Exhibit 10.12


 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made as of August 20,
2001 by and between John Gillespie
(“Officer”), and National Mentor, Inc.,
a Delaware corporation (“Employer”).


 


WHEREAS,
Employer and Officer desire to set forth the terms and conditions of Officer’s
employment with Employer under this Agreement;


 


NOW,
THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements in this Agreement, the parties agree as
follows:


 


STATEMENT
OF AGREEMENT:


 


1.                                      Employment.
Employer agrees to employ Officer, and Officer accepts such employment in
accordance with the terms of this Agreement, for an initial term of 2 years
commencing August 20, 2001, unless terminated earlier in accordance with
the terms of this Agreement. After the initial term has expired, this Agreement
will renew automatically on the anniversary date of each year for a one-year
term . If either party desires not to renew the Agreement, they must provide
the other party with written notice of their intent not to renew the Agreement
at least sixty days prior to the next anniversary date. If Employer chooses not
to renew this Agreement, Employer shall continue to pay Officer the
compensation provided for in Section 4(a) of this Agreement for one
year commencing on such anniversary date.


 


2.                                      Position
and Duties of Officer. Officer will serve as Executive Vice President
and Chief Financial Officer. Officer agrees to serve in such position or in
such other positions of a similar status or level as Employer determines from
time to time, and to perform the commensurate duties that Employer may assign
from time to time to Officer until the expiration of the term or such time as
Officer’s employment with Employer is terminated pursuant to this Agreement.


 


3.                                      Time
Devoted and Location of Officer.


 


(a) Subject to Section 3(c),
Officer will devote his/her full business time and energy to the business
affairs and interests of Employer, and will use his/her best efforts and
abilities to promote Employer’s interests. Officer agrees that he/she will
diligently endeavor to perform services contemplated by this Agreement in a
manner consistent with his/her position and in accordance with the policies
established by the Employer and provided to Officer from time to time.


 


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(b) Officer’s
primary business office and normal place of work will be located in Boston,
Massachusetts.


 


(c) Officer may
serve as an officer, director, agent or employee of any direct or indirect
subsidiary or other affiliate of Employer, but may not serve as an officer,
director, agent or employee of any other business enterprise without written
approval of the Board; provided, that Officer may serve in any capacity with
any civic, educational or charitable organization, or any governmental entity
or trade association, without seeking or obtaining such written approval of the
Board, if such activities and services do not interfere or conflict with the
performance of Officer’s duties under this Agreement.


 


4.                                      Compensation.


 


(a) Base Salary.
Employer will pay Officer a base salary in the amount of $230,000 per year,
which amount will be paid in accordance with Employer’s normal payroll schedule less
appropriate withholdings for federal and state taxes and other deductions
authorized by Officer. Such salary will be subject to review and adjustment by
Employer from time to time.


 


(b) Benefits.
Officer will be eligible to participate in all benefit plans of Employer to the
same extent as they are made available to other senior executives of Employer
at Officer’s level. Officer will receive separate information detailing the
terms of the benefit plans and the terms of such plans will control. Officer
will also be eligible to participate in any annual incentive plan and stock
option plan applicable to Officer by its terms.


 


5.                                      Expenses.
During the term of this Agreement, Employer will reimburse Officer promptly for
all reasonable travel, entertainment, parking, business meetings and similar
expenditures in pursuance and furtherance of Employer’s business upon receipt
of reasonably supporting documentation as required by Employer’s policies
applicable to its officers and employees generally.


 


6.                                      Termination.


 


(a) Termination Due
to Resignation and Termination with Cause. Except as
otherwise set forth in this Agreement, Officer’s employment and Officer’s
rights to receive compensation and benefits from Employer, will terminate upon
the occurrence of any of the following events (i) the effective date of
Officer’s resignation without good reason, or (ii) termination for cause
at the discretion of Employer under the following circumstances: (a) Officer’s
commission of an act of fraud or dishonesty involving his/her duties on behalf
of Employer; (b) Officer’s willful failure or refusal to faithfully and
diligently perform material duties assigned to Officer consistent with Section 2
above , or other breach of any material term under this Agreement; (c) Officer’s
willful failure or refusal to abide by Employer’s material policies, rules,
procedures or 


 


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directives; or (d) Officer’s
conviction of a felony or misdemeanor involving moral turpitude. If Officer is
terminated pursuant to this Section 6(a), Employer’s only remaining
financial obligation to Officer under this Agreement will be to pay any earned
but unpaid base salary and accrued but unpaid vacation and reimbursable travel
and entertainment expenses through the date of Officer’s termination.


