Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”), is made as of this 6th day of November,
2007, by and between LOGISTICARE SOLUTIONS, LLC, a Delaware limited liability
company, with its principal office located at 1800 Phoenix Boulevard, Suite 120,
College Park, Georgia 30349, its successors and assigns (hereinafter
collectively referred to as “Company”), and JOHN L. SHERMYEN, an individual
residing at 11715 N.W. 1122nd Terrace, Alachua, Florida 32615 (“Employee” and
together with the Company, the “parties”).

BACKGROUND

WHEREAS, Employee is currently employed by Company as its President and Chief
Executive Officer (“CEO”); and

WHEREAS, Company is contemplating a merger with a wholly owned subsidiary of The
Providence Service Corporation (“Providence”), a Delaware corporation, with its
head office located at 5524 East Fourth Street, Tucson, Arizona (the
“Transaction”); and

WHEREAS, should Company complete the Transaction, Providence will become the
parent company of Company; and

WHEREAS, should Company complete the Transaction, Company desires to employ
Employee, and Employee desires to be employed by Company, all upon the terms and
conditions set forth in this Agreement; and

WHEREAS, the execution of this Agreement is a condition of the Transaction; and

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. Employment. The Company hereby employs Employee and Employee hereby accepts
employment by the Company, for the period set forth in Section 3 below and upon
the terms and conditions set forth in this Agreement, subject to earlier
termination pursuant to Section 6 below.

2. Office and Duties.

(a) During the term of this Agreement, Employee shall serve as CEO of the
Company, and shall report directly to the Chief Operating Officer (“COO”) of
Providence, and be subject to the COO of Providence’s supervision, control and
direction.

(b) In his capacity as CEO of the Company, 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 COO of Providence, and shall perform such additional duties and
responsibilities as may be from time to time assigned to him by the COO of
Providence. In addition, Employee acknowledges and agrees that he shall observe
and comply with all of the Company’s policies and procedures, observe and comply
with all of Providence’s policies and procedures, and comply with all directives
of the boards of directors of Providence and the Company.

 

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(c) The 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.

(d) During the term of this Agreement, Employee shall not be engaged in any
business activity which, in the reasonable judgment of the COO of Providence,
conflicts with Employee’s duties hereunder, whether or not such activity is
pursued for pecuniary advantage.

3. Term. This Agreement shall be effective for a term of two (2) years on the
terms and conditions set out herein (“Term”) from the date on which the
Transaction completes (“Effective Date”) and ending two (2) years later, unless
sooner terminated as hereinafter provided. The Term shall be automatically
extended and renewed for a period of one (1) year from the end of the Term
(“Renewal Date”) unless either the Company or Employee shall give written notice
of non-renewal to the other party at least six (6) months prior to the end of
the Term, in which event this Agreement shall terminate at the end of the Term.
Subject to the termination provisions contained herein, if this Agreement is
renewed on the Renewal Date for an additional one (1) year period, it will
automatically be renewed on the anniversary of the Renewal Date and each
subsequent year thereafter (the “Annual Renewal Date”) for a period of one
(1) year , unless either party gives written notice of non-renewal to the other
party at least six (6) months prior to any Annual Renewal Date, in which case
the Agreement will terminate on the Annual Renewal Date immediately following
such notice.

4. Compensation.

(a) Base Salary. In consideration of the services rendered by Employee to the
Company during the term hereof, Employee shall receive an annual base salary of
Two Hundred and Eighty-Five Thousand Dollars ($285,000) (“Base Salary”), payable
in equal periodic installments in accordance with the Company’s regular payroll
practices in effect from time to time. Employee’s Base Salary shall be reviewed
by Providence’s Board and/or Compensation Committee in or around April 2008 and
thereafter in accordance with the policies of the Company, and may be modified
as a result of such review at the sole discretion of Providence’s Board and/or
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”), with the exception of Company’s Executive
Deferred Compensation Plan unless amended to the satisfaction of Providence
prior to the Effective Date. In lieu of continuing participation in the
Company’s Executive Deferred Compensation Plan (in the event that such plan is
terminated, frozen or otherwise unavailable to Employee), Employee, if eligible,
shall be entitled to participate in Providence’s deferred compensation plans. In
addition, the Employee shall be entitled to an annual performance bonus based
upon the Employee’s individual performance and the overall performance of the
Company. Whether to award such performance bonus and the amount thereof shall be
subject to the sole discretion of Providence’s Board and/or Compensation
Committee.

