee’s employment hereunder at any time without
Cause and/or without the occurrence of Employee’s death or Disability upon
thirty (30) days written notice to Employee. The effective date of such
termination shall be after the completion of the thirty (30) day notice period.

 

(d) Termination By Employee For Good Reason. Employee shall have the right to
terminate this Agreement and his employment hereunder at any time during the
Term for “Good Reason” upon sixty (60) days prior written notice to the
Company’s Board. The effective date of such termination shall be after the
completion of the sixty (60) day notice period. For purposes of this Agreement,
“Good Reason” shall mean any of the following:

 

(i)    the assignment to Employee by the Company of any duties inconsistent with
Employee’s status with the Company or a substantial alteration in the nature or
status of Employee’s responsibilities from those in effect on the Effective Date
hereof, or a reduction in Employee’s titles or offices as in effect on the
Effective Date hereof, except in connection with the termination of his
employment for Cause or Disability or as a result of Employee’s death, or by
Employee other than for Good Reason, or the Company’s establishment of a new
office to which Employee may be asked to report, or the hiring of a President or
other officer which may result in the reassignment of some of Employee’s duties
to someone in the Company or Logisticare below the level of Employee;

 

(ii)   a reduction by the Company in Employee’s Base Salary as in effect on the
Effective Date or as the same may be increased from time to time during the term
of this Agreement;

 

(iii)  a relocation of Employee by the Company to a Company office outside the
greater metropolitan area of Atlanta, Georgia; or

 

 
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(iv) any material breach by the Company of a material term or provision
contained in this Agreement, which breach is not cured within thirty (30) days
following the receipt by the Company’s Board of written notice of such breach.

 

(e) Termination by Employee for Other than Good Reason. If Employee shall desire
to terminate his employment hereunder for other than Good Reason, he shall first
give the Company not less than ninety forty five (45) days prior written notice
of termination. Upon a termination of Employee’s employment with the Company
under this Section 5(e), the effective date of termination shall be the date set
forth in employee’s resignation notice (assuming such date is in compliance with
the notice provisions of this Section 5(e)) or an earlier date after the
Company’s receipt of such notice as determined by the Company, in its sole
discretion, but not earlier than the date on which the Company learned of
Employee’s decision to terminate his employment for other than Good Reason.

 

(f) Notice of Termination. Any termination, except for death, pursuant to this
Section 5 shall be communicated by a Notice of Termination. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate those specific termination provisions in this Agreement relied upon and
which sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee’s employment under the
provisions so indicated. The Notice of Termination shall also set forth that
Employee’s employment is terminated and be delivered in accordance with the
terms of this Agreement.

 

Notwithstanding anything to the contrary set forth herein, the provisions of
Sections 7, 8 and 9 shall survive the end of the Term and/or the termination of
Employee’s employment hereunder for any reason, and shall remain in full force
and effect thereafter.

 

6. Payments Upon Termination and Change in Control.

 

(a) Termination for Cause. In the event Employee’s employment hereunder is
terminated for Cause, all of Employee’s rights to his Base Salary, Benefits and
Bonus, if any, shall immediately terminate as of the date of such termination,
except that Employee shall be entitled to any earned and unpaid portion of his
Base Salary and accrued Benefits up to the date of termination, less all
deductions or offsets for amounts owed by Employee to the Company or
Logisticare. Employee shall not be entitled to any Bonus, prorated or otherwise.
The Company shall have no further obligations to Employee under the Agreement.

 

(b) Termination Due to Death or Disability. In the event Employee’s employment
hereunder is terminated due to his death or Disability, all of Employee’s rights
to his Base Salary, Benefits and Bonus, if any, shall immediately terminate as
of the date of such termination, except that Employee (or, in the event that
Employee’s employment hereunder is terminated due to Employee’s death,
Employee’s heirs, personal representatives or estate) shall be entitled to any
earned and unpaid portion of his Base Salary and accrued Benefits up to the date
of termination less all deductions or offsets for amounts owed by Employee to
the Company or Logisticare, and any accrued Bonus prorated through the date of
termination. Subject to the provisions of the applicable Company stock option or
stock incentive plan, should Employee’s death occur within one (1) year
following his termination for Disability, but prior to his exercise of any
options vested at the date of termination, Employee’s estate shall be entitled
to exercise Employee’s options for (i) the remainder of the one (1) year period,
or (ii) if earlier, until the earlier of (A) the latest date upon which the
option could have expired by its original terms under any circumstances or (B)
the 10th anniversary of the original date of grant of the option. The foregoing
clause (ii) shall apply to the extent needed to avoid adverse tax consequences
under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”).
The Company shall have no further obligations to Employee under the Agreement.

