Exhibit
10.4


 


EXECUTION COPY


 


AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

(Edward Murphy)


 


THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of June 29,
2006 by and between Edward Murphy (“Officer”), and National Mentor
Holdings Inc., a Delaware corporation (“Employer”).


 


WHEREAS, an Agreement and Plan of Merger dated March 22, 2006 (the “Merger
Agreement”) has been entered into by and among NMH Holdings, LLC, a
Delaware limited liability company (“Parent”), NMH Mergersub, Inc. a
Delaware Corporation wholly owned by Parent, and National Mentor Holdings Inc.,
a Delaware corporation, pursuant to which the Employer shall become a wholly
owned subsidiary of Parent (the “Transaction”);


 


WHEREAS, Officer is currently employed by the Employer and the Employer desires
that Officer continue to be employed by the Employer following the Closing (as
defined in the Merger Agreement) and to enter into this Agreement embodying the
terms of Officer’s employment;


 


WHEREAS, Officer desires to continue to be employed by the Employer following
the Closing and to enter into this Agreement;


 


NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements contained 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 three years commencing on the
Closing and, unless terminated earlier in accordance with the terms of this
Agreement, ending on the third anniversary of the date hereof. 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 (60) days prior to
the next anniversary date.


 


2.             Position and Duties of Officer.
Officer will serve as President and Chief Executive Officer of Employer. 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 full business time and energy to the business affairs
and interests of Employer, and will use his reasonable best efforts and
abilities to promote Employer’s interests. Officer agrees that he will
diligently endeavor to perform services contemplated by this Agreement in a
manner consistent with his position and in accordance with the policies
established by the Employer and provided to Officer from time to time.


 

















 


(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 the written approval of
Employer’s board of directors (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
materially interfere or conflict with the performance of Officer’s duties under
this Agreement. Notwithstanding the foregoing, nothing contained herein shall
prohibit Officer from continuing as trustee of the Massachusetts Health and
Welfare Trust.


 


4.             Compensation.


 


(a)           Base Salary. Employer will pay
Officer a base salary in the amount of $350,000 per year (the “Base Salary”),
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)           Bonuses. For fiscal year 2006,
Officer shall be eligible to receive a bonus pursuant to the plan as in
existence prior to the Closing in an amount to be determined by the Board in
good faith. Thereafter, Employer shall establish a bonus plan for each fiscal
year (the “Plan”) pursuant to which Officer will be eligible to receive an
annual bonus (the “Bonus”). The Board or the Compensation Committee of the
Board will administer the Plan and establish performance objectives for each
year in consultation with Officer. In the event that Employer achieves target
based on actual performance, Officer shall be entitled to receive a Bonus in an
amount equal to no less than Officer’s Base Salary. The Bonus shall become
payable on or before the 15th day of the third month following the end of the
applicable fiscal year of the Employer.


 


(c)           Benefits. Officer will be
eligible to participate in all benefit plans to the same extent as they are
made available to other senior Officers of Employer. Officer will receive
separate information detailing the terms of the benefit plans and the terms of
such plans will control. Officer also will be eligible to participate in any
annual incentive 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
Without Good Reason and Termination with Cause. Except as otherwise set
forth in this Agreement, 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 any of the following circumstances: (A) the
commission by the Officer of an act of fraud or embezzlement, (B) the
indictment or conviction of the Officer for (x) a felony or (y) a crime
involving moral turpitude or a plea by Officer of guilty or nolo contendere
involving such a crime (to the extent such crime results in an adverse effect
on the business or reputation of Employer), (C) the willful misconduct by the
Officer in the performance of Officer’s duties, including any willful
misrepresentation or willful concealment by Officer on any report submitted to


 


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Employer (or any of its
securityholders or subsidiaries) that is other than de minimis, (D) the
violation by Officer of a written Company policy regarding substance abuse,
sexual harassment, discrimination or any other material written policy of
Employer regarding employment, (E) the willful failure of the Officer to render
services to Employer or any of its subsidiaries in accordance with Officer’s
employment which failure amounts to a material neglect of the Officer’s duties
to Employer or any of its subsidiaries, (F) the failure of the Officer to
comply with reasonable directives of the Board consistent with the Officer’s
duties or (G) the material breach by Officer of any of the provisions of any
agreement between Officer, on the one hand, and Employer or a securityholder or
an affiliate of Employer, on the other hand. Notwithstanding the foregoing,
with respect to clauses (C), (D), (E), (F) and (G) above, Officer’s termination
of employment with Employer shall not be deemed to have been terminated for
Cause unless and until Officer has been provided written notice of Employer’s
intention to terminate his employment for Cause and the specific facts relied
on; ten (10) business days from the receipt of such notice to cure any such conduct
or omission giving rise to a termination for Cause; and Officer does not cure
any such conduct or omission within such ten-day period.