 


For the events described
in Sections 6(a)(ii)(b) and (c), Employer will give Officer written notice
of such event and a reasonable opportunity to cure such situation, but in no
event less than thirty days.


 


(b) Termination
without Cause. Officer may terminate his/her employment
without cause at any time giving thirty days written notice of resignation to
Employer. Employer may terminate this Agreement without cause at any time by
giving thirty days prior written notice to Officer. If Employer terminates this
Agreement without cause, Employer may direct Officer to cease providing
services immediately. Subject to the limitation set forth in Section 7(a) below,
if Employer terminates this Agreement without cause, Employer shall continue to
pay Officer the compensation provided for in Section 4(a) of this
Agreement for a period of time equal to the greater of (i) the remaining
term of this Agreement or (ii) two years. No other benefits or
compensation will be paid to Officer if he/she is terminated pursuant to this Section 6(b),
unless otherwise provided for in the terms of the applicable plan or benefit.


 


(c) Termination by
Officer for Good Reason. Officer may terminate this
Agreement, and his/her employment with Employer, for “good reason” upon the
occurrence of any of the following:


 


(i)                                     a
requirement by Employer that Officer relocate his/her primary business office
more than 25 miles from its current location in order to fulfill Officer’s
duties under this Agreement;


 


(ii)                                  the
failure of Employer to comply with Section 4; or


 


(iii)                               any
material breach of this Agreement by Employer; or


 


(iv)                              the
assignment to Officer of duties materially inconsistent with Officer’s status
as Executive Vice President and Chief Financial Officer of Employer.


 


Prior to terminating this
Agreement pursuant to this Section, Officer shall give to Employer written
notice of his/her “good reason” for terminating this Agreement and provide
Employer with a reasonable period in which to contest or correct the “good
reason”, but in no event less than thirty days. In the event of a termination
for “good reason” pursuant to this Section, Officer will be entitled to receive
all compensation and benefits provided for in this Agreement for a termination
by Employer without cause.


 


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(d) Automatic
Termination. This Agreement will terminate automatically upon the death or
permanent disability of Officer. Officer will be deemed to be “Disabled” or to
suffer from a “Disability” within the meaning of this Agreement if, because of
a physical or mental impairment, Officer has been unable to perform the
essential functions of his/her position for a period of 180 consecutive days,
or if Officer can reasonably be expected to be unable to perform the essential
functions of his/her position for such period. The term “essential duties” is
defined as the ability to consistently perform his/her assigned duties,
including travel requirements. Subject to continuing coverage under applicable
benefits plans, and except as otherwise provided in this Agreement, if Officer
is terminated pursuant to this Section 6(d), Employer’s only remaining
financial obligation to Officer under this Agreement will be to pay any earned
but unpaid base salary and accrued but unpaid vacation and reimbursable travel
and entertainment expenses through the date of Officer’s termination.


 


(e) Effect of
Termination. Except as otherwise provided for in this Agreement, upon
termination of this Agreement, all rights and obligations under this Agreement
will cease except for the rights and obligations under Sections 4 and 5 to the
extent Officer has not been compensated or reimbursed for services performed
prior to termination or has not been paid vacation and reimbursable travel and
entertainment expenses accrued through the termination date (the amount of
compensation to be prorated for the portion of the pay period prior to
termination); the rights and obligations under Sections 7, 8, 9; and all
procedural and remedial provisions of this Agreement. A termination of this
Agreement will constitute a termination of Officer’s employment with Employer.