 

 
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(c) Termination By Company Without Cause or By Employee For Good Reason. If the
Company terminates Employee’s employment other than for Cause or the occurrence
of Employee’s death or Disability, or if Employee terminates his employment for
Good Reason, or if Employee’s employment with the Company terminates at the end
of the Term because the Company and Employee have not entered into either an
extension of this Agreement or a new employment agreement, Employee shall be
entitled to receive and the Company shall pay a severance benefit in the gross
amount of one and one-half (1-1/2) times his Base Salary in effect at the time
of such termination in a lump sum payment minus appropriate tax and other
withholdings (so long as Employee is not in material breach of this Agreement)
(“Severance Payment”) on the sixtieth (60th) day following such termination
(“Payment Date”), provided that (i) prior to the Payment Date the Employee
executes and delivers to the Company a General Release of all claims relating to
his employment and termination from employment in a form provided by the Company
(which General Release shall not affect any rights the Employee may have under
COBRA or under any vested award previously issued to Employee by the Company
under any Company benefit plan), (ii) on or prior to the Payment Date, such
General Release is not revoked, and (iii) as of the Payment Date, the Employee
is not in material breach of this Agreement. The Employee understands that if
the conditions set forth in the preceding sentence are not met, he shall not be
entitled to the Severance Payment under this section. The Company shall have no
further obligations to Employee under this Agreement.

 

(d) Termination By Employee For Other Than Good Reason. In the event Employee
terminates his employment for other than Good Reason during the Term, all of
Employee’s rights to his Base Salary, Benefits and Bonus, if any, shall
immediately terminate as of the date of termination, except that Employee shall
be entitled to any earned and unpaid portion of his Base Salary and accrued
Benefits up to the date of termination. Employee shall not be entitled to any
Bonus, prorated or otherwise. The Company shall have no further obligations to
Employee under the Agreement.

 

(e) Payment Upon Change in Control of the Company. Notwithstanding any other
provision in this Agreement to the contrary, if a “Change in Control of the
Company” (as defined herein), shall occur during the Term, and prior to the
twenty-four (24) month anniversary of the consummation date of the Change in
Control of the Company (i) the Company or Logisticare terminates Employee’s
employment without Cause, (ii) Employee terminates his employment for Good
Reason, in lieu of any other amounts payable under this Agreement, or (iii) this
Agreement expires by its terms and the Company does not offer to renew this
Agreement for an additional term to expire no earlier than the twenty-four (24)
month anniversary of the consummation date of the Change in Control of the
Company, Employee shall receive a lump sum payment equal to two (2) times
Employee’s average annual W-2 compensation from Logisticare for the most recent
five (5) taxable years ending before the date on which the Change in Control of
the Company occurs (or such portion of such period during which Employee
performed personal services for the Company); provided, however, that if such
lump sum payment, either alone or together with other payments or benefits,
either cash or non-cash, that Employee has the right to receive from the Company
and/or Logisticare, including, but not limited to, accelerated vesting or
payment of any deferred compensation, options, stock appreciation rights or any
benefits payable to Employee under any plan for the benefit of employees, which
would constitute an “excess parachute payment” (as defined in Section 280G of
the Code), then such lump sum payment or other benefit shall be reduced to the
largest amount that will not result in receipt by Employee of a parachute
payment (“Change in Control of Company Payment”). The Change in Control of
Company Payment will be paid to Employee within ten (10) days of his termination
of employment following the Change in Control of the Company as provided above.
A Change in Control of the Company will have no other effect on this Agreement
which will remain in full force and effect. Notwithstanding the foregoing, the
Employee shall not be entitled under this Agreement to receive both a Change in
Control of Company Payment and a Change in Control of Logisticare Payment (as
defined below).