 


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, any earned but unpaid bonus for any completed full year
prior to the year of such termination and accrued but unpaid vacation and
reimbursable travel and entertainment expenses through the date of Officer’s
termination (collectively, “Accrued Obligations”).


 


Officer
may resign his employment without “good reason” at any time by giving thirty
(30) days written notice of resignation to Employer.


 


(b)           Termination Without Cause.
Employer may terminate this Agreement without “cause” (as defined in Section
6(a)(ii) above) at any time by giving thirty (30) days prior written notice to
Officer. If Employer terminates this Agreement without “cause”, Employer may
direct Officer to cease providing services immediately. If Employer terminates
this Agreement without “cause”, Employer shall (i) pay the Accrued Obligations;
(ii) continue to pay Officer the compensation provided for in Section 4(a)
of this Agreement and to provide Officer with the benefits pursuant to Section
4(c) of this Agreement which he was receiving immediately prior to the date of
the Officer’s termination at Employer’s expense for a period of time equal to
two years following the date of such termination; (iii) pay Officer an amount equal
to Officer’s target annual bonus for the year in which such termination occurs,
at the end of each of the two years following the date of such termination; and
(iv) a pro rata bonus for the year in which such termination occurs based on
Employer’s actual performance, such bonus to be paid within 30 days of the end
of the fiscal year, provided, however that no such pro rata bonus will be paid
if the termination occurs in the first six months of such fiscal year. No other
benefits or compensation will be paid or provided to Officer if he is
terminated pursuant to this Section 6(b) unless otherwise provided for
in the terms of the applicable plan or agreement.


 


(c)           Termination by Officer for Good
Reason. Officer may terminate this Agreement, and his employment with
Employer, for “good reason” upon the occurrence of any of the following: (i) a
change by Employer in Officer’s title, duties and responsibilities which is
materially inconsistent with Officer’s position in Employer, (ii) a reduction
in Officer’s annual base salary or annual bonus opportunity (excluding any
reduction in Officer’s base salary or bonus opportunity that is part of a plan
to reduce compensation of comparably situated employees of Employer generally; provided
that such reduction in Officer’s salary or bonus opportunity is not greater
than ten percent (10%) of Officer’s salary or bonus opportunity on the date
hereof), (iii) a material breach by Employer of this Agreement, (iv) the
relocation of the Officer’s principal place of work from its current location
to a location that is beyond a 50-mile radius of such current location;
provided that, notwithstanding anything to the contrary in the foregoing,
Officer shall only have “Good Reason” to terminate employment following
Employer’s failure


 


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to remedy the act or omission
which is alleged to constitute “Good Reason” within fifteen (15) days following
Employer’s receipt of written notice from Officer specifying such act or
omission; or (v) the Employer’s failure to renew the initial term of employment
or any subsequent renewal term. If Officer terminates this Agreement for “good
reason”, Employer shall (w) pay the Accrued Obligations; (x) continue to pay
Officer the compensation provided for in Section 4(a) of this Agreement
and to provide Officer with the benefits pursuant to Section 4(c) of this
Agreement which he was receiving immediately prior to the date of the Officer’s
termination of employment at Employer’s expense for a period of time equal to
two years following the date of such termination; (y) pay Officer an amount
equal to Officer’s target annual bonus for the year in which such termination
occurs, at the end of each of the two years following the date of such
termination; and (z) a pro rata bonus for the year in which such termination
occurs based on Employer’s actual performance, such bonus to be paid within 30
days of the end of the fiscal year, provided, however that no such pro rata
bonus will be paid if the termination occurs in the first six months of such
fiscal year. No other benefits or compensation will be paid or provided to
Officer if he is terminated pursuant to this Section 6(c) unless
otherwise provided for in the terms of the applicable plan or agreement.


 


(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 position for
a period of 180 consecutive days, or if Officer can reasonably be expected to
be unable to perform the essential functions if his position for such period.
The term “essential duties” is defined as the ability to consistently
perform his assigned duties, including travel requirements. Subject to
continuing coverage under applicable benefit 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 (i) the Accrued Obligations and (ii) a pro rata bonus
for the year in which such termination occurs based on Employer’s actual performance,
such bonus to be paid within 30 days of the end of the fiscal year.