 


7.                                      Protection
of Confidential Information /Non-Competition/Non-Solicitation. 


 


Officer covenants and
agrees as follows:


 


(a) During Employer’s
employment of Officer and for a period of eighteen months following the
termination of Officer’s employment for any reason, Officer will not use or
disclose, directly or indirectly, for any reason whatsoever or in any way,
other than at the direction of Employer (with the written consent of National
Mentor Holdings, Inc.) during the course of Officer’s employment, or
following the termination of Officer’s employment after receipt of the prior
written consent of Employer, any confidential information or trade secrets of
Employer or its controlled subsidiaries or affiliates, including but not
limited to, the following: lists of past, current or potential customers of
Employer and its controlled subsidiaries and affiliates; all systems, manuals,
materials, processes and other intellectual property of any type used by
Employer or its controlled subsidiaries and affiliates in connection with their
respective business operations; financial statements, cost reports and other
financial information; contract proposals and bidding information; rate and fee
structures; policies and procedures developed as part of a confidential
business plan; and management systems and procedures, including manuals and
supplements (collectively the “Confidential Information”). 


 


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The obligation not to use
or disclose any Confidential Information will not apply to: (i) any
Confidential Information known by Officer before commencing employment with
Employer, (ii) Confidential Information which Officer obtains from a third
party, provided Officer has no actual or constructive knowledge that the third
party obtained the Confidential Information by wrongful or inappropriate means,
(iii) following the termination of the employment of Officer with
Employer, to any information that is or becomes public knowledge through no
fault of Officer, and that may be utilized by the public without any direct or
indirect obligation to Employer, but the termination of the obligation for
non-use or nondisclosure by reason of such information becoming public will
extend only from the date such information becomes public knowledge, or (iv) disclosure
compelled by legal process. The above will be without prejudice to any rights
or remedies of Employer under any state or federal law protecting trade secrets
or other information.


 


(b) Officer
covenants and agrees that during the term of his/her employment with Employer
and for a period of twelve months immediately following the termination of said
employment for any reason, he/she will not, directly or indirectly, seek,
obtain or accept a “Competitive Position” in the “Restricted Territory” with a “Competitor”
of Employer.


 


The following definitions
shall apply to this Section:


 


“Competitor” means any
business, individual, partnership, joint venture, association, firm,
corporation or other entity engaged, wholly or in part, in the provision or
sale of therapeutic foster care or other home or community-based healthcare or
human services (the “Competitive Business”).


 


“Competitive Position”
means any position (including a consulting position) or employment with a “Competitor”
of Employer in which Officer is engaged in corporate or operational management
of the part of such Competitor’s business which constitutes a Competitive
Business.


 


“Restricted Territory” is
the geographic area set forth in Exhibit A to this Agreement. The parties
agree to review the geographic area included within Restricted Territory from
time to time at either party’s request and the Restricted Territory will
thereafter be modified so that its coverage extends to, but only to, the
geographic area necessary to protect the interest of the Employer and its
controlled subsidiaries and affiliates engaged in the provision or sale of
therapeutic foster care or other home and community-based healthcare or human
services. No such reformation will be valid unless it is evidenced by written
amendment to this Agreement and signed by both parties.


 


(c) To protect the
goodwill of Employer and its controlled subsidiaries and affiliates, or the
customers of Employer and its controlled subsidiaries and affiliates, Officer
agrees that, for a period of eighteen months immediately 


 


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following the termination
of his/her employment with Employer, he/she will not, without the prior written
permission of Employer, directly or indirectly, for himself or herself or on
behalf of any other person or entity, solicit, divert away, take away or
attempt to solicit or take away any Customer of Employer for purposes of providing
or selling therapeutic foster care or other home or community-based healthcare
or human services if Employer, or the particular controlled subsidiary or
affiliate of Employer, is then still engaged in the sale or provision of such
services at the time of the solicitation. For purposes of this Section 7(c) ,
“Customer” means any individual or entity to whom Employer or its controlled
subsidiaries or affiliates has provided, or contracted to provide, therapeutic
foster care or other home and community-based healthcare or human services, and
with whom Officer had, alone or in conjunction with others, Material Contact
during the twelve months prior to the termination of her employment. For
purposes of this Section 7(c) , Officer had “Material Contact” with a
customer if (i) Officer had business dealings with the customer on behalf
of the Employer or its controlled subsidiaries or affiliates; (ii) Officer
was responsible for supervising or coordinating the dealings between the
customer and Employer or its controlled subsidiaries or affiliates; or (iii) Officer
obtained trade secrets or confidential information about the customer as a
result of Officer’s association with Employer or its controlled subsidiaries or
affiliates.