 

 
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(i) Definition of Change in Control of the Company. For purposes of this
Agreement, the term “Change in Control of the Company” shall mean an event or
events, in which:

 

(A) any “person” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “1934 Act”) (other than (1) the Company,
(2) any subsidiary of the Company, (3) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of any subsidiary of
the Company, or (4) any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the “beneficial owner” (as
defined in Section 13(d) of the 1934 Act), together with all affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules and
Regulations under the 1934 Act) of such person, directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or more of the
combined voting power of the Company’s then outstanding securities (the “Trigger
Percentage”); provided, however, that in the case the “person” referenced in
this Section 6(e)(i)(A) is Coliseum Capital Management, LLC, directly or
indirectly through one or more of its affiliates or Associates (as such terms
are used in Rule 12b-2 of the General Rules and Regulations under the 1934 Act)
(collectively, “Coliseum”), the Trigger Percentage shall be fifty percent (50%);

 

(B) the consummation of a merger or consolidation of the Company with any other
company, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any subsidiary of the Company, at least
sixty-five percent (65%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) after which no “person”
(with the method of determining “beneficial ownership” used in clause (A) of
this definition) owns more than the Trigger Percentage of the Company or the
surviving entity of such merger or consolidation provided, however, that in the
case the “person” referenced in this Section 6(e)(i)(B) is Coliseum, the Trigger
Percentage shall be fifty percent (50%);

 

 
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(C) during any period of two (2) consecutive years individuals who at the
beginning of such period constitute the Company’s Board, and any new director
(other than a director designated by a person who has conducted or threatened a
proxy contest, or has entered into an agreement with the Company to effect a
transaction described in clause (A), (B) or (D) of this definition) whose
election by the Company’s Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office, who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved cease for any reason to constitute at least a majority thereof; or

 

(D) The Company consummates its liquidation or sale or disposition by the
Company of all or substantially all of its assets.

 

(f) Payment Upon Change in Control of Logisticare. Notwithstanding any other
provision in this Agreement to the contrary, if a “Change in Control of
Logisticare” shall occur during the Term, and prior to the twenty-four (24)
month anniversary of the consummation date of the Change in Control of
Logisticare (i) Logisticare terminates Employee’s employment without Cause or
(ii) Employee terminates his employment for Good Reason, in lieu of any other
amounts payable under this Agreement, or (iii) this Agreement expires by its
terms and Logisticare does not offer to renew this Agreement for an additional
term to expire no earlier than the twenty-four (24) month anniversary of the
consummation date of the Change in Control of Logisticare, Employee shall
receive a lump sum payment equal to two (2) times Employee’s average annual W-2
compensation from Logisticare for the most recent five (5) taxable years ending
before the date on which the Change in Control of Logisticare occurs (or such
portion of such period during which Employee performed personal services for
Logisticare); provided, however, that if such lump sum payment, either alone or
together with other payments or benefits, either cash or non-cash, that Employee
has the right to receive from the Company and/or Logisticare, including, but not
limited to, accelerated vesting or payment of any deferred compensation,
options, stock appreciation rights or any benefits payable to Employee under any
plan for the benefit of employees, which would constitute an “excess parachute
payment” (as defined in Section 280G of the Code), then such lump sum payment or
other benefit shall be reduced to the largest amount that will not result in
receipt by Employee of a parachute payment (“Change in Control of Logisticare
Payment”). The Change in Control of Logisticare Payment will be paid to Employee
within ten (10) days of his termination of employment following the Change in
Control of Logisticare as provided above. A Change in Control of Logisticare
will have no other effect on this Agreement which will remain in full force and
effect. Notwithstanding the foregoing, the Employee shall not be entitled under
this Agreement to receive both a Change in Control of Logisticare Payment and a
Change in Control of Company Payment.

 

 
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(i) Definition of Change in Control of Logisticare. For purposes of this
Agreement, the term “Change in Control of Logisticare” shall mean, and shall
only mean, a transaction after which neither the Company nor any of its then
direct or indirect subsidiaries is the “beneficial owner” (as defined in Section
13(d) of the 1934 Act), of more than fifty percent (50%) of the combined voting
power of the outstanding securities of Logisticare.

 

(g) Recognition. Employee recognizes and accepts that the Company shall not, in
any case, be responsible for any additional amount, severance pay, termination
pay, severance obligation or other payments or damages whatsoever arising from
the termination of Employee’s employment, above and beyond those specifically
provided for herein.