 


(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 8, 9 and 10; 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.             Notwithstanding anything contained
herein or in any other agreement, plan, program or policy to which Officer and
the Company are parties or by which they are bound, to the extent that any
payments hereunder (when aggregated with any other payments, benefits or other
consideration to be received by Officer in connection with the change in
control occurring as a result of the transaction contemplated in the Merger Agreement)
could reasonably be expected to result in any amount or payment which would be
non-deductible under Section 280G of the Internal Revenue Code of 1986, as
amended, any payments that would otherwise be payable hereunder shall be
reduced (to the extent possible, the specific payment to be so reduced will be
made at the election of Officer), but not below zero, such that the total
amount considered to have been received by Officer will be one dollar less than
the amount which would result in the loss of any deduction under such Section
280G with respect to the amounts. The parties intend for the payments under
Sections 4 and 6 of this Agreement to reasonably compensate Officer for his
services to be performed after the Closing, or in the event of his termination
of employment, to compensate him for the restrictive covenants by which he is
bound, the release of his claims, and, in certain circumstances, the
interruption of his employment. The provisions of this Section 7


 


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shall not be applied to reduce
amounts payable to the Officer to the extent such amounts are treated as a
“parachute payment” in connection with any transaction other than the
transactions contemplated in the Merger Agreement.


 


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


 


Officer
covenants and agrees as follows:


 


(a)           Officer will not at any time (whether
during or after Officer’s employment with Employer), other than in the ordinary
course of performing services for Employer, (x) retain or use for the benefit,
purposes or account of Officer or any other person, firm, partnership, joint
venture, association, corporation or other business organization, entity or
enterprise whatsoever (“Person”); or (y) disclose, divulge, reveal,
communicate, share, transfer or provide access to any Person outside Employer
(other than its professional advisers who are bound by confidentiality
obligations), any non-public, proprietary or confidential information obtained
by Officer in connection with the commencement of Officer’s employment with
Employer or at any time thereafter during the course of Officer’s employment
with Employer — including without limitation trade secrets, know-how, research
and development, software, databases, inventions, processes, formulae,
technology, designs and other intellectual property, information concerning
finances, investments, profits, pricing, costs, products, services, vendors,
customers, clients, partners, investors, personnel, compensation, recruiting,
training, advertising, sales, marketing, promotions, government and regulatory
activities and approvals — concerning the past, current or future business,
activities and operations of Employer and/or any third party that has disclosed
or provided any of the same to Employer on a confidential basis (provided that
with respect to such third party Officer knows or reasonably should have known
that the third party provided it to Employer on a confidential basis)
(“Confidential Information”) without the prior written authorization of the
Board of Directors of Employer; provided, however, that in any event Officer
shall be permitted to disclose any Confidential Information reasonably
necessary (i) to perform Officer’s duties while employed with Employer or (ii)
in connection with any litigation or arbitration involving this or any other
agreement entered into between Officer and Employer before, on or after the
date of this Agreement in connection with any action or proceeding in respect
thereof.


 


(b)           “Confidential Information” shall not
include any information that is (A) generally known to the industry or the
public other than as a result of Officer’s breach of this covenant or any
breach of other confidentiality obligations by third parties to the extent the
Officer knows or reasonably should have known of such breach by such third
parties; (B) made legitimately available to Officer by a third party (unless
Officer knows or reasonably should have known that such third party has
breached any confidentiality obligation); or (C) required by law or by any
court, arbitrator, mediator or administrative or legislative body (including
any committee thereof) with actual or apparent jurisdiction to order Officer to
disclose or make accessible any information; provided that, with respect to
clause (C) Officer, except as otherwise prohibited by law or regulation, shall
give prompt written notice to Employer of such requirement, disclose no more
information than is so required, and shall reasonably cooperate with any
attempts by Employer, at its sole cost, to obtain a protective order or similar
treatment prior to making such disclosure.


 


(c)           Except as required by law or
otherwise set forth in Section 8(b) above, or unless or until publicly
disclosed by Employer, Officer will not disclose to anyone, other than
Officer’s immediate family and legal, tax or financial advisors, the material
provisions of this Agreement; provided that Officer may disclose the provisions
of this Agreement (A) to any prospective future employer provided they agree to
maintain the confidentiality of such terms or (B) in connection with any
litigation or arbitration involving this Agreement.