 


(d) During Employer’s
employment of Officer and for a period of eighteen months following the
termination of Officer’s employment with Employer for any reason, Officer will
not solicit for employment, directly or indirectly, any employee of Employer or
any of its controlled subsidiaries or affiliates who was employed with Employer
or its controlled subsidiaries or affiliates within the one year period
immediately prior to Officer’s termination.


 


(e) Employer may,
with the prior written consent of National Mentor Holdings, Inc. waive
compliance with one or more of the covenants of Officer set forth in this Section 7
for the purpose of facilitating the negotiation of the acquisition of Employer
by a third party. Such a waiver must be made in writing and executed by
Employer and National Mentor Holdings, Inc., and shall be effective only
with respect to the acts specifically described herein.


 


8.                                      Work
Made for Hire. Officer agrees that any written program materials,
protocols, research papers and all other writings (the “Work”), which Officer
develops for Employer’s use, or for use by Employer’s controlled subsidiaries
or affiliates, during the term of this Agreement, will be considered “work made
for hire” within the meaning of the United States Copyright Act, Title 17,
United States Code, which vests all copyright interest in and to the Work in
the Employer. In the event, however, that any court of competent jurisdiction
finally declares that the Work is not or was not a work made for hire as
agreed, Officer agrees to assign, convey, and transfer to the Employer all
right, title and interest Officer may presently have or may have or be deemed
to have and to any such Work and in the copyright of such work, including but
not limited to, all rights of 


 


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reproduction,
distribution, publication, public performance, public display and preparation
of derivative works, and all rights of ownership and possession of the original
fixation of the Work and any and all copies. Additionally, Officer agrees to
execute any documents necessary for Employer to record and/or perfect its
ownership of the Work and the applicable copyright. The foregoing will not
apply to any writings Officer develops which are not for Employer’s use or are
in each instance specifically excluded in advance of publication from the
coverage of the foregoing by Employer’s Board of Directors.


 


9.                                      Property
of Employer. Officer agrees that, upon the termination of Officer’s
employment with Employer, Officer will immediately surrender to Employer all
property, equipment, funds, lists, books, records and other materials of
Employer or its controlled subsidiaries or affiliates in the possession of or
provided to Officer, provided, however, Officer shall be entitled to retain
individualized bound volumes of transaction documents in which Officer provided
services.


 


10.                               Governing
Law. This Agreement and all issues relating to the validity,
interpretation and performance will be governed by and interpreted under the
laws of the State of Massachusetts.


 


11.                               Remedies.
Employer and Officer agree that an actual or threatened violation by Officer of
the covenants and obligations set forth in Sections 7,8 and 9 will cause
irreparable harm to Employer or its controlled subsidiaries or affiliates and
that the remedy at law for any such violation will be inadequate. Officer
agrees, therefore, that Employer or its controlled subsidiaries or affiliates
will be entitled to appropriate equitable relief, including, but not limited
to, a temporary restraining order and a preliminary injunction, without the
necessity of posting a bond. The provisions of Sections 7,8, and 9 will survive
the termination of this Agreement in accordance with the terms set forth in
each Section.


 


12.                               Arbitration.
Except for an action for injunctive relief as described in Section 11, any
disputes or controversies arising under this Agreement will be settled by
arbitration in Boston, Massachusetts in accordance with the rules of the
American Arbitration Association relating to the arbitration of employment
disputes. The determination and findings of such arbitrators will be final and
binding on all parties and may be enforced, if necessary, in any court of
competent jurisdiction.