 

7. Restrictive Covenants.

 

(a) Non-Competition. During the Term and for a period of eighteen (18) months
after this Agreement is terminated for any reason, Employee will not, in any
capacity (including, but not limited to, owner, partner, member shareholder,
consultant, advisor, financier, agent, employee, officer, director, manager or
otherwise), directly or indirectly, for his own account or for the benefit of
any natural person, corporation, partnership, trust, estate, joint venture, sole
proprietorship, association, cooperative or other entity (“Person”), establish,
engage in, work for, or be connected with, except as an employee of the Company
or its Affiliates, any business in competition with the Business of the Company
(as defined in Section 7(i) below), if such business competes with the Business
of the Company in any State, county, or municipality where the Company or its
Affiliates conduct business, are preparing to conduct business or have conducted
business during the Term.

 

(b) Non-Solicitation/Non-Piracy. During the Term, and for a period of eighteen
(18) months after this Agreement is terminated for any reason, Employee will
not, directly or indirectly, for his own account or for the benefit of any
Person or entity:

 

(i) solicit, service, contact, or aid in the solicitation or servicing of any
Person or entity which is or was a customer, prospective customer, client,
prospective client, contractor, subcontractor or supplier of the Company or its
Affiliates within three (3) years prior to Employee’s termination (“Company
Customers/Clients”), for the purpose of (A) selling services or goods in
competition with the Business of the Company; (B) inducing Company
Customers/Clients to cancel, transfer or cease doing business in whole or in
part with the Company or its Affiliates or (C) inducing Company
Customers/Clients to do business with any Person or business entity in
competition with the Business of the Company (as hereafter defined).

 

(ii) solicit, aid in solicitation of, induce, contact for the purpose of,
encourage or in any way cause any employee of the Company or its Affiliates to
leave the employ of the Company or its Affiliates, or interfere with such
employee’s relationship with the Company or its Affiliates.

 

 
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(c) Non-Disclosure. Other than in furtherance of the Business of the Company, in
the ordinary course in his capacity as an employee hereunder, Employee will not,
at any time, except with the express prior written consent of the CEO, directly
or indirectly, disclose, communicate or divulge to any Person or entity, or use
for the benefit of any Person or entity, any secret, confidential or proprietary
knowledge or information with respect to the conduct or details of the Business
of the Company, or the business of any of its Affiliates including, but not
limited to, customer and client lists, customer and client accounts and
information, prospective client, customer, contractor and subcontractor lists
and information, services, techniques, methods of operation, pricing, costs,
sales, sales strategies and methods, marketing, marketing strategies and
methods, products, product development, research, know-how, policies, financial
information, financial condition, business strategies and plans and other
information of the Company or any of its Affiliates which is not generally
available to the public and which has been developed or acquired by the Company,
or any of its Affiliates with considerable effort and expense. Upon the
expiration or termination of Employee’s employment under this Agreement,
Employee shall immediately deliver to the Company or Logisticare, as the case
may be, all memoranda, books, papers, letters, and other data (whether in
written form or computer stored), and all copies of same, which were made by
Employee or otherwise came into his possession or under his control at any time
prior to the expiration or termination of his employment under this Agreement,
and which in any way relate to the Business of the Company or the business of
any of its Affiliates as conducted or as planned to be conducted by the Company
or any of its Affiliates on the date of the expiration or termination.

 

(d) Intellectual Property. Employee will promptly communicate to the Company, in
writing when requested, all software, designs, techniques, concepts, methods and
ideas, other technical information, marketing strategies and other ideas and
creations pertaining to the Business of the Company or any of its Affiliates
which are conceived or developed by Employee alone or with others, at any time
(during or after business hours) while Employee is employed by the Company or
its Affiliates. Employee acknowledges that all of those ideas and creations are
inventions and works for hire, and will be the Company’s exclusive property.
Employee will sign any documents which the Company deems necessary to confirm
its ownership of those ideas and creations, and Employee will cooperate with the
Company in order to allow the Company to take full advantage of those ideas and
creations.