 


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(d)           Upon termination of Officer’s
employment with Employer for any reason, Officer shall (A) cease and not
thereafter commence use of any Confidential Information or intellectual
property (including without limitation, any patent, invention, copyright, trade
secret, trademark, trade name, logo, domain name or other source indicator) if
such property is owned or used by Employer; (B) immediately destroy, delete, or
return to Employer, at Employer’s option, all originals and copies in any form
or medium (including memoranda, books, papers, plans, computer files, letters
and other data) in Officer’s possession or control (including any of the
foregoing stored or located in Officer’s office, home, laptop or other
computer, whether or not Company property) that contain Confidential
Information or otherwise relate to the business of Employer, except that
Officer may retain only those portions of any personal notes, notebooks and
diaries that do not contain Confidential Information; and (C) notify and fully
cooperate with Employer regarding the delivery or destruction of any other
Confidential Information of which Officer is or becomes aware to the extent
such information is in Officer’s possession or control. Notwithstanding
anything elsewhere to the contrary, Officer shall be entitled to retain (and
not destroy) information showing Officer’s compensation or relating to
reimbursement of expenses that Officer reasonably believes is necessary for tax
purposes and copies of plans, programs, policies and arrangements of, or other
agreements with, Employer addressing Officer’s compensation or employment or
termination thereof.


 


(e)           During the term of Officer’s
employment and during the two (2) years immediately following (x) the date of
any termination of Officer’s employment with Employer by Employer with or
without Cause and (y) if earlier than the date referenced in clause (x) hereof,
the date that notice is given by Officer to Employer of Officer’s resignation
from Employer for any reason (other than due to Officer’s death) (such period,
the “Restricted Period”), Officer will not, directly or indirectly:


 


(A)          engage in any business that competes,
wholly or in part, as of the Relevant Date (as defined below), in the provision
or sale of acquired brain injury services, therapeutic foster care, other
foster care or other home or community-based healthcare, therapy, counseling or
other educational or human services to people with special needs, or any other
business that Employer is actively conducting or is actively considering
conducting at the time of Officer’s termination of employment (so long as
Officer knows or reasonably should have known about such plan(s)), in each case
anywhere in the United States (a “Competitive Business”);


 


(B)           enter the employ of, or render any
services to, any Person (or any division or controlled or controlling affiliate
of any Person) who or which is a Competitive Business as of the date Officer
enters such employment or renders such services; or


 


(C)           acquire a financial interest in, or
otherwise become actively involved with, any Competitive Business which is a
Competitive Business as of the date of such acquisition or involvement,
directly or indirectly, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or officer.


 


(f)            Notwithstanding the provisions of
Section 8(e)(A), (B) or (C) above, nothing contained in Section 8(e) shall
prohibit Officer from (A) investing, as a passive investor, in any publicly
held company provided that Officer’s beneficial ownership of any class of such
publicly held company’s securities does not exceed one percent (1%) of the
outstanding securities of such class, (B) entering the employ of any academic
institution or governmental or regulatory instrumentality of any country or any
domestic or foreign state, county, city or political subdivision, or (C)
providing services to a subsidiary or affiliate of an entity that controls a
separate subsidiary or affiliate that is a Competitive Business, so long as the
subsidiary or affiliate for which Officer may be providing services is not itself
a Competitive Business and Officer is not, as an Officer of such subsidiary or
affiliate, engaging in activities that would otherwise cause such subsidiary or
affiliate to be deemed a Competitive Business.


 


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(g)           During the Restricted Period, Officer
will not, whether on Officer’s own behalf or on behalf of or in conjunction
with any Person, directly or indirectly solicit or assist in soliciting the
business of, in all such cases determined as of the Relevant Date
(collectively, the “Clients”):


 


(A)          with whom Officer had personal contact
or dealings on behalf of Employer during the one-year period immediately
preceding Officer’s termination of employment;


 


(B)           with whom employees of Employer
reporting to Officer have had personal contact on behalf of Employer and about
such contacts the Officer was aware during the one-year period immediately
preceding the Officer’s termination of employment; or


 


(C)           with whom Officer had direct or
indirect responsibility during the one-year period immediately preceding
Officer’s termination of employment.


 


For
purposes of this Section 8, the term “Relevant Date” shall mean, during
the term of Officer’s employment, any date falling during such time, and, for
the period of time during the Restricted Period that falls after the date of
any termination of Officer’s employment with Employer, the effective date of
termination of Officer’s employment with Employer.