 

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(c) Stock Options. Employee currently holds 20,931 stock options pursuant to
Company’s Stock Option Plan. Prior to the Effective Date, the Stock Options
exist under Company’s Stock Option Plan. Such Stock Options will be cancelled
and exchanged for Providence common stock as of the Effective Date of this
Agreement in accordance with the terms of the merger agreement governing the
Transaction and the Stock Option Cancellation and Exchange Agreement between the
Company and Employee attached as Exhibit A. Such Providence common stock shall
be subject to a Lock-Up Agreement between the Company and Employee, attached as
Exhibit B.

(d) Benefits. During the Term, Employee shall also be entitled to receipt of
benefits substantially similar to those that are presently being provided by
Company to Employee, subject to any future modifications of such plans
(collectively, the “Benefits”) in the sole discretion of Providence’s Board
and/or Compensation Committee.

(e) Vacation. During the Term, Employee shall also be entitled to take vacation
and receive vacation pay substantially similar to that which is presently
provided by Company to Employee, subject to any future modifications by the
Company in the sole discretion of Providence’s Board and/or Compensation
Committee. 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.

(f) Business Expenses. During the Term, the Company 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 may reasonably
require and in accordance with the generally applicable policies and practices
of the Company.

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

5. 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.

6. 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 if he is serving in such capacity.
For purposes of this Agreement, a “Separation from Service” with

 

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respect to the Employee means the Employee’s “separation from service,” as
defined in Treasury Regulations Section 1.409A-1(h). For purposes of
“termination of employment,” a complete and total expectation that no further
services will be performed shall be required.

(a) Termination by Company for Cause. The Company shall have the right to
terminate this Agreement and the 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 Providence, the Company or any of
their respective 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 Paragraph 8 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 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 duties or
responsibilities as directed by the COO of Providence, or violates any express
direction of any lawful rule or regulation established by the Company which 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 COO of Providence, 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 by Company upon the Death or Disability of Employee. The Company
shall have the right to terminate this Agreement and Employee’s employment
hereunder at any time upon the death or Disability of Employee. The term,
“Disability”, as used herein, means any physical or mental illness, infirmity or
incapacity which prevents or significantly restricts 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 of this Agreement 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 (unless such relocation would
constitute “Good Reason” under Section 6(d)(iii) hereof), or the Company’s
hiring of a President or other officer which may result in the reassignment of
some of Employee’s duties to someone in the Company below the level of Employee
(unless such reassignment would constitute “Good Reason” under Section 6(d)(iv)
hereof).

(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 and for purposes of this
Agreement, a relocation to a Company office outside the greater metropolitan
area of Atlanta, Georgia;

 

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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 Board of written notice of such breach (it shall be
deemed a material breach of this Agreement if the Employee is required to report
to a person below the rank of COO of Providence; or

(v) the Company gives Employee proper notice in accordance with Section 3 above
that the Agreement will not be extended or renewed for an additional one
(1) year period from the end of the Term or from the end of any subsequent
Annual Renewal Date.

(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 (90) days prior written notice of
termination. Upon a termination of Employee’s employment with the Company under
this Section 6(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 6(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 6 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 8, 9 and 10 shall survive the end of the Term, the non-renewal of the
Agreement, and/or the termination of Employee’s employment hereunder for any
reason, and shall remain in full force and effect thereafter.

7. 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, which shall
be paid to Employee within thirty (30) days of 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.

 

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(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 representative 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, and any earned and accrued Bonus prorated through the date of
termination, which shall be paid to Employee (or his estate) in a lump sum
within thirty (30) days of the date of termination. The Company shall have no
further obligations to Employee under the Agreement.