 

(e) Non-Disparagement. Employee will not, at any time publish or communicate,
disparaging or derogatory statements or opinions about the Company or its
Affiliates, including but not limited to, disparaging or derogatory statements
or opinions about the Company’s or its Affiliates’ management, products or
services, to any third party. It shall not be a breach of this section for
Employee to testify truthfully in any judicial or administrative proceeding or
to make statements or allegations in legal filings that are based on Employee’s
reasonable belief and are not made in bad faith. The Company will not, at any
time publish or communicate, disparaging or derogatory statements or opinions
about the Employee, including but not limited to, disparaging or derogatory
statements or opinions about the Employee’s management, to any third party. It
shall not be a breach of this section for a representative of the Company to
testify truthfully in any judicial or administrative proceeding or to make
statements or allegations in legal filings that are based on his or her
reasonable belief and are not made in bad faith.

 

 
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(f) Enforcement. Employee acknowledges that the covenants and agreements of this
Section 7 (“Covenants”) herein are of a special and unique character, which give
them peculiar value, the loss of which cannot be reasonably or adequately
compensated for in an action at law. Employee further acknowledges that any
breach or threat of breach by him of any of the Covenants will result in
irreparable injury to the Company for which money damages could not be adequate
to compensate the Company. Therefore, in the event of any such breach or
threatened breach, the Company shall be entitled, in addition to all other
rights and remedies which the Company may have at law or in equity, to have an
injunction issued by any competent court enjoining and restraining Employee
and/or all other Persons involved therein from committing a breach or continuing
such breach. The remedies granted to the Company in this Agreement are
cumulative and are in addition to remedies otherwise available to the Company at
law or in equity. The Covenants contained in this Section 7 are independent of
any other provision of this Agreement, and the existence of any claim or cause
of action which Employee or any such other Person may have against the Company
shall not constitute a defense or bar to the enforcement of any of the
Covenants. If the Company is obliged to resort to litigation to enforce any of
the Covenants which has a fixed term, then such term shall be extended for a
period of time equal to the period during which a material breach of such
Covenant was occurring, beginning on the date of a final court order (without
further right of appeal) holding that such a material breach occurred, or, if
later, the last day of the original fixed term of such Covenant.

 

(g) Acknowledgements. Employee expressly acknowledges that the Covenants are a
material part of the consideration bargained for by the Company, and, without
the agreement of Employee to be bound by the Covenants, the Company would not
have agreed to enter into this Agreement Employee further acknowledges and
agrees that the Business of the Company the Business of Logisticare and its
services are highly competitive, and that the Covenants contained in this
Section 7 are reasonable and necessary to protect the Company’s and
Logisticare’s legitimate business interests. In addition, Employee acknowledges
that in the event his employment with Logisticare terminates, he will still be
able to earn a livelihood without violating this Agreement, and that the
Covenants contained in this Section 7 are material conditions to his employment
and continued employment with Logisticare or the Company, as the case may be.

 

(h) Scope. If any portion of any Covenant or its application is construed to be
invalid, illegal or unenforceable, then the remaining portions and their
application shall not be affected thereby, and shall be enforceable without
regard thereto. If any of the Covenants is determined to be unenforceable
because of its scope, duration, geographical area or similar factor, then the
court or other trier of fact making such determination shall modify, reduce or
limit such scope, duration, area or other factor, and enforce such Covenant to
the extent it believes is lawful and appropriate.

 

(i) Business of the Company. The term “Business of the Company”, as used herein,
shall mean the provision by the Company or Logisticare or any of the Company’s
other Affiliates of the arrangement, brokering and/or provision of non-emergency
transportation services for Medicaid or Medicare or other recipients and any
other transportation business in which the Company or Logisticare or any of the
Company’s other Affiliates were actually engaged and in which the Employee was
involved.

 

 
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(j) Costs, Expenses in the Event of Breach. In the event that Employee breaches
or attempts to breach the Covenants contained in this Section 7, the Company
shall be entitled to reimbursement from Employee for all costs and expenses
associated with any successful action to enforce any of the Covenants contained
in Section 7, including but not limited to reasonable attorneys’ fees and costs
of litigation. Should the Company file an action against Employee relating to a
breach of the Covenants contained in Section 7, and a court of competent
jurisdiction determines that Employee did not breach any of those Covenants,
Employee shall be entitled to reimbursement from the Company of all costs and
expenses associated with defending against such action asserting a breach,
including reasonable attorneys’ fees and costs.