 


(h)           Non-Interference with Business
Relationships. During the Restricted Period, Officer will not interfere
with, or attempt to interfere with, business relationships (whether formed
before, on or after the date of this Agreement) between Employer, on the one
hand, and any Client, customers, suppliers, partners, of Employer, on the other
hand, in any such case determined as of the Relevant Date.


 


(i)            During the term of Officer’s
employment and during the Restricted Period, Officer will not, whether on
Officer’s own behalf or on behalf of or in conjunction with any Person, directly
or indirectly (other than in the ordinary course of Officer’s employment with
Employer on Employer’s behalf):


 


(A)          solicit or encourage any employee of
Employer to leave the employment of Employer; or


 


(B)           hire any such employee who was
employed by Employer as of the date of Officer’s termination of employment with
Employer or who left the employment of Employer coincident with, or within one
year prior to or after, the termination of Officer’s employment with Employer;
or


 


(C)           solicit or encourage to cease to work
with Employer any Officer that Officer knows, or reasonably should have known,
is then under contract with Employer.


 


(j)            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 8 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 therein.


 


It
is expressly understood and agreed that although Officer and Employer consider
the restrictions contained in this Section 8 to be reasonable, if a final
judicial determination is made by a court of competent jurisdiction that the
time or territory or any other restriction contained in this Agreement is an
unenforceable restriction against Officer, the provisions of this Agreement
shall not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as


 


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such court may judicially determine or
indicate to be enforceable (provided that in no event shall any such amendment
broaden the time period or scope of any restriction herein). Alternatively, if
any court of competent jurisdiction finds that any restriction contained in
this Agreement is unenforceable, and such restriction cannot be amended so as
to make it enforceable, such finding shall not affect the enforceability of any
of the other restrictions contained herein.


 


9.             Intellectual Property.


 


(a)           If Officer has created, invented,
designed, developed, contributed to or improved any inventions, intellectual
property, discoveries, copyrightable subject matters or other similar work of
intellectual property (including without limitation, research, reports,
software, databases, systems or applications, presentations, textual works,
content, or audiovisual materials) (“Works”), either alone or with third
parties, prior to or during Officer’s prior and current employment with
Employer, that are in connection with such employment (“Prior Works”),
to the extent Officer has retained or does retain any right in such Prior Work,
Officer hereby grants Employer a perpetual, non-exclusive, royalty-free,
worldwide, assignable, sublicensable license under all rights and intellectual
property rights (including rights under patent, industrial property, copyright,
trademark, trade secret, unfair competition and related laws) therein to the
extent of Officer’s rights in such Prior Work for all purposes in connection
with Employer’s current and future business.


 


(b)           If Officer creates, invents, designs,
develops, contributes to or improves any Works, either alone or with third
parties, at any time during Officer’s employment by Employer and within the
scope of such employment and/or with the use of any Employer resources (“Company
Works”), Officer shall promptly and fully disclose same to Employer and
hereby irrevocably assigns, transfers and conveys, to the maximum extent
permitted by applicable law, and at Employer’s sole expense, all rights and
intellectual property rights therein (including rights under patent, industrial
property, copyright, trademark, trade secret, unfair competition and related
laws) to Employer to the extent ownership of any such rights does not vest
originally in Employer.


 


(c)           Officer agrees to keep and maintain
adequate and current written records (in the form of notes, sketches, drawings,
and any other form or media requested by Employer) of all Company Works. The
records will be available to and remain the sole property and intellectual
property of Employer at all times.


 


(d)           Officer shall take all requested
actions and execute all requested documents (including any licenses or
assignments required by a government contract) at Employer’s expense (but
without further remuneration) to assist Employer in validating, maintaining,
protecting, enforcing, perfecting, recording, patenting or registering any of
Employer’s rights in the Prior Works and Company Works as set forth in this
Section 9. If Employer is unable for any other reason to secure Officer’s
signature on any document for this purpose, then Officer hereby irrevocably
designates and appoints Employer and its duly authorized officers and agents as
Officer’s agent and attorney in fact, to act for and in Officer’s behalf and
stead to execute any documents and to do all other lawfully permitted acts in
connection with the foregoing.