 


	
   /s/ JWG

  	
   

  
	
  Officer’s
  initials

  



 


13.                               Notices.
Any notice or request required or permitted to be given to any party will be
given in writing and, excepting personal delivery, will be given at the address
set forth below or at such other address as such party may designate by written
notice to the other party to this Agreement:


 


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  To Officer:

  	
   

  	
  John Gillespie

  
	
   

  	
   

  	
  210 Riverside
  Drive

  
	
   

  	
   

  	
  Apt. 7G

  
	
   

  	
   

  	
  New York, NY 10025

  
	
   

  	
   

  	
   

  
	
  To Employer:

  	
   

  	
  National Mentor, Inc.

  
	
   

  	
   

  	
  313 Congress
  Street

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02210

  
	
   

  	
   

  	
  Attention: General
  Counsel

  
	
   

  	
   

  	
  Facsimile: 617-790-4941

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  National Mentor
  Holdings, Inc.

  
	
   

  	
   

  	
  c/o Madison Dearborn
  Capital Partners, LLC

  
	
   

  	
   

  	
  Three First National
  Plaza, Suite 3800

  
	
   

  	
   

  	
  Chicago, Illinois 60602

  
	
   

  	
   

  	
  Attention: Timothy
  Sullivan

  
	
   

  	
   

  	
  Facsimile: (312) 895-1001

  



 


Each notice given in
accordance with this Section will be deemed to have been given, if
personally delivered, on the date personally delivered; if delivered by
facsimile transmission, when sent and confirmation of receipt is received; or,
if mailed, on the third day following the day on which it is deposited in the
United States mail, certified or registered mail, return receipt requested,
with postage prepaid, to the address last given in accordance with this
Section.


 


14.                               Headings.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and should not be construed or interpreted to
restrict or modify any of the terms or provisions of this Agreement.


 


15.                               Severability.
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term of this
Agreement, such provision will be fully severable and this Agreement and each
separate provision will be construed and enforced as if such illegal, invalid
or unenforceable provision had never comprised a part of this Agreement, and
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance from this Agreement. In addition, in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically, as part
of this Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provisions as may be possible and be legal, valid and
enforceable, if such reformation is allowable under applicable law.


 


16.                               Binding
Effect. This Agreement will be binding upon and shall inure to the
benefit of each party and each party’s respective successors, heirs and legal
representatives. This Agreement may not be assigned by Officer to any other 


 


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person or entity but may
be assigned by Employer to any wholly-owned subsidiary or affiliate of Employer
or to any successor to or transferee of all, or any part, of the stock or
assets of Employer.


 


17.                               Employer
Policies, Regulations, and Guidelines for Officers. Employer may issue
policies, rules, regulations, guidelines, procedures or other material, whether
in the form of handbooks, memoranda, or otherwise, relating to its officers.
These materials are general guidelines for Officer’s information and will not
be construed to alter, modify or amend this Agreement for any purpose
whatsoever.


 


18.                               Entire
Agreement. This Agreement and the letter from Employer to Officer dated
July 19, 2001 (the “Letter”) embody the entire agreement and understanding
between the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, whether written or oral,
relating to such subject matter, unless expressly provided otherwise within
this Agreement. No amendment or modification of this Agreement will be valid
unless made in writing and signed by each of the parties and countersigned by
Madison Dearborn Capital Partners, LLC. No representations, inducements or
agreements have been made to induce either Officer or Employer to enter into
this Agreement which are not expressly set forth within this Agreement. Officer
and Employer acknowledge and agree that Employer’s wholly owned subsidiaries
and affiliates are express third party beneficiaries of this Agreement.


 


IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.


 


	
  JOHN
  GILLESPIE

  	
   

  	
  NATIONAL
  MENTOR, INC.

  
	
  “Officer”

  	
   

  	
  “Employer”

  
	
   

  	
   

  	
   

  
	
  /s/ John W. Gillespie

  	
   

  	
   

  	
  By:

  	
  /s/ Gregory Torres

  	
   

  
	
   

  	
   

  	
  Name: Gregory Torres

  
	
   

  	
   

  	
  Title: President and
  CEO

  
						



 


EXHIBIT A

Restricted Territory


 


The Restricted Territory
is any location within a radius of fifty miles of any existing operation of
Employer, or its affiliates or controlled subsidiaries, engaged in the
provision or sale of therapeutic foster care or other home or community-based
healthcare or human services.