 

8. Section 409A of the Code.

 

(a) Amounts payable under this Agreement are intended cither to be exempt from
the rules of Section 409A of the Code or to satisfy those rules and shall be
construed accordingly. The Company shall not be liable to Employee with respect
to any Agreement-related adverse tax consequences arising under Section 409A or
other provision of the Code.

 

(b) If any provision of this Agreement contravenes any regulations or Treasury
guidance promulgated under Code Section 409A or could cause an amount payable
hereunder to be subject to the interest and penalties under Code Section 409A,
such provision of the Agreement shall be deemed automatically modified to
maintain, to the maximum extent practicable, the original intent of the
applicable provision without violating the provisions of Code Section 409A. A
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
is also a “Separation from Service” within the meaning of Code Section 409A and,
for purposes of any such provision of this Agreement, references to a
“termination,” “termination of employment” or like terms shall mean Separation
from Service.

 

(c) Notwithstanding any provisions of this Agreement to the contrary, if
Employee is a “specified employee” (as such term is defined for purposes of Code
Section 409A), no payment shall be made under Section 6(c) or 6(e) hereof prior
to the six (6)-month anniversary of Employee’s separation of service to the
extent such six-month delay in payment is required to comply with Code Section
409A. To the extent that this Section 8(c) applies to any Severance Payment
under Section 6(c) hereof, and the actions described in this sentence do not
cause adverse tax consequences to be imposed under the Code, the Company shall,
as soon as practicable following Employee’s termination of employment, and after
Employee executes and does not revoke the General Release of all claims as
referenced in Section 6(c), deposit an amount equal to the gross amount of such
Severance Payment into an irrevocable Rabbi Trust in the form prescribed by
Internal Revenue Service Revenue Procedure 92-64. Such Rabbi Trust shall be
established and maintained by the Company, at its own expense, pending the
distribution of such amount to Employee under this Agreement. The Trustee shall
be a financial institution selected by the Company, and the Trustee shall invest
all amounts deposited therein with the purpose of preserving the Trust
principal. All principal and income from the Rabbi Trust shall be paid to
Employee on the first day following the six (6)-month anniversary of Employee’s
separation from service. The Trustee shall withhold or cause to be withheld all
withholding taxes as may be required by applicable law.

 

 
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9. Miscellaneous.

 

(a) Indulgences, Etc. Neither the failure, nor any delay, on the part of either
party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same, or of any other right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver shall be effective unless it is in writing
and is signed by the party asserted to have granted such waiver.

 

(b) Controlling Law; Consent to Arbitration; Service of Process.

 

(i)  This Agreement and all questions relating to its validity, interpretation,
performance and enforcement (including, without limitation, provisions
concerning limitations of actions), shall be governed by and construed in
accordance with the laws of the State of Arizona (notwithstanding any
conflict-of-laws doctrines of such state or other jurisdiction to the contrary),
and without the aid of any canon, custom or rule of law requiring construction
against the draftsman.

 

(ii) Except to the extent provided for in Section 7 above (relating to
injunctive relief and other equitable remedies), the Company and Employee agree
that any claim, dispute or controversy arising under or in connection with this
Agreement, or otherwise in connection with Employee’s employment by the Company
or termination of his employment (including, without limitation, any such claim,
dispute or controversy arising under any federal, state or local statute,
regulation or ordinance or any of the Company’s employee benefit plans, policies
or programs) shall be resolved solely and exclusively by binding, confidential,
arbitration. The arbitration shall be held in Tucson, Arizona (or at such other
location as shall be mutually agreed by the parties). The arbitration shall be
conducted in accordance with the National Rules for the Resolution of Employment
Disputes (the “Rules”) of the American Arbitration Association (“the AAA”) in
effect at the time of the arbitration, except that the arbitrator shall be
selected by alternatively striking from a list of five arbitrators supplied by
the AAA. All fees and expenses of the arbitration, including a transcript if
either requests, shall be borne equally by the parties, however, all costs for
the services of the arbitrator shall be borne solely by the Company. Each party
is responsible for the fees and expenses of its own attorneys, experts,
witnesses, and preparation and presentation of proofs and post-hearing briefs
(unless the party prevails on a claim for which attorney’s fees are recoverable
under law). In rendering a decision, the arbitrator shall apply all legal
principles and standards that would govern if the dispute were being heard in
court. This includes the availability of all remedies that the parties could
obtain in court. In addition, all statutes of limitation and defenses that would
be applicable in court, will apply to the arbitration proceeding. The decision
of the arbitrator shall be set forth in writing, and be binding and conclusive
on all parties. Any action to enforce or vacate the arbitrator’s award shall be
governed by the Federal Arbitration Act, if applicable, and otherwise by
applicable state law. If either the Company or Employee improperly pursues any
claim, dispute or controversy against the other in a proceeding other than the
arbitration provided for herein, the responding party shall be entitled to
dismissal or injunctive relief regarding such action and recovery of all costs,
losses and attorney’s fees related to such action.