 


(e)           Except as may otherwise be required
under Section 4(a) above, Officer shall not improperly use for the benefit of,
bring to any premises of, divulge, disclose, communicate, reveal, transfer or
provide access to, or share with Employer any confidential, proprietary or
non-public information or intellectual property relating to a former employer
or other third party which Officer knows or reasonably should have known is
confidential, proprietary or non-public information or intellectual property of
such third party without the prior written permission of such third party.
Officer hereby indemnifies, holds harmless and agrees to defend Employer and
its officers, directors, partners,


 


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Officers, agents and
representatives from any breach of the foregoing covenant. Officer shall comply
with all relevant policies and guidelines of Employer, including regarding the
protection of confidential information and intellectual property and potential
conflicts of interest. Officer acknowledges that Employer may amend any such
policies and guidelines from time to time, and that Officer remains at all
times bound by their most current version.


 


10.           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.


 


11.           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 Commonwealth of
Massachusetts.


 


12.           Remedies. Officer
acknowledges and agrees that in the course of Officer’s employment with
Employer, Officer will be provided with access to Confidential Information, and
will be provided with the opportunity to develop relationships with clients,
prospective clients, employees and other agents of Employer, and Officer
further acknowledges that such confidential information and relationships are
extremely valuable assets of Employer in which Employer has invested and will
continue to invest substantial time, effort and expense. Accordingly, Officer
acknowledges and agrees that Employer’s remedies at law for a breach or
threatened breach of any of the provisions of Section 8, 9 or 10 would be
inadequate and, in recognition of this fact, Officer agrees that, in the event
of such a breach or threatened breach, in addition to any remedies at law,
Employer, without posting any bond, shall be entitled to cease making any
payments or providing any benefit otherwise required to be paid or provided by
Employer (other than any vested benefits under any retirement plan or as may
otherwise be required by applicable law to be provided) and seek equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may then
be available; provided, however, that if it is subsequently determined in a
final and binding arbitration or litigation that Officer did not breach any
such provision, Employer will promptly pay any payments or provide any
benefits, which Employer may have ceased to pay when originally due and
payable, plus an additional amount equal to interest (calculated based on the
applicable federal rate for the month in which such final determination is
made) accrued on the applicable payment or the amount of the benefit, as
applicable, beginning from the date such payment or benefit was originally due
and payable through the day preceding the date on which such payment or benefit
is ultimately paid hereunder.


 


13.           Arbitration. Except for an
action for injunctive relief as described in Section 12, 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 finding of such arbitrators will be final and binding on all
parties and may be enforced, if necessary, in any court of competent
jurisdiction.


 


14.           Indemnification. Employer
agrees to maintain a Directors and Officers Liability Policy covering Executive
to the fullest extent permitted by Delaware Law unless such policy increases in
cost to an amount that is more than three times the amount that Employer pays
as of the date of this Agreement.


 


15.           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:


 


9

















 


If
to Employer:


 


National
Mentor Holdings, Inc.


c/o
Vestar Capital Partners


245
Park Avenue, 41st Floor


New
York, NY 10167


Attn:
General Counsel


Telecopy:
(212) 808-4922


 


with
a copy to:


 


Simpson
Thacher & Bartlett


425
Lexington Avenue


New
York, New York 10017


Attention:  Alvin Brown, Esq.


(Fax
#212-455-2502)


 


If
to the Officer:


 


To
the most recent address of file with Company for the Officer.


 


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.


 


16.           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.


 


17.           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 a
part of this Agreement, a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and legal, valid and
enforceable, if such reformation is


 


18.           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 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.


 


19.           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.


 


10

















 


20.           Entire Agreement. This
Agreement, embodies the entire agreement and understanding between the parties
with respect to the subject matter contained herein and supersedes all prior
agreements and understandings, whether written or oral, relating to their
subject matter, unless expressly provided otherwise within such agreements,
including but not limited to that certain employment agreement entered into
between Officer and National Mentor, Inc. dated September 7, 2004. No amendment
or modification of this Agreement will be valid unless made in writing and
signed by each of the parties and countersigned by Vestar Capital Partners V,
L.P. 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.


 


*              *              *              *              *


 


11

















 


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


 


	
  EDWARD MURPHY

  	
  NATIONAL MENTOR HOLDINGS,

  INC.

  
	
  “Officer”

  	
  “Employer”

  
	
   

  	
   

  
	
  /s/
  Edward Murphy

  	
   

  	
  By:

  	
  /s/
  Linda DeRenzo

  	
   

  
	
   

  	
  Name:
  Linda DeRenzo

  
	
   

  	
  Title:
  Senior Vice President

  
					



 


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