(c) Termination By Company Without Cause or By Employee For Good Reason. If the
Employee has a Separation from Service by reason of termination of his
employment by Company other than for Cause or the occurrence of Employee’s death
or Disability, or if Employee has a Separation from Service by reason of
resignation of his employment for Good Reason, Employee shall be entitled to
receive severance in the amount of twelve (12) months of his Base Salary in
effect at the time of termination (so long as Employee is not in breach of this
Agreement) (“Severance Payment”), provided that Employee executes, and does not
revoke, a General Release, attached hereto as Exhibit C, of all claims relating
to his employment and termination from employment in a form provided by the
Company. Subject to Section 9 hereof, the Company shall pay the Severance
Payment in equal installments based on the number of regularly scheduled payroll
periods (in effect as of the date of the termination) during the Severance
Period (The Severance Period is a period of 12 months. The first day of the
Severance Period shall be determined by the Company which shall occur no later
than ninety (90) days after the termination and correspond to a regularly
scheduled payment date.), provided that (1) Employee has delivered the General
Release within such time as designated by the Company, (2) the Company
determines that the General Release is legally binding on Employee and
(3) Employee does not revoke the General Release, and subject to the
requirements under Section 9(c) hereof. The first installment shall be paid on
the first day of the Severance Period and subsequent installments on each
regularly scheduled payroll date thereafter until no additional amount is
payable to the Employee. The Severance Payment shall be subject to all
applicable withholding for federal, state, and local taxes. In the event of the
Employee’s death prior to receiving all due installment payments of his/her
Severance Payment, any remaining installments thereof shall be paid to the
Employee’s estate on the same payment schedule as would have occurred, but for
the death of the Employee. In no event shall payment of any Severance Payment be
made prior to the effective date of termination or prior to the expiration of
the revocation period, if any, applicable to the General Release. If Employee
fails to deliver such legally binding General Release by the due date designated
by the Company, the Company shall not have any obligation to make any Severance
Payments. Employee understands that should he fail or refuse to execute the
General Release provided by the Company, or revoke such General Release, he
shall not be entitled to the Severance Payment under this section. The Company
shall have no further obligations to Employee under the Agreement.

(d) Termination By Employee For Other Than Good Reason. In the event Employee
terminates his employment for other than Good Reason, 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 earned 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.

 

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(e) Payment Upon Change in Control. In the event of a “Change in Control” of
Providence (as defined herein) and Employee is employed on the date of closing
for the Change in Control event, Employee shall receive a lump sum payment equal
to one and one-half (1.5) times Employee’s average annual W-2 compensation from
the Company for the most recent five (5) taxable years ending before the date on
which the Change in Control occurs (or such portion of such period during which
Employee performed personal services for the Company), but not in excess of the
amount specified in Code Section 162(m)(1) (currently, $1,000,000) or any
successor Code Section thereto; 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, 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 Payment”). The
Change in Control Payment will be paid to Employee upon the closing of the
transaction causing the Change in Control. A Change in Control will have no
other effect on this Agreement which will remain in full force and effect.

(i) Definition of Change in Control. For purposes of this Agreement, the term
“Change in Control” shall have the following definition:

(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 (i) Providence,
(ii) any subsidiary of Providence, (iii) any trustee or other fiduciary holding
securities under an employee benefit plan of Providence or of any subsidiary of
Providence, or (iv) any company owned, directly or indirectly, by the
stockholders of Providence in substantially the same proportions as their
ownership of stock of Providence), 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 Providence representing 50% or more of the combined voting power
of Providence’s then outstanding securities;

(B) the stockholders of Providence approve a merger or consolidation of
Providence with any other company, other than (i) a merger or consolidation
which would result in the voting securities of Providence 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 Providence or any
subsidiary of Providence, at least 65% of the combined voting power of the
voting securities of Providence or such surviving entity outstanding immediately
after such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of Providence (or similar transaction) after which
no “person” (with the method of determining “beneficial ownership” used in
clause (A) of this definition) owns more than 50% of the combined voting power
of the securities of Providence or the surviving entity of such merger or
consolidation;

 

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(C) during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board of Providence, 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 Providence to
effect a transaction described in clause (A), (B) or (D) of this definition)
whose election by the Board or nomination for election by Providence’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 stockholders of Providence approve a plan of complete liquidation of
Providence or an agreement for the sale or disposition by Providence of all or
substantially all of Providence’s assets.