 

 
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(iii) Each of the parties hereto hereby consents to process being served in any
suit, action or proceeding of any nature, by the mailing of a copy thereof by
registered or certified first-class mail, postage prepaid, return receipt
requested, to them at their respective addresses set forth in Section 9(c)
hereof. Each of parties hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, all claims of error by reason of any such service
pursuant to the terms hereof (but does not waive any right to assert lack of
subject matter jurisdiction) and agrees that such service (A) shall be deemed in
every respect effective service of process in any such suit, action or
proceeding and (B) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service.

 

(iv) Nothing in this Section 9(b) shall affect the right of any party hereto to
serve process in any manner permitted by law or affect the right of any party to
bring proceedings against any other party in the courts of any jurisdiction or
jurisdictions.

 

(c) Notices. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received only when delivered (personally, by courier
service such as Federal Express, or by other messenger) or when deposited in the
United States mails, registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below.

 

(i)                         If to Employee:

 

Herman Schwarz

 

(ii)                         If to the Company:

The Providence Service Corporation
64 East Broadway Blvd.
Tucson, AZ 85701
Attention: Chief Executive Officer

 

In addition, notice by mail shall be by air mail if posted outside of the
continental United States.

 

Any party may alter the addresses to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.

 

 
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(d) Assignment of Agreement. The rights and obligations of both parties under
this Agreement shall inure to the benefit of and shall be binding upon their
heirs, successors and assigns. The Company may assign or otherwise transfer its
rights under this Agreement, including but not limited to all Covenants
contained in Section 7 above, to any successor or affiliated business or
corporation whether by sale of stock, merger, consolidation, sale of assets or
otherwise. This Agreement may not, however, be assigned by Employee to a third
party, nor may Employee delegate his duties under this Agreement.

 

(e) Fees and Expenses. The Company shall bear its own legal fees and expenses in
connection with the negotiation of this Agreement and shall pay the reasonable
fees and expenses of Employee in connection with the negotiation of this
Agreement, which shall not exceed One Thousand Eight Hundred and 00/100 Dollars
($1,800).

 

(f) Execution in Counterparts. This Agreement may be executed in any number of
counterparts, including by facsimile, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.

 

(g) Provisions Separable. The provisions of this Agreement are independent of
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

(h) Entire Agreement. This Agreement contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings between the parties,
inducements or conditions, express or implied, oral or written, except as herein
contained The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.

 

(i) Section Headings. The Section headings in this Agreement are for convenience
only; they form no part of this Agreement and shall not affect its
interpretation.

 

(j) Gender, Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate.

 

(k) Independent Review and Consultation. Employee is hereby advised to consult
with an attorney before signing this Agreement. Employee acknowledges that it is
his decision whether or not to do so.

 

 
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(l) Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday on which entities which are provincially regulated are or may
elect to be closed, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or such holiday.

 

 
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement,
intending to be legally bound hereby, as of the date first above written.

 

THE PROVIDENCE SERVICE CORPORATION

   

By: /s/ Warren Rustand                                 
Name:Warren Rustand
Title:Chief Executive Officer

   

HERMAN SCHWARZ

 

/s/ Herman Schwarz                                        

   

AGREED AND ACCEPTED SOLELY AS TO SECTION 1(b) OF

THIS AGREEMENT LOGISTICARE SOLUTIONS, LLC

   

By:/s/ Michael-Bryant Hicks                          

Name:  Michael-Bryant Hicks

Title:  Corporate Secretary  

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Employment Agreement of Herman Schwarz]