(ii) If this Agreement provides for the payment of deferred compensation subject
to Section 409A of the Code, any payment of such deferred compensation by reason
of a Change in Control shall be made only if the Change in Control is a “change
in control event” as described in Treasury Regulation Section 1.409A-3(i)(5) and
shall be paid consistent with the requirements of Section 409A. If any deferred
compensation that would otherwise be payable by reason of a Change in Control
cannot be paid by reason of the immediately preceding sentence, it shall be paid
as soon as practicable thereafter consistent with the requirements of
Section 409A, as determined by Providence.

(f) 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.

8. Restrictive Covenants.

(a) Non-Competition. During the Term and any renewal periods, and for a period
of twelve (12) 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, any business in competition with the
Business of the Company (as defined in Section 8(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.

 

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(b) Non-Solicitation/Non-Piracy. During the Term and any renewal periods, and
for a period of twelve (12) 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.

(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 COO of
Providence, directly or indirectly, disclose, communicate or divulge to any
Person or entity, or use for the benefit of any Person or entity, any trade
secret, confidential or proprietary knowledge or information, with respect to
the conduct or details of the Business of the Company 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 its Affiliates which is not generally available to
the public and which has been developed or acquired by the Company or 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 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
as conducted or as planned to be conducted by the Company or 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 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.

 

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(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.

(f) Enforcement. Employee acknowledges that the covenants and agreements of this
Section 8 (“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 8 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 and its services are highly competitive,
and that the Covenants contained in this Section 8 are reasonable and necessary
to protect the Company’s legitimate business interests. In addition, Employee
acknowledges that in the event his employment with the Company terminates, he
will still be able to earn a livelihood without violating this Agreement, and
that the Covenants contained in this Section 8 are material conditions to my
employment and continued employment with the Company.

(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.

 

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(i) Business of the Company. The term “Business of the Company”, as used herein,
shall mean the provision by the Company or its Affiliates of the arrangement,
brokering and/or provision of non-emergency transportation services for Medicaid
or MediCare recipients.

(j) Costs, Expenses in the Event of Breach. In the event that Employee breaches
or attempts to breach the Covenants contained in this Section 8, 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 8, 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 8, 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.

9. Section 409A of the Code.

(a) Amounts payable under this Agreement are intended either 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 applicable 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, the Company and the Employee agree to amend this Agreement, or
take such other actions as the Company and the Employee deem necessary or
appropriate, to maintain, to the maximum extent practicable, the original intent
of the applicable provision without violating the provisions of Code
Section 409A or the Treasury guidance thereunder.

(c) Notwithstanding any provisions of this Agreement to the contrary, if, on the
date of termination, Employee is a “specified employee” (as such term is defined
for purposes of Code Section 409A and determined in accordance with Code
Section 409A(a)(2)(B)(i) and Treasury Regulations Section 1.409A-1(i)), no
Severance Payment (or any other payment under this Agreement determined to be
subject to Section 409A) shall be made under Section 7(c) hereof prior to the
six-month anniversary of Employee’s Separation from Service, to the extent such
six-month delay in payment is required to comply with Code Section 409A. To the
extent that this Section 9(c) applies to any Severance Payment under
Section 7(c) hereof (or any other payment under this Agreement determined to be
subject to Section 409A), the Company shall, as soon as practicable following
Employee’s Separation from Service, and after Employee executes and does not
revoke the General Release of all claims as referenced in Section 7(c) within
such time as designated by the Company, deposit an amount equal to the gross

 

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amount of such Severance Payment (and any other amount subject to Section 409A)
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 in a lump
sum payment on the earlier of the first day following (i) the six-month
anniversary of Employee’s Separation from Service or (ii) the Employee’s death.
The Trustee shall withhold or cause to be withheld all withholding taxes as may
be required by applicable law. Any remaining payments due under this Agreement
shall be paid as otherwise provided herein.

10. 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 Delaware (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 8 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

 

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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.

(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 10(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 10(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:

John L. Shermyen

XXXXX XX XXXXX XXXXXXX

XXXXXXX, XX XXXXX

 

  (ii) If to the Company:

The Providence Service Corporation

620 N. Craycroft

Tucson, AZ 85711

Attention: Chief Executive Officer

 

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With a copy to:

The Providence Service Corporation

5524 East Fourth Street

Tucson, AZ 85711

Attention: General Counsel

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.

(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 8 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) 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.

(f) 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.

(g) Entire Agreement. This Agreement contains the entire understanding among the
parties hereto, 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. Specifically, the parties
acknowledge that, upon the Effective Date, this Agreement terminates the current
Employment Agreement that exists between Employee and Company, dated April 20,
2004. 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.

(h) 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.

 

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(i) 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.

(j) 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.

(k) 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.

 

LOGISTICARE SOLUTIONS, LLC By:   /s/ Thomas Oram

Name:   Thomas Oram Title:   Chief Financial Officer JOHN L. SHERMYEN /s/ John
L. Shermyen

 

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EXHIBIT A

Stock Option Cancellation and Exchange Agreement

 

18

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EXHIBIT B

Lock-Up Agreement

 

19

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EXHIBIT C

General Release

In consideration for LOGISTICARE SOLUTIONS, LLC (“LogistiCare”) providing me
with a Severance Payment (as defined in the Agreement attached hereto), I, JOHN
L. SHERMYEN, on behalf of and for the benefit of myself, my heirs, executors,
administrators, representatives, successors and assigns agree to the following:

1. I acknowledge and agree that the above-referenced consideration is
satisfactory and adequate in exchange for my promises and release contained
herein.

2. In consideration of the above, I hereby agree, for myself, my heirs,
executors, administrators, representatives, successors and assigns (the
“Releasors”), to fully and unconditionally release and completely and forever
discharge LogistiCare and The Providence Service Corporation and each of their
parent companies, shareholders, subsidiaries, divisions and affiliates, and each
of their respective predecessors, successors, heirs and assigns (the “Released
Parties”) from any and all rights and claims that Releasors may have based on or
relating to my employment with LogistiCare or the termination of that employment
for any and all reasons. I specifically release the Released Parties from any
rights or claims which I may have based upon the Age Discrimination in
Employment Act or the Older Workers Benefit Protection Act, which prohibit age
discrimination in employment; Title VII of the Civil Rights Act of 1964, as
amended, which prohibits discrimination in employment based on race, color,
creed, national origin or sex; the Equal Pay Act, which prohibits paying men and
women unequal pay for equal work; the Americans with Disabilities Act of 1990,
which prohibits discrimination against disabled persons; the Employee Retirement
Income Security Act, which regulates employment benefits; the [Georgia Fair
Employment Practices Act]1, which prohibits discrimination based on race, color,
religious creed, ancestry, age, sex, national origin or disability; or any other
federal, state or local laws or regulations prohibiting discrimination or which
otherwise regulate employment terms and conditions. I also release the Released
Parties from any claim for wrongful discharge, unfair treatment, breach of
public policy, express or implied contract, or any other claims arising under
common law which relate in any way to my employment with LogistiCare or the
termination thereof. This General Release covers claims that I know about and
those that I may not know about up through the date of this General Release.
This General Release specifically includes any and all claims for attorney’s
fees and costs which are incurred by me for any reason arising out of or
relating to any or all matters covered by this Agreement.

This General Release does not waive rights or claims that may arise after the
date this General Release is executed, nor does it release: (i) any rights I
have to indemnification under applicable state law, articles of incorporation,
bylaws or policy of insurance; (ii) my rights the severance benefits provided in
exchange for this release; (iii) vested retirement or welfare benefits; or
(iv) rights under any restricted stock or stock option agreement (except as set
forth therein).

3. I hereby confirm that I have not caused or permitted any charge, complaint,
lawsuit or any other action or proceeding whatsoever to be filed against the
Released Parties based on my employment or the separation of that employment to
date.

 

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1

The applicable state law will differ for each executive.

 

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4. I acknowledge and agree that before entering into this General Release, I
have had the opportunity to consult with an attorney of my choice, and I have
been advised to do so if I so choose. I have entered into this General Release
voluntarily and knowingly and without any inducement from LogistiCare other than
the terms of this General Release. I have read and understand the terms of this
General Release before signing it.

5. I understand that I have a period of twenty-one (21) days to consider, sign
and return this General Release and that I may revoke the General Release by
delivering a signed revocation notice to LogistiCare within seven (7) days of
signing and returning this General Release.

6. This General Release will be governed and construed in accordance with the
laws of the state of Delaware. No amendment or modification of the terms of the
General Release will be made except by a writing executed by LogistiCare and
myself.

 

Dated:                     John L. Shermyen

